<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission file number: 333-11149
ORBCOMM GLOBAL, L.P.
ORBCOMM GLOBAL CAPITAL CORP.
(Exact name of Registrants as specified in their charters)
54-1698039
DELAWARE 54-1841164
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization of Registrants) Identification Nos.)
21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166
(Address of Registrants' principal executive offices)
(Zip Code)
(703) 406-6000
(Registrants' telephone number, including area code)
Indicate by check mark whether the Registrants (1) have filed all
reports required to be filed by Section 13 and 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the last 90 days.
YES X NO
--- ---
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ORBCOMM GLOBAL, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED BALANCE SHEETS
(IN THOUSANDS; UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 56,870 $ 45,945
Investments 55,522 48,309
Inventory 1,751 3,863
------------ ----------
Total Current Assets 114,143 98,117
LONG TERM ASSETS:
Investments 42,360 28,919
Mobile Communications Satellite System,
net of accumulated depreciation 170,034 188,909
Other assets, net 6,138 6,147
Investments in and advances to affiliates (3,166) (1,267)
------------ ----------
TOTAL ASSETS $ 329,509 $320,825
============ ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Current portion of long-term debt $ 991 $ 1,014
Accounts payable and accrued expenses 18,298 14,438
------------ ----------
Total Current Liabilities 19,289 15,452
Long-term debt 172,278 172,015
------------ ----------
Total Liabilities 191,567 187,467
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Teleglobe Mobile Partners 73,596 71,304
Orbital Communications Corporation 64,346 62,054
------------ ----------
Total Partners' Capital 137,942 133,358
------------ ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 329,509 $320,825
============ ==========
</TABLE>
(See accompanying notes to the condensed financial statements)
1
<PAGE> 3
ORBCOMM GLOBAL, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS; UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
ACCUMULATED
DURING
DEVELOPMENT
THREE MONTHS ENDED STAGE
MARCH 31, THROUGH
--------------------------- MARCH 31,
1996 1997 1997
---------- ------------ -------------
<S> <C> <C> <C>
INCOME:
Product sales $ 0 $ 133 $ 401
Distribution fees 0 0 1,000
Other 0 2 54
---------- ------------ -------------
Total Income 0 135 1,455
EXPENSES:
Cost of product sales 0 124 393
Depreciation 1,519 1,718 7,916
Engineering expenses 933 1,580 7,033
Marketing, administrative and other expenses 836 1,300 8,291
---------- ------------ -------------
Total Expenses 3,288 4,722 23,633
---------- ------------ -------------
Losses from operations (3,288) (4,587) (22,178)
OTHER INCOME AND EXPENSES:
Interest income (expense), net 15 2,016 5,628
Equity in losses of affiliates (606) (1,823) (7,278)
---------- ------------ -------------
DEFICIENCY OF INCOME OVER EXPENSES $ (3,879) $ (4,394) $ (23,828)
========== ============ =============
</TABLE>
(See accompanying notes to the condensed financial statements)
2
<PAGE> 4
ORBCOMM GLOBAL, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS; UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
CASH FLOWS
DURING
DEVELOPMENT
THREE MONTHS ENDED STAGE
MARCH 31, THROUGH
--------------------- MARCH 31,
1996 1997 1997
----------- --------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Deficiency of income over expenses $ (3,879) $ (4,394) $ (23,828)
ADJUSTMENTS TO RECONCILE DEFICIENCY
OF INCOME OVER EXPENSES TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Depreciation 1,519 1,718 7,916
Amortization of financing fees 0 206 513
Equity in losses of affiliates 606 1,823 7,258
Increase in receivables (113) (55) (1,325)
Increase in inventory (52) (2,112) (3,863)
Increase (decrease) in accounts payable and
accrued expenses 4,895 (3,860) 14,438
----------- --------- ----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 2,976 (6,674) 1,109
----------- --------- ----------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Capital expenditures (16,828) (20,593) (196,825)
Increase in amount due from affiliates (718) (3,721) (5,991)
Purchase of investments 0 (23,533) (160,044)
Proceeds from sale of investments 0 44,051 84,058
----------- --------- ----------
NET CASH USED IN INVESTING ACTIVITIES (17,546) (3,796) (278,802)
----------- --------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Net proceeds from issuance of long-term debt 0 0 169,475
Repayment of long-term debt (218) (240) (1,970)
Partners' contributions 14,000 0 159,800
Financing fees paid 0 (215) (3,667)
----------- --------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 13,782 (455) 323,638
----------- --------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (788) (10,925) 45,945
CASH AND CASH EQUIVALENTS:
Beginning of period 1,785 56,870 0
----------- --------- ----------
CASH AND CASH EQUIVALENTS:
End of period $ 997 $ 45,945 $ 45,945
=========== ========= ==========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 94 $ 12,160 $ 12,932
=========== ========= ==========
</TABLE>
(See accompanying notes to the condensed financial statements)
3
<PAGE> 5
ORBCOMM GLOBAL, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS; UNAUDITED)
1. 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. (the "Company"), 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 services
using the ORBCOMM low-Earth orbit satellite communications system (the "ORBCOMM
System") in the United States and internationally, respectively. In 1995, the
Company became a 98% General Partner in ORBCOMM USA, reducing OCC's General
Partner interest to 2% and eliminating Teleglobe Mobile's interest entirely.
Simultaneously, the Company became a 98% General Partner in ORBCOMM
International, reducing Teleglobe Mobile's General Partner interest to 2% and
eliminating OCC's interest entirely.
2. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed
financial statements reflect all adjustments, consisting of only normal
recurring accruals, necessary for a fair presentation of the financial position
of the Company as of March 31, 1997, the results of its operations and cash
flows for the three-month periods ended March 31, 1997 and 1996, and the period
from June 30, 1993 (date of inception) through March 31, 1997. These condensed
financial statements are unaudited and do not include all related footnote
disclosures and therefore, should be read in conjunction with the audited
financial statements and the footnotes thereto for the year ended December 31,
1996 filed with the Securities and Exchange Commission. The results of
operations for the three months ended March 31, 1997 are not necessarily
indicative of the results of operations expected in the future, although the
Company will continue to be a development stage enterprise and anticipates a
net loss for fiscal year 1997.
3. RELATED PARTY TRANSACTIONS
The Company paid Orbital $6,332 and $9,000 for the three months ended
March 31, 1997 and 1996, respectively, and approximately $153,000 for the
period June 30, 1993 (date of inception) through December 31, 1996. Payments
were made for work performed pursuant to the ORBCOMM System Design,
Development, and Operations Agreement (for the initial portion of the ORBCOMM
System), the ORBCOMM System Procurement Agreement (for, among other things, the
additional satellites comprising the ORBCOMM System) and the Administrative
Services Agreement (for the provision of ongoing support to the Company).
4. COMMITMENTS AND CONTINGENCIES
In August 1996, the Company and ORBCOMM Global Capital Corp. issued
$170,000 of Senior Notes due 2004 with Revenue Participation Interest (the "Old
Notes"). All of the Old Notes were exchanged for an equal principal amount of
registered 14% Series B Senior Notes due 2004 with Revenue Participation
Interest (the "Notes"). The Notes are fully and unconditionally guaranteed on
a joint and several basis by OCC, Teleglobe Mobile, ORBCOMM USA and ORBCOMM
International (each a "Guarantor" and collectively the "Guarantors"), except
that the guarantees are non-recourse to the shareholders and/or partners of the
Guarantors, limited only to the extent necessary for each such guarantee not to
constitute a fraudulent conveyance under applicable law.
4
<PAGE> 6
ORBCOMM GLOBAL, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
(IN THOUSANDS; UNAUDITED)
4. COMMITMENTS AND CONTINGENCIES - (CONTINUED)
On the closing of the offering of the Old Notes, the Company used
$44,814 of the net proceeds from the sale of the Old Notes to purchase a
portfolio of U.S. Government securities to provide for payment in full of
interest on the Old Notes and Notes through August 15, 1998. Of this
investment portfolio, $12,086 was used for the interest payment due on February
15, 1997.
The Company also has a $5,000 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 through December 1999. The
note is secured by equipment located at certain of the U.S. Earth stations, the
network control center and the satellite control center, and is guaranteed by
Orbital.
5
<PAGE> 7
ORBCOMM USA, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED BALANCE SHEETS
(IN THOUSANDS; UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 0 $ 0
Accounts receivable 54 67
----------- ---------
TOTAL ASSETS $ 54 $ 67
=========== =========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued expenses $ 342 $ 410
----------- ---------
Total Current Liabilities 342 410
Amount due to ORBCOMM Global, L.P. 3,578 4,790
----------- ---------
Total Liabilities 3,920 5,200
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Orbital Communications Corporation (77) (102)
ORBCOMM Global, L.P. (3,789) (5,031)
----------- ---------
Total Partners' Capital (3,866) (5,133)
----------- ---------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 54 $ 67
=========== =========
</TABLE>
(See accompanying notes to the condensed financial statements)
6
<PAGE> 8
ORBCOMM USA, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS; UNAUDITED)
<TABLE>
<CAPTION>
TOTAL ACCUMULATED
DURING
THREE MONTHS ENDED DEVELOPMENT STAGE
MARCH 31, THROUGH
--------------------- MARCH 31,
1996 1997 1997
--------- ---------- -----------------
<S> <C> <C> <C>
INCOME:
Product sales $ 0 $ 50 $ 279
Contract revenues 0 0 4,203
Service revenues 0 8 19
---------- ---------- -----------
Total Income 0 58 4,501
EXPENSES:
Cost of product sales 0 72 334
Marketing and administrative expenses 524 1,253 9,310
---------- ---------- -----------
Total Expenses 524 1,325 9,644
---------- ---------- -----------
DEFICIENCY OF INCOME OVER EXPENSES $ (524) $ (1,267) $ (5,143)
========== ========== ===========
</TABLE>
(See accompanying notes to the condensed financial statements)
7
<PAGE> 9
ORBCOMM USA, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS; UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
CASH FLOWS
DURING
THREE MONTHS ENDED DEVELOPMENT STAGE
MARCH 31, THROUGH
------------------- MARCH 31,
1996 1997 1997
-------- -------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Deficiency of income over expenses $ (524) $ (1,267) $ (5,143)
ADJUSTMENTS TO RECONCILE DEFICIENCY
OF INCOME OVER EXPENSES TO NET CASH
USED IN OPERATING ACTIVITIES:
Increase in accounts receivable (10) (13) (67)
Increase (decrease) in accounts payable and
accrued expenses (53) 68 410
-------- --------- -----------
NET CASH USED IN OPERATING ACTIVITIES (587) (1,212) (4,800)
-------- --------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Increase in amount due to ORBCOMM Global, L.P. 627 1,212 4,790
Partners' contributions 0 0 10
-------- --------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 627 1,212 4,800
-------- --------- -----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 40 0 0
CASH AND CASH EQUIVALENTS:
Beginning of period 10 0 0
-------- --------- -----------
CASH AND CASH EQUIVALENTS:
End of period $ 50 $ 0 $ 0
======== ========= ===========
</TABLE>
(See accompanying notes to the condensed financial statements)
8
<PAGE> 10
ORBCOMM USA, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS; UNAUDITED)
1. 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. (the "Company"), 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 services
using the ORBCOMM low-Earth orbit satellite communications system in the United
States and internationally, respectively. In 1995, the Company became a 98%
General Partner in ORBCOMM USA, reducing OCC's General Partner interest to 2%
and eliminating Teleglobe Mobile's interest entirely.
2. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed
financial statements reflect all adjustments, consisting of only normal
recurring accruals, necessary for a fair presentation of the financial position
of ORBCOMM USA as of March 31, 1997, the results of its operations and cash
flows for the three-month periods ended March 31, 1997 and 1996, and the period
from June 30, 1993 (date of inception) through March 31, 1997. These condensed
financial statements are unaudited and do not include all related footnote
disclosures and therefore, should be read in conjunction with the audited
financial statements and the footnotes thereto for the year ended December 31,
1996 filed with the Securities and Exchange Commission. The results of
operations for the three months ended March 31, 1997 are not necessarily
indicative of the results of operations expected in the future.
3. RELATED PARTY TRANSACTIONS
As of March 31, 1997, ORBCOMM USA had a payable of $4,790 ($3,578 as
of December 31, 1996) to the Company for amounts advanced to support ORBCOMM
USA in establishing commercial and government markets. ORBCOMM USA is
currently in development stage and obtains funds to support its operations
through non-interest bearing advances from the Company.
4. COMMITMENTS AND CONTINGENCIES
In August 1996, the Company and ORBCOMM Global Capital Corp. issued
$170,000 of Senior Notes due 2004 with Revenue Participation Interest (the "Old
Notes"). All of the Old Notes were exchanged for an equal principal amount of
registered 14% Series B Senior Notes due 2004 with Revenue Participation
Interest (the "Notes"). The Notes are fully and unconditionally guaranteed on
a joint and several basis by OCC, Teleglobe Mobile, ORBCOMM USA and ORBCOMM
International (each a "Guarantor" and collectively the "Guarantors"), except
that the guarantees are non-recourse to the shareholders and/or partners of the
Guarantors, limited only to the extent necessary for each such guarantee not to
constitute a fraudulent conveyance under applicable law.
9
<PAGE> 11
ORBCOMM INTERNATIONAL PARTNERS, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED BALANCE SHEETS
(IN THOUSANDS; UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 0 $ 0
Accounts receivable 15 39
Prepaid contract costs 3,871 6,847
Amount due from ORBCOMM Global, L.P. 1,309 0
------------ ---------
TOTAL ASSETS $ 5,195 $ 6,886
============ =========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued expenses $ 729 $ 1,812
Deferred revenue 6,147 6,147
------------ ---------
Total Current Liabilities 6,876 7,959
Amount due to ORBCOMM Global, L.P. 0 1,201
------------ ---------
Total Liabilities 6,876 9,160
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Teleglobe Mobile Partners (34) (46)
ORBCOMM Global, L.P. (1,647) (2,228)
------------ ---------
Total Partners' Capital (1,681) (2,274)
------------ ---------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 5,195 $ 6,886
============ =========
</TABLE>
(See accompanying notes to the condensed financial statments)
10
<PAGE> 12
ORBCOMM INTERNATIONAL PARTNERS, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS; UNAUDITED)
<TABLE>
<CAPTION>
TOTAL ACCUMULATED
DURING
THREE MONTHS ENDED DEVELOPMENT STAGE
MARCH 31, THROUGH
---------------------- MARCH 31,
1996 1997 1997
---------- ------- -----------------
<S> <C> <C> <C>
INCOME:
Product sales $ 0 $ 28 $ 36
EXPENSES:
Cost of product sales 0 22 $ 29
Marketing and administrative expenses 96 599 $ 2,291
-------- -------- -----------
Total Expenses 96 621 2,320
-------- -------- -----------
DEFICIENCY OF INCOME OVER EXPENSES $ (96) $ (593) $ (2,284)
======== ======== ===========
</TABLE>
(See accompanying notes to the condensed financial statements)
11
<PAGE> 13
ORBCOMM INTERNATIONAL PARTNERS, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS; UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
CASH FLOWS
DURING
THREE MONTHS ENDED DEVELOPMENT STAGE
MARCH 31, THROUGH
--------------------- MARCH 31,
1996 1997 1997
-------- ---------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Deficiency of income over expenses $ (95) $ (593) $ (2,284)
ADJUSTMENTS TO RECONCILE DEFICIENCY
OF INCOME OVER EXPENSES TO NET CASH
USED IN OPERATING ACTIVITIES:
Increase in accounts receivable (7) (24) (39)
Increase in prepaid contract costs 0 (2,976) (6,847)
Increase in other current liabilities 16 1,083 1,812
Increase in deferred revenue 0 0 6,147
-------- ---------- ---------
NET CASH USED IN OPERATING ACTIVITIES (86) (2,510) (1,211)
-------- ---------- ---------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Decrease in amount due from ORBCOMM
Global, L.P. 0 1,309 0
-------- ---------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES 0 1,309 0
-------- ---------- ---------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Increase in amount due to ORBCOMM
Global, L.P. 90 1,201 1,201
Partners' contributions 0 0 10
-------- ---------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 90 1,201 1,211
-------- ---------- ---------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 4 0 0
CASH AND CASH EQUIVALENTS:
Beginning of period 10 0 0
-------- ---------- ---------
CASH AND CASH EQUIVALENTS:
End of period $ 14 $ 0 $ 0
======== ========== =========
</TABLE>
(See accompanying notes to the condensed financial statements)
12
<PAGE> 14
ORBCOMM INTERNATIONAL PARTNERS, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS; UNAUDITED)
1. 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. (the "Company"), 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 services
using the ORBCOMM low-Earth orbit satellite communications system in the United
States and internationally, respectively. In 1995, the Company became a 98%
General Partner in ORBCOMM International, reducing Teleglobe Mobile's General
Partner interest to 2% and eliminating OCC's interest entirely.
2. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed
financial statements reflect all adjustments, consisting of only normal
recurring accruals, necessary for a fair presentation of the financial position
of ORBCOMM International as of March 31, 1997, the results of its
operations and cash flows for the three-month periods ended March 31, 1997 and
1996, and the period from June 30, 1993 (date of inception) through March 31,
1997. These condensed financial statements are unaudited and do not include
all related footnote disclosures and therefore, should be read in conjunction
with the audited financial statements and the footnotes thereto for the year
ended December 31, 1996 filed with the Securities and Exchange Commission. The
results of operations for the three months ended March 31, 1997 are not
necessarily indicative of the results of operations expected in the future.
3. RELATED PARTY TRANSACTIONS
As of March 31, 1997, ORBCOMM International had a payable of $1,201 (a
receivable of $1,309 as of December 31, 1996) to the Company for amounts
advanced to support ORBCOMM International in establishing commercial and
government markets. ORBCOMM International is currently in development stage
and obtains funds to support its operations through non-interest bearing
advances from the Company.
4. COMMITMENTS AND CONTINGENCIES
In August 1996, the Company and ORBCOMM Global Capital Corp. issued
$170,000 of Senior Notes due 2004 with Revenue Participation Interest (the "Old
Notes"). All of the Old Notes were exchanged for an equal principal amount of
registered 14% Series B Senior Notes due 2004 with Revenue Participation
Interest (the "Notes"). The Notes are fully and unconditionally guaranteed on
a joint and several basis by OCC, Teleglobe Mobile, ORBCOMM USA and ORBCOMM
International (each a "Guarantor" and collectively the "Guarantors"), except
that the guarantees are non-recourse to the shareholders and/or partners of the
Guarantors, limited only to the extent necessary for each such guarantee not to
constitute a fraudulent conveyance under applicable law.
13
<PAGE> 15
ORBCOMM INTERNATIONAL PARTNERS, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
(IN THOUSANDS; UNAUDITED)
4. COMMITMENTS AND CONTINGENCIES (CONTINUED)
In October 1996, ORBCOMM International entered into agreements with
certain manufacturers for the construction of gateway Earth stations scheduled
for delivery over the next two years. As of March 31, 1997, ORBCOMM
International had $6,847 of prepaid contract costs that represent advance
payments to these manufacturers ($3,871 as of December 31, 1996). Total
commitments remaining under these agreements approximate $14,000.
5. SERVICE LICENSE AGREEMENTS
ORBCOMM International has signed seven Service License Agreements
("SLAs"), six of which have associated gateway procurement contracts and
software license agreements, with International Licensees. These SLAs cover
Canada, Europe, the Malaysian Region, a portion of North Africa, Turkey, the
Middle East and Korea. The SLAs authorize the International Licensees to use
the ORBCOMM System to provide two-way data and messaging communications
services. As of December 31, 1996, under these agreements $6,147 had been
received and recorded as deferred revenue (none during the three-month period
ended March 31, 1997). ORBCOMM International is obligated to ship six gateways
to certain international licensees under certain of these agreements.
14
<PAGE> 16
ORBITAL COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
-------------- --------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 141,654 $ 84,208
Receivables, billed and billable 28,820 66,328
-------------- --------------
Total Current Assets 170,474 150,536
Investments in affiliates 67,667,383 66,090,991
-------------- --------------
TOTAL ASSETS $ 67,837,857 $ 66,241,527
============== ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 116,681 $ 81,962
Other current liabilities 554,431 664,022
-------------- --------------
Total Current Liabilities 671,112 745,984
Due to affiliates 78,728,078 79,832,861
-------------- --------------
Total Liabilities 79,399,190 80,578,845
NON-CONTROLLING INTEREST IN NET ASSETS OF ORBCOMM USA, L.P. (1,894,556) (2,515,364)
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Common stock, par value $0.01; 8,000,000 shares authorized;
4,730,392 and 4,748,792 shares issued;
4,679,620 and 4,698,020 shares outstanding 47,304 47,488
Additional paid-in capital 210,230 287,171
Treasury stock (155,508) (736,176)
Retained deficit (9,768,803) (11,420,437)
-------------- --------------
Total stockholders' deficit (9,666,777) (11,821,954)
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 67,837,857 $ 66,241,527
============== ==============
</TABLE>
(See accompanying notes to the condensed consolidated financial statements)
15
<PAGE> 17
ORBITAL COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
March 31,
-----------------------------
1996 1997
------------- -------------
<S> <C> <C>
Revenues $ - $58,564
Direct expenses 7,419 72,357
------------- -------------
Gross profit (loss) (7,419) (13,793)
General and administrative expenses 519,193 682,257
------------- -------------
Operating loss (526,612) (696,050)
Equity in losses of ORBCOMM Global, L.P. (1,683,124) (1,576,392)
Non-controlling interest in net loss of ORBCOMM USA, L.P. 256,518 620,808
------------- -------------
Loss before provision for income taxes (1,953,218) (1,651,634)
Provision for income taxes - -
------------- -------------
NET LOSS ($1,953,218) ($1,651,634)
============= =============
</TABLE>
(See accompanying notes to the condensed consolidated financial statements)
16
<PAGE> 18
ORBITAL COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
1996 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,953,218) $ (1,651,634)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Equity in losses of affiliates 1,683,124 1,576,392
Non-controlling interest in net loss of ORBCOMM USA, L.P. (256,518) (620,808)
Decrease (increase) in receivables, billed and billable 897,487 (37,508)
Increase in current liabilities 313,794 74,872
------------- -------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 684,669 (658,686)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in affiliates (5,766,481) -
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (5,766,481) -
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock to employees 102,375 77,125
Purchases of treasury stock - (580,668)
Net borrowings from affiliates 627,314 852,119
Net borrowings from Orbital Sciences Corporation 4,788,960 252,664
------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,518,649 601,240
------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 436,837 (57,446)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 141,654
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 436,837 $ 84,208
============= =============
</TABLE>
(See accompanying notes to the condensed consolidated financial statements)
17
<PAGE> 19
ORBITAL COMMUNICATIONS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
Orbital Communications Corporation ("OCC" or the "Company") is a majority owned
subsidiary of Orbital Sciences Corporation ("Orbital") and is included in
Orbital's Consolidated Financial Statements. OCC and Teleglobe Mobile Partners
("Teleglobe Mobile") are each 50% general partners in ORBCOMM Global, L.P.
