<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 7, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ORBITAL IMAGING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
4899
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)
54-1660268
(IRS EMPLOYER
IDENTIFICATION NUMBER)
21700 ATLANTIC BOULEVARD
DULLES, VA 20166
(703) 406 5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
SUSAN HERLICK, ESQ.
GENERAL COUNSEL
21700 ATLANTIC BOULEVARD
DULLES, VA 20166
(703) 406 5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
With a copy to:
ERIC A. STERN, ESQ.
LATHAM & WATKINS
1001 PENNSYLVANIA AVE., N.W. SUITE 1300
WASHINGTON, D.C. 20004-2505
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
================================================================================
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE
TITLE OF EACH CLASS OF SECURITIES TO TO BE PRICE PER OFFERING AMOUNT OF
BE REGISTERED REGISTERED UNIT(1) PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------
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11 5/8% Senior Notes Due 2005......... $150,000,000 100% $150,000,000 $44,250
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
ORBITAL IMAGING CORPORATION
------------------------
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K, SHOWING THE LOCATION IN THE
PROSPECTUS OF THE INFORMATION REQUIRED BY PART I OF FORM S-4.
<TABLE>
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ITEM NUMBER AND CAPTION IN FORM S-4 LOCATION OR CAPTION IN PROSPECTUS
----------------------------------- ---------------------------------
<C> <S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus... Cover Page of Registration Statement; Cross
Reference Sheet; Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front Cover Page; Outside Back Cover
Page
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............ Prospectus Summary; Risk Factors; Business;
Selected Historical Financial Data
4. Terms of the Transaction................... Prospectus Summary; The Exchange Offer;
Description of the Exchange Notes;
Certain U.S. Federal Income Tax
Consequences
5. Pro Forma Financial Information............ Prospectus Summary; Selected Historical
Financial Data
6. Material Contacts with the Company being
Acquired................................. Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters....................... Not Applicable
8. Interests of Named Experts and Counsel..... Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information With Respect to S-3
Registrants.............................. Not Applicable
11. Incorporation of Certain Information by
Reference................................ Not Applicable
12. Information With Respect to S-2 or S-3
Registrants.............................. Not Applicable
13. Incorporation of Certain Information by
Reference................................ Not Applicable
14. Information With Respect to Registrants
Other Than S-2 or S-3 Registrants........ Prospectus Summary; Risk Factors;
Capitalization; Management's Discussion
and Analysis of Financial Condition and
Results of Operations; Selected
Historical Financial Data; Business;
Management; Principal Stockholders;
Description of the Exchange Notes;
Financial Statements
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information With Respect to S-3
Companies................................ Not Applicable
16. Information With Respect to S-2 or S-3
Companies................................ Not Applicable
17. Information With Respect to Companies Other
Than S-2 or S-3 Companies................ Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations Are to be Solicited....... Not Applicable
19. Information if Proxies, Consents or
Authorizations Are Not to be Solicited or
in an Exchange Offer..................... Management
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 7, 1998
PROSPECTUS
OFFER TO EXCHANGE
11 5/8% SENIOR NOTES DUE 2005, SERIES B FOR ALL ORIGINAL
11 5/8% SENIOR NOTES DUE 2005, SERIES A
OF
ORBITAL IMAGING CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON JUNE ,
1998, UNLESS EXTENDED.
Orbital Imaging Corporation, a Delaware corporation (the "Company" or
"ORBIMAGE") hereby offers (the "Exchange Offer"), upon the terms and subject to
the conditions set forth in this Prospectus and the accompanying Letter of
Transmittal (the "Letter of Transmittal"), to exchange its outstanding 11 5/8%
Senior Notes Due 2005, Series A (the "Original Notes"), of which an aggregate of
$150 million in principal amount is outstanding as of the date hereof, for an
equal principal amount of newly issued 11 5/8% Senior Notes due 2005, Series B
(the "Exchange Notes"). The form and terms of the Exchange Notes will be the
same as the form and terms of the Original Notes except that (i) the Exchange
Notes will be registered under the Securities Act of 1933, as amended (the
"Securities Act") and hence will not bear legends restricting the transfer
thereof, and (ii) the holders of Exchange Notes will not be entitled to certain
rights of holders of Original Notes under the Registration Rights Agreement (as
defined) which rights will terminate upon the consummation of the Exchange
Offer. The Exchange Notes will evidence the same debt as the Original Notes and
will be entitled to the benefits of an indenture dated as of February 25, 1998
by and between ORBIMAGE and Marine Midland Bank, as trustee (the "Trustee")
governing the Original Notes and the Exchange Notes (the "Indenture"). The
Indenture provides for the issuance of both the Exchange Notes and the Original
Notes. The Exchange Notes and the Original Notes are sometimes referred to
herein collectively as the "Notes."
The Exchange Notes will bear interest from the most recent date on which
interest has been paid or duly provided for on such Original Notes surrendered
in exchange for such Exchange Notes or if no interest has been paid or duly
provided for on such Original Notes, from February 25, 1998, at the rate of
11 5/8% per annum, payable semi-annually in arrears on March 1 and September 1
of each year, commencing on September 1, 1998. The Exchange Notes will mature on
March 1, 2005. The Company will not be required to make any mandatory redemption
or sinking fund payments with respect to the Exchange Notes prior to maturity.
The Exchange Notes will be redeemable at the option of the Company at any time
after March 1, 2002 at the redemption prices set forth herein, plus accrued and
unpaid interest and Liquidated Damages (as defined), if any, thereon to the
redemption date. In addition, the Company will be entitled, at any time on or
before March 1, 2001 to redeem the Exchange Notes with the net cash proceeds of
one or more sales of Capital Stock (other than Disqualified Stock (as defined))
at the redemption price set forth herein plus accrued and unpaid interest and
Liquidated Damages, if any, to the redemption date; provided, however, that at
least 65% of the aggregate principal amount of Notes remains outstanding after
giving effect to such redemption. See "Description of Exchange Notes--Optional
Redemption."
On a Change of Control, the Company will be required to offer to repurchase
all or any part of the Exchange Notes at a purchase price equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of purchase. See Description of
Exchange Notes--Repurchase at the Option of the Holders."
The Original Notes were issued by ORBIMAGE in an offering (the "Units
Offering") of 150,000 units (the "Units"), each consisting of $1,000 principal
amount of Original Notes and one warrant (a "Warrant") to purchase 8.75164
shares of common stock, par value $.01 per share ("Common Stock"), of the
Company, consummated on February 25, 1998.
The Company used $32.9 million of the net proceeds of the Units Offering to
purchase a portfolio of securities initially consisting of U.S. government
securities (including any securities substituted in respect thereof, the
"Pledged Securities"), representing funds sufficient to provide for payment in
full of the first four scheduled interest payments on the Notes. The Pledged
Securities are pledged as security for repayment of principal of and interest on
the Notes.
The Original Notes are and the Exchange Notes will be senior obligations of
the Company, will rank pari passu in right of payment with all existing and
future senior Indebtedness (as defined) of the Company, and will rank senior in
right of payment to any future subordinated Indebtedness of the Company. As of
December 31, 1997, on a pro forma basis after giving effect to the Units
Offering, the Company would have had approximately $163 million ($154 million
net of debt discount) of senior Indebtedness outstanding (including current
liabilities of approximately $13 million). The indenture pursuant to which the
Notes will be issued (the "Indenture") will permit the Company to incur
additional Indebtedness, subject to certain limitations.
------------------------ (continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE 15 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE UNITS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS MAY , 1998.
<PAGE> 4
(Continued from previous page)
The Company will accept for exchange and all validly tendered Original Notes
on or prior to 5:00 p.m., New York City time, on June , 1998 (if and as
extended, the "Expiration Date"). Tenders of the Original Notes in the Exchange
Offer is not conditioned upon any minimum principal amount of notes being
tendered for exchange. The Original Notes may be tendered only in integral
multiples of $1,000. In the event the Company terminates the Exchange Offer and
does not accept for exchange any Original Notes, the Company will promptly
return all previously tendered Original Notes to the holders thereof.
The Exchange Offer is subject to certain customary conditions. The Original
Notes were sold by the Company on February 25, 1998 to the Initial Purchasers
(as defined herein) in the Units Offering, which was a transaction effected
without registration under the Securities Act in reliance upon an exemption
under the Securities Act. The Initial Purchasers subsequently placed the
Original Notes with qualified institutional buyers in reliance upon Rule 144A
under the Securities Act and pursuant to offers and sales that occurred outside
the United States within the meaning of Regulation S under the Securities Act.
Accordingly, the Original Notes may not be reoffered, resold or otherwise
transferred unless registered under the Securities Act or unless an applicable
exemption from the registration requirements of the Securities Act is available.
The Exchange Notes are being offered hereunder in order to satisfy the
obligations of the Company under the Registration Rights Agreement (as defined
herein) entered into by the Company in connection with the offering of the
Original Notes. See "The Exchange Offer."
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, the Company believes
the Exchange Notes issued pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by any holder thereof (other than any
such holder that is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business and
such holder has no arrangement or understanding with any person to participate
in the distribution of such Exchange Notes. See "The Exchange Offer--Purpose and
Effect of the Exchange Offer" and "The Exchange Offer--Resale of Exchange
Notes." Each broker-dealer (a "Participating Broker-Dealer") that receives
Exchange Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a Participating Broker-Dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer as a result of market-making activities or
other trading activities. The Company has agreed that, for a period of 180 days
after the Expiration Date, it will make this Prospectus available to any
Participating Broker-Dealer for use in connection with any such resale. See
"Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the
Exchange Notes. There can be no assurance as to the liquidity of any markets
that may develop for the Exchange Notes, the ability of holders to sell the
Exchange Notes or the price at which holders would be able to sell the Exchange
Notes. The Company does not intend to list the Exchange Notes for trading on any
national securities exchange or over-the-counter market system. Future trading
prices of the Exchange Notes will depend on many factors, including among other
things, prevailing interest rates, the Company's operating results and the
market for similar securities. Historically, the market for securities similar
to the Exchange Notes, including non-investment grade debt, has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that any market for the Exchange Notes, if
such market develops, will not be subject to similar disruptions. The Initial
Purchasers have advised the Company that it currently intends to make a market
in the Exchange Notes offered hereby. However, the Initial Purchasers are not
obligated to do so and any market making may be discontinued at any time without
notice.
Any Original Notes not tendered and accepted in the Exchange Offer will
remain outstanding and will be entitled to all the rights and will be subject to
the limitations applicable thereto under the Indenture. Following consummation
of the Exchange Offer, the holders of Original Notes will continue to be subject
to the existing restrictions upon transfer thereof and the Company will have no
further obligation to such holders to provide for registration under the
Securities Act of the Original Notes held by them. To the extent that Original
Notes are tendered and accepted in the Exchange Offer, a holder's ability to
sell untendered Original Notes could be adversely affected. See "Risk
Factors--Consequences of Failure to Exchange" and "Exchange Offer--Procedures
for Tendering."
The Exchange Notes will be available initially only in book-entry form. The
Company expects that the Exchange Notes issued pursuant to this Exchange Offer
will be issued in the form of one or more Global Notes (as defined herein),
which will be deposited with, or on behalf of, The Depository Trust Company (the
"Depositary") and registered in its name or in the name of Cede & Co., its
nominee. Beneficial interests in a Global Note representing the Exchange Notes
will be shown on, and transfers thereof will be effected through, records
maintained by the Depositary and its participants. After the initial issuance of
the Global Notes, Exchange Notes in certificated form will be issued in exchange
for a Global Note only on the terms set forth in the Indenture. See "Description
of Exchange Notes--Book Entry, Delivery and Form."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF ORIGINAL NOTES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
ORIGINAL NOTES PURSUANT TO THE EXCHANGE OFFER.
This Prospectus, together with the Letter of Transmittal, is being sent to
all registered holders of Original Notes as of May , 1998.
The Company will not receive any cash proceeds from the issuance of the
Exchange Notes offered hereby. No dealer-manager is being used in connection
with this Exchange Offer. The Company will pay all expenses incurred by it
incident to the Exchange Offer. See "Use of Proceeds" and "Plan of
Distribution."
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER, OR A SOLICITATION
IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS, NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN
THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
ii
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
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PAGE
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Prospectus Summary.......................................... 1
Risk Factors................................................ 15
Use of Proceeds............................................. 26
Capitalization.............................................. 27
Selected Historical Financial Data.......................... 28
The Exchange Offer.......................................... 29
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 38
Business.................................................... 40
Regulation.................................................. 53
Management.................................................. 56
Principal Stockholders...................................... 59
Certain Relationships and Related Transactions.............. 60
Description of Capital Stock................................ 65
Relationship with Orbital Sciences Corporation.............. 66
Description of Exchange Notes............................... 68
Provisions Applicable to All Securities..................... 100
Certain U.S. Federal Income Tax Consequences................ 102
Plan of Distribution........................................ 105
Legal Matters............................................... 106
Independent Auditors........................................ 106
Index to Financial Statements............................... F-1
Glossary of Terms........................................... G-1
</TABLE>
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Registration Statement", which term shall include all amendments,
exhibits, annexes and schedules thereto) pursuant to the Securities Act, and the
rules and regulations promulgated thereunder, covering the Exchange Notes being
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. Copies of such material can be
obtained from the Company upon request.
The Company has agreed to file with the Commission, to the extent
permitted, and distribute to holders of the Exchange Notes reports, information
and documents specified in Section 13 and 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), so long as the Exchange Notes are
outstanding, whether or not the Company is subject to such informational
requirements of the Exchange Act. Periodic reports, proxy statements and other
information filed by the Company with the Commission may be inspected at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, or at its regional offices located at the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and 7 World Trade Center, 13th Floor, New York, New York 10007. The Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. Such Web site is located at http://www.sec.gov. While any Exchange
Notes remain outstanding, the Company will make available, upon request, to any
holder of the Exchange Notes, the information required pursuant to Rule
144A(d)(4) under the Securities Act during any period in which the Company is
not subject to Section 13 or 15(d) of the Exchange Act. Any such request should
be directed to the Vice President--General Counsel of the Company at 21700
Atlantic Boulevard, Dulles, Virginia, 20166
iii
<PAGE> 6
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS: THE STATEMENTS CONTAINED
IN THIS PROSPECTUS THAT ARE NOT HISTORICAL FACTS ARE "FORWARD-LOOKING
STATEMENTS" (AS SUCH TERM IS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995), WHICH CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY
SUCH AS "ESTIMATES," "PROJECTS," "ANTICIPATES," "EXPECTS," "INTENDS," "PLANS,"
"BELIEVES," OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE
TERMINOLOGY, OR BY DISCUSSIONS OF STRATEGY THAT INVOLVE RISKS AND UNCERTAINTIES.
MANAGEMENT WISHES TO CAUTION THE READER THAT THESE FORWARD-LOOKING STATEMENTS,
SUCH AS THE MARKET OPPORTUNITY PRESENTED BY THE COMPANY'S TARGET MARKETS,
STATEMENTS REGARDING DEVELOPMENT OF THE COMPANY'S BUSINESSES, THE ESTIMATE OF
MARKET SIZE AND ADDRESSABLE MARKETS FOR THE COMPANY'S PRODUCTS, CASH PROJECTED
TO BE USED IN OPERATIONS, THE ANTICIPATED CAPITAL EXPENDITURES TO DESIGN,
CONSTRUCT, AND LAUNCH THE HIGH-RESOLUTION ORBVIEW SATELLITES, EXPECTED LAUNCH
DATES, AND OTHER STATEMENTS CONTAINED IN THIS PROSPECTUS REGARDING MATTERS THAT
ARE NOT HISTORICAL FACTS, ARE ONLY ESTIMATES OR PREDICTIONS. NO ASSURANCE CAN BE
GIVEN THAT FUTURE RESULTS WILL BE ACHIEVED; ACTUAL EVENTS OR RESULTS MAY DIFFER
MATERIALLY AS A RESULT OF RISKS FACING THE COMPANY OR ACTUAL RESULTS DIFFERING
FROM THE ASSUMPTIONS UNDERLYING SUCH STATEMENTS. SUCH RISKS AND ASSUMPTIONS
INCLUDE, BUT ARE NOT LIMITED TO, RISKS ASSOCIATED WITH SCHEDULE DELAYS IN THE
CONSTRUCTION AND LAUNCH OF THE HIGH-RESOLUTION ORBVIEW SATELLITES. THE COMPANY'S
ABILITY TO SUCCESSFULLY MARKET ITS IMAGERY PRODUCTS AND SERVICES TO CURRENT AND
NEW CUSTOMERS, GENERATE CUSTOMER DEMAND FOR ITS IMAGERY PRODUCTS AND SERVICES IN
THE PARTICULAR MARKETS WHERE IT PLANS TO MARKET PRODUCTS AND SERVICES ALL IN A
TIMELY MANNER, AT REASONABLE COSTS AND ON SATISFACTORY TERMS AND CONDITIONS, AS
WELL AS REGULATORY, LEGISLATIVE AND JUDICIAL DEVELOPMENTS THAT COULD CAUSE
ACTUAL RESULTS TO VARY MATERIALLY FROM THE FUTURE RESULTS INDICATED, EXPRESSED
OR IMPLIED IN SUCH FORWARD-LOOKING STATEMENTS. ALL WRITTEN AND ORAL
FORWARD-LOOKING STATEMENTS MADE IN CONNECTION WITH THIS OFFERING WHICH ARE
ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF ARE EXPRESSLY
QUALIFIED IN THEIR ENTIRETY BY THESE CAUTIONARY STATEMENTS.
iv
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus. Unless the
context otherwise requires, the terms "ORBIMAGE" or "Company" refer, with
respect to periods prior to May 8, 1997, to the Orbital Imaging Division of
Orbital Sciences Corporation and, with respect to periods after such date, to
Orbital Imaging Corporation. The term "Orbital" refers to Orbital Sciences
Corporation, the Company's majority shareholder, and, unless the context
otherwise requires, its subsidiaries. Certain technical and other capitalized
terms used in this Prospectus are defined in the Glossary. Holders of Original
Notes should carefully consider the specific matters set forth under "Risk
Factors" beginning on page 15 as well as the other information and data included
in this Prospectus prior to tendering their Original Notes pursuant to the
Exchange Offer.
THE COMPANY
ORBIMAGE is a leading provider of global space-based imagery. The Company
operates, and is further developing, a fleet of satellites that collect, process
and distribute digital imagery of the Earth's surface (land and oceans), the
atmosphere and weather conditions. ORBIMAGE currently has two satellites in
operation that provide imagery to a variety of scientific and commercial
customers, including NASA. The Company expects to place two additional
satellites providing high-resolution digital imagery into operation in 1999 and
2000, respectively. The Company's imagery products and services are intended to
provide ORBIMAGE customers with information concerning, among other things,
forestry and crop health, urban growth and development, the locations and
movements of troops or military assets, land and ocean-based natural resources
and weather patterns and wind conditions. ORBIMAGE intends to provide customers
with imagery at a lower price than that provided by existing or planned remote
imagery alternatives. Customers have entered into imagery contracts providing
for minimum payments to the Company totaling approximately $100 million, of
which the Company has received approximately $48 million to date.
In April 1995, ORBIMAGE launched its first satellite, OrbView-1, which
provides dedicated weather-related imagery and meteorological products to NASA.
The Company's second satellite, OrbView-2, was launched in August 1997 and
provides images of land and ocean surfaces to commercial customers, as well as
to NASA and other scientific users. The Company believes that OrbView-2 is the
only satellite of its kind providing daily color images of the entire Earth's
surface. ORBIMAGE is in the process of completing the design of two
high-resolution imaging satellites, OrbView-3 and OrbView-4 (the
"high-resolution OrbView satellites"), which are being designed to provide
high-resolution panchromatic (black and white), multispectral (color and
infrared) and, in the case of OrbView-4, hyperspectral (enhanced color and
enhanced infrared) imagery. OrbView-3 is scheduled to be operational during the
second half of 1999, and OrbView-4 is scheduled to be operational in mid-2000.
The Company believes that OrbView-3 and OrbView-4 will be among the first
commercial satellites with high-resolution imagery capability and that OrbView-4
will be the world's first satellite with commercially available hyperspectral
capability.
Remote imaging is the process of observing, measuring and recording
features, objects or events from a distance using a variety of sensors mounted
on satellites and aircraft. ORBIMAGE believes that the current market for global
remote imagery and related products exceeds $10 billion annually. This existing
market consists of both domestic and international commercial and government
users, and includes satellite development, construction and operations costs
incurred by users who decide to build and operate their own satellite systems.
Historically, in the United States, the only "commercial" operators of remote
imaging satellites were quasi-governmental programs such as the low-resolution
Landsat satellite systems in operation since the 1970s. The opportunities for
commercialization of space-based imagery expanded significantly in 1994 when the
U.S. government implemented a policy permitting the worldwide, commercial sale
of high-resolution satellite imagery. The U.S. government has estimated that the
worldwide market for remote imagery products and services addressable by
commercial imagery providers will be approximately $2 billion by the year 2000.
ORBIMAGE believes that this worldwide commercial imagery market will grow as the
1
<PAGE> 8
availability of low-cost, high quality satellite imagery stimulates the demand
for such products and services and encourages the development of new
satellite-imaging technologies and applications.
Customers have entered into imagery contracts providing for minimum
payments to the Company totaling approximately $100 million, of which the
Company has received approximately $48 million to date. These contracts include
(i) a contract to provide NASA with weather-related imagery and meteorological
information generated by OrbView-1, (ii) a contract to provide NASA with color
ocean imagery generated by OrbView-2, (iii) a contract to provide the U.S. Air
Force with hyperspectral imagery from OrbView-4 and (iv) a distributor agreement
with Samsung Aerospace Industries, Ltd. ("Samsung Aerospace"), which grants
Samsung Aerospace an exclusive license to receive, process and sell
high-resolution imagery of the Korean peninsula (the "Samsung Agreement"). In
addition, the Company has entered into agreements with regional distributors for
OrbView-2 imagery in Canada and Chile and is in negotiation with potential
regional distributors for high-resolution OrbView imagery in the Middle East,
Europe, Asia, Southern Africa, South America and Australia. To provide
industry-specific imagery applications, ORBIMAGE is seeking to develop strategic
alliances with key value-added resellers ("VARs") who currently provide imagery
products to customers in industries such as oil and gas exploration, mining,
agriculture, forestry, fishing and cartography.
BUSINESS STRATEGY
ORBIMAGE's business strategy is to (i) penetrate existing markets, (ii)
create new markets to sustain long-term growth, (iii) provide imagery at prices
lower than other satellite and aerial-based imagery, (iv) achieve global
distribution, (v) provide worldwide coverage on a timely basis, (vi) establish
an electronic imagery archive with broad and diverse imagery products and (vii)
leverage the expertise of Orbital, including Orbital's existing satellite
imagery technology and product infrastructure, to promote rapid market
acceptance.
Penetrate Existing Markets. The Company believes that its existing
addressable market consists of numerous applications, including new construction
site selection, oil, gas, and mineral exploration activities, utility
infrastructure monitoring, scientific and environmental monitoring and U.S.
national security applications. In each of these market applications, ORBIMAGE
believes it should be able to gain market share rapidly because it expects its
imagery to be priced below that of existing aerial imagery and planned satellite
imagery and to be of higher resolution than existing satellite imagery.
Create New Markets. Through the introduction of affordable,
high-resolution satellite imagery, the Company believes it will stimulate the
development of new markets. For example, ORBIMAGE's marketing efforts to date
indicate that certain market segments do not currently have access to dedicated
high-resolution imagery, such as the foreign national security and commercial
fishing markets. The Company believes that such markets will develop rapidly as
commercial high-resolution imagery becomes available. Furthermore, the Company
believes it can develop new commercial applications for satellite-based imagery
including, among other uses, real estate assessment, travel planning and
entertainment applications.
Provide Low Priced Imagery. The Company believes that the expected cost to
construct its high-resolution OrbView satellites and related ground systems, the
principal components of which will be furnished by Orbital under a fixed-price
contract, will be less than or competitive with the announced costs of its
competitors' high-resolution satellite systems. The Company believes that the
cost of its satellites and related ground systems will afford it pricing
flexibility for its imagery products and services, allowing it to pursue a
strategy of pricing aggressively while still realizing attractive returns.
ORBIMAGE believes that the high-resolution OrbView satellites will be able to
provide a lower-priced imagery alternative to existing aerial photography.
Achieve Global Distribution. The Company believes that it can expand its
market share by providing imagery to end users both directly and through third
party distribution channels. The Company intends to focus its direct
distribution efforts on larger customers in the commercial/consumer and
scientific/environmental markets and on the U.S. national security market. The
Company expects VARs will perform application-specific processing and analysis
of the Company's imagery for various commercial applications. The Company
believes that utilizing these distribution channels simultaneously will enhance
the distribution of its products and services.
2
<PAGE> 9
ORBIMAGE believes that the most effective way to penetrate foreign markets
is to enter into relationships with strong regional partners who have existing
marketing and distribution infrastructures and are able to overcome local
regulatory barriers. The Company expects these distributors to purchase or
upgrade and operate the ground imagery receiving and processing stations in
their territories and to obtain the necessary regulatory approval to operate in
their territories. ORBIMAGE has entered into distribution agreements with
regional distributors in Chile and Canada for OrbView-2 imagery and the Samsung
Agreement to distribute high-resolution imagery of the Korean peninsula. The
Company is also in negotiations with potential regional distributors for
high-resolution OrbView imagery in the Middle East, Europe, Asia, Southern
Africa, South America and Australia.
Provide Worldwide Coverage on a Timely Basis. All the OrbView satellites
are designed to provide timely product delivery, either through real-time
imagery downlinking to a distributor's or customer's local ground receiving
station, or through delivery of processed imagery from ORBIMAGE's central U.S.
ground station by overnight courier or via the Internet. OrbView-2 provides
global imagery on a daily basis. OrbView-3 is designed to image virtually any
location on Earth with a "revisit" time of three days or less. Upon the launch
of OrbView-4, the effective "revisit" time of the high-resolution OrbView
satellites should be reduced to less than two days.
Establish Electronic Imagery Archive. The Company is developing the OrbNet
Digital Archive, a database that will collect, store and distribute imagery
derived from satellite and aerial sources. OrbView-2 imagery can be viewed on
the Company's website and is expected to become available for sale over the
Internet. ORBIMAGE intends to expand its imagery catalogue with aerial and
existing satellite imagery products prior to the launch of its OrbView-3
satellite by entering into strategic alliances with existing imaging satellite
operators, aerial photography firms and imagery VARs. The Company intends to
deliver imagery to customers over the Internet, on CD or on computer tape for a
per image fee.
Leverage Expertise of Orbital. Orbital, the Company's majority
shareholder, is a space technology and satellite services company with extensive
experience in the design and construction of remote imaging satellites and
ground stations. ORBIMAGE has used, and will continue to use, the integrated
space capabilities, infrastructure and experience of Orbital to develop its
business cost effectively, including leveraging certain of Orbital's existing
customer relationships and product lines.
TARGET MARKETS
ORBIMAGE is focusing on four primary market segments in which it believes
there currently exist or will develop a significant demand for high-quality,
timely, low-cost remote imagery. These four market segments are:
Commercial/Consumer. The Company believes that the near-term
commercial/consumer market segment will include domestic and foreign companies
and local government entities, such as municipalities, that currently use aerial
photographs and medium-resolution satellite imagery products. In the long term,
the Company also expects to market to individual businesses and consumers.
Initial applications are expected to include standardized map-making,
maintaining computer-based geographic information systems, agriculture and
forestry management, fishing, natural resource exploration and extraction and
tax assessment. In addition, as high-resolution satellite imagery becomes
available, the Company expects new consumer markets will emerge involving real
estate assessment, travel planning, education and entertainment applications.
Scientific/Environmental. The scientific/environmental market is comprised
of government entities that use satellite imagery to monitor environmental,
climate-related and meteorological phenomena, both in real-time and over
extended time periods, as well as other environmental, scientific and commercial
entities that need accurate, timely environmental information over a wide
geographic area. The Company expects that its multispectral and hyperspectral
imagery will have a variety of environmental applications, including assessing
damage from natural disasters and severe storms and the environmental impact of
industrial activities through pollution detection techniques.
3
<PAGE> 10
U.S. National Security. Satellite imagery can supplement existing
dedicated U.S. government surveillance satellites to serve tactical
reconnaissance, wide-area mapping and other needs not fully or economically
served by existing satellites. The U.S. government has indicated that it expects
to meet a portion of its future national security imagery requirements by
outsourcing to U.S. commercial providers of high-resolution satellite imagery.
Additionally, the Company believes that potential cutbacks in the Department of
Defense ("DoD") and National Reconnaissance Office ("NRO") budgets, together
with more geographically dispersed military assets, could further increase the
government's need for commercially available high-resolution imagery and cause
it to rely on lower-cost commercial providers.
Foreign National Security. Many countries have a strong national security
interest in obtaining real-time high-resolution imagery to help monitor borders,
gather intelligence on potential adversaries, identify and target enemy troops
and assets, plan missions, deploy resources and assess battle damage.
Commercially available high-resolution satellite imagery can provide friendly
foreign governments with real-time, high-resolution imagery for national
security enhancement on a routine, regional "time-share" basis. This type of
high-resolution imagery generally has not been available to governments other
than those of the United States and the former Soviet Union.
RISK MITIGATION
ORBIMAGE has adopted a comprehensive strategy to mitigate the financial,
business and technical risks associated with market development and satellite
construction, launch and operations.
Market Development. ORBIMAGE has reduced, and seeks to continue to reduce,
the financial risks associated with constructing and operating its fleet of
satellites by negotiating pre-launch contracts with customers and/or
distributors. Customers have entered into imagery contracts providing for
minimum payments to the Company totaling approximately $100 million, of which
the Company has received approximately $48 million to date. To further
facilitate market penetration, the Company is also seeking to develop strategic
alliances with VARs who currently provide imagery products to customers in
industries such as oil and gas exploration, mining, agriculture, forestry,
fishing and cartography.
Construction and Launch. ORBIMAGE has entered into a fixed-price contract
with Orbital to build and launch the high-resolution OrbView satellites, and to
construct the related ground system (the "Procurement Agreement"). The majority
of the imagery technology and the sub-system components to be used in the
high-resolution OrbView satellites been deployed in U.S. government surveillance
and space programs prior to use by ORBIMAGE. In addition, the high-resolution
OrbView satellites incorporate system redundancies for certain critical
components.
Operations. The OrbView-3 and OrbView-4 satellites have substantially
similar performance parameters, with OrbView-4 additionally having hyperspectral
imagery capability. The high-resolution OrbView satellites are expected to be
launched within a year of each other, thus reducing the business risk from
launch and operational failure and resulting in a more robust satellite system.
RELATIONSHIP WITH ORBITAL
Orbital currently owns approximately 58% of the outstanding capital stock
of the Company on a fully diluted basis assuming conversion of the Company's
outstanding Series A Convertible Preferred Stock (the "Series A Preferred
Stock") and exercise of the Warrants and outstanding options to purchase Common
Stock. To date, Orbital has contributed approximately $88 million in capital to
ORBIMAGE. Pursuant to the Procurement Agreement, the Company has agreed to pay
Orbital a fixed price of approximately $295 million for the design, development
and launch of OrbView-1 and the high-resolution OrbView satellites, the
OrbView-2 License (as defined), and the U.S. ground segment for all four OrbView
satellites. Orbital has granted the Company the exclusive worldwide license to
promote, market, sell and use OrbView-2 imagery (the "OrbView-2 License") and
has assigned to the Company all revenues received by Orbital pursuant to a
contract between Orbital and NASA. See "Certain Relationships and Related
Transactions."
Orbital is a space and information systems company that designs,
manufactures, operates and markets a broad range of space-related products and
services. Orbital is a leading provider of turn-key space systems,
4
<PAGE> 11
with a heritage of designing and building satellites and providing launch
services for various satellites operating today. All four OrbView satellites,
and the related ground systems, have been or will be designed and constructed by
Orbital. Orbital's Pegasus(R) launch vehicle has successfully launched OrbView-1
and OrbView-2 and is expected to also launch OrbView-3.
The Company's principal executive offices are located at 21700 Atlantic
Boulevard, Dulles, Virginia 20166. The Company's Internet address is
www.orbimage.com, and the Company's telephone number is (703) 406-5000.
SERIES A OFFERING
On February 25, 1998, the holders of the Series A Preferred Stock (the
"Series A Holders") exercised an option granted pursuant to a stock purchase
agreement dated May 7, 1997 by and among Orbital, the Company and the Series A
Holders, as amended (the "Stock Purchase Agreement"), to purchase an additional
$22.7 million of Series A Preferred Stock (the "Series A Offering"), which
represents the maximum number of shares of Series A Preferred Stock that Series
A Holders may purchase under the Stock Purchase Agreement. The Series A Offering
was consummated concurrently with the Units Offering. The Series A Offering
generated net proceeds of approximately $21 million.
THE UNITS OFFERING
On February 25, 1998, the Company consummated the Units Offering, pursuant
to which it sold 150,000 Units, each consisting of $1,000 principal amount of
Original Notes and one Warrant. Each Warrant, when exercised, will entitle the
holder thereof to purchase 8.75164 shares of Common Stock of the Company at an
exercise price of $.01 per share (the "Exercise Price"). The Exercise Price and
the number of Warrant Shares issuable on exercise of a Warrant are both subject
to anti-dilutive adjustments. The Warrants are exercisable at any time on or
after the earlier to occur of (i) the first anniversary of the date of issuance
and (ii) in the event a Change of Control occurs, the date the Company mails
notice thereof to holders of Notes and Warrants. Unless exercised, the Warrants
will automatically expire on March 1, 2005. The Warrants will entitle the
holders thereof to purchase in the aggregate approximately 3% of the outstanding
Common Stock of the Company on a fully-diluted basis as of the date of issuance
of the Warrants after giving effect to the exercise of certain outstanding
options and rights issued by the Company. The Original Notes and Warrants will
become separable no later than upon the commencement of the Exchange Offer.
The Company used approximately $32.9 million of the net proceeds from the
Units Offering to fund the purchase of the Pledged Securities, which will
provide funds sufficient to pay in full when due the first four scheduled
interest payments on the Notes. The Pledged Securities are pledged as security
for the repayment of principal of and interest on the Notes, Liquidated Damages,
if any, and all other obligations under the Indenture. See "Description of
Exchange Notes--Security." All remaining proceeds, including the net proceeds
from the Series A Offering, will be applied to (i) develop, construct, test,
launch and operate the high-resolution OrbView satellites, (ii) develop, upgrade
and construct the U.S. domestic ground system used in connection with
high-resolution OrbView satellites, (iii) market remote imagery products and
services and (iv) provide working capital.