("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"). ORBCOMM is a 98%
non-controlling general partner in each of ORBCOMM USA and ORBCOMM
International. Directly and indirectly, OCC currently holds 51% and 49% of
ORBCOMM USA and ORBCOMM International, respectively.
2. BASIS OF PRESENTATION
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. Certain information and footnote
disclosure normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to instructions, rules and regulations prescribed by the Securities
and Exchange Commission. Although the Company believes that the disclosures
provided are adequate to make the presented information not misleading, these
unaudited interim condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and the
footnotes thereto for the year ended December 31, 1996 filed with the
Securities and Exchange Commission. Operating results for the three-month
periods ended March 31, 1996 and 1997 are not necessarily indicative of fiscal
year performance.
3. RELATED PARTY TRANSACTIONS
OCC obtains virtually all of its funding for operations and for its capital
investments in ORBCOMM from Orbital through a non-interest bearing intercompany
borrowing agreement. As of December 31, 1996 and March 31, 1997, OCC owed
Orbital $74,786,000 and $75,000,000, respectively, none of which is currently
payable.
ORBCOMM USA currently obtains its funding from ORBCOMM through non-interest
bearing advances. As of December 31, 1996 and March 31, 1997, ORBCOMM USA owed
ORBCOMM approximately $3,578,000 and $4,790,000, respectively, none of which is
currently payable.
18
<PAGE> 20
ORBITAL COMMUNICATIONS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
4. COMMITMENTS AND CONTINGENCIES
On August 7, 1996, ORBCOMM issued $170,000,000 senior unsecured notes due 2004
(the "Notes") to institutional investors. The Notes bear interest at a fixed
rate of 14% and provide for noteholder participation in future ORBCOMM service
revenues. The Notes are fully and unconditionally guaranteed on a joint and
several basis by OCC, Teleglobe Mobile, ORBCOMM USA and ORBCOMM International.
The guarantees are nonrecourse to the shareholders and/or partners of the
guarantors.
19
<PAGE> 21
TELEGLOBE MOBILE PARTNERS
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS; UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,618 $ 1,478
Accounts receivable 17 43
Prepaid contract costs 3,871 6,847
Due from an affiliate, without interest and repayment terms 1,309 0
------------ ------------
Total Current Assets 6,815 8,368
Joint venture investment 74,361 72,188
------------ ------------
TOTAL ASSETS $ 81,176 $ 80,556
============ ============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Accounts payable and accrued liabilities $ 899 $ 1,850
Deferred revenue 6,147 6,147
------------ ------------
Total Current Liabilities 7,046 7,997
Due to an affiliate, without interest and repayment terms 0 1,201
Non-controlling interest (823) (1,114)
------------ ------------
Total Liabilities 6,223 8,084
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL
Teleglobe Mobile, L.P. 51,942 50,223
TR (U.S.A.) Ltd. 22,486 21,742
Teleglobe Mobile Investment Inc. 525 507
------------ ------------
Total Partners' Capital 74,953 72,472
------------ ------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 81,176 $ 80,556
============ ============
</TABLE>
(See accompanying notes to the condensed consolidated financial statements)
20
<PAGE> 22
TELEGLOBE MOBILE PARTNERS
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS; UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
ACCUMULATED
DURING
THREE MONTHS ENDED DEVELOPMENT
MARCH 31, STAGE THROUGH
--------------------- MARCH 31,
1996 1997 1997
--------- -------- -------------
<S> <C> <C> <C>
INCOME
Product sales $ 0 $ 28 $ 36
Interest income 324 19 2,177
Share in net loss of a joint venture (1,893) (2,078) (11,272)
--------- -------- ------------
Total Income (1,569) (2,031) (9,059)
EXPENSES
Cost of product sales 0 22 28
Operating expenses 158 624 4,272
Financial charges 0 0 288
--------- -------- ------------
Total Expenses 158 646 4,588
Loss before non-controlling interest (1,727) (2,677) (13,647)
Non-controlling interest 47 291 1,119
--------- -------- ------------
NET LOSS $ (1,680) $(2,386) $ (12,528)
========= ======== ============
</TABLE>
(See accompanying notes to the condensed consolidated financial statements)
21
<PAGE> 23
TELEGLOBE MOBILE PARTNERS
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS; UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
CASH FLOWS
DURING
THREE MONTHS ENDED DEVELOPMENT
MARCH 31, STAGE THROUGH
----------------------- MARCH 31,
1996 1997 1997
---------- -------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $ (1,680) $ (2,386) $ (12,528)
Non-cash items:
Share in net loss of a joint venture 1,893 2,078 11,272
Non-controlling interest (47) (291) (1,119)
Changes in non-cash operating balances:
Accounts receivable (90) (26) (43)
Prepaid contract costs 0 (2,976) (6,847)
Accounts payable and accrued liabilities 84 951 1,850
Deferred revenue 0 0 6,147
---------- --------- -----------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 160 (2,650) (1,268)
---------- --------- -----------
INVESTING ACTIVITIES
Net increase in a joint venture investment (8,239) 0 (83,511)
Due from an affiliate 0 1,309 0
---------- --------- -----------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (8,239) 1,309 (83,511)
---------- --------- -----------
FINANCING ACTIVITIES
Share of financing fees of a joint venture 0 0 (1,014)
Due to an affiliate 90 1,201 1,201
Partners' contributions 0 0 86,065
Non-controlling interest 0 0 5
---------- --------- -----------
CASH PROVIDED BY FINANCING ACTIVITIES 90 1,201 86,257
---------- --------- -----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (7,989) (140) 1,478
CASH AND CASH EQUIVALENTS
Beginning of period 34,168 1,618 0
---------- --------- -----------
CASH AND CASH EQUIVALENTS
End of period $ 26,179 $ 1,478 $ 1,478
========== ========= ===========
</TABLE>
(See accompanying notes to the condensed consolidated financial statements)
22
<PAGE> 24
TELEGLOBE MOBILE PARTNERS
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS; UNAUDITED)
(1) ORGANIZATION
Teleglobe Mobile Partners, a Delaware general partnership (the
"Partnership"), was formed in 1993 for purposes of being a general and a
limited partner in ORBCOMM Global, L.P. ("ORBCOMM Global"), a Delaware limited
partnership, providing international wireless data communication services using
a low-Earth orbit satellite communication system ("the ORBCOMM System"). The
Partnership holds a 50% participation percentage ("Participation Percentage")
in ORBCOMM Global, which in turn holds a 98% non-controlling interest in
ORBCOMM USA, L.P. ("ORBCOMM USA") and ORBCOMM International Partners, L.P.
("ORBCOMM International"), two other partnerships formed to market the ORBCOMM
System. The Partnership also directly holds a 2% Participation Percentage in
ORBCOMM International bringing its direct and indirect Participation Percentage
to 51%.
(2) BASIS OF PRESENTATION
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. Certain information and
footnote disclosure normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to instructions, rules and regulations prescribed by the
Securitites and Exchange Commission. Although the Partnership believes that the
disclosures provided are adequate to make the presented information not
misleading, these unaudited interim condensed consolidated statements should be
read in conjunction with the audited consolidated financial statements and
footnotes thereto for the year ended December 31, 1996 filed with the
Securities and Exchange Commission. Operating results for the three-month
periods ended March 31, 1996 and 1997 are not necessarily indicative of fiscal
year performance.
(3) RELATED PARTY TRANSACTIONS
As of March 31, 1997, ORBCOMM International had a payable of $1,201 (a
receivable of $1,309 as of December 31, 1996) to ORBCOMM Global for amounts
advanced to support ORBCOMM International in establishing commercial and
government markets. ORBCOMM International is currently in development stage and
obtains funds to support operations through non-interest bearing advances from
ORBCOMM Global.
(4) COMMITMENTS AND CONTINGENCIES
In August 1996, ORBCOMM Global and ORBCOMM Global Capital Corp. issued
$170,000 of Senior Notes due 2004 with Revenue Participation Interest (the "Old
Notes"). All of the Old Notes were exchanged for an equal principal amount of
registered 14% Series B Senior Notes due 2004 with Revenue Participation
Interest (the "Notes"). The Notes are fully and unconditionally guaranteed on
a joint and several basis by the Partnership, OCC, ORBCOMM USA and ORBCOMM
International (each a "Guarantor" and collectively, the "Guarantors"), except
that the guarantees are non-recourse to the shareholders and/or partners of the
Guarantors, limited only to the extent necessary for each such guarantee not to
constitute a fraudulent conveyance under applicable law.
23
<PAGE> 25
TELEGLOBE MOBILE PARTNERS
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(IN THOUSANDS; UNAUDITED)
(4) COMMITMENTS AND CONTINGENCIES - (CONTINUED)
In October 1996, ORBCOMM International entered into agreements with
certain manufacturers for construction of gateway Earth stations scheduled for
delivery over the next two years. As of March 31, 1997, ORBCOMM International
had $6,847 of prepaid contract costs that represent advance payments to these
manufacturers ($3,871 as of December 31, 1996). Total commitments remaining
under these agreements approximate $14,000.
The Partnership is committed to invest approximately $85,000 in
ORBCOMM Global. As of March 31, 1997 and December 31, 1996, this amount was
invested entirely.