The Units were sold by the Company on February 25, 1998 to Bear, Stearns &
Co. Inc., Merrill Lynch & Co. and NationsBanc Montgomery Securities LLC (the
"Initial Purchasers") pursuant to a Purchase Agreement dated February 20, 1998
(the "Purchase Agreement"). The Initial Purchasers subsequently resold the Units
to qualified institutional buyers pursuant to Rule 144A under the Securities Act
and pursuant to offers and sales that occurred outside the United States within
the meaning of Regulation S under the Securities Act. Pursuant to the Purchase
Agreement, the Company and the Initial Purchasers entered into the Registration
Rights Agreement dated February 25, 1998 (the "Registration Rights Agreement"),
which grants the holders of the Original Notes certain exchange and registration
rights. The
5
<PAGE> 12
Exchange Offer is intended to satisfy certain obligations of the Company under
the Registration Rights Agreement.
SOURCES AND USES OF FUNDING
The net proceeds to the Company from the Units Offering (after deducting
fees and expenses) were approximately $144.5 million. The Company used
approximately $32.9 million of such proceeds to fund the purchase of the Pledged
Securities. All remaining proceeds, including the net proceeds from the Series A
Offering, will be applied to (i) develop, construct, test, launch and operate
the high-resolution OrbView satellites, (ii) develop, upgrade and construct the
U.S. domestic ground system used in connection with the high-resolution OrbView
satellites, (iii) market remote imagery products and services and (iv) provide
working capital. See "Description of the Exchange Notes--Certain Covenants--Use
of Proceeds."
The table below summarizes the estimated sources and uses of funding for
the period from inception through June 30, 1999, by which date OrbView-3 is
expected to be launched.
SOURCES AND USES OF FUNDING
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
SOURCES OF FUNDING (AS OF JANUARY 31, 1998):
<S> <C>
Initial equity investments:
Orbital............................... $ 88
Series A Holders, net................. 34
Payments from customers (2)............. 48
----
Sources............................ 170
----
FUTURE SOURCES:
Series A Offering, net.................. 21
Net proceeds of the Units Offering...... 145
Advance payments from customers (2)..... 20
----
Future sources..................... 186
----
Total sources................. $356
====
</TABLE>
<TABLE>
<CAPTION>
USES OF FUNDING: (1)
<S> <C>
Satellites........................... $230
Ground systems....................... 28
Insurance............................ 10
Purchase of Pledged Securities....... 33
Cash used in and available for
operations (3)..................... 55
----
Total uses................. $356
====
</TABLE>
- ---------------
(1) Approximately $133 million has been expended as of December 31, 1997 for
satellites, ground systems and insurance. The Company's accumulated deficit
as of December 31, 1997 was approximately $24 million.
(2) Represent cash payments received pursuant to contracts or expected to be
received prior to delivery of imagery.
(3) The Company believes the above sources and cash expected to be generated
from operations will be sufficient to fund operating expenses through June
30, 1999, by which date OrbView-3 is expected to be launched. Approximately
$11 million has been used in operations through December 31, 1997 (excluding
payments from customers included in the above sources).
ORBIMAGE believes that the net proceeds of the Units Offering and the
Series A Offering, together with expected net cash from advance payments from
customers and operations, will be sufficient to fund the Company's operations
through at least June 30, 1999, by which date OrbView-3 is expected to be
launched. Additional funding may be necessary in the event of an OrbView-3
satellite launch delay, cost overruns or any shortfall in estimated levels of
operating cash flow, or to meet unanticipated expenses. See "Risk
Factors--Potential Additional Capital Requirements."
6
<PAGE> 13
THE EXCHANGE OFFER
SECURITIES OFFERED............ $150,000,000 aggregate principal; amount of
Series B 11 5/8% Senior Notes due 2005 (the
"Exchange Notes")
THE EXCHANGE OFFER............ The Company is offering to exchange up to $150
million principal amount of the Exchange Notes
for a like principal amount of the Original
Notes. The Exchange Notes may be exchanged only
in multiples of $1,000 principal amount. The
Company will issue the Exchange Notes on or
promptly after the Expiration Date. See "The
Exchange Offer."
Based on interpretations by the Staff set forth
in no-action letters issued to third parties,
the Company believes that the Exchange Notes
issued pursuant to the Exchange Offer in
exchange for the Original Notes may be offered
for resale, resold and otherwise transferred by
any holder thereof (other than any such holder
which is (i) an "affiliate" of the Company
within the meaning of Rule 405 under the
Securities Act, (ii) a broker-dealer who
acquired the Original Notes directly from the
Company or (iii) a broker-dealer who acquired
the Original Notes as a result of market making
or other trading activities) without compliance
with the registration and prospectus delivery
provisions of the Securities Act, provided that
such Exchange Notes are acquired in the
ordinary course of such holder's business and
such holder is not engaged in, and does not
intend to engage in, and has no arrangement or
understanding with any person to participate in
the distribution of such Exchange Notes. Each
broker-dealer that receives the Exchange Notes
for its own account pursuant to the Exchange
Offer must acknowledge that it will deliver a
prospectus in connection with any resale of
such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by
delivering a prospectus, a Participating
Broker-Dealer will not be deemed to admit that
it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may
be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer in
connection with resales of Exchange Notes
received in exchange for Original Notes where
such Original Notes were acquired by such
Participating Broker-Dealer as a result of
market-making activities or other trading
activities (other than a resale of an unsold
allotment from the original sale of Original
Notes). The Company has agreed that, for a
period of 180 days after the Exchange Offer
Registration Statement is declared effective,
it will make this Prospectus available to any
Participating Broker-Dealer for use in
connection with any such resale.
Any holder who tenders in the Exchange Offer
with the intention to participate, or for the
purpose of participating, in a distribution of
the Exchange Notes could not rely on the
position of the staff of the Commission
enunciated in no-action letters and, in the
absence of an exemption therefrom, must comply
with the registration and prospectus delivery
requirements of the Securities Act in
connection with any resale transaction. Failure
to comply with such requirements in such
instance may result in such holder incurring
7
<PAGE> 14
liability under the Securities Act for which
the holder is not indemnified by the Company.
See "Plan of Distribution."
To comply with the securities laws of certain
jurisdictions, it may be necessary to qualify
for sale or register the Exchange Notes prior
to offering or selling such Exchanges Notes. If
a holder of Original Notes does not exchange
such Original Notes for the Exchange Notes
pursuant to the Exchange Offer, such Original
Notes will continue to be subject to the
restrictions on transfer contained in the
legend thereon. In general, Original Notes may
not be offered or sold, unless registered under
the Securities Act, except pursuant to an
exception from, or in a transaction not subject
to the Securities Act and applicable state
securities laws. See "The Exchange
Offer--Consequences of Failure to Exchange" and
"Description of Exchange Notes."
EXPIRATION DATE............... The Exchange Offer will expire at 5:00 p.m.,
New York City time, on June , 1998, unless
extended in which case the term "Expiration
Date" shall mean the latest date and time to
which the Exchange Offer is so extended.
ACCRUED INTEREST ON THE
EXCHANGE NOTES AND THE
ORIGINAL NOTES.............. Each Exchange Note will bear interest from the
most recent date to which interest has been
paid or duly provided for on the Original Note
surrendered in exchange for such Exchange Note
or, if no interest has been paid or duly
provided for on such Original Note, from
February 25, 1998. Interest on the Exchange
Notes is payable semi-annually on each March 1
and September 1, commencing on September 1,
1998. Holders of Original Notes whose Original
Notes are accepted for exchange will not
receive accrued interest on such Original Notes
for any period from and after the last date to
which interest has been paid or duly provided
for on the Original Notes prior to the original
issue date of the Exchange Notes or, if no such
interest has been paid or duly provided for,
will not receive any accrued interest on such
Original Notes, and will be deemed to have
waived, the right to receive any interest on
such Original Notes accrued from and after
February 25, 1998.
CONDITIONS TO THE EXCHANGE
OFFER......................... The Exchange Offer is subject to certain
customary conditions, which may be waived by
the Company in whole or in part and from time
to time in its sole discretion. See "The
Exchange Offer--Conditions." The Exchange Offer
is not conditioned upon any minimum aggregate
principal amount of Original Notes being
tendered for exchange.
PROCEDURES FOR TENDERING THE
ORIGINAL NOTES................ Each holder of Original Notes wishing to accept
the Exchange Offer must complete, sign and date
the Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal,
or such facsimile, together with such Original
Notes and any other required documentation, to
the Exchange Agent at the address set forth
herein. By executing the Letter of Transmittal,
each holder of the Original Notes (other than
participating broker-dealers) will represent to
the Company that, among other
8
<PAGE> 15
things, the Exchange Notes acquired pursuant to
the Exchange Offer are being obtained in the
ordinary course of business of the person
receiving such Exchange Notes, whether or not
such person is the holder of the Original
Notes, that neither the holder of the Original
Notes nor any such other person has an
arrangement or understanding with any person to
participate in the distribution of such Notes
and that neither the holder nor any such person
is an "affiliate," as defined in Rule 405 under
the Securities Act of the Company. Any Original
Notes not accepted for exchange for any reason
will be returned without expense to the
tendering holder thereof as promptly as
practicable after the expiration or termination
of the Exchange Offer. See "The Exchange
Offer--Procedures for Tendering."
UNTENDERED OLD NOTES.......... Following the consummation of the Exchange
Offer, holders of Original Notes eligible to
participate but who do not tender their
Original Notes will not have any further
exchange rights and such Original Notes will
continue to be subject to certain restrictions
on transfer. Accordingly, the liquidity of the
market for such Original Notes could be
adversely affected.
SPECIAL PROCEDURES FOR
BENEFICIAL HOLDERS............ Any beneficial holder whose Original Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender should contact such
registered holder promptly and instruct such
registered holder to tender on its own behalf.
If such beneficial holder wishes to tender on
its owns behalf, such holder must, prior to
completing and executing the Letter of
Transmittal and delivering its Original Notes,
either make appropriate arrangements to
register ownership of the Original Notes in
such holder's name or obtain a properly
completed bond power from the record holder.
The transfer of registered ownership may take
considerable time and may not be able to be
completed prior to the Expiration Date. See
"The Exchange Offer--Procedures for Tendering."
SHELF REGISTRATION
STATEMENT..................... In the event that (i) the Exchange Offer is not
available to any holder or may not be
consummated because, in either case, it would
violate applicable securities laws or because
the applicable interpretations of the staff of
the Commission would not permit the Company to
effect the Exchange Offer, or (ii) in certain
circumstances the holder notifies the Company
that it is unable to participate in the
Exchange Offer or is unable to use this
Prospectus, the Company will cause to be filed
with the Commission, no later than 45 days
after such obligation arises, a shelf
registration statement (the "Shelf Registration
Statement"). The Company will use its best
efforts to cause the Shelf Registration
Statement to be declared effective on or before
the 150th day after such obligation arises. The
Company has agreed to maintain the
effectiveness of the Shelf Registration
Statement, under certain circumstances, for a
maximum of two years following the date of the
completion of the Units Offering.
GUARANTEED DELIVERY
PROCEDURES.................... Holders of the Original Notes who wish to
tender their Original Notes and whose Original
Notes are not immediately available or
9
<PAGE> 16
who cannot deliver their Original Notes and the
Letter of Transmittal or any other documents
required by the Letter of Transmittal to the
Exchange Agent prior to the Expiration Date,
must tender their Original Notes according to
the guaranteed delivery procedures set forth in
"The Exchange Offer--Guaranteed Delivery
Procedures."
WITHDRAWAL RIGHTS............. Tenders of Original Notes may be withdrawn at
any time prior to 5:00 p.m., New York City
time, on the Expiration Date. For a withdrawal
to be effective, a written or facsimile notice
of withdrawal must be received by the Exchange
Agent at its address set forth herein. Such
notice must (i) specify the name of the person
having tendered the Original Notes to be
withdrawn; (ii) identify the Original Notes to
be withdrawn (including the serial number or
numbers and principal amount of Original Notes
to be withdrawn); (iii) be signed by the holder
in the same manner as the original signature on
the Letter of Transmittal by which such
Original Notes were tendered; and (iv) specify
the name in which the Original Notes are to be
registered, if different from that of the
withdrawing holder. See "The Exchange
Offer--Withdrawal Rights."
ACCEPTANCE OF ORIGINAL NOTES
AND
DELIVERY OF EXCHANGE
NOTES....................... The Company will accept for exchange any and
all Original Notes which are properly tendered
in the Exchange Offer prior to 5:00 p.m., New
York City time, on the Expiration Date. The
Exchange Notes issued pursuant to the Exchange
Offer will be delivered promptly following the
Expiration Date. See the "The Exchange
Offer--Terms of the Exchange Offer."
CONSEQUENCES OF FAILURE
TO EXCHANGE................. Holders of Original Notes who do not exchange
their Original Notes for the Exchange Notes
pursuant to the Exchange Offer will continue to
be subject to the restrictions on transfer of
such Original Notes as set forth in the legend
thereon. In general, the Original Notes that
are not exchanged pursuant to the Exchange
Offer may not be offered or sold except
pursuant to a registration statement under
Securities Act or an exemption from
registration thereunder and in compliance with
applicable state securities laws. In the event
the Company completes the Exchange Offer, the
interest rate on Original Notes will remain as
stated thereon and holders of Original Notes
will have no further rights under the
Registration Rights Agreement.
CERTAIN TAX CONSIDERATIONS.... Latham & Watkins, counsel to the Company, has
advised the Company that because the Exchange
Notes should not be considered to differ
materially from the Original Notes, the
exchange of the Original Notes for Exchange
Notes should not result in any material federal
income tax consequences to holders exchanging
the Original Notes for the Exchange Notes. For
a full description of the basis of, and
limitations on, this opinion, see "Certain U.S.
Federal Income Tax Consequences."
REGISTRATION RIGHTS
AGREEMENT..................... Pursuant to a registration rights agreement
(the "Registration Rights Agreement") among the
Company and the Initial Purchas-
10
<PAGE> 17
ers, the Company has agreed (i) to file a
registration statement with respect to an offer
to exchange the Original Notes for a like
principal amount of Exchange Notes and (ii) to
use their reasonable best efforts to cause such
registration statement to become effective
under the Securities Act. This Exchange Offer
is intended to satisfy the rights of holders of
Original Notes under the Registration Rights
Agreement, which rights terminate upon
consummation of the Exchange Offer. The holders
of the Exchange Notes are not entitled to any
exchange or registration rights with respect to
the Exchange Notes.
EXCHANGE AGENT................ Marine Midland Bank is the Exchange Agent. The
address and telephone number of the Exchange
Agent are set forth in the "The Exchange
Offer--Exchange Agent."
USE OF PROCEEDS............... There will be no cash proceeds to the Company
from the exchange pursuant to the Exchange
Offer.
11
<PAGE> 18
THE EXCHANGE NOTES
The form and terms of the Exchange Notes are the same as the form and terms
of the Original Notes (which they replace) except that (i) the Exchange Notes
bear a Series B designation, (ii) the Exchange Notes have been registered under
the Securities Act and, therefore, will not bear legends restricting the
transfer thereof, and (iii) the holders of Exchange Notes will not be entitled
to certain rights under the Registration Rights Agreement, including the
provisions providing for an increase in the interest rate on the Original Notes
in certain circumstances relating to the timing of the Exchange Offer, which
rights will terminate when the Exchange Offer is consummated. See "The Exchange
Offer--Purpose and Effect of the Exchange Offer." The Exchange Notes will
evidence the same debt as the Original Notes and will be entitled to the
benefits of the Indenture. See "Description of Exchange Notes." The Warrants
issued in connection with the issuance of the Original Notes are not subject to
the Exchange Offer and will continue to be subject to the restrictions on
transfer set forth therein.
ISSUER........................ Orbital Imaging Corporation
MATURITY...................... March 1, 2005.
INTEREST...................... Interest on the Exchange Notes will accrue at
the rate of 11 5/8% per annum, payable
semi-annually in arrears on March 1 and
September 1 of each year, commencing on
September 1, 1998.
RANKING....................... The Exchange Notes will be senior obligations
of the Company, will rank pari passu in right
of payment with all existing and future senior
Indebtedness (as defined) of the Company and
will rank senior in right of payment to any
future subordinated Indebtedness of the
Company. As of December 31, 1997, after giving
pro forma effect to the Unit Offering and the
application of the net proceeds therefrom, the
total amount of senior Indebtedness (including
current liabilities) of the Company would have
been $163 million ($154 million net of debt
discount).
SECURITY...................... The Company used approximately $32.9 million of
the net proceeds thereof to purchase the
Pledged Securities, representing funds
sufficient to provide for payment in full of
the first four scheduled interest payments on
the Notes. The Pledged Securities are pledged
as security for repayment of the principal of
and interest on the Notes. See "Description of
Exchange Notes--Security." When an interest
payment is due, the Company may either deposit
sufficient funds to pay the interest scheduled
to be paid or direct the Trustee to release
from the Pledge Account (as defined herein)
funds sufficient to pay the interest scheduled.
In the event the Company exercises the former
option, the Pledge Agreement provides the
Company may direct the Trustee to release
proceeds or the Pledged Securities from the
Pledge Account in a like amount. If the Company
makes the first four scheduled interest
payments on the Notes in a timely manner and no
Default (as defined herein) or Event of Default
(as defined herein) is then continuing, the
remaining Pledged Securities, if any, will be
released from the Pledge Account and the Notes
will thereafter be unsecured obligations of the
Company. See "Description of Exchange
Notes--Security."
OPTIONAL REDEMPTION........... The Exchange Notes are not redeemable prior to
March 1, 2002. Thereafter, the Exchange Notes
will be redeemable at the option of the
Company, at the redemption prices set forth
herein plus
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<PAGE> 19
accrued and unpaid interest and Liquidated
Damages (as defined), if any, thereon to the
applicable redemption date. See "Description of
Exchange Notes--Optional Redemption."
Prior to March 1, 2001, the Company may, on any
one or more occasions, redeem outstanding
Exchange Notes with the net cash proceeds of
one or more sales of Capital Stock (as defined)
(other than Disqualified Stock (as defined)) of
the Company to one or more Persons (but only to
the extent the proceeds of such sales of
Capital Stock consist of cash or Cash
Equivalents (as defined)) at a redemption price
equal to 111.625% of the principal amount
thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the
redemption date; provided, however, that: (i)
not less than 65% of the aggregate principal
amount of the Notes remains outstanding
immediately after any such redemption and (ii)
such redemption shall occur within 60 days
after the date of closing of such sale of
Capital Stock.
MANDATORY REDEMPTION.......... The Company will not be required to make
mandatory redemption or sinking fund payments
with respect to the Exchange Notes.
CHANGE OF CONTROL............. Upon the occurrence of a Change of Control (as
defined), each holder of Exchange Notes will
have the right to require the Company to
purchase all or any part of such holder's
Exchange Notes at an offer price in cash equal
to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date
of purchase. See "Description of Exchange
Notes--Repurchase at the Option of Holders."
CERTAIN COVENANTS............. The Indenture contains certain covenants that
limit the ability of the Company and its
Restricted Subsidiaries (as defined) to incur
additional Indebtedness, pay dividends or make
other distributions, repurchase Equity
Interests (as defined) or subordinated
Indebtedness, make certain other Restricted
Payments (as defined), create certain liens,
enter into certain transactions with
affiliates, sell assets, enter into Sale and
Leaseback Transactions (as defined), issue or
sell Equity Interests of the Company's
Restricted Subsidiaries, enter into any
business not related to the remote imaging
industry or enter into certain mergers and
consolidations. The Indenture also requires the
Company to obtain launch vehicle and in-orbit
insurance under certain circumstances. See
"Description of Exchange Notes--Certain
Covenants."
RISK FACTORS
For a discussion of certain risk factors that should be considered by
holders of Original Notes in evaluating a tender of Original Notes for Exchange
Notes pursuant to the Exchange Offer, see "Risk Factors."
13
<PAGE> 20
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1993 1994 1995 (1) 1996 1997 (2)
------- ------- -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues....................................... $ -- $ -- $ 4,567 $ 1,055 $ 2,062
Direct costs................................... -- 800 7,998 4,320 6,312
Selling, general and administrative expenses... 1,702 3,156 2,371 1,630 2,844
------- ------- ------- ------- -------
Loss from operations........................... $(1,702) $(3,956) $(5,802) $(4,895) $(7,094)
======= ======= ======= ======= =======
OTHER DATA:
Capital expenditures........................... $13,749 $13,832 $18,989 $12,617 $49,029
EBITDA (3)..................................... (1,702) (3,157) 1,975 (914) (1,558)
Ratio of earnings (losses) to fixed charges.... -- -- -- -- --
Deficiency of earnings (losses) to fixed
charges...................................... 1,710 3,965 5,811 4,927 7,211
Pro forma deficiency of earnings (losses) to
fixed charges (4)............................ -- -- -- -- 26,603
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
--------------------------
ACTUAL AS ADJUSTED (5)
------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments........... $22,220 $154,820
Pledged Securities.......................................... -- 32,900
Property, equipment and satellites and related rights,
net....................................................... 115,280 115,280
Total assets................................................ 137,750 308,750
Notes....................................................... -- 141,000(6)
Series A Preferred Stock (7)................................ 33,547 54,547
Stockholders' equity........................................ 85,361 115,361(6)
</TABLE>
- ------------------------------
(1) The OrbView-1 satellite was launched in April 1995.
(2) The OrbView-2 satellite was launched in August 1997.
(3) EBITDA consists of earnings (losses) before interest, income taxes,
depreciation, amortization and other non-cash charges. While EBITDA is not
an alternative to operating income as an indicator of operating performance
or an alternative to cash flows from operating activities as a measure of
liquidity, management believes that EBITDA is a measure commonly used to
analyze and compare companies on the basis of operating performance,
leverage and liquidity. EBITDA as defined herein may not conform to the
definition of Consolidated Cash Flow as defined in the Indenture. See
"Description of Notes--Certain Definitions--Consolidated Cash Flow."
(4) Pro forma deficiency of earnings (losses) to fixed charges is calculated
based upon the annual interest rate on the Notes plus the amortization of
deferred financing fees and the debt discount as of the beginning of the
period.
(5) Gives effect to the Offering and the Series A Offering and the application
of the estimated net proceeds therefrom as described under "Use of
Proceeds." See "Use of Proceeds" and "Capitalization."
(6) The estimated value of the Warrants, $9 million, is reflected as both a debt
discount and an element of additional paid-in capital.
(7) Represents stated value of $100 per share of Series A Preferred Stock less
applicable fees and expenses.
14
<PAGE> 21
RISK FACTORS
Holders of Original Notes should carefully consider the following matters,
in addition to the other information contained in this Prospectus, in evaluating
the Company and its business in connection with the Exchange Offer.
LIMITED OPERATING HISTORY; NET LOSSES
Limited Operating and Financial Data. Holders of Original Notes have
limited operating and financial data about ORBIMAGE on which to base an
evaluation of the Company's performance in connection with tendering Original
Notes for Exchange Notes in this Exchange Offer. ORBIMAGE did not commence
commercial service until 1995 with the launch of OrbView-1. To date, the Company
has generated only limited revenues from the operations of OrbView-1 and
OrbView-2. To execute the Company's business plan, the Company will have to
complete, in a timely manner, the construction and deployment of the high-
resolution OrbView satellites, successfully develop and implement the related
ground infrastructure network, develop a customer base for the Company's
products and services, and establish distribution channels. Results of
operations may vary from quarter to quarter and year to year. Given ORBIMAGE's
limited operating history and in light of the risks, expenses, difficulties and
delays encountered with a high technology, highly regulated business such as
ORBIMAGE's, there can be no assurance that the Company will be able to overcome
these barriers, develop a sufficiently large revenue-generating customer base to
service its indebtedness, or compete successfully in the remote imaging
industry.
Expectation of Continued Losses. The continued development of ORBIMAGE's
business will require significant capital expenditures, a substantial portion of
which will be incurred prior to the realization of significant revenues.
Together with the Company's operating expenses, these capital expenditures will
result in a negative cash flow until an adequate revenue-generating customer
base is established. ORBIMAGE has incurred cumulative losses of approximately
$23.7 million through December 31, 1997 and it expects such losses to continue
for the foreseeable future. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The Company does not expect to
generate net positive cash flow from operations until OrbView-3 is operational,
currently expected in the second half of 1999. There can be no assurance that
OrbView-3 will become operational on this timetable, or at all, or that the
Company will achieve or sustain any positive cash flow or profitability
thereafter. See "Business."
SUBSTANTIAL LEVERAGE; RESTRICTIVE COVENANTS
As of December 31, 1997, on a pro forma basis after giving effect to the
Units Offering and the Series A Offering, the Company's total indebtedness would
have been $150 million ($141 million net of debt discount), consisting entirely
of the Original Notes, and its stockholders' equity would have totaled
approximately $115.4 million. On a pro forma basis after giving effect to the
Units Offering, the Company's deficiency of earnings before fixed charges to
cover fixed charges for the year ended December 31, 1997 would have been $26.6
million. The Company anticipates earnings will be insufficient to cover fixed
charges through at least June 30, 1999. The Indenture will permit the Company to
incur additional indebtedness under certain limited conditions, and the Company
expects that it may incur indebtedness, in addition to the Notes, such as one or
more fixed asset financings, to the extent it is permitted to do so under the
Indenture. Such fixed asset financing, if pursued, will be secured by first
priority security interests in certain of the Company's assets. Accordingly, the
lenders of such fixed asset financing, if pursued, will have a claim on these
assets prior to the claims of the holders of the Exchange Notes.
The successful implementation of the Company's strategy, among other
things, is necessary for the Company to be able to meet its debt service. The
Company currently has limited sources of revenue. In addition, the Company's
ability to satisfy its obligations after the OrbView-3 satellite is operational
will depend on the Company's future performance, which is subject to a number of
factors, many of which are beyond the Company's control. There can be no
assurance that OrbView-1 and OrbView-2 will continue to operate for their design
lives, or that both of the high-resolution OrbView satellites will be
successfully deployed and become fully operational or that, once the
high-resolution OrbView satellites are operational,
15
<PAGE> 22
ORBIMAGE will generate sufficient cash flow from operating activities to meet
its debt service and working capital requirements. In the absence of such
operating results, the Company could face substantial constraints on its
liquidity and may be required to seek additional financing through the issuance
of debt or equity securities. There can be no assurance the Company would be
successful in completing such financing. See "Management's Discussion and
Analysis of Financial Condition and Results of Operation--Liquidity and Capital
Resources." Any failure of the OrbView-2 satellite, or any failure or delay in
deployment of the high-resolution OrbView satellites could have a material
adverse effect upon the Company's business, results of operations and financial
condition, including failure to meet its debt service requirements.
The Company's degree of leverage could have adverse consequences to the
holders of the Exchange Notes, including: (i) a substantial portion of the
Company's net cash provided by operations will be committed to the payment of
the Company's debt service requirements and will not be available to the Company
for its operations, capital expenditures, or other purposes; (ii) the Company's
ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions or general corporate purposes may be limited;
and (iii) the Company may be placed at a competitive disadvantage and its
flexibility in reacting to changes in its business may be limited. See
"Description of Exchange Notes."
The Indenture contains, and any additional financing agreements may
contain, certain restrictive covenants. The restrictions in the Indenture will
affect, and in some cases will significantly limit or prohibit, among other
things, the ability of the Company to incur indebtedness, make prepayments of
certain indebtedness, pay cash dividends, make investments, engage in
transactions with affiliates, issue capital stock of subsidiaries, create liens,
sell assets and engage in mergers and consolidations. If the Company fails to
comply with the restrictive covenants in the Indenture, the Company's obligation
to perform its obligations under the Indenture may be accelerated.
POTENTIAL ADDITIONAL CAPITAL REQUIREMENTS
The Company currently expects to require approximately $279.1 million for
capital expenditures, development and initial operating costs of ORBIMAGE's
satellite system through June 30, 1999, by which date OrbView-3 is expected to
be launched. Through December 31, 1997, ORBIMAGE has expended approximately $133
million for the design, construction, deployment and/or procurement of the
OrbView satellites, and portions of the U.S. ground system. To finance such
expenditures, the Company has obtained approximately $125 million in equity
contributions from Orbital and third party investors and approximately $48
million in imagery contract payments. Furthermore, the Company received
approximately $21 million in net proceeds from the Series A Offering. See
"Certain Relationships and Related Transactions--Stock Purchase Agreement," and
"Use of Proceeds." The Company believes that the net proceeds of the Units
Offering and the Series A Offering, together with expected cash from operations,
will be sufficient to fund the Company's operations through June 30, 1999, by
which date OrbView-3 is expected to be launched. There can be no assurance that
the Company will generate sufficient cash from operations, or that expenses will
not exceed the Company's estimates. In such event, the Company will require
additional capital.
A significant portion of the Company's expenses will be incurred pursuant
to the Procurement Agreement covering development, construction and launch of
the OrbView satellites and construction and activation of its U.S. ground
system. While most of ORBIMAGE's costs under the Procurement Agreement will be
fixed, certain items and services, such as launch and in-orbit insurance, launch
service costs for OrbView-4 in excess of approximately $23 million, OrbView-4's
hyperspectral sensor and related work, and ORBIMAGE-directed technological
assistance and regulatory support will be furnished by Orbital to ORBIMAGE on a
cost-plus or cost-reimbursable basis. Many factors outside the control of
ORBIMAGE may influence the costs of such items and services and the Company may
be required to raise additional capital if any material increase in costs should
occur.
Furthermore, additional capital may be required if, for example: (i) there
are significant delays in the deployment of the high-resolution OrbView
satellites, as a result of technical difficulties, launch or satellite failure
or otherwise; (ii) the Company does not enter into agreements with customers,
VARs or distributors for high-resolution imagery at the times or on the terms
anticipated by ORBIMAGE, if at all; (iii) there is an
16
<PAGE> 23
increase in the Company's estimated net operating deficit as a result of the
Company incurring significant unanticipated expenses, such as costs related to
resolving satellite operational difficulties; or (iv) the Company incurs
additional costs as a result of modifications to all or a portion of the
high-resolution OrbView satellites or ground segment designs to meet changed or
unanticipated market, regulatory or technical requirements. In the event that
these or other events occur, there can be no assurance that additional capital
would be available from public or private markets on favorable terms, on a
timely basis, or at all. A substantial shortfall in funding would delay or
prevent construction and launch of the high-resolution OrbView satellites.
SCHEDULE DELAYS
Delay in the timely construction, deployment and commercial operation of
either of the high-resolution OrbView satellites could result from a variety of
causes, including delays in the design, construction, integration and testing of
any of the satellites and related ground systems, a delayed or unsuccessful
launch, subcontractor or manufacturer delays, delays caused by technical reviews
and redesign and testing activities in the event of failures during testing or a
loss of a satellite, delays in the receipt of licenses necessary to operate the
satellite system, or other events beyond the control of ORBIMAGE. The sensors
for the high-resolution OrbView satellites, which are key components of the
satellites, are being designed and constructed by a subcontractor. The Company
previously encountered significant delays in the design, production and testing
of the OrbView-2 satellite that was launched in August 1997. Significant delays
in the launch of either of the high-resolution OrbView satellites could increase
the costs of such satellites, delay the generation of revenue and have a
material adverse effect on the Company's results of operations. There can be no
assurance that either of the high-resolution OrbView satellites will be launched
and placed into operation on a timely basis.
Competitive posture in the satellite-based imaging industry may be affected
by perceived and actual timing of satellite launches. Significant delays, or the
perception of anticipated or potential delays, in the deployment of either of
the high-resolution OrbView satellites could increase the costs of such
satellites, delay the generation of revenue or have a material adverse effect on
the Company's business, financial condition and results of operations and its
ability to meet its debt service requirements.
LAUNCH RISKS
Satellite launches are subject to significant risks, including partial or
complete failure of the launch vehicle, which may result in disabling damage to
or loss of a satellite or failure of the launch vehicle to deliver the satellite
to its proper orbit. The Company has contracted with Orbital to launch the
high-resolution OrbView satellites. Orbital intends to launch OrbView-3 on a
Pegasus(R) launch vehicle. Orbital's Pegasus launch vehicle has experienced
launch failures from time to time, and has an approximately 90% launch success
rate. There are a number of additional Pegasus launches currently planned prior
to the launch of OrbView-3, and the failure of any one of these launch vehicles
could result in a delay in the deployment of OrbView-3. Orbital's Pegasus launch
vehicle is launched from beneath a modified Lockheed L-1011 aircraft owned by
Orbital. In the event the Orbital aircraft is unavailable for any reason, the
Company could experience significant delays as a result of Orbital having to
acquire and modify a new carrier aircraft or the Company having to arrange for
deployment of OrbView-3 using an alternative launch vehicle. There can be no
assurance that another aircraft could be obtained and properly modified or that
alternate launch services could be obtained on a timely basis, if at all.
Orbital is currently reviewing launch vehicle alternatives for OrbView-4.
Possible launch vehicles for OrbView-4 include Orbital's Taurus(R) launch
vehicle (which has had two missions, both of which were successful), other
similar class launch vehicles, or on larger launch vehicles such as the Delta or
Ariane rocket, on which OrbView-4 would be a secondary payload. There can be no
assurance that the high-resolution OrbView satellites will be successfully
deployed in a timely manner or that a launch failure will not occur. Any such
delay or occurrence of a launch failure could have a material adverse effect on
the Company's business, financial condition and results of operations and its
ability to meet its debt service requirements.
17
<PAGE> 24
MARKET ACCEPTANCE; ESTIMATES
The success of the OrbView satellites and the Company's ability to meet its
debt service requirements on the Notes will depend on acceptance of its imagery
products and services in existing markets as well as the development of new
markets. Market acceptance in turn depends upon a number of factors, including
the spatial and spectral quality, scope, timeliness, sophistication and price of
the Company's imagery products and services and of alternative products and
services. There can be no assurance that the products and services to be offered
by ORBIMAGE will achieve market acceptance, or that the market will demand such
products and services from ORBIMAGE at prices and on terms acceptable to
ORBIMAGE.