(5) SERVICE LICENSE AGREEMENTS
ORBCOMM International has signed seven Service License Agreements
("SLAs"), six of which have associated gateway procurement contracts and
software license agreements, with International Licensees. These SLAs cover
Canada, Europe, the Malaysian Region, a portion of North Africa, Turkey, the
Middle East and Korea. The SLAs authorize the International Licensees to use
the ORBCOMM System to provide two-way data and messaging communications
services. As of December 31, 1996, under these agreements $6,147 had been
received and recorded as deferred revenue (none during the three-month period
ended March 31, 1997). ORBCOMM International is obligated to ship six gateways
to certain international licensees under certain of these agreements.
24
<PAGE> 26
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (IN THOUSANDS; EXCEPT UNIT INFORMATION)
OVERVIEW
In 1993, ORBCOMM Global, L.P. (the "Company" or "ORBCOMM") was formed
by Orbital Sciences Corporation ("Orbital"), acting through Orbital
Communications Corporation ("OCC"), and Teleglobe Inc. ("Teleglobe"), acting
through Teleglobe Mobile Partners ("Teleglobe Mobile"). Each of OCC and
Teleglobe Mobile acquired and currently owns a 50% interest in the Company,
with Technology Resources Industries Bhd. (through TR (U.S.A.) Ltd.) now
holding a 30% interest in Teleglobe Mobile. Concurrently with the formation of
the Company, OCC and Teleglobe Mobile formed two marketing partnerships,
ORBCOMM USA, L.P. ("ORBCOMM USA") and ORBCOMM International Partners, L.P.
("ORBCOMM International") (collectively, the "Marketing Partnerships"), with
the exclusive right to market services using the Company's low-Earth orbit
satellite communications system (the "ORBCOMM System") in the United States and
internationally, respectively. The Company 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 Federal Communications Commission ("FCC")
licenses (the "FCC License") and the ORBCOMM System, consistent with FCC
regulations.
To date, OCC and Teleglobe Mobile have invested an aggregate of
approximately $160 million in the ORBCOMM project. In addition, on August 7,
1996, the Company and ORBCOMM Global Capital Corp. ("Capital") completed a
private placement (the "Old Notes Offering") of $170 million 14% Senior Notes
due 2004 with Revenue Participation Interest (the "Old Notes"). In January
1997, all of the Old Notes were exchanged for notes that are substantially
similar to the Old Notes, except that the new notes (the "Notes") are
registered under the Securities Act of 1933, as amended. The Notes are fully
and unconditionally guaranteed on a joint and several basis by OCC, Teleglobe
Mobile, ORBCOMM USA and ORBCOMM International, except that the guarantees are
nonrecourse to the shareholders and/or partners of the guarantors, limited only
to the extent necessary for each such guarantee not to constitute a fraudulent
conveyance under applicable law.
ORGANIZATIONAL STRUCTURE; FINANCIAL REPORTING
Pursuant to the terms of the partnership agreements for the Company and
the Marketing Partnerships: (i) OCC and Teleglobe Mobile share equal
responsibility for the operational and financial affairs of the Company; (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, the
Company accounts for the Marketing Partnerships using the equity method of
accounting. The Company does not consolidate, and therefore does not report in
its financial statements, ORBCOMM USA's and ORBCOMM International's actual
assets, liabilities and operating revenues and expenses. Instead, the
Company's proportionate share of the deficiency of income over expenses of the
Marketing Partnerships is recorded under the caption "Equity in losses of
affiliates" in the Company's financial statements. Correspondingly, the
Company's investment in the Marketing Partnerships is carried at cost,
subsequently adjusted for the proportionate share of net income and losses,
additional capital contributions and distributions under the caption
"Investments in and advances to affiliates." Investors are encouraged to refer
to the financial statements of both ORBCOMM USA and ORBCOMM International
included elsewhere in this Report.
25
<PAGE> 27
ORBCOMM USA pays to OCC an output capacity charge ("Output Capacity
Charge") that is a quarterly fee equal to 23% of ORBCOMM USA's total service
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 tangible assets (including software)
located in the United States to be delivered to the Company pursuant to certain
procurement agreements (the "System Assets"). In consideration of the
construction and financing of the System Assets, 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, defined as the aggregate of
ORBCOMM USA's and ORBCOMM International's total system service revenues ("Total
Aggregate Revenues").
ORBCOMM International pays to Teleglobe Mobile an international output
capacity charge ("International Output Capacity Charge") that is a quarterly
fee equal to 23% of ORBCOMM International's total service revenues for such
calendar quarter in exchange for the exclusive right to market, sell, lease and
franchise all ORBCOMM System output capacity outside the United States. 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, Teleglobe Mobile, in turn, pays to the Company an
international system charge that is a quarterly fee equal to the International
Output Capacity Charge minus 1.15% of Total Aggregate Revenues.
SERVICE ROLL-OUT
The roll-out of ORBCOMM System services will occur in two stages.
Commercial intermittent service commenced in the United States in February
1996. The Company currently serves several U.S. market segments that can
benefit from intermittent data communications services, 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. Two
additional satellites are planned to be launched on a Taurus(R) launch vehicle
in the third quarter of 1997. An additional eight satellites are planned to be
launched on a Pegasus XL(R) launch vehicle during the fourth quarter of 1997,
with the second plane of eight satellites planned to be launched within two to
three months after the launch of the first plane of eight satellites and the
third plane of eight satellites planned to be launched within two to three
months after the launch of the second plane of eight satellites. Service
outside the United States will be provided as international licensees
("International Licensees") receive regulatory approval and build network
ground systems.
To facilitate the introduction and development of commercial service,
the Company procured several thousand subscriber communicators ("Subscriber
Communicators") from certain of its Subscriber Communicator manufacturers. The
Company believes that this inventory will be sufficient to support certain
market sales activities through at least the end of 1997.
REVENUE
Currently, during the period of commercial intermittent service,
ORBCOMM USA is building an initial base of subscribers in the United States
through value-added resellers ("Resellers"), who purchase ORBCOMM System
services directly from ORBCOMM USA, and through direct sales activities.
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 registration, access and usage, the Company has
developed a pricing structure in the United States that suits the initial
markets addressed by the existing two-satellite system. Additional pricing,
including 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
26
<PAGE> 28
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 ("Service License
Agreement") for execution by International Licensees, who are generally
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 the exclusive right to market
services using the ORBCOMM System in 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, an
International Licensee is required to purchase a gateway ("Gateway") from
ORBCOMM International or to share the U.S. Gateway or a closely located Gateway
operated by 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 policies regarding
competition.
OPERATING EXPENSES
As discussed above, the Company owns and operates the assets, other
than the FCC License, 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. Beginning in January
1996, the Company has been depreciating some of its assets, recording a
depreciation charge in its statements of operations. Additionally, the Company
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
The Company commenced commercial intermittent service in the United
States on February 1, 1996 and has generated minimal revenues and negative cash
flows to date. The Company'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, execution of reseller agreements with domestic Resellers and
Service License Agreements with International Licensees, 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. The Company expects to continue
to generate negative cash flows through most of 1998.
Income. In 1995, the Company received a nonrefundable fee from a
potential International Licensee. The Company recognized this nonrefundable
fee over the term of the relevant agreement. No such fees were received in
earlier periods or during the three-month period ended March 31, 1997.
In late 1994, the Company borrowed $5,000 from MetLife Capital
Corporation ("MetLife") pursuant to a Loan and Security Agreement dated
December 22, 1994 between MetLife and the Company (the "MetLife Note") to help
finance a portion of the ORBCOMM System. In addition, in August 1996, ORBCOMM
closed the Old Notes Offering. The proceeds from the sale of the Old Notes are
invested primarily in short term government securities, with certain
restrictions attached to all of the investment portfolio. In January 1997, all
of the Old Notes were exchanged for the Notes. The Company recognized interest
income on the invested portion of the MetLife Note and the proceeds of the Old
Notes Offering of $1,765 and $15 for the three months ended March 31, 1997 and
1996, respectively.
Expenses. As discussed above, the Company is in its development stage
and does not anticipate emerging from the development stage until mid-to late
1998. During the construction phase of the ORBCOMM System, the Company has
capitalized all construction costs, consisting primarily of satellites, launch
services and the U.S. ground segment procured from Orbital. Research and
development expenses and selling, general and administrative costs have been
expensed in the period incurred. Interest expense, where appropriate, related
to the MetLife Note, the Old Notes and the Notes has been capitalized as part
of the historical cost of the ORBCOMM System.
27
<PAGE> 29
The Company incurred $1,300 and $836 of marketing, administrative and
other expenses for the three months ended March 31, 1997 and 1996,
respectively. The Company also incurred $1,580 and $933 of ORBCOMM System
engineering expenses for the three months ended March 31, 1997 and 1996,
respectively. The Company is capitalizing a portion of engineering direct
labor costs that relates to hardware and system design, development and coding
of the software products that enhance the operation of ORBCOMM System. The
Company also incurred $1,718 and $1,519 in ORBCOMM System depreciation expense
for the three months ended March 31, 1997 and 1996, respectively, as the
ORBCOMM System became available for service in early 1996.
Equity in losses of affiliates. The Company recognized its share of
ORBCOMM USA's and ORBCOMM International's losses, consisting primarily of
marketing expenses, of $1,823 and $606 for the three months ended March 31,
1997 and 1996, respectively. Each of ORBCOMM USA and ORBCOMM International
began their marketing efforts in 1995 in anticipation of commercial service in
1996.
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 (the "System
Charge Agreement"), whereby OCC reimbursed ORBCOMM USA for all marketing costs
incurred. Accordingly, ORBCOMM USA recognized contract revenues of $4,203 from
June 30, 1993 (date of inception) through September 30, 1995. The U.S.
marketing service portion of the System Charge Agreement expired in 1995.
During the first three months of 1997, ORBCOMM USA recognized revenues relating
to the provision of products and services of $58 (none during the three-month
period ended March 31, 1996).
Expenses. ORBCOMM USA incurred $1,253 and $524 of marketing and
administrative expenses and $72 and $0, of cost of product sales for the three
months ended March 31, 1997 and 1996, respectively (once the ORBCOMM System
began operations). Pursuant to the System Charge Agreement, ORBCOMM USA
incurred contract marketing costs of $4,203 from June 30, 1993 (date of
inception) through September 30, 1995.
RESULTS OF OPERATIONS - ORBCOMM INTERNATIONAL
Expenses. ORBCOMM International incurred $599 and $96 of marketing and
administrative expenses for the three months ended March 31, 1997 and 1996,
respectively. As of March 31, 1997, ORBCOMM International had $6,847 of
prepaid contract costs, which represents advance payments to certain
manufacturers for construction of gateway Earth stations scheduled for delivery
over the next two years.