The Company's strategy to target certain markets for its satellite imagery
products is based on a number of assumptions, some or all of which may be
incorrect, and unanticipated events may occur that could adversely affect the
Company's market results. The Company's description of potential markets for its
products and services and estimates of the Company's addressable markets that
are discussed in this Prospectus represent the Company's estimates as of the
date hereof with respect to such markets. In particular, the Company is
anticipating significant revenues from sales of imagery generated by the
OrbView-2 and the high-resolution OrbView satellites. Satellite imagery with
spatial and spectral characteristics generated by the OrbView-2 satellite, and
to be generated by the high-resolution OrbView satellites, is not now
commercially available. Consequently, it is difficult to predict accurately the
ultimate size of the market and the demand for these services and products, and
actual markets should be expected to vary from the addressable markets discussed
herein, and these variations may be material. Lack of significant market
acceptance, delays in such acceptance, or failure of certain markets to develop
could also have a material adverse effect on the Company's business, financial
condition and results of operations and its ability to meet its debt service
requirements.
TECHNOLOGICAL, DEVELOPMENT AND IMPLEMENTATION RISKS
ORBIMAGE is in the process of completing the design of the high-resolution
OrbView satellites; however, there can be no assurance that the design of the
satellites will not require modifications to achieve desired performance
criteria. The high-resolution OrbView satellites will employ advanced
technologies and sensors that will be subjected to severe environmental stresses
during launch or in space that could affect the satellite's performance.
Sometimes, human operators may also execute an improper command that may
negatively impact a satellite's performance. Employing these technologies is
further complicated by the fact that the OrbView satellites will be in space.
Correcting problems related to hardware components in space may require
premature satellite replacement, with attendant costs and revenue losses.
EarthWatch Incorporated's ("EarthWatch") three-meter remote imagery satellite
bus (not including the sensor or systems-level assembly, integration and test)
was designed and constructed by CTA Incorporated ("CTA") pursuant to a contract
awarded to CTA in 1995. Orbital acquired CTA's satellite manufacturing business
in August 1997. The EarthWatch satellite was launched in December 1997 but is
not currently operational.
There can be no assurance that the high-resolution OrbView satellites will
be successfully launched or operated, or that each of the OrbView satellites
will perform or remain in operation for the duration of its expected "design
life." Furthermore, even if the high-resolution OrbView satellites are
successfully launched, minor flaws in the satellites' sensors could
significantly degrade the satellites' performance and affect ORBIMAGE's ability
to successfully market its products.
The Company has not procured a spare satellite for OrbView-2, nor does it
maintain an inventory of long lead-time parts for a replacement OrbView-2
satellite. In the event of an OrbView-2 satellite failure, if the Company were
to decide to construct and launch a replacement, ORBIMAGE would likely
experience a delay of at least 24 months or more before it would be able to
launch the replacement satellite.
The Company also has not procured a spare high-resolution OrbView
satellite, nor does it currently maintain an inventory of long lead-time parts
for the high-resolution OrbView satellites. If there is a failure in
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<PAGE> 25
an OrbView-3 satellite subsystem that is common to the OrbView-4 satellite
(e.g., the sensor), such failure may result in a delay of the OrbView-4 launch.
LIMITED LIFE OF SATELLITES
The OrbView satellites, which constitute a substantial portion of the
Company's total assets, will have a limited useful life. A number of factors
will affect the useful lives of the OrbView satellites, including the quality of
construction, the expected gradual environmental degradation of solar panels,
the durability of various satellite components and the orbit in which the
satellite is placed. Random failure of satellite components could result in
damage to or loss of a satellite. In rare cases, satellites could also be
damaged or destroyed by electrostatic storms or collisions with other objects.
The high-resolution OrbView satellites each have an expected "design life"
of five years, OrbView-1 has an expected "design life" of three years, and
OrbView-2 has an expected "design life" of seven and one-half years. At the end
of its "design life", the performance of each OrbView satellite is expected to
gradually decline. The "design life" of a satellite results from a complex
calculation involving among other factors, estimated probabilities of failure of
the constituent components of the satellite from design or manufacture defects,
environmental stresses or other causes. There can be no assurance of the
longevity of any of the OrbView satellites. A useful life of the OrbView
satellites that is significantly shorter than the design life of the satellites
would have a material adverse effect on the Company's business, financial
condition, and results of operations and its ability to meet its debt service
requirements.
The Company anticipates using funds generated from operations to develop
follow-on high-resolution satellites. If sufficient funds from operations are
not available and ORBIMAGE is unable to obtain financing for additional
satellites, ORBIMAGE will not be able to deploy follow-on satellites to replace
OrbView-3 and OrbView-4 at the end of their useful lives. There can be no
assurance that additional capital will be available to develop follow-on
high-resolution OrbView satellites on favorable terms or on a timely basis, if
at all. Additionally, there can be no assurance that ORBIMAGE will be able to
contract with Orbital or any other company to design, construct or launch a
follow-on high-resolution satellite.
COMPETITION
The Company's products and services will compete with satellite and
aircraft-based imagery and other related products and services offered by a
range of private and government providers that have the technical and financial
ability to compete in these markets and applications. Certain of these entities
have greater financial, personnel and other resources than the Company.
Potential competitors include at least two companies, Space Imaging EOSAT
("Space Imaging EOSAT") and EarthWatch, each of which intends to offer satellite
imagery comparable to the imagery that the high-resolution OrbView satellites
are designed to provide. Space Imaging EOSAT has announced that it expects to
launch its first one-meter satellite in mid-1998 and EarthWatch has announced
that the launch of its one-meter satellite is targeted for late 1999. In
addition, the U.S. government and foreign governments may fund the development,
construction, launch and operation of remote imaging satellites that may compete
with OrbView-2 as well as the high-resolution OrbView satellites. The U.S.
government's Earth Science Program includes the launch of a satellite next year
that will provide imagery similar to imagery provided by OrbView-2 that could be
competitive with some of the Company's imagery products and services. In
addition, the U.S. government will probably continue to rely on government-owned
and operated systems for certain highly classified satellite-based
high-resolution imagery. While the Company believes that it generally will have
a competitive advantage because it expects to have sufficient pricing
flexibility to be a low-cost commercial provider within its targeted markets and
applications, the low marginal cost of producing satellite imagery once a
satellite is operating could result in adverse pricing pressure, reductions in
anticipated profits or even losses. The Company's competitors or potential
competitors who may have greater resources than the Company could in the future
offer satellite-based imagery, or other products, having technical
characteristics or other features that could be more attractive than those of
the Company's products. Such new technologies, even if not ultimately
successful, could have a material adverse effect on OrbView's marketing efforts,
and its business could be adversely affected if competitors develop and launch
satellites with advanced capabilities and technologies compared to
19
<PAGE> 26
the OrbView high-resolution satellites. See "Risk Factors--Potential Conflict of
Interest" and "Business--Competition."
LIMITED INSURANCE; AVAILABILITY
The Company will generally be required under the Indenture to obtain
launch, in-orbit checkout and in-orbit operations insurance for risks related to
the launch and operations of the high-resolution OrbView satellites. The Company
has included estimates that it believes to be reasonable for certain of the
premiums for insurance for the high-resolution OrbView satellites in its
projected capital requirements. However, the Company has not yet determined the
amounts and types of coverage that it will obtain. Insurance market conditions
or other factors outside the Company's control at the time the Company seeks to
procure such insurance, such as failure of a satellite using similar components
or a similar launch vehicle, could cause premiums to be significantly higher
than current estimates, could cause other terms to be significantly less
favorable than those currently available, may result in limits on amounts of
coverage that are obtainable or may result in such insurance not being available
at all. In addition, certain risks, such as partial degradation of functionality
of the satellite, may be difficult to insure. The OrbView-1 satellite is not
insured. The Company has procured in-orbit insurance for OrbView-2 to cover
losses up to $12 million for its first year of operations, and which policy is
renewable in the second and third year of operations to cover losses of $10
million and $8 million, respectively. There can be no assurance that launch or
satellite failures will not occur and that insurance will be available to the
Company in the future or, if available, at a cost or on terms acceptable to the
Company. There can be no assurance that proceeds from insurance will be
sufficient to provide for a new satellite due to cost increases and other
factors beyond the Company's control.
DEPENDENCE ON ORBITAL; LIMITED RECOURSE
The Company depends on Orbital to design, develop and launch the
high-resolution OrbView satellites and to construct the U.S. ground segment for
the high-resolution OrbView satellites, and does not intend to acquire, except
by contracting with other parties, the ability to design, construct or launch
the OrbView satellites or to modify its existing ground segment to accommodate
these imagery satellites. The Company also relies upon the OrbView-2 License
from Orbital to market the OrbView-2 imagery. Under the Procurement Agreement
the Company has contracted with Orbital, and Orbital has contracted with certain
subcontractors, to provide these services. In the event that Orbital fails to
perform adequately its obligations under the Procurement Agreement, the
deployment of the high-resolution OrbView satellites would be delayed until the
Company located an alternative provider of necessary services to replace
Orbital. Orbital's liability to ORBIMAGE under the Procurement Agreement is
limited to $10 million. Pursuant to the Services Agreement, Orbital has agreed
to provide various administrative and operational functions on a cost
reimbursable or cost-plus fee basis. These functions include on-orbit mission
operations and anomaly resolution for the four OrbView satellites. In the event
Orbital fails to perform certain of its obligations under the Services
Agreement, the operation of the OrbView satellites may be adversely affected.
The Services Agreement terminates for each OrbView satellite three years after
the respective launch of each such satellite. There can be no assurance that the
Services Agreement will be renewed on terms favorable to ORBIMAGE if at all. In
addition, a material adverse change in Orbital or its financial condition or
that of one of its subcontractors could adversely affect Orbital's ability to
perform under the Procurement Agreement or the Services Agreement. The Company
has not identified any alternate providers, and there can be no assurance that
such alternate provider would be available or, if available, would be available
at a cost or on terms favorable to the Company or Orbital.
REGULATION; SIGNIFICANT REMAINING REGULATORY APPROVALS
Domestic. ORBIMAGE's business requires licenses from the DoC and from the
FCC. The Company currently has a license from the DoC to operate two
high-resolution satellites (the "DoC License"), and Orbital holds a license from
the DoC to operate OrbView-2. Each of these DoC licenses expires in 2004; there
can be no assurance that such licenses will be renewed. In March 1998, Orbital
filed an application with the DoC to transfer the OrbView-2 DoC license to
ORBIMAGE. Under the provisions of the DoC licenses, the
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<PAGE> 27
U.S. government reserves the right to interrupt service during periods of
national emergency when U.S. national security interests are affected. The
threat or implementation of such interruptions of service could adversely affect
ORBIMAGE's ability to market its products to certain foreign distributors or
end-user customers. In addition, the DoC has the right to review and approve the
terms of agreements with ORBIMAGE's international customers and any such review
might result in a delay in or the prohibition of the execution of such
agreements. ORBIMAGE could in the future be subjected to new laws, policies or
regulations, or changes in the interpretation or application of existing laws,
policies and regulations, that modify the present regulatory environment in the
United States. In November 1997, the DoC issued a notice of proposed rulemaking
regarding regulations governing the licensing and operation of remote imaging
satellite systems clarifying among other things, DoC oversight regarding foreign
imagery sales agreements and certain limitations on company financings. There
can be no assurances that limitations applicable to other countries will not be
imposed by U.S. regulators, and any such limitations could adversely affect the
Company's operations. See "Regulation."
ORBIMAGE has filed an application with the DoC to amend the DoC License to
permit it to distribute OrbView-4 hyperspectral imagery on a commercial basis.
Failure to gain approval of such amendment or loss of the DoC License could have
a material adverse effect on the Company's ability to market hyperspectral
imagery to non-U.S. government customers.
A FCC license is required to operate each of the OrbView satellites (other
than OrbView-1). The Company currently operates OrbView-2 under an experimental
FCC license held by Orbital. This license expires in 1999 and the Company
expects that Orbital will file an application with the FCC to renew this license
prior to that date. There can be no assurances, however, that the FCC will grant
a renewal to this license. The failure to obtain a renewal to this license, or a
revocation of this license, would have a material adverse effect on the
Company's ability to operate the OrbView-2 satellite in the United States.
ORBIMAGE has filed an application with the FCC to receive a license to launch
and operate the high-resolution OrbView satellites (the "FCC License"). The
Company cannot operate or launch the high-resolution OrbView satellites without
the FCC License. Although historically the FCC has granted licenses to systems
that conform to the technical, legal and financial requirements for such systems
as set forth by the FCC, there can be no assurance that the FCC will grant to
ORBIMAGE a license to operate either of or both the high-resolution OrbView
satellites. Certain U.S. competitors of the Company, EarthWatch and Space
Imaging EOSAT, each have obtained the required DoC and FCC licenses. See
"Regulation."
International. All satellite systems operating internationally are subject
to general international regulations and the specific laws of the countries in
which satellite imagery is downlinked. Applicable regulations include (i)
International Telecommunications Union ("ITU") regulations, which define, for
each service, the technical operating parameters (including maximum transmitter
power, maximum interference to other services and users, and the minimum
interference the user must operate under for that service), (ii) the Intelsat
and Inmarsat agreements which provide that in order to conform with
international treaties and obligations the operators of international satellite
systems must demonstrate that they will not cause economic or technical harm to
Intelsat and Inmarsat, and (iii) regulations of foreign countries that require
that satellite operators secure appropriate licenses and operational authority
for utilization of the required spectrum in each country. Obtaining local
regulatory approval for operation of the OrbView-2 and high-resolution OrbView
satellites will be the responsibility of the Company's customers or
distributors. While regional foreign distributors will be selected, in part,
based on their perceived qualifications to obtain the requisite local approvals,
there can be no assurance that they will be successful in doing so, and if they
are not successful, remote imagery service will not be made available for real
time distribution in such territories. ORBIMAGE's inability to offer service in
a significant number of foreign countries could have a material adverse effect
on ORBIMAGE's business. Regulatory provisions in countries in which the Company
or its foreign regional distributors are seeking to operate may impose
restrictions on the Company's or its foreign regional distributors' operations
and there can be no assurance that such restrictions would not be unduly
burdensome. The Company's business may also be adversely affected by regulatory
changes resulting from adoption of treaties, legislation or regulation by the
national authorities where ORBIMAGE plans to operate.
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<PAGE> 28
Although the Company believes that it will be able to obtain all
international licenses and authorizations necessary to operate effectively,
there can be no assurance that it will be successful in doing so. The failure of
the Company to obtain some or all necessary licenses or approvals could have a
material adverse effect on the Company's business.
Launch License. Commercial U.S. space launches require licenses from the
U.S. Department of Transportation ("DoT"). Under the Procurement Agreement,
Orbital is responsible for ensuring that the appropriate DoT commercial launch
license is in place for the high-resolution OrbView satellite launches. There
can be no assurance that Orbital will continue to be successful in its efforts
to obtain necessary licenses or regulatory approvals. The inability of Orbital
to secure any necessary licenses or approvals for the launch of high-resolution
OrbView satellites could delay such launches, which could have a material
adverse effect on the Company's business, financial condition and results of
operation and its ability to meet its debt service requirements.
MANAGEMENT OF GROWTH
The Company may experience periods of rapid growth. Such growth could place
a significant strain on the Company's management, operating, financial and other
resources. The Company's future performance will depend, in part, upon its
ability to manage its growth effectively, which will require it to develop its
management information systems capabilities, improve its operating, financial
and accounting systems and to expand, train and manage its employee base. The
Company's inability to manage its growth effectively could have a material
adverse effect on the Company's results of operations, and its ability to meet
its obligations as they become due.
RELIANCE ON FOREIGN DISTRIBUTORS AND VALUE ADDED RESELLERS
ORBIMAGE will rely on foreign regional distributors to market and
distribute internationally a significant portion of the Company's imagery from
its OrbView-2 and its high-resolution OrbView satellites. The existing and
potential foreign regional distributors generally are expected to be acting on
behalf of, or contracting directly with, foreign governments for the sale of
imagery for national security and related purposes, and these regional
distributors may not possess the skill or experience to develop regional
commercial markets for the Company's products and services. The failure of the
Company to enter into such agreements on a timely basis or the failure of the
Company's foreign regional distributors to successfully market the Company's
imagery products and services would have a material adverse effect on the
Company's business, financial condition and results of operations and its
ability to meet its debt service requirements.
The Company intends to rely on VARs to develop and market products and
services based on ORBIMAGE's imagery to address certain of the Company's
targeted markets. The failure of the Company's VARs to successfully develop and
market OrbView products and services would adversely affect the Company's
results of operations.
INTERNATIONAL OPERATIONS
The Company expects to derive substantial revenues from international sales
of products and services. Such operations are subject to certain risks, such as
changes in domestic and foreign governmental regulations and telecommunications
standards, maintenance of friendly foreign status with the United States,
licensing requirements, tariffs or taxes and other trade barriers, export
controls, exchange controls and political and economic stability, including
fluctuations in the value of foreign currencies which may make payment in U.S.
dollars more expensive for foreign customers.
POTENTIAL CONFLICT OF INTEREST
Orbital owns approximately 58% of the outstanding capital stock of the
Company on a fully diluted basis assuming (i) conversion of the Company's
outstanding Series A Preferred Stock and (ii) exercise of the Warrants and
outstanding options to purchase Common Stock. Certain of the Company's executive
officers and directors are also employees and/or directors of Orbital. Such
ongoing relationships may result in conflicts
22
<PAGE> 29
of interest with respect to matters involving both the Company and Orbital.