Service License Agreements. ORBCOMM International has signed seven
Service License Agreements, six of which have associated Gateway procurement
contracts and software license agreements, with International Licensees. These
Service License Agreements cover Canada, Europe, the Malaysian Region, a
portion of North Africa, Turkey, the Middle East and Korea. The Service
License Agreements authorize the International Licensees to use the ORBCOMM
System to provide two-way data and messaging communications services. As of
December 31, 1996, under these agreements $6,147 had been received and
recorded as deferred revenue (none during the three-month period ended March
31, 1997). ORBCOMM International generally recognizes fees from Service
License Agreements
28
<PAGE> 30
ratably over the term of the agreement, or when ORBCOMM International's
obligations thereunder are substantially complete. Revenue under the Gateway
procurement contracts is generally recognized when products are shipped or when
customers have accepted the products or services, depending on contractual
terms.
SUPPLEMENTAL DATA
Set forth below is certain supplemental data for the ORBCOMM System
comprising data of the Company, ORBCOMM USA and ORBCOMM International for the
three months ended March 31, 1997. Such supplemental data should be read in
conjunction with the financial statements of the Company, ORBCOMM USA and
ORBCOMM International and the notes thereto located elsewhere in this Report.
<TABLE>
<CAPTION>
SUPPLEMENTAL DATA
QUARTER ENDED MARCH 31, 1997
ORBCOMM ORBCOMM ELIMINATION
ORBCOMM USA INTERNATIONAL ENTRIES TOTAL
----------- ------------ ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenue(1) $ 135 $ 58 $ 28 $ (124) $ 97
Interest income (expense),
net 2,016 (2) 0 0 2,016
Expenses 4,722 (3) 1,325 621 124 6,544
Losses before
interest and taxes (2,571) (4) (1,267) (593) (4,431)
Net loss (2,571) (4) (1,267) (593) (4,431)
Capital expenditures 20,593 (5) 0 0 20,593
</TABLE>
<TABLE>
<CAPTION>
SUPPLEMENTAL DATA
AS OF MARCH 31, 1997
ORBCOMM ORBCOMM
ORBCOMM USA INTERNATIONAL TOTAL
-------------- --------- ------------- ---------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 45,945 $ 0 $ 0 $ 45,945
Mobile Communications
Satellite System, net 188,909 0 0 188,909
Total debt 173,029 0 0 173,029
Subscriber Communicators (units) 0 347 105 452
</TABLE>
- -----------------------
(1) As development stage companies, none of the Company, ORBCOMM USA and
ORBCOMM International had any significant operating revenues for the
three months ended March 31, 1997.
(2) Net of $206 of amortization of deferred financing fees.
(3) Includes depreciation expenses of $1,718. Interest expense of $6,023
was capitalized for the three months ended March 31, 1997.
(4) Excludes equity in losses of affiliates of $1,823.
(5) Represents capital expenditures, principally for the construction of
the space and ground network system elements.
29
<PAGE> 31
LIQUIDITY AND CAPITAL RESOURCES
The development of the Company's business, launch of the initial two
satellites and construction of the network control center and U.S. Gateway have
resulted in substantial capital expenditures during the past several years.
Capital expenditures by the Company were $196,825 from June 30, 1993 (date of
inception) to March 31, 1997. Capital expenditures for the three months ended
March 31, 1997 and 1996 were $20,593 and $16,828, respectively.
A combination of operating losses and substantial capital expenditures
related to the development of the ORBCOMM System has resulted in negative cash
flows since 1994. Funding of this cash flows deficiency has been accomplished
through capital contributions from OCC and Teleglobe Mobile and through the
proceeds from the Old Notes Offering and the MetLife Note. The Company expects
to have to continue to fund operating losses as the Company develops and
expands its business. The Company has set aside a sufficient amount in a
segregated account to provide for payments in full of interest on the Old Notes
and Notes through August 15, 1998. Following August 15, 1998, interest expense
on the Notes will represent a significant cash requirement for the Company.
The total cost of the construction and deployment of the ORBCOMM
System is estimated to be approximately $258,000. Of this amount,
approximately $202,000 will be used for the satellite constellation, ground
spares and launch services, approximately $30,000 will be used for the U.S.
ground segment, approximately $8,000 will be used for insurance and
approximately $18,000 will be used for other costs. As of March 31, 1997,
$196,825 of this amount had been expended. To date, the Company's partners
have invested approximately $160,000 in the ORBCOMM project. Such equity
investments, together with the proceeds of the Old Notes Offering, MetLife Note
and cash expected to be generated from operations, is expected to allow the
Company to meet its financial obligations through at least the end of 1997.
The Company believes that a portion of cash from operations through the end of
1997 will be generated through international license fees obtained by entering
into Service License Agreements. The Company expects that its capital
requirements in 1998 will be provided by cash flows from operations and,
consistent with the covenants contained in the Indenture governing the Notes,
other potential sources including capital contributions, equity investments,
credit facilities and/or operating lease arrangements.
The Notes contain a revenue participation feature providing for
payment by the Company, on each interest payment date, of interest ("Revenue
Participation Interest") in an aggregate amount equal to 5% of System Revenue
(as defined in the Indenture) for the six-month period ending on December 31 or
June 30 most recently completed prior to such interest payment date. The
Company is not required to pay any Revenue Participation Interest, however,
until the Credit Parties Fixed Charge Coverage Ratio (as defined in the
Indenture) for the four consecutive fiscal quarters last completed prior to
such interest payment date equals or exceeds 2:1. Once this ratio is exceeded,
the Company will have to pay additional interest on the Notes beyond the base
rate of 14%, which will negatively impact the Company's liquidity.
There are no distributions required to be made to the partners of the
Company other than a minimum annual distribution required by the ORBCOMM
Partnership Agreement in the amount of 40%, multiplied by the lesser of (a)
such partners' distributive share of the Company's taxable income for the
preceding year, and (b) the excess, if any, of cumulative Net Income (as
defined) over cumulative Net Loss (as defined) allocated to such partner since
the inception of the Company. All other distributions are to be made at the
discretion of the partners. Pursuant to the covenants contained in the
Indenture, no additional cash distributions are permitted to be made to the
partners of the Company other that those distributions that satisfy the
requirements of the various limitations on "Restricted Payments" contained in
the Indenture. To the extent that such requirements are met and the partners
receive additional cash distributions from the Company beyond that required by
the ORBCOMM Partnership Agreement, this could negatively impact the Company's
liquidity.
30
<PAGE> 32
LOAN AGREEMENT WITH METLIFE CAPITAL CORPORATION
Under the terms of the MetLife Note, MetLife loaned $5,000 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 March 31, 1997, $3,029 was outstanding under the MetLife
Note. The Notes rank pari passu in right and priority of payment with the
MetLife Note, except to the extent of the collateral securing such MetLife
Note.
FORWARD LOOKING STATEMENTS
When used in this Report, the words "expects," "anticipates" and
similar expressions are intended to identify forward looking statements. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those expressed in any of the forward
looking statements. Such risks and uncertainties include, but are not limited
to, industry-wide market factors, market acceptance of products and services
offered by the Company and potential launch delays and risks associated with
the launch and operation of a satellite system.
31
<PAGE> 33
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) A complete list of the exhibits required to be filed with this
Report on Form 10-Q is provided in the Exhibit Index that
precedes the exhibits filed with this Report.
(b) Neither the Company nor Capital has previously been required
to file a Report on Form 8-K under the Act.
32
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrants have duly caused this report to be signed on their behalf by
the undersigned thereunto duly authorized.
ORBCOMM GLOBAL, L.P.
Date: By: /s/ ALAN L. PARKER
-------------------------- ----------------------------------------
Alan L. Parker
President and Chief Executive Officer
(Principal Executive Officer)
Date: By: /s/ W. BARTLETT SNELL
-------------------------- ----------------------------------------
W. Bartlett Snell
Senior Vice President, Finance and
Administration and Chief Financial
Officer
(Principal Financial Officer)
ORBCOMM GLOBAL CAPITAL CORP.
Date: By: /s/ ALAN L. PARKER
-------------------------- ------------------------------------------
Alan L. Parker
President
(Principal Executive Officer)
Date: By: /s/ W. BARTLETT SNELL
-------------------------- ------------------------------------------
W. Bartlett Snell
Vice President and Treasurer
(Principal Financial Officer)
33
<PAGE> 35
EXHIBIT INDEX
The following exhibits are filed as part of this report.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.7 Certificate of Incorporation of ORBCOMM Global Capital Corp.
3.8 Bylaws of ORBCOMM Global Capital Corp.
10.4.1 Amendment No. 1 to Master Agreement dated February 5, 1997 by
and among the Company, Orbital Sciences Corporation, Teleglobe
Inc. and Teleglobe Mobile Partners. (Transmitted herewith.)
10.5.2 Amendment No. 2 to Procurement Agreement dated March 24, 1997
between Orbital Sciences Corporation and the Company.
(Transmitted herewith.)
27 Financial Data Schedule (such schedule is furnished for the
information of the Securities and Exchange Commission and is
not to be deemed "filed" as part of the Form 10-Q, or otherwise
subject to the liabilities of Section 18 of the Securities
Exchange Act of 1934). (Transmitted herewith.)
</TABLE>
34
<PAGE> 1
EXHIBIT 3.7
CERTIFICATE OF INCORPORATION
OF
ORBCOMM GLOBAL CAPITAL CORP.
1. The name of the corporation is ORBCOMM Global Capital Corp. (the
"Corporation").
2. The address of the registered office of the Corporation in the State
of Delaware is 1013 Centre Road, County of New Castle, Wilmington,
Delaware 19805. The name of its registered agent at such address is
Corporation Service Company.
3. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
4. The total number of shares of stock that the Corporation shall have
authority to issue is one thousand (1,000) shares of Common Stock, par
value $.01 per share. Each share of Common Stock shall be entitled to
one (1) vote.
5. The election of directors need not be by ballot except and to the
extent provided in the By-Laws of the Corporation.
6. In furtherance and not in limitation of the power conferred upon the
Board of Directors by law, the Board of Directors shall have power to
make, adopt, alter, amend and repeal, from time to time, By-Laws of
the Corporation, subject to the right of the stockholders entitled to
vote with respect thereto to alter and repeal By-Laws made by the
Board of Directors.
7. To the full extent permitted by the General Corporation Law of the
State of Delaware or any other applicable laws presently or hereafter
in effect, no director of the Corporation shall be personally liable
to the Corporation or its stockholders for or with respect to any acts
or omissions in the performance of his or her duties as a director of
the Corporation. No amendment or repeal of this paragraph 7 shall
apply to or have any effect on the liability or alleged liability of
any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment or
repeal.