Although the Company has adopted policies which it believes will preclude or
prevent such conflicts from arising, there can be no assurance that conflicts
will not arise that could adversely affect the Company. The Company and Orbital
are parties to the Procurement Agreement, the OrbView-2 License, the Services
Agreement and the Non-Compete Agreement, (as defined) each of which is material
to the Company's business. Orbital's interests as an equity holder may at times
conflict with its interests under these agreements. Under the Procurement
Agreement, Orbital (or in certain cases its subcontractors) retains ownership of
the technology in all four OrbView satellites and their common ground system. To
the extent the Company has obligations to deliver OrbView-compatible ground
stations to its customers, the Company has contracted to procure such ground
stations from MacDonald, Dettwiler and Associates Ltd. ("MDA"), a wholly owned
subsidiary of Orbital, provided that the terms are commercially competitive.
Under a Non-Competition and Teaming Agreement between Orbital and ORBIMAGE
dated May 8, 1997 (the "Non-Compete Agreement"), Orbital is prohibited from
selling turn-key satellite imaging systems (i.e., satellite, sensors, launch
vehicles and ground system), but is generally permitted to sell components of
such systems, including launch services and satellites, to current or future
customers or competitors of ORBIMAGE. The Non-Compete Agreement will terminate
on the earlier of June 30, 2003 or the occurrence of certain events. As a result
of Orbital's acquisition of the space business of CTA in August 1997, Orbital
became the supplier of the satellite bus (not including the sensor, system-level
assembly, integration and test) for the EarthWatch three-meter resolution
satellite that was launched in December 1997. As a result of an earlier
acquisition, Orbital is also building the ground system network for EarthWatch.
The Company expects EarthWatch to be a direct competitor of the Company. In
March 1998, MDA was selected by the Canadian government to develop, construct
and manage the RADARSAT-II three-meter radar satellite program. Under this
program, Orbital will provide the satellite platform and MDA will provide the
ground station. MDA will own and operate the Radarsat-2 satellite. In addition,
as a result of certain acquisitions, Orbital holds approximately a 4% equity
interest in EarthWatch, and an approximate 26% equity interest in Radarsat
International Inc. ("Radarsat"), a low-spatial resolution satellite radar
imagery provider.
CONTRACTS
At December 31, 1997, a substantial portion of the Company's total firm
contract backlog was derived from contracts with the U.S. government and its
agencies. Changes in government policies, priorities or funding levels through
agency or program budget reductions by the U.S. Congress or executive agencies
or the imposition of budgetary constraints could have a material adverse effect
on the Company's business, financial condition and results of operations and its
ability to meet its debt service requirements. Furthermore, contracts with the
U.S. government may be terminated or suspended by the U.S. government at any
time, with or without cause. There can be no assurance that these contracts will
not be terminated or suspended in the future. The U.S. Air Force has contracted
with Orbital to fund the cost of the design and construction of the
hyperspectral sensor that will be integrated on the OrbView-4 satellite. If the
Air Force terminates or suspends the contract and ORBIMAGE desires to proceed
with its hyperspectral program, ORBIMAGE would be required to incur the
remaining cost of upgrading OrbView-4 with hyperspectral capability. The Samsung
Agreement is cancelable by Samsung Aerospace for any reason (with liquidated
damages payable under certain circumstances). The termination of the Samsung
Agreement could have a material adverse effect on the Company's business,
financial condition and results of operations and its ability to meet its debt
service requirements.
CONTROL OF THE COMPANY
The holders of the Series A Preferred Stock (which represents approximately
34% of the Company's outstanding Common Stock, on a fully diluted basis assuming
conversion of the Series A Preferred Stock and the Company are parties to the
Stock Purchase Agreement and a Stockholders' Agreement dated as of May 8, 1997,
as amended and restated (the "Stockholders' Agreement"). The Stockholders'
Agreement and the Company's Second Amended and Restated Certificate of
Incorporation (the "Charter") contain provisions relating to, among other
things, the election of members of the Company's Board of Directors. In
particular,
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<PAGE> 30
the Stockholders' Agreement provides that the Board of Directors may consist of
up to five directors consisting of (i) two directors designated by Orbital (the
"Common Directors"), (ii) two directors designated by the Series A Holders (the
"Series A Directors") and (iii) a single independent director designated by both
Orbital and the Series A Holders.
Under the Charter, the Series A Holders will be entitled to designate two
additional members to the Board of Directors (i) in the event of the failure by
the Company to pay timely dividends, or to repurchase the Series A Preferred
Stock in certain circumstances or (ii) in the event of the failure by Orbital to
conduct a favorable critical design review of the OrbView-3 spacecraft by
October 31, 1998 or the failure by Orbital to have commenced by March 15, 1999
the integration and testing of the OrbView-3 spacecraft or to have commenced by
November 15, 1999 the integration and testing of the OrbView-4 spacecraft (such
dates may be extended by 30 days in the discretion of ORBIMAGE under certain
circumstances). Such additional directors shall serve until the event giving
rise to such right has been resolved. Under these circumstances, the Series A
Directors would have the ability to control the management and policies of the
Company. In addition, under the Stockholders' Agreement, certain major actions
taken by the Company require the approval of one of the Series A Directors.
BROAD DISCRETION OVER USE OF PROCEEDS
The Company's management has broad discretion in determining the specific
uses for the net proceeds of the Units Offering and the timing of the related
expenditures. Furthermore, depending on future developments in the Company's
business and other factors, it is possible that the actual use of the proceeds
may vary to some extent from the specific intended uses described herein.
Pending application of the proceeds from the sale of the Units, the Company has
invested such proceeds (other than the portion used to purchase the Pledged
Securities) in short-term investment grade securities, and the Company expects
that the interest payable on such securities will be substantially less than the
interest payable on the Exchange Notes. See "Use of Proceeds."
REPURCHASE OF NOTES AND SERIES A PREFERRED STOCK UPON CHANGE OF CONTROL
Upon the occurrence of a Change of Control (as defined), the Company will
be required to offer to repurchase all of the outstanding Exchange Notes at a
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to the repurchase date. Additionally,
upon a Change of Control, subject to the senior rights of the holders of
Exchange Notes, the Company will be required to offer to repurchase all of the
outstanding Series A Preferred Stock at the Liquidation Amount (as defined in
the Stock Purchase Agreement). There can be no assurance that the Company would
have sufficient resources to repurchase the Exchange Notes or the Series A
Preferred Stock upon the occurrence of a Change of Control. The failure to
repurchase all of the Exchange Notes tendered to the Company would constitute an
Event of Default under the Indenture. Furthermore, the repurchase of the
Exchange Notes by the Company upon a Change of Control might result in a default
on the part of the Company in respect of other future indebtedness of the
Company, as a result of the financial effect of such repurchase on the Company
or otherwise. The Change of Control repurchase feature of the Exchange Notes may
have anti-takeover effects and may delay, defer or prevent a merger, tender
offer or other takeover attempt. See "Description of Exchange Notes--Repurchase
at Option of Holders, and--Definitions--Change of Control."
RESTRICTION ON RESALE
The Units, Original Notes and Warrants have not been registered under the
Securities Act or any state securities laws and, unless so registered, may not
be offered or sold except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and applicable
state securities laws.
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<PAGE> 31
SHARES ELIGIBLE FOR FUTURE SALE
Future sales of shares of Common Stock by existing stockholders under Rule
144 of the Securities Act, or through the exercise of registration rights or the
issuance of shares of Common Stock upon the exercise of options or warrants,
could have a material adverse effect on the market price of shares of Common
Stock and could materially impair the Company's future ability to raise capital
through an offering of equity securities. No predictions can be made as to the
effect, if any, market sales of such shares or the availability of such shares
for future sale will have on the market price of shares of Common Stock
prevailing from time to time.
CERTAIN TAX CONSIDERATIONS
The Original Notes were issued with original issue discount ("OID") for
U.S. federal income tax purposes. This OID will carry over to, and be treated as
OID on, the Exchange Notes received in exchange for the Original Notes, and each
U.S. holder of an Exchange Note will be required to include in taxable income
for any particular taxable year a portion of such OID in advance of the receipt
of the cash to which such OID is attributable. For additional information
regarding the OID associated with the Notes, as well as certain other federal
income tax considerations relevant to the exchange of Original Notes for
Exchange Notes and the ownership and disposition of Exchange Notes, see "Certain
U.S. Federal Income Tax Consequences."
LACK OF PUBLIC MARKET
Prior to the Exchange Offer, there has not been any public market for the
Original Notes. The Original Notes have not been registered under the Securities
Act and will be subject to restrictions on transferability to the extent that
they are not exchanged for Exchange Notes by holders who are entitled to
participate in the Exchange Offer. The holders of Original Notes (other than any
such holder that is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) who are not eligible to participate in the Exchange
Offer are entitled to certain registration rights, and the Company is required
to file a Shelf Registration Statement with respect to such Original Notes. The
Exchange Notes will constitute a new issue of securities with no established
trading market. The Exchange Notes will not be listed on any securities exchange
and the Company will not seek the admission thereof to trading in the National
Association of Securities Dealers Automated Quotation System. The Company has
been advised by the Initial Purchasers that they intend to make a market in the
Exchange Notes; however, the Initial Purchasers are not obligated to do so, and
any such market making activities may be discontinued at any time without
notice. In addition, such market making activity may be subject to the limits
imposed by the Securities Act and the Exchange Act and may be limited during the
Exchange Offer and the pendency of the Shelf Registration Statement. Therefore,
there can be no assurance that an active market for the Exchange Notes will
develop or as to liquidity of a trading market for the Exchange Notes.
Depending on prevailing interest rates, the market for similar securities
and other factors, including the financial condition of the Company, the
Exchange Notes may trade at a discount from their principal amount.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Original Notes who do not exchange their Original Notes for
Exchange Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such original Notes as set forth in the legend
thereon as a consequence of the issuance of the Original Notes pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Original Notes may not be offered or sold, unless registered under
the Securities Act and applicable state securities laws, or pursuant to an
exemption therefrom. The Company does not intend to register the Original Notes
under the Securities Act. In addition, any holder of Original Notes who tenders
in the Exchange Offer for the purpose of participating in a distribution of the
Exchange Notes may be deemed to have received restricted securities and, if so,
will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction. To
the extent Original Notes are tendered and accepted in the Exchange Offer, the
trading market, if any, for the Original Notes not tendered could be adversely
affected. See "The Exchange Offer."
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<PAGE> 32
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Exchange Notes offered hereby. The Exchange Offer is intended to satisfy certain
of the Company's obligations under the Registration Rights Agreement.
The net proceeds to the Company from the Units Offering (after deducting
discounts, and commissions to the Initial Purchasers and estimated offering
expenses) were approximately $144.5 million. The Company used approximately
$32.9 million of such proceeds to fund the purchase of the Pledged Securities.
All remaining proceeds, including the net proceeds from the Series A Offering,
will be applied to (i) develop, construct, test, launch and operate the
high-resolution OrbView satellites, (ii) develop, upgrade and construct the U.S.
domestic ground system used in connection with high-resolution OrbView
satellites, (iii) market remote imagery products and services and (iv) provide
working capital. See "Description of the Notes--Certain Covenants--Use of
Proceeds."
The net proceeds to the Company from the Series A Offering, which was
consummated simultaneously with the Units Offering, was approximately $21
million.
Prior to the application of the net proceeds of the Units Offering, as
described above, such funds (other than amounts used to purchase the Pledged
Securities) are invested in short-term investment-grade securities.
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<PAGE> 33
CAPITALIZATION
The following table sets forth the cash, cash equivalents, short-term
investments and Pledged Securities and capitalization of the Company as of
December 31, 1997 on an actual basis and as adjusted to give effect to the Units
Offering and the Series A Offering, and the application of the estimated net
proceeds therefrom as described under "Use of Proceeds." This table should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements, including the
notes thereto, included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash, cash equivalents and short-term investments........... $ 22,220 $154,820
Pledged Securities.......................................... -- 32,900(2)
-------- --------
Total cash, cash equivalents and short-term investments
and Pledged Securities................................ $ 22,220 $187,720
======== ========
Long-term debt:
Notes (3)................................................. $ -- $141,000
-------- --------
Total long-term debt.............................. -- 141,000
Stockholders' equity:
Series A Cumulative Convertible 12% Preferred Stock,
par value $.01 2,000,000 shares authorized, and
392,887 shares outstanding (4)........................ 4 6
Common Stock, par value $.01 per share, 75,000,000
shares authorized, and 25,214,000 shares outstanding
(5)................................................... 252 252
Additional paid-in capital (3)......................... 108,828 138,826
Accumulated deficit.................................... (23,723) (23,723)
-------- --------
Total stockholders' equity............................. 85,361 115,361
-------- --------
Total capitalization.............................. $ 85,361 $256,361
======== ========
</TABLE>
- ------------------------------
(1) Gives effect to the Units Offering and the Series A Offering and the
application of the estimated net proceeds therefrom as described under "Use
of Proceeds."
(2) Represents the aggregate principal amount of the Pledged Securities, of
approximately $32.9 million. See "Description of the Exchange
Notes--Security."
(3) The estimated value of the Warrants, $9 million, is reflected as both a debt
discount and an element of additional paid-in capital.
(4) Dividends are payable semi-annually on May 1 and November 1 in cash or
in-kind, subject to restrictions contained in the Indenture.
(5) Excludes 4,800,000 shares of Common Stock reserved for issuance under the
Company's 1996 Stock Option Plan (the "Stock Option Plan"), of which options
to purchase 1,884,000 shares of Common Stock were outstanding at December
31, 1997 and options to purchase 707,250 shares of Common Stock were
exercisable at December 31, 1997. See "Management--Stock Option Plan."
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<PAGE> 34
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Original Notes were originally sold by the Company on February 25, 1998
to the Initial Purchasers pursuant to the Purchase Agreement. The Initial
Purchasers subsequently resold the Original Notes to qualified institutional
buyers in reliance on Rule 144A under the Securities Act and pursuant to offers
and sales that occurred outside the United States within the meaning of
Regulation S under the Securities Act. As a condition to the completion of the
Units Offering, the Company entered into the Registration Rights Agreement with
the Initial Purchasers pursuant to which the Company agreed to file with the
Commission the Exchange Offer Registration Statement on the appropriate form
under the Securities Act with respect to an offer to exchange the Original Notes
for Exchange Notes. The Exchange Notes will be substantially identical to the
Original Notes, except that the Exchange Notes will bear a Series B designation
and will have been registered under the Securities Act and, therefore will not
contain terms with respect to transfer restrictions (other than those that might
be imposed by state securities laws). If (i) the Company is not required to file
the Exchange Offer Registration Statement or permitted to commence or accept
tenders pursuant to the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy, (ii) any Holder of Transfer
Restricted Securities (as defined herein) notifies the Company within 20
business days after the consummation of the Exchange Offer that (a) such holder
was prohibited by applicable law or Commission policy from participating in the
Exchange Offer or (b) such holder may not resell the Exchange Notes acquired by
it in the Exchange Offer to the public without delivering a prospectus and the
prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales or (c) such holder is a broker-dealer
and owns Original Notes acquired directly from the Company or an affiliate of
the Company or (iii) the Exchange Offer is for any other reason not consummated
within 180 days of the issuance date of the Original Notes, the Company will
file with the Commission the Shelf Registration Statement. For purposes of the
Exchange Offer, "Transfer Restricted Securities" means each Note, until the
earliest to occur of (a) the date on which such Original Note is exchanged in
the Exchange Offer and entitled to be resold to the public by the holder thereof
without complying with the prospectus delivery requirements of the Securities
Act, (b) the date on which such Original Note has been sold pursuant to a Shelf
Registration Statement, (c) the date on which such Exchange Note is disposed of
by a broker-dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including delivery of the prospectus
contained therein) or (d) the date on which such Note is distributed to the
public pursuant to Rule 144 under the Securities Act.
Under existing interpretations of the staff of the Commission, the Exchange
Notes would, in general, be freely transferable after the Exchange Offer without
further registration under the Securities Act. However, any purchaser of
Original Notes who is an "affiliate" of the Company or intends to participate in
the Exchange Offer for the purpose of distributing the Exchange Notes (i) will
not be able to rely on the interpretations of the staff of the Commission, (ii)
will not be able to tender its Original Notes in the Exchange Offer and (iii)
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or transfer of the Original Notes,
unless such sale or transfer is made pursuant to an exemption from such
requirements.
Each holder who wishes to exchange such Original Notes for Exchange Notes
in the Exchange Offer will be required to make certain representations,
including representations that (i) it is not an affiliate of the Company, (ii)
it is not engaged in, and does not intend to engage in, and has no arrangement
or understanding with any person to participate in, a distribution of the
Exchange Notes and (iii) it is acquiring the Exchange Notes in its ordinary
course of business. In addition, broker-dealers receiving Exchange Notes in the
Exchange Offer will have a prospectus delivery requirement with respect to
resales of Exchange Notes. The Commission has taken the position that such
broker-dealers may fulfill their prospectus delivery requirements with respect
to the Exchange Notes (other than a resale of an unsold allotment from the
original sale of Original Notes) with the prospectus contained in the Exchange
Offer Registration Statement. Under the Registration Rights Agreement, the
Company is required to allow such broker-dealers to use the prospectus contained
in the Exchange Offer Registration Statement in connection with the resale of
such Exchange Notes for a period of 180 days after the Exchange Offer is
consummated.