8. The Corporation shall, to the maximum extent permitted from time to
time under the law of the State of Delaware, indemnify and, upon
request, advance expenses to any person who is or was a party or is
threatened to be made a party to any threatened, pending or completed
action, suit, proceeding or claim, whether civil, criminal,
administrative or investigative, by reason of the fact that such
person is or was or has agreed to be a director or officer of the
Corporation or while a director or officer is or was serving at the
request of the Corporation as a director, officer, partner, trustee,
employee or agent of any corporation, partnership, joint venture,
trust or other enterprise, including service with respect to employee
<PAGE> 2
benefit plans, against expenses (including attorneys' fees and
expenses), judgments, fines, penalties and amounts paid in settlement
incurred in connection with the investigation, preparation to defend
or defense of such action, suit, proceeding or claim; provided,
however, that the foregoing shall not require the Corporation to
indemnify or advance expenses to any person in connection with any
action, suit, proceeding, claim or counterclaim initiated by or on
behalf of such person. Such indemnification shall not be exclusive of
other indemnification rights arising under any By-Law, agreement, vote
of directors or stockholders or otherwise and shall inure to the
benefit of the heirs and legal representatives of such person. Any
person seeking indemnification under this paragraph 8 shall be deemed
to have met the standard of conduct required for such indemnification
unless the contrary shall be established. Any repeal or modification
of the foregoing provision of this paragraph 8 shall not adversely
affect any right or protection of a director or officer of the
Corporation with respect to any acts or omissions of such director or
officer occurring prior to such repeal or modification.
9. The name and mailing address of the sole incorporator is: Randy G.
Legg, Latham & Watkins, 1001 Pennsylvania Avenue, N.W., Suite 1300,
Washington D.C. 20004.
10. The books of the Corporation may (subject to any statutory
requirements) be kept outside the State of Delaware as may be
designated by the Board of Directors or in the By-Laws of the
Corporation.
11. The names and mailing addresses of the persons who are to serve as
directors of the Corporation until the first annual meeting of
stockholders or until their successors are elected and qualified are
as follows:
Alan L. Parker
21700 Atlantic Boulevard
Dulles, Virginia 20166
W. Bartlett Snell
21700 Atlantic Boulevard
Dulles, Virginia 20166
THE UNDERSIGNED, the sole incorporator named above, hereby certifies
that the facts stated above are true as of this 11th day of July, 1996.
--------------------------
Randy G. Legg
Sole Incorporator
<PAGE> 1
EXHIBIT 3.8
BY-LAWS
OF
ORBCOMM GLOBAL CAPITAL CORP.
SECTION 1. LAW, CERTIFICATE OF INCORPORATION AND BY-LAWS
1.1 These By-Laws are subject to the Certificate of Incorporation
of the Corporation. In these By-Laws, references to law, the Certificate of
Incorporation and By-Laws mean the law, the provisions of the Certificate of
Incorporation and the By-Laws as from time to time in effect.
SECTION 2. STOCKHOLDERS
2.1 Annual Meeting. The annual meeting of stockholders shall be
held at such date and time as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting, at which they shall
elect a Board of Directors and transact such other business as may be required
by law or these By-Laws or as may properly come before the meeting.
2.2 Special Meetings. A special meeting of the stockholders may
be called at any time by the Chairman of the Board, if any, the President or
the Board of Directors. A special meeting of the stockholders shall be called
by the Secretary, or in the case of the death, absence, incapacity or refusal
of the Secretary, by the Assistant Secretary or some other officer, upon
application of a majority of the directors. Any such application shall state
the purpose or purposes of the proposed meeting. Any such call shall state the
place, date, hour and purposes of the meeting.
2.3 Place of Meeting. All meetings of the stockholders for the
election of directors or for any other purpose shall be held at such place
within or without the State of Delaware as may be determined from time to time
by the Chairman of the Board, if any, the President or the Board of Directors.
Any adjourned session of any meeting of the stockholders shall be held at the
place designated in the vote of adjournment.
2.4 Notice of Meetings. Except as otherwise provided by law, a
written notice of each meeting of stockholders stating the place, day and hour
thereof and, in the case of a special meeting, the purposes for which the
meeting is called, shall be given not less then ten (10) nor more than sixty
(60) days before the meeting, to each stockholder entitled to vote thereat, and
to each stockholder who, by law, by the Certificate of Incorporation or by
these By-Laws, is entitled to notice, by leaving such notice with him or her at
his or her residence or usual place of business, or by depositing it in the
United States mail, postage prepaid, and addressed to such stockholder at his
or her address as it appears in the records of the Corporation. Such notice
shall be given by the Secretary, or by an officer or person designated by the
Board of Directors, or in the case of a special meeting, by the officer calling
the meeting. As to any adjourned session of any meeting of
<PAGE> 2
stockholders, notice of the adjourned meeting need not be given if the time and
place thereof are announced at the meeting at which the adjournment was taken,
except that if the adjournment is for more than thirty (30) days or if, after
the adjournment, a new record date is set for the adjourned session, notice of
any such adjourned session of the meeting shall be given in the manner
heretofore described. No notice of any meeting of stockholders or any
adjourned session thereof need be given to a stockholder if a written waiver of
notice, executed before or after the meeting or such adjourned session by such
stockholder, is filed with the records of the meeting or if the stockholder
attends such meeting without objecting at the beginning of the meeting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
meeting of the stockholders or any adjourned session thereof need be specified
in any written waiver of notice.
2.5 Quorum of Stockholders. At any meeting of the stockholders, a
quorum as to any matter shall consist of a majority of the votes entitled to be
cast on the matter, except where a larger quorum is required by law, by the
Certificate of Incorporation or by these By-Laws. Any meeting may be adjourned
from time to time by a majority of the votes properly cast upon the question,
whether or not a quorum is present. If a quorum is present at an original
meeting, a quorum need not be present at an adjourned session of that meeting.
Shares of its own stock belonging to the Corporation or to another corporation,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held, directly or indirectly, by the Corporation,
shall neither be entitled to vote nor be counted for quorum purposes; provided,
however, that the foregoing shall not limit the right of any corporation to
vote stock, including, but not limited to, its own stock, held by it in a
fiduciary capacity.
2.6 Action by Vote. When a quorum is present at any meeting, a
plurality of the votes properly cast for election to any office shall elect to
such office and a majority of the votes properly cast upon any question other
than an election to an office shall decide the question, except when a larger
vote is required by law, by the Certificate of Incorporation or by these
By-Laws.
2.7 Proxy Representation. Every stockholder may authorize another
person or persons to act for him or her by proxy in all matters in which a
stockholder is entitled to participate, whether by waiving notice of any
meeting, objecting to or voting or participating at a meeting, or expressing
consent or dissent without a meeting. Every proxy must be signed by the
stockholder or by his or her attorney-in-fact. No proxy shall be voted or
acted upon after three (3) years from its date unless such proxy provides for a
longer period. A duly executed proxy shall be irrevocable if it states that it
is irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the Corporation generally. The
authorization of a proxy may, but need not be, limited to specified action;
provided, however, that if a proxy limits its authorization to a meeting or
meetings of stockholders, unless otherwise specifically provided, such proxy
shall entitle the holder thereof to vote at any adjourned session but shall not
be valid after the final adjournment thereof.
2.8 Inspectors. The directors or the person presiding at the
meeting may, but need not, appoint one or more inspectors of election and any
substitute inspectors to act at the meeting or any
2
<PAGE> 3
adjournment thereof. Each inspector, before entering upon the discharge of his
or her duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his or her ability. The inspectors, if any, shall determine the number of
shares of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum and the validity and
effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the person presiding at the meeting, the
inspectors shall make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found by them.
2.9 List of Stockholders. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at such meeting, arranged in alphabetical
order and showing the address of each stockholder and the number of shares
registered in his or her name. The stock ledger shall be the only evidence as
to who are stockholders entitled to examine such list or to vote in person or
by proxy at such meeting.
SECTION 3. BOARD OF DIRECTORS
3.1 Powers. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors who shall have and
may exercise all the powers of the Corporation and do all such lawful acts and
things as are not by law, the Certificate of Incorporation or these By-Laws
directed or required to be exercised or done by the stockholders.
3.2 Number and Term of Office. The Board of Directors shall
consist of one or more members. The number of directors shall be fixed by
resolution of the Board of Directors or by the stockholders at the annual
meeting or at a special meeting. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 3.3, and each
director elected shall hold office until his or her successor is elected and
qualified, except as required by law. Any decrease in the authorized number of
directors shall not be effective until the expiration of the term of the
directors then in office, unless, at the time of such decrease, there shall be
vacancies on the Board which are being eliminated by such decrease.
3.3 Vacancies and New Directorships. Vacancies and any newly
created directorships resulting from any increase in the number of directors
may be filled by vote of the stockholders at a meeting called for the purpose,
or by a majority of the directors then in office, although less than a quorum,
or by a sole remaining director. When one or more directors shall resign from
the Board, effective at a future date, a majority of the directors then in
office, including those who have resigned, shall have power to fill such
vacancy or vacancies, the vote or action by writing thereon to take effect when
such resignation or resignations shall become effective. The directors shall
have and may exercise all their powers, notwithstanding the existence of one or
more vacancies in their number, subject to any requirements of law or of the
Certificate of Incorporation or of these By-Laws as to the number of directors
required for a quorum or for any vote or other actions.
3
<PAGE> 4
3.4 Committees. The Board of Directors may, by vote of a majority
of the whole Board, (a) designate, change the membership of or terminate the
existence of any committee or committees, each committee to consist of one or
more of the directors, (b) designate one or more directors as alternate members
of any such committee who may replace any absent or disqualified member at any
meeting of the committee, and (c) determine the extent to which each such
committee shall have and may exercise the powers of the Board of Directors in
the management of the business and affairs of the Corporation, including the
power to authorize the seal of the Corporation to be affixed to all papers that
require it and the power and authority to declare dividends or to authorize the
issuance of stock; excepting, however, such powers that by law, by the
Certificate of Incorporation or by these By-Laws they are prohibited from so
delegating. In the absence or disqualification of any member of such committee
and his or her alternate, if any, the member or members thereof present at any
meeting and not disqualified from voting, whether or not constituting a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Except as the
Board of Directors may otherwise determine, any committee may make rules for
the conduct of its business, but unless otherwise provided by the Board or such
rules, its business shall be conducted as nearly as may be in the same manner
as is provided by these By-Laws for the conduct of business by the Board of
Directors. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors upon request.
3.5 Regular Meetings. Regular meetings of the Board of Directors
may be held without call or notice at such places within or without the State
of Delaware and at such times as the Board may from time to time determine,
provided that notice of the first regular meeting following any such
determination shall be given to absent directors. A regular meeting of the
directors may be held without call or notice immediately after and at the same
place as the annual meeting of stockholders.
3.6 Special Meetings. Special meetings of the Board of Directors
may be held at any time and at any place within or without the State of
Delaware designated in the notice of the meeting, when called by the Chairman
of the Board, if any, the President, or by one-third (1/3) or more in number of
the directors, reasonable notice thereof being given to each director by the
Secretary or by the Chairman of the Board, if any, the President or any one of
the directors calling the meeting.