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<PAGE> 35
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the Registration Rights Agreement, a copy
of which is filed as an exhibit to the Exchange Offer Registration Statement of
which this Prospectus is a part. See "Description of the Exchange
Notes--Registration Rights; Liquidated Damages."
Following the consummation of the Exchange Offer, holders of the Original
Notes who were eligible to participate in the Exchange Offer but who did not
tender their Original Notes will not have any further registration rights and
such Original Notes will continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market for such Original Notes could
be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Original
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York time, on
the Expiration Date. The Company will issue $1,000 principal amount of Exchange
Notes in exchange for each $1,000 principal amount of outstanding Original Notes
accepted in the Exchange Offer. Holders may tender some or all of their Original
Notes pursuant to the Exchange Offer. However, Original Notes may be tendered
only in integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Original Notes except that (i) the Exchange Notes bear a Series B
designation and a different CUSIP Number from the Original Notes, (ii) the
Exchange Notes have been registered under the Securities Act and hence will not
bear legends restricting the transfer thereof and (iii) the holders of the
Exchange Notes will not be entitled to certain rights under the Registration
Rights Agreement, including the provisions providing for an increase in the
interest rate on the Original Notes in certain circumstances relating to the
timing of the Exchange Offer, all of which rights generally will terminate when
the Exchange Offer is terminated. The Exchange Notes will evidence the same debt
as the Original Notes and will be entitled to the benefits of the Indenture.
The Exchange Offer is not conditioned upon any minimum number of Original
Notes being tendered. As of the date of this Prospectus, $150 million aggregate
principal amount of Original Notes were outstanding.
Holders of Original Notes do not have any appraisal or dissenters rights
under the General Corporation Law of Delaware or the Indenture in connection
with the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Original
Notes when, as and if the Company has given oral or written notice thereof to
the Exchange Agent. The Exchange Agent will act as agent for the tendering
holders for the purpose of receiving the Exchange Notes from the Company.
If any tendered Original Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Original Notes will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.
Holders whose Original Notes are not tendered or are tendered but not
accepted in the Exchange Offer will continue to hold such Original Notes and
will be entitled to all the rights and preferences and subject to the
limitations applicable thereto under the Indenture. Following consummation of
the Exchange Offer, the holders will continue to be subject to the existing
restrictions upon transfer thereon and the Company will have no further
obligation to such holders to provide for the registration under the Securities
Act of the Original Notes held by them. To the extent that Original Notes are
tendered and accepted in the Exchange Offer, the trading market for untendered
and tendered but unaccepted Original Notes could be adversely affected.
Holders who tender Original Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of
Original Notes pursuant to the Exchange Offer. The Company will pay all charges
and
29
<PAGE> 36
expenses, other than transfer taxes in certain circumstances, in connection with
the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSION; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York time, on June ,
1998, unless the Company, in its sole discretion, extends the Exchange Offer, in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice prior to 9:00 a.m., New York
time, on the next business day after the previously scheduled expiration date.
Any such extension will be followed as promptly as practicable by notice thereof
by press release or other public announcement (or by written notice to the
holders of the Notes).
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Original Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "--Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of the
Exchange Offer in any manner.
INTEREST ON THE EXCHANGE NOTES
Interest on the Exchange Notes will accrue at the rate of 11 5/8% per annum
from the most recent date to which interest has been paid or duly provided for
on the Original Notes surrendered in exchange for such Exchange Notes or, if no
interest has been paid or duly provided for on such Original Notes, from
February 25, 1998.
Holders of Original Notes whose Original Notes are accepted for exchange
will not receive accrued interest on such Original Notes for any period from and
after the last date to which interest has been paid or duly provided for on the
Original Notes prior to the original issue date of the Exchange Notes or, if no
such interest has been paid or duly provided for, will not receive any accrued
interest on such Original Notes, and will be deemed to have waived the right to
receive any interest on such Original Notes, accrued from and after February 25,
1998.
PROCEDURES FOR TENDERING
For a holder of Original Notes to tender Original Notes validly pursuant to
the Exchange Offer, a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantee, or (in the case
of a book-entry transfer), an Agent's Message (as defined) in lieu of the Letter
of Transmittal, and any other required documents, must be received by the
Exchange Agent at the address set forth in the Letter of Transmittal prior to
5:00 p.m., New York time, on the Expiration Date. In addition, prior to 5:00
p.m., New York time, on the Expiration Date, either (a) certificates for
tendered Original Notes must be received by the Exchange Agent at such address
or (b) such Original Notes must be transferred pursuant to the procedures for
book-entry transfer described below (and a confirmation of such tender received
by the Exchange Agent, including an Agent's Message if the tendering holder has
not delivered a Letter of Transmittal).
The term "Agent's Message" means a message transmitted by the Depository,
received by the Exchange Agent and forming part of the confirmation of a
book-entry transfer, which states that the Depository has received an express
acknowledgment from the participant in the Depository tendering Original Notes
which are the subject of such book-entry confirmation that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Company may enforce such agreement against such participant. In the
case of an Agent's Message relating to guaranteed delivery, the term means a
message transmitted by the Depository and received by the Exchange Agent, which
states that the Depository has received an express acknowledgment from the
participant in the Depository tendering Original Notes that such participant has
received and agrees to be bound by the Notice of Guaranteed Delivery.
30
<PAGE> 37
By tendering Original Notes pursuant to the procedures set forth above,
each holder will make to the Company the representations set forth above in the
third paragraph under the heading "--Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal. THE METHOD OF DELIVERY OF ORIGINAL NOTES AND THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND SOLE RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL,
HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR ORIGINAL NOTES SHOULD BE
SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
Any beneficial owner whose Original Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender such Original Notes, such beneficial owner
must, prior to completing and executing the Letter of Transmittal and delivering
such Original Notes in such beneficial owner's name, either make appropriate
arrangements to register ownership of the Original Notes in such beneficial
owner's name or obtain a properly completed bond power from the registered
holder of the Original Notes. The transfer of registered ownership may take
considerable time and may not be able to be completed prior to the Expiration
Date.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Original Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of a
recognized signature guarantee medallion program within the meaning of Rule
17Ad-15 of the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Original Notes listed therein, such Original Notes must
be endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Original
Notes with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Original Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
offices of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and evidence
satisfactory to the Company of their authority to so act must be submitted with
the Letter of Transmittal.
The Exchange Agent and DTC have confirmed that the Exchange Offer is
eligible for the DTC Automated Tender Offer Program ("ATOP"). Accordingly, DTC
participants may electronically transmit their acceptance of the Exchange Offer
by causing DTC to transfer Original Notes to the Exchange Agent in accordance
with DTC's ATOP procedures for transfer. DTC will then send an Agent's Message
to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Original Notes and withdrawal of tendered
Original Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all Original Notes not properly tendered or any Original Notes
the Company's acceptance of which would, in the opinion of counsel for the
Company, be unlawful. The Company also reserves the right in its sole discretion
to waive any defects, irregularities or conditions of tender as to particular
Original Notes. The
31
<PAGE> 38
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Original Notes must be cured within such time as the
Company shall determine. Although the Company intends, to notify holders of
defects or irregularities with respect to tenders of Original Notes, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Original Notes will not be deemed
to have been made until such defects or irregularities have been cured or
waived. Any Original Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
BOOK-ENTRY TRANSFER
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Original Notes at the bookentry transfer facility, The Depository Trust
Company ("DTC" or the "Book-Entry Transfer Facility"), for the purpose of
facilitating the Exchange Offer, and subject to the establishment thereof, any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Original Notes by causing such
Book-Entry Transfer Facility to transfer such Original Notes into the Exchange
Agent's account with respect to the Original Notes in accordance with the
Book-Entry Transfer Facility's procedures for such transfer. Although delivery
of the Original Notes may be effected through book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility, an appropriate
Letter of Transmittal properly completed and duly executed with any required
signature guarantee, or, in the case of a book-entry transfer, an Agent's
Message in lieu of the Letter of Transmittal and all other required documents
must in each case be transmitted to and received or confirmed by the Exchange
Agent at its address set forth in the Letter of Transmittal on or prior to the
Expiration Date, or, if the guaranteed delivery procedures described below are
complied with, within the time period provided under such procedures. Delivery
of documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
Unless an exemption applies under the applicable law and regulations
concerning "backup withholding" of federal income tax, the Exchange Agent will
be required to withhold, and will withhold, 31% of the gross proceeds otherwise
payable to a holder pursuant to the Exchange Offer if the holder does not
provide its taxpayer identification number (social security number or employer
identification number) and certify that such number is correct. Each tendering
holder should complete and sign the main signature form and the Substitute Form
W-9 included as part of the Letter of Transmittal, so as to provide the
information and certification necessary to avoid backup withholding, unless an
applicable exemption exists and is proved in a manner satisfactory to the
Company and the Exchange Agent.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Original Notes and (i) whose Original
Notes are not immediately available, (ii) who cannot deliver their Original
Notes, the Letter of Transmittal or any other required documents to the Exchange
Agent or (iii) who cannot complete the procedures for book-entry transfer, prior
to the Expiration Date, may effect a tender if: (a) the tender is made through
an Eligible Institution; (b) prior to the Expiration Date, the Exchange Agent
receives from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s) of
such Original Notes and the principal amount of Original Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within five New
York Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof) together with the certificate(s) representing
the Original Notes (or a confirmation of book-entry transfer of such Original
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility),
and any other documents required by the Letter of Transmittal will be deposited
by the Eligible Institution with the Exchange Agent; and (c) such properly
completed and executed Letter of Transmittal (or facsimile thereof), as well as
the certificates representing all tendered Original Notes in proper form for
transfer (or a
32
<PAGE> 39
confirmation of book-entry transfer of such Original Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility), and all other documents
required by the Letter of Transmittal are received by the Exchange Agent upon
five New York Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Original Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time prior to 5:00 p.m., New York time, on the Expiration Date.
To withdraw a tender of Original Notes in the Exchange Offer, a telegram,
telex, letter or facsimile transmission notice of withdrawal must be received by
the Exchange Agent at its address set forth in the Letter of Transmittal prior
to 5:00 p.m., New York time, on the Expiration Date. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Original
Notes to be withdrawn (the "Depositor"), (ii) identify the Original Notes to be
withdrawn (including the certificate number(s) and principal amount of such
Original Notes, or, in the case of Original Notes transferred by book-entry
transfer, the name and number of the account at the Book-Entry Transfer Facility
to be credited), (iii) be signed by the holder in the same manner as the
original signature on the Letter of Transmittal by which such Original Notes
were tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the
Original Notes register the transfer of such Original Notes into the name of the
person withdrawing the tender and (iv) specify the name in which any such
Original Notes are to be registered, if different from that of the Depositor.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by the Company, whose determination
shall be final and binding on all parties. Any Original Notes so withdrawn will
be deemed not to have been validly tendered for purposes of the Exchange Offer
and no Exchange Notes will be issued with respect thereto unless the Original
Notes so withdrawn are validly retendered. Any Original Notes which have been
tendered but which are not accepted for exchange will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn
Original Notes may be retendered by following one of the procedures described
above under "--Procedures for Tendering" at any time prior to the Expiration
Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Exchange Notes for, any Original
Notes, and may terminate or amend the Exchange Offer as provided herein before
the acceptance of such Original Notes, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the Company's reasonable discretion, might materially impair the
ability of the Company to proceed with the Exchange Offer or any material
adverse development has occurred in any existing action or proceeding with
respect to the Company or any of its subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff
of the Commission is proposed, adopted or enacted, which, in the Company's
reasonable discretion, might materially impair the ability of the Company
to proceed with the Exchange offer or materially impair the contemplated
benefits of the Exchange offer to the Company; or
(c) any governmental approval has not been obtained, which approval
the Company shall, in the Company's reasonable discretion, deem necessary
for the consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its reasonable discretion that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Original
Notes and return all tendered Original Notes to the tendering holders, (ii)
extend the Exchange Offer and retain all Original Notes tendered prior to the
expiration of the
33
<PAGE> 40
Exchange Offer, subject, however, to the rights of holders to withdraw such
Original Notes (see "--Withdrawal of Tenders"), or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all properly tendered
Original Notes which have not been withdrawn.
The foregoing conditions are solely for the benefit of the Company and may
be asserted by the Company in good faith regardless of the circumstances giving
rise to such conditions or may be waived by the Company in whole or in part at
any time and from time to time in its discretion. The failure by the Company at
any time to exercise the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. In addition, the Company has
reserved the right, notwithstanding the satisfaction of each of the foregoing,
to terminate or amend the Exchange Offer.
EXCHANGE AGENT
Marine Midland Bank (the "Exchange Agent") has been appointed as Exchange
Agent for the Exchange Offer. Questions and requests for assistance, requests
for additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery should be directed to the Exchange
Agent at the address indicated in the Letter of Transmittal. DELIVERY TO AN
ADDRESS OTHER THAN AS SET FORTH IN THE LETTER OF TRANSMITTAL WILL NOT CONSTITUTE
A VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Original Notes as reflected in the Company's accounting records on the date of
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company. The expenses of the Exchange Offer will be expensed
over the term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Original Notes who do not exchange their Original Notes for
Exchange Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Original Notes as set forth in the legend
thereon. In general, the Original Notes may not be offered or sold, unless
registered under the Securities Act, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act and applicable state securities
laws. The Company does not intend to register the Original Notes under the
Securities Act.
RESALE OF EXCHANGE NOTES
With respect to resales of Exchange Notes, based on interpretations by the
staff of the Commission set forth in no-action letters issued to third parties
(for example, the letters of the commission to (i) Exxon Capital Holdings
Corporation (avail. May 13, 1988), (ii) Morgan Stanley & Co., Inc. (avail. June
5, 1991)
34
<PAGE> 41
and (iii) Shearson & Sterling (avail. July 2, 1993)), the Company believes that
a holder or other person (other than a person that is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) who receives
Exchange Notes in exchange for Original Notes in the ordinary course of business
and who is not participating, does not intend to participate, and has no
arrangement or understanding with any person to participate, in the distribution
of the Exchange Notes, will be allowed to resell the Exchange Notes to the
public without further registration under the Securities Act and without
delivering to the purchasers of the Exchange Notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. However, if any holder
acquires Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in a distribution of the Exchange Notes, such holder cannot rely
on the position of the staff of the Commission enunciated in such no-action
letters or any similar interpretive letters, and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration is
otherwise available. Further, each participating broker-dealer that receives
Exchange Notes for its own account in exchange for Original Notes, where such
Original Notes were acquired by such participating broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
Each holder of Original Notes who wishes to exchange Original Notes for
Exchange Notes in the Exchange Offer will be required to represent that (i) it
is not an affiliate of the Company, (ii) it is not engaged in, and does not
intend to engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Exchange Notes and (iii) it is acquiring
the Exchange Notes in its ordinary course of business. Each broker-dealer that
receives Exchange Notes for its own account pursuant to the Exchange Offer must
acknowledge that it acquired the Original Notes for its own account as the
result of market-making activities or other trading activities and must agree
that it will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. Based on the position taken by the staff of the Division of
Corporation Finance of the Commission in the interpretive letters referred to
above, the Company believes that participating broker-dealers who acquired
Original Notes for their own accounts as a result of market-making activities or
other trading activities may fulfill their prospectus delivery requirements with
respect to the Exchange Notes received upon exchange of such Original Notes
(other than Original Notes which represent an unsold allotment from the original
sale of the Original Notes) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution with respect to
the resale of such Exchange Notes. Accordingly, this Prospectus, as it may be
amended or supplemented from time to time, may be used by a participating
broker-dealer during the period referred to below in connection with resales of
Exchange Notes received in exchange for Original Notes where such Original Notes
were acquired by such participating broker-dealer for its own account as a
result of market-making or such other trading activities. Subject to certain
provisions set forth in the Registration Rights Agreement, the Company has
agreed that this Prospectus, as it may be amended or supplemented from time to
time, may be used by a participating broker-dealer in connection with resales of
such Exchange Notes for a period ending 180 days after the date on which the
Exchange Offer Registration Statement is declared effective. However, a
participating broker-dealer who intends to use this Prospectus in connection
with the resale of Exchange Notes received in exchange for Original Notes
pursuant to the Exchange Offer must notify the Company, or cause the Company to
be notified, on or prior to the Expiration Date, that it is a participating
broker-dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent at its
addresses set forth in the Letter of Transmittal. See "Plan of Distribution."
Any participating broker-dealer who is an "affiliate" of the Company may not
rely on such interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction.
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<PAGE> 42
FEDERAL INCOME TAX CONSEQUENCES
The exchange of Original Notes for Exchange Notes by holders should not be
a taxable exchange for federal income tax purposes, and holders should not
recognize any taxable gain or loss or any interest income as a result of such
exchange. See "Certain U.S. Federal Income Tax Consequences."