3.7 Notice. It shall be reasonable and sufficient notice to a
director to send notice by mail at least forty-eight (48) hours or by facsimile
at least twenty-four (24) hours before the meeting addressed to him or her at
his or her usual or last known business or residence address or to give notice
to him or her in person or by telephone at least twenty-four (24) hours before
the meeting. Notice of a meeting need not be given to any director if a
written waiver of notice, executed by him or her before or after the meeting,
is filed with the records of the meeting, or to any director who attends the
meeting without protesting prior thereto, or at its commencement, the lack of
notice to him or her. Neither notice of a meeting nor a waiver of a notice
need specify the purposes of the meeting.
4
<PAGE> 5
3.8 Quorum. Except as may be otherwise provided by law, by the
Certificate of Incorporation or by these By-Laws, at any meeting of the
directors, a majority of the directors then in office shall constitute a
quorum; a quorum shall not in any case be less than one-third (1/3) of the
total number of directors constituting the whole Board. Any meeting may be
adjourned from time to time by a majority of the votes cast upon the question,
whether or not a quorum is present, and the meeting may be held as adjourned
without further notice.
3.9 Action by Vote. Except as may be otherwise provided by law,
by the Certificate of Incorporation or by these By-Laws, when a quorum is
present at any meeting, the vote of a majority of the directors present shall
be the act of the Board of Directors.
3.10 Action Without a Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors or a committee thereof may be
taken without a meeting if all the members of the Board or of such committee,
as the case may be, consent thereto in writing, and such writing or writings
are filed with the records of the meetings of the Board or of such committee.
Such consent shall be treated for all purposes as the act of the Board or of
such committee, as the case may be.
3.11 Participation in Meetings by Conference Telephone. Members of
the Board of Directors, or any committee designated by such Board, may
participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other or by any other means
permitted by law. Such participation shall constitute presence in person at
such meeting.
3.12 Compensation. In the discretion of the Board of Directors,
each director may be paid such fees for his or her services as director and be
reimbursed for his or her reasonable expenses incurred in the performance of
his or her duties as director as the Board of Directors from time to time may
determine. Nothing contained in this section shall be construed to preclude
any director from serving the Corporation in any other capacity and receiving
reasonable compensation therefor.
SECTION 4. OFFICERS AND AGENTS
4.1 Enumeration; Qualification. The officers of the Corporation
shall be a President, a Treasurer, a Secretary and such other officers, if any,
as the Board of Directors from time to time may in its discretion elect or
appoint, including, without limitation, a Chairman of the Board, one or more
Vice Presidents and a controller. The Corporation may also have such agents,
if any, as the Board of Directors from time to time may in its discretion
choose. Any officer may be, but none need be, a director or stockholder. Any
two or more offices may be held by the same person.
4.2 Powers. Subject to law, to the Certificate of Incorporation
and to the other provisions of these By-Laws, each officer shall have, in
addition to the duties and powers herein set forth, such duties and powers as
are commonly incident to his or her office and such additional duties and
powers as the Board of Directors may from time to time designate.
5
<PAGE> 6
4.3 Election. The officers may be elected by the Board of
Directors at their first meeting following the annual meeting of the
stockholders or at any other time. At any time or from time to time the
directors may delegate to any officer their power to elect or appoint any other
officer or any agents.
4.4 Tenure. Each officer shall hold office until the first
meeting of the Board of Directors following the next annual meeting of the
stockholders and until his or her respective successor is chosen and qualified
unless a shorter period shall have been specified by the terms of his or her
election or appointment or, in each case, until he or she sooner dies, resigns,
is removed or becomes disqualified. Each agent shall retain his or her
authority at the pleasure of the directors, or the officer by whom he or she
was appointed or by the officer who then holds agent appointive power.
4.5 Chairman of the Board of Directors, President and Vice
President. The Chairman of the Board, if any, shall have such duties and
powers as shall be designated from time to time by the Board of Directors.
Unless the Board of Directors otherwise specifies, the Chairman of the Board
or, if there is none, the Chief Executive Officer, shall preside, or designate
the person who shall preside, at all meetings of the stockholders and of the
Board of Directors.
Unless the Board of Directors otherwise specifies, the President shall
be the chief executive officer and shall have direct charge of all business
operations of the Corporation and, subject to the control of the directors,
shall have general charge and supervision of the business of the Corporation.
Any Vice Presidents shall have such duties and powers as shall be set
forth in these By-Laws or as shall be designated from time to time by the Board
of Directors or by the President.
4.6 Treasurer and Assistant Treasurers. Unless the Board of
Directors otherwise specifies, the Treasurer shall be the chief financial
officer of the Corporation and shall be in charge of its funds and valuable
papers, and shall have such other duties and powers as may be designated from
time to time by the Board of Directors or by the President. If no controller
is elected, the Treasurer shall, unless the Board of Directors otherwise
specifies, also have the duties and powers of the controller.
Any Assistant Treasurers shall have such duties and powers as shall be
designated from time to time by the Board of Directors, the President or the
Treasurer.
4.7 Controller and Assistant Controllers. If a Controller is
elected, he or she shall, unless the Board of Directors otherwise specifies, be
the chief accounting officer of the Corporation and be in charge of its books
of account and accounting records, and of its accounting procedures. He or she
shall have such other duties and powers as may be designated from time to time
by the Board of Directors, the President or the Treasurer.
6
<PAGE> 7
Any Assistant Controller shall have such duties and powers as shall be
designated from time to time by the Board of Directors, the President, the
Treasurer or the Controller.
4.8 Secretary and Assistant Secretaries. The Secretary shall
record all proceedings of the stockholders, of the Board of Directors and of
committees of the Board of Directors in a book or series of books to be kept
therefor and shall file therein all actions by written consent of stockholders
or directors. In the absence of the Secretary from any meeting, an Assistant
Secretary, or, if there be none, or he or she is absent, a temporary secretary
chosen at the meeting, shall record the proceedings thereof. Unless a transfer
agent has been appointed, the Secretary shall keep or cause to be kept the
stock and transfer records of the Corporation, which shall contain the names
and record addresses of all stockholders and the number of shares registered in
the name of each stockholder. He or she shall have such other duties and
powers as may from time to time be designated by the Board of Directors or the
President.
Any Assistant Secretaries shall have such duties and powers as shall
be designated from time to time by the Board of Directors, the President or the
Secretary.
SECTION 5. RESIGNATIONS AND REMOVALS
5.1 Any director or officer may resign at any time by delivering
his or her resignation in writing to the Chairman of the Board, if any, the
President, or the Secretary or to a meeting of the Board of Directors. Such
resignation shall be effective upon receipt unless specified to be effective at
some other time, and without, in either case, the necessity of its being
accepted unless the resignation shall so state. A director (including persons
elected by directors to fill vacancies in the Board) may be removed from office
with or without cause by the vote of the holders of a majority of the shares
issued and outstanding and entitled to vote in the election of directors. The
Board of Directors may at any time remove any officer either with or without
cause. The Board of Directors may at any time terminate or modify the
authority of any agent. No director or officer resigning and (except where a
right to receive compensation shall be expressly provided in a duly authorized
written agreement with the Corporation) no director or officer removed shall
have any right to any compensation as such director or officer for any period
following his or her resignation or removal, or any right to damages on account
of such removal, whether his or her compensation be by the month or by the year
or otherwise; unless, in the case of a resignation, the directors, or, in the
case of removal, the body acting on the removal, shall in their or its
discretion provide for compensation.
SECTION 6. VACANCIES
6.1 If the office of the President or the Treasurer or the
Secretary becomes vacant, the directors may elect a successor by vote of a
majority of the directors then in office. If the office of any other officer
becomes vacant, any person or body empowered to elect or appoint that officer
may choose a successor. Each such successor shall hold office for the
unexpired term and, in the case of the President, the Treasurer and the
Secretary, until his or her successor is chosen and
7
<PAGE> 8
qualified or, in each case, until he or she sooner dies, resigns, is removed or
becomes disqualified. Any vacancy of a directorship shall be filled as
specified in Section 3.3 of these By-Laws.
SECTION 7. CAPITAL STOCK
7.1 Stock Certificates. Each stockholder shall be entitled to a
certificate stating the number and the class and the designation of the series,
if any, of the shares held by him or her, in such form as shall, in conformity
to law, the Certificate of Incorporation and the By-Laws, be prescribed from
time to time by the Board of Directors. Such certificate shall be signed by
the Chairman or Vice Chairman of the Board, if any, or the President or a Vice
President and by the Treasurer or an Assistant Treasurer or by the Secretary or
an Assistant Secretary. Any of or all the signatures on the certificate may be
a facsimile. In case an officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed on such certificate shall have
ceased to be such officer, transfer agent, or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if he or
she were such officer, transfer agent, or registrar at the time of its issue.
7.2 Loss of Certificates. In the case of the alleged theft, loss,
destruction or mutilation of a certificate of stock, a duplicate certificate
may be issued in place thereof, upon such terms, including receipt of a bond
sufficient to indemnify the Corporation against any claim on account thereof,
as the Board of Directors may prescribe.
SECTION 8. TRANSFER OF SHARES OF STOCK
8.1 Transfer on Books. Subject to the restrictions, if any,
stated or noted on the stock certificate, shares of stock may be transferred on
the books of the Corporation by the surrender to the Corporation or its
transfer agent of the certificate therefor properly endorsed or accompanied by
a written assignment and power of attorney properly executed, with necessary
transfer stamps affixed, and with such proof of the authenticity of signature
as the Board of Directors or the transfer agent of the Corporation may
reasonably require. Except as may be otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the Corporation shall be
entitled to treat the record holder of stock as shown on its books as the owner
of such stock for all purposes, including the payment of dividends and the
right to receive notice and to vote or to give any consent with respect thereto
and to be held liable for such calls and assessments, if any, as may lawfully
be made thereon, regardless of any transfer, pledge or other disposition of
such stock until the shares have been properly transferred on the books of the
Corporation.
It shall be the duty of each stockholder to notify the Corporation of
his or her post office address.
8.2 Record Date and Closing Transfer Books. In order that the
Corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, the Board of Directors
may fix a record date, which record date shall not
8
<PAGE> 9
precede the date on which the resolution fixing the record date is adopted by
the Board of Directors, and which record date shall not be more than sixty (60)
nor less than ten (10) days before the date of such meeting. If no such record
date is fixed by the Board of Directors, the record date for determining the
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the day on which
notice is given or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
on which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten (10) days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no such record date has been fixed by the Board of Directors,
the record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is required by the General Corporation Law of the State of Delaware,
shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation by
delivery to its registered office in Delaware by hand or certified or
registered mail, return receipt requested, to its principal place of business
or to an officer or agent of the Corporation having custody of the book in
which proceedings of meetings of stockholders are recorded. If no record date
has been fixed by the Board of Directors, and prior action by the Board of
Directors is required by the General Corporation Law of the State of Delaware,
the record date for determining stockholders entitled to consent to corporate
action in writing without a meeting shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action.
In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
on which the resolution fixing the record date is adopted, and which record
date shall be not more than sixty (60) days prior to such payment, exercise or
other action. If no such record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
SECTION 9. CORPORATE SEAL
9.1 Subject to alteration by the directors, the seal of the
Corporation shall consist of a flat-faced circular die with the word "Delaware"
and the name of the Corporation cut or engraved thereon, together with such
other words, dates or images as may be approved from time to time by the
directors.
9
<PAGE> 10
SECTION 10. EXECUTION OF PAPERS
10.1 Except as the Board of Directors may generally or in
particular cases authorize the execution thereof in some other manner, all
deeds, leases, transfers, contracts, bonds, notes, checks, drafts or other
obligations made, accepted or endorsed by the Corporation shall be signed by
the Chairman of the Board, if any, the President, a Vice President or the
Treasurer.
SECTION 11. FISCAL YEAR
11.1 The fiscal year of the Corporation shall end on the 31st day
of December of each year.
SECTION 12. AMENDMENTS
12.1 These By-Laws may be adopted, amended or repealed by vote of a
majority of the directors then in office or by vote of a majority of the stock
outstanding and entitled to vote. Any by-law, whether adopted, amended or
repealed by the stockholders or directors, may be amended or reinstated by the
stockholders or the directors.
10
<PAGE> 1
EXHIBIT 10.4.1
AMENDMENT NO. 1
TO
RESTATED MASTER AGREEMENT
This Amendment No. 1 to the Restated Master Agreement ("Amendment No.
1") is made and entered into this 5th day of February 1997 by and among Orbital
Sciences Corporation ("Orbital"), Orbital Communications Corporation
("ORBCOMM"), Teleglobe Inc. ("Teleglobe") and Teleglobe Mobile Partners
("Teleglobe Mobile").
W I T N E S S E T H
WHEREAS, Orbital, ORBCOMM, Teleglobe and Teleglobe Mobile previously
entered into a Restated Master Agreement dated as of September 12, 1995 (the
"Restated Master Agreement"); and
WHEREAS, Orbital, ORBCOMM, Teleglobe and Teleglobe Mobile desire to
amend and modify the Restated Master Agreement.
NOW, THEREFORE, the parties agree as follows:
SECTION 1. Terms used but not otherwise defined herein shall have the
meanings assigned thereto in the Restated Master Agreement.
SECTION 2. Section 4.1(d) of the Restated Master Agreement is hereby
amended to replace the number "750,000" appearing therein with the number
"900,000".
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to
the Restated Master Agreement as of the day and year first above written.
ORBITAL SCIENCES CORPORATION
By: /s/ BRUCE W. FERGUSON
---------------------------------------------
Name: Bruce W. Ferguson
Title: Executive Vice President and General
Manager/Communications and
Information Systems Group
<PAGE> 2
ORBITAL COMMUNICATIONS CORPORATION
By: /s/ ALAN L. PARKER
-------------------------------------------
Name: Alan L. Parker
Title: President
TELEGLOBE INC.
By: /s/ CLAUDE SEGUIN
-------------------------------------------
Name: Claude Seguin
Title: Executive Vice President, Finance and
Corporate Development and
Chief Financial Officer
TELEGLOBE MOBILE PARTNERS
By:Teleglobe Mobile Investment Inc.,
its Managing Partner
By: /s/ CLAUDE SEGUIN
-------------------------------------------
Name: Claude Seguin
Title: Chairman of the Board and
Chief Executive Officer
2
<PAGE> 1
EXHIBIT 10.5.2
AMENDMENT NO.2 TO
ORBCOMM SYSTEM PROCUREMENT AGREEMENT
This Amendment No. 2 ("Amendment No. 2") to ORBCOMM System Procurement
Agreement is entered into this 24th day of March, 1997 between ORBCOMM Global,
L.P. ("ORBCOMM Global") and Orbital Sciences Corporation ("Orbital").
WITNESSETH
WHEREAS, the parties previously entered into ORBCOMM System
Procurement Agreement dated as of September 12, 1995 (the "Procurement
Agreement"); and
WHEREAS, the parties with to amend certain terms and conditions
regarding the payment of certain milestones set forth therein;
NOW THEREFORE, the parties agree as follows:
ARTICLE 1 - DEFINITIONS
Terms used herein and not otherwise defined shall have the meanings
assigned thereto in the Procurement Agreement.
ARTICLE 2 - AMENDMENTS
Section 2.1 The first sentence of Section 4.1(b) of the
Procurement Agreement shall be deleted in its entirety and replaced with the
following:
Orbital shall invoice ORBCOMM Global on a monthly basis for a maximum
of 90% of its costs incurred during such month plus, to the extent
permitted by Section 4.1(f), such portion of the cost in excess of the
maximum amount to be invoiced to ORBCOMM Global in accordance with
such Section 4.1(f) and not previously invoiced and paid; provided
however that Orbital shall not be entitled to invoice ORBCOMM Global
under Section 4.1(a) and this Section 4.1(b) in a cumulative total
amount greater than $125,884,929.
Section 2.2 Section 4.1(c) of the Procurement Agreement shall be
deleted in its entirety and replaced with the following:
The remaining 10% of costs incurred in any month through December 1997
may be invoiced incrementally on completion of the Category B
Milestone for that month as set forth in Exhibit B; provided however
that Orbital shall not be entitled to invoice ORBCOMM Global under
this Section 4.1(c) in an amount greater than $13,987,214.
<PAGE> 2
Section 2.3 Section 4.1(e) of the Procurement Agreement shall be
deleted in its entirety and replaced with the following:
The total amount paid under Section 4.1(a), (b) and (c) shall not
exceed $139,872,143 (the "Total Costs"). In the event costs incurred
through December 31, 1997, are less than the Total Costs, the parties
shall negotiate additional Category B Milestones for payment of the
remaining balance of the Total Costs.
Section 2.4 Exhibit B to the Procurement Agreement shall be
deleted in its entirety and replaced with Exhibit B attached to this Amendment
No. 2.
SECTION 3 - MISCELLANEOUS
Section 3.1 This Amendment No. 2 shall be construed in accordance
with and governed by the laws of the Commonwealth of Virginia, without giving
effect to the provisions, policies or principles thereof related to choice or
conflict of laws.
Section 3.2 No changes to the Procurement Agreement are
authorized hereby except as otherwise specified in this Amendment No. 2.
IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 as
of the day and year first above written.
ORBCOMM GLOBAL, L.P.
By:
-------------------------
Name:
Title:
ORBITAL SCIENCES CORPORATION
By:
-------------------------
Name:
Title:
2
<PAGE> 3
EXHIBIT B
ORBCOMM PROGRAMMATIC MILESTONES
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
# DESCRIPTION DATE
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
1 Determine FM1&2 antenna performance deficiencies Sep-95
-----------------------------------------------------------------------------------------------------
2 Preliminary Launch Vehicle ICD Distributed Oct-95
-----------------------------------------------------------------------------------------------------
3 Preliminary Electrical ICD Distributed Nov-95
-----------------------------------------------------------------------------------------------------
4 Avionics Box CDR Dec-95
-----------------------------------------------------------------------------------------------------
5 Comm EDU (SRX,STX,G/W) Characterization Test Jan-96
-----------------------------------------------------------------------------------------------------
6 EDU System Comprehensive Performance Test Feb-96
-----------------------------------------------------------------------------------------------------
7 Electrical ICD Release Mar-96
-----------------------------------------------------------------------------------------------------
8 EDU System Environmental Test Complete Apr-96
-----------------------------------------------------------------------------------------------------
9 Qual Unit Testing Complete on Structure, Avionics Box, BCR, SRX, STX, Gateway, May-96
and Antenna
-----------------------------------------------------------------------------------------------------
10 First Plane Flight Structures Delivered to OSC Jun-96
-----------------------------------------------------------------------------------------------------
11 Preliminary Flight Checklist Released Jul-96
-----------------------------------------------------------------------------------------------------
12 Qual Vehicle Thermal Vacuum Test complete Aug-96
-----------------------------------------------------------------------------------------------------
13 First 4 sets of Bus Flight units including Harness Ready for Integration Sep-96
-----------------------------------------------------------------------------------------------------
14 Acceptance Test - First Pegasus Motor Set Oct-96
-----------------------------------------------------------------------------------------------------
15 HAPS Integration & Test Completed Successfully Nov-96
-----------------------------------------------------------------------------------------------------
16 First Pegasus Launch - Separation from Pegasus Carrier Aircraft Dec-96
-----------------------------------------------------------------------------------------------------
17 First 8 sets of Flight STX, SRX, Gateway & Antenna units Ready for Integration Jan-97
-----------------------------------------------------------------------------------------------------
18 24 sets of BCR, Avionics Box, SRX, STX & Gateway units Ready for Integration. Feb-97
-----------------------------------------------------------------------------------------------------
19 12th spacecraft completes Integration and Test Mar-97
-----------------------------------------------------------------------------------------------------
20 Plane 1 Preliminary Test Report Submitted Apr-97
-----------------------------------------------------------------------------------------------------
21 First Pegasus Launch - Separation from Pegasus Carrier Aircraft. May-97
-----------------------------------------------------------------------------------------------------
22 Third Motor Set Flight Sim 1 Performed Jun-97
-----------------------------------------------------------------------------------------------------
23 20th spacecraft completes Integration and Test Jul-97
-----------------------------------------------------------------------------------------------------
24 First Pegasus Launch - Separation from Pegasus Carrier Aircraft Aug-97
-----------------------------------------------------------------------------------------------------
25 26 sets of Solar Arrays complete Sep-97
-----------------------------------------------------------------------------------------------------
26 26 Structures complete preparation Oct-97
-----------------------------------------------------------------------------------------------------
27 Second HAPS completes Integration and Test Nov-97
-----------------------------------------------------------------------------------------------------
28 26 Antenna Assemblies ready for Integration Dec-97
-----------------------------------------------------------------------------------------------------
</TABLE>
Note : Milestones 16, 21 & 24 are identical and should be invoiced
simultaneously upon First Pegasus Launch. All milestones are
expected to be completed prior to the Third Pegasus Launch.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ORBCOMM
GLOBEL, L.P. FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS AND FOOTNOTES THERETO.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 45,945
<SECURITIES> 48,309<F1>
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 3,863
<CURRENT-ASSETS> 98,117
<PP&E> 190,627
<DEPRECIATION> (1,718)
<TOTAL-ASSETS> 320,825
<CURRENT-LIABILITIES> 15,452
<BONDS> 172,015
0
0
<COMMON> 0
<OTHER-SE> 133,358<F2>
<TOTAL-LIABILITY-AND-EQUITY> 320,825
<SALES> 133
<TOTAL-REVENUES> 135
<CGS> 124
<TOTAL-COSTS> 4,598
<OTHER-EXPENSES> 193<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0<F4>
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,394)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,394)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Represents only the current marketable securities.
<F2>Represents total partners' capital.
<F3>Include both interest income and equity in losses of affiliates.
<F4>$6,023 interest expense was capitalized.
</FN>
</TABLE>