OTHER
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Original Notes are urged to
consult their financial and tax advisors in making their own decisions on what
action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Original Notes pursuant to the terms of this Exchange Offer,
the Company will have fulfilled a covenant contained in the terms of the
Original Notes and the Registration Rights Agreement. Holders of the Original
Notes who do not tender their certificates in the Exchange Offer will continue
to hold such certificates and will be entitled to all the rights, and
limitations applicable thereto, under the Indenture, except for any such rights
under the Registration Rights Agreement which by their terms terminate or cease
to have further effect as a result of the making of this Exchange Offer. See
"Description of Exchange Notes." All untendered Original Notes will continue to
be subject to the restriction on transfer set forth in the Indenture. To the
extent that Original Notes are tendered and accepted in the Exchange Offer, the
trading market, if any, for the Original Notes could be adversely affected. See
"Risk Factors--Consequences of Failure to Exchange."
The Company may in the future seek to acquire untendered Original Notes in
open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The Company has no present plan to acquire any Original
Notes which are not tendered in the Exchange Offer.
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<PAGE> 43
SELECTED HISTORICAL FINANCIAL DATA
The following selected historical financial data of ORBIMAGE as of and for
the years ended December 31, 1993, 1994, 1995, 1996 and 1997 have been derived
from the audited financial statements of ORBIMAGE. The selected historical
financial data set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements as of December 31, 1997 and 1996 and for each of the
years in the three-year period ending December 31, 1997, and notes thereto,
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993 1994 1995 (1) 1996 1997 (2)
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<CAPTION>
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.............................. $ -- $ -- $ 4,567 $ 1,055 $ 2,062
Direct costs.......................... -- 800 7,998 4,320 6,312
------- ------- ------- ------- -------
Gross profit (loss)................... -- (800) (3,431) (3,265) (4,250)
Selling, general and administrative
expenses............................ 1,702 3,156 2,371 1,630 2,844
------- ------- ------- ------- -------
Loss from operations.................. (1,702) (3,956) (5,802) (4,895) (7,094)
Interest income....................... -- -- -- -- 1,260
------- ------- ------- ------- -------
Loss before benefit for income
taxes............................... (1,702) (3,956) (5,802) (4,895) (5,834)
Benefit for income taxes.............. -- -- -- -- 1,752
------- ------- ------- ------- -------
Net loss.............................. $(1,702) $(3,956) $(5,802) $(4,895) $(4,082)
======= ======= ======= ======= =======
OTHER DATA:
Capital expenditures.................. $13,749 $13,832 $18,989 $12,617 $49,029
EBITDA (3)............................ (1,702) (3,157) 1,975 (914) (1,558)
Ratio of earnings (losses) to fixed
charges............................. -- -- -- -- --
Deficiency of earnings (losses) to
fixed charges....................... 1,710 3,965 5,811 4,927 7,211
Pro forma deficiency of earnings
(losses) to fixed charges (4)....... -- -- -- -- 26,603
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<CAPTION>
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term
investments......................... $ -- $ -- $ -- $ -- $ 22,220
Property, equipment and satellites and
related rights, net................. 38,911 51,944 63,155 71,792 115,280
Total assets.......................... 38,911 51,944 63,423 72,328 137,750
Total liabilities..................... 31,985 40,419 43,466 46,048 52,389
Series A Preferred Stock.............. -- -- -- -- 33,547(5)
Stockholders' equity.................. 6,926 11,525 19,957 26,280 85,361
</TABLE>
- ------------------------------
(1) The OrbView-1 satellite was launched in April 1995.
(2) The OrbView-2 satellite was launched in August 1997.
(3) EBITDA, as defined in the Indenture, consists of earnings before interest,
income taxes, depreciation, amortization and other non-cash charges. While
EBITDA is not an alternative to operating income as an indicator of
operating performance or an alternative to cash flows from operating
activities as a measure of liquidity, management believes that EBITDA is a
measure commonly used to analyze and compare companies on the basis of
operating performance, leverage and liquidity. EBITDA as defined herein may
not conform to the definition of Consolidated Cash Flow as defined in the
Indenture. See "Description of Notes--Certain Definitions--Consolidated Cash
Flow."
(4) Pro forma deficiency of earnings (losses) to fixed charges is calculated
based upon the annual interest rate on the Notes plus the amortization of
deferred financing fees and the debt discount as of the beginning of the
period.
(5) Represents stated value of $100 per share of Series A Preferred Stock less
applicable fees and expenses.
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<PAGE> 44
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
ORBIMAGE is a leading provider of global space-based imagery. The Company
operates, and is further developing a fleet of satellites that collect, process
and distribute digital imagery of the Earth's surface (land and oceans), the
atmosphere and weather conditions. ORBIMAGE has entered into the Procurement
Agreement with Orbital to purchase OrbView-1, the high-resolution OrbView
satellites (including launch services), and the U.S. ground system necessary to
operate the satellites and to collect, process and distribute imagery. ORBIMAGE
also acquired the OrbView-2 License from Orbital pursuant to the Procurement
Agreement. Furthermore, Orbital provides certain administrative services to
ORBIMAGE such as accounting, tax, human resources and benefit-related services
as well as on-orbit satellite operations, pursuant to the Services Agreement.
See "Certain Relationships and Related Transactions--Services Agreement."
In August 1995, ORBIMAGE began operating the OrbView-1 satellite. Under an
imagery contract between the Company and NASA, ORBIMAGE currently provides
OrbView-1 imagery of severe weather patterns and global lightning information.
In November 1997, ORBIMAGE began commercial operations of the OrbView-2
satellite. Imagery from the OrbView-2 satellite enables commercial users and
civilian and government scientists and researchers to detect subtle changes in
the coloration of the Earth's surface. Pursuant to an imagery contract between
Orbital and NASA and under the OrbView-2 License, ORBIMAGE is providing NASA
with OrbView-2 imagery for certain scientific research purposes for the initial
five years of the satellite's operation.
In 1999 and 2000, ORBIMAGE expects to begin commercial operations of its
OrbView-3 satellite and OrbView-4 satellite, respectively. The Company has
entered into the Samsung Agreement to distribute high-resolution imagery of the
Korean peninsula and has agreed with Orbital that it will provide the U.S. Air
Force with hyperspectral imagery generated by OrbView-4 pursuant to a contract
between Orbital and the U.S. Air Force.
Revenue. ORBIMAGE intends to sell its imagery products directly to end
users as well as to VARs and foreign regional distributors for subsequent resale
to end users. ORBIMAGE expects its revenues will be generated on a "per image"
or "per tasking" basis, or based on the quantity of imagery provided or tasking
requested. ORBIMAGE also expects to generate product royalties on sales made by
VARs and foreign regional distributors.
ORBIMAGE has executed or is performing several long-term sales contracts
for its imagery products, and in most cases, has received payments pursuant to
these contracts in advance of product delivery. In such circumstances, ORBIMAGE
initially records deferred revenue for the total amount of the payment and
recognizes revenue as products are delivered over the contractual delivery
period. At December 31, 1997, ORBIMAGE had approximately $37 million of deferred
revenue related to advance payments for OrbView-2 imagery.
System Depreciation. ORBIMAGE is depreciating its satellites over the
design life of each satellite. ORBIMAGE is amortizing the cost of the OrbView-2
License over the 7 1/2 year design life of the OrbView-2 satellite. ORBIMAGE
depreciates the ground systems used to operate the satellites and collect,
process and distribute imagery over the estimated lives of the assets, generally
eight years. Depreciation begins when the satellites and ground system are
placed in service.
RESULTS OF OPERATIONS
Revenues. ORBIMAGE's revenues for the years ended December 31, 1995, 1996,
and 1997 were approximately $4.6 million, $1.1 million and $2.1 million,
respectively. Revenues in 1995 and 1996 were attributable solely to the sale of
OrbView-1 imagery products to NASA and UCAR. OrbView-1 imagery sales to NASA
have continued, although at lower "per image" prices, and are expected to
continue throughout that
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<PAGE> 45
satellite's operational life (now expected to be five years, or until April
2000) at approximately $1 million per year.
ORBIMAGE placed the OrbView-2 satellite into commercial operations in
November 1997 following an August launch. The Company recorded approximately
$1.3 million of revenues in 1997 pursuant to the OrbView-2 License. ORBIMAGE
expects this contract will generate approximately $9 million in revenues in
1998.
Direct Expenses. Direct expenses include costs of operating and
depreciating the Company's satellites and related assets. Direct expenses were
approximately $8.0 million, $4.3 million, and $6.3 million for the years ended
December 31, 1995, 1996 and 1997, respectively. Direct expenses increased from
1996 to 1997 as a result of initial OrbView-2 License amortization, and
additional ground station depreciation and operating expenses. Direct expenses
in 1995 were higher than direct expenses in 1996 because direct expenses in 1995
included costs incurred to support the launch and initial checkout of the
OrbView-1 satellite. The Company expects direct expenses to increase
significantly in 1998 from the increase in the OrbView-2 License amortization
and OrbView-2 operating expenses.
Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses were approximately $2.4 million, $1.6 million
and $2.8 million for the years ended December 31, 1995, 1996 and 1997,
respectively. The increase in SG&A expenses in 1997 was primarily attributable
to an increase in the Company's staffing levels related to administrative
functions and ongoing market efforts incurred in pursuing sales of imagery
products and services and in preparing for system operations. SG&A expenses in
1995 were higher than in 1996 because SG&A expenses in 1995 included costs
incurred to support the launch and initial checkout of the OrbView-1 satellite.
LIQUIDITY AND CAPITAL RESOURCES
On May 8, 1997, ORBIMAGE consummated a private equity placement in which it
sold 300,100 shares of Series A Preferred Stock generating gross proceeds of
approximately $30 million. On May 8, 1997, Orbital increased its common equity
investment in ORBIMAGE, bringing its total equity invested to approximately $88
million. On July 3, 1997, ORBIMAGE consummated a private equity placement in
which it sold an additional 72,605 shares of Series A Preferred Stock generating
gross proceeds of approximately $7 million. Cash, cash equivalents and
short-term investments as of December 31, 1997, totaled approximately $22
million, the majority of which was held in short-term investments.
The total cost of the OrbView-1 satellite, the high-resolution OrbView
satellites, the OrbView-2 License and the U.S. ground system is estimated to be
approximately $297 million (of which $295 million is provided for under the
Procurement Agreement), which amount includes all satellite design, construction
and launch costs, but excludes insurance costs. Of this amount, the Company has
spent approximately $133 million as of December 31, 1997. The Company expects to
spend approximately $142 million to complete the high-resolution OrbView
satellites, $18 million to procure insurance and $22 million to complete
modifications to the U.S. ground system through June 30, 2000.
ORBIMAGE anticipates funding its future capital expenditures and negative
cash flows from operations from the net proceeds of the Units Offering and the
Series A Offering, together with net cash from advance customer payments and
operations. Additional funds may be necessary in the event of a launch delay of
either of the high-resolution OrbView satellites, unanticipated cost increases
or any shortfall in projected levels of estimated cash flow, or to meet
unanticipated expenses. There can be no assurance that additional capital will
be available on favorable terms or on a timely basis, if at all.
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<PAGE> 46
BUSINESS
OVERVIEW
ORBIMAGE is a leading provider of global space-based imagery. The Company
operates, and is further developing, a fleet of satellites that collect, process
and distribute digital imagery of the Earth's surface (land and oceans), the
atmosphere and weather conditions. ORBIMAGE currently has two satellites in
operation that provide imagery to a variety of scientific and commercial
customers, including NASA. The Company expects to place two additional
satellites providing high-resolution digital imagery into operation in 1999 and
2000, respectively. The Company's imagery products and services are intended to
provide ORBIMAGE customers with information concerning, among other things,
forestry and crop health, urban growth and development, the locations and
movements of troops or military assets, land and ocean-based natural resources
and weather patterns and wind conditions. ORBIMAGE intends to provide customers
with imagery at a lower price than that provided by existing or planned remote
imagery alternatives. Customers have entered into imagery contracts providing
for minimum payments to the Company totaling approximately $100 million, of
which the Company has received approximately $48 million to date.
In April 1995, ORBIMAGE launched its first satellite, OrbView-1, which
provides dedicated weather-related imagery and meteorological products to NASA.
The Company's second satellite, OrbView-2, was launched in August 1997 and
provides images of land and ocean surfaces to commercial customers, as well as
to NASA and other scientific users. The Company believes that OrbView-2 is the
only satellite of its kind providing daily color images of the entire Earth's
surface. ORBIMAGE is in the process of completing the design of the
high-resolution OrbView satellites, which are being designed to provide
high-resolution panchromatic (black and white), multispectral (color and
infrared) and, in the case of OrbView-4, hyperspectral (enhanced color and
enhanced infrared) imagery. OrbView-3 is scheduled to be operational during the
second half of 1999, and OrbView-4 is scheduled to be operational in mid-2000.
The Company believes that OrbView-3 and OrbView-4 will be among the first
commercial satellites with high-resolution imagery capability and that OrbView-4
will be the world's first satellite with commercially available hyperspectral
capability.
Remote imaging is the process of observing, measuring and recording
features, objects or events from a distance using a variety of sensors mounted
on satellites and aircraft. ORBIMAGE believes that the current market for global
remote imagery and related market exceeds $10 billion annually. This existing
market consists of both domestic and international commercial and government
users, and includes satellite development, construction and operations costs
incurred by users who decide to build and operate their own satellite systems.
Historically, in the United States, the only "commercial" operators of remote
imaging satellites were quasi-governmental programs such as the low-resolution
Landsat satellite systems in operation since the 1970s. The opportunities for
commercialization of space-based imagery expanded significantly in 1994 when the
U.S. government implemented a policy permitting the worldwide, commercial sale
of high-resolution satellite imagery. The U.S. government has estimated that the
worldwide market for remote imagery products and services addressable by
commercial imagery providers will be approximately $2 billion by the year 2000.
ORBIMAGE believes that this worldwide commercial imagery market will grow as the
availability of low-cost, high quality satellite imagery stimulates the demand
for such products and services and encourages the development of new
satellite-imaging technologies and applications.
Customers have entered into imagery contracts providing for minimum
payments to the Company totaling approximately $100 million, of which the
Company has received approximately $48 million to date. These contracts include
(i) a contract to provide NASA with weather-related imagery and meteorological
information generated by OrbView-1, (ii) a contract to provide NASA with color
ocean imagery generated by OrbView-2, (iii) a contract to provide the U.S. Air
Force with hyperspectral imagery from OrbView-4 and (iv) the Samsung Agreement.
The Samsung Agreement requires Samsung Aerospace to pay an annual minimum amount
for high-resolution OrbView imagery for each of the three years after OrbView-3
becomes operational. In addition, the Company has entered into agreements with
regional distributors in Canada and Chile for OrbView-2 imagery and is in
negotiation with potential regional distributors for high-resolution OrbView
imagery in the Middle East, Europe, Asia, Southern Africa, South America and
Australia. To
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<PAGE> 47
provide industry-specific imagery applications, ORBIMAGE is seeking to develop
strategic alliances with key VARs who currently provide imagery products to
customers in industries such as oil and gas exploration, mining, agriculture,
forestry, fishing and cartography.
THE REMOTE IMAGERY INDUSTRY
Remote imaging is the process of observing, measuring and recording objects
or events from a distance using a variety of sensors mounted on satellites,
aircraft or ground-based stations. Imagery is usually processed in an electronic
or hard copy format consisting of panchromatic or multispectral images. Until
1992, all satellite imagery systems were either military surveillance platforms
or were sponsored by large national and international civil space agencies,
which used satellites to monitor meteorological conditions and environmental
changes on the Earth's surface. Currently, there are a limited number of
commercial providers of satellite imaging services, which collectively address
only a portion of the demands and opportunities in the remote imaging industry.
The majority of today's remote imagery comes from local or regional aerial
photography firms. Although aerial imaging companies are able to achieve high
spatial resolution and customize their products according to local needs, their
slow response time, limited coverage area, restricted ability to fly over
certain areas and high cost limit widespread use of such imagery. Many existing
maps are based on out-of-date imagery because they are expensive to update. The
remainder of current commercial imagery sales are generated by a few providers
of low-resolution satellite imaging services; however, these providers have
failed to satisfy the market's growing sophistication and demand segmentation.
As the market develops, primary competitive factors are expected to
include: (i) spatial and/or spectral resolution, (ii) frequency of revisit
times, (iii) pricing, (iv) timeliness of imagery distribution and (v) extent of
geographic coverage. OrbView-2 and the high-resolution OrbView satellites have
been designed to offer a number of strategic advantages over currently available
commercial remote imaging systems including increased spatial resolution and
increased spectral capability. Certain markets such as national security mapping
and surveying markets require spatial resolution of less than three meters. In
addition, increased spectral resolution, or the ability to take highly precise
color and infrared images of the Earth's surface, enables potential customers in
the agriculture and fishing industries to better detect and identify crop health
and map prime fishing locations. Spectral resolution also can be used in the
exploration of natural resources, for example, land conditions that signify the
presence of oil will be easier to identify on an infrared image than in a
conventional black and white aerial photograph.
The Company believes that a key competitive advantage that the
high-resolution OrbView satellites will have over aerial photography is their
ability to image any location on the Earth in one to three days and to make the
imagery available in real time through a broad distribution channel. Currently,
a commercial imagery customer such as a telecommunications company that wants to
map a large, fairly remote area to determine where to place cellular towers
would hire an aerial photographer to fly an airplane over the area to take
pictures, develop the film and deliver the final map to the customer. This can
be time-consuming and expensive. In contrast, the Company expects that its
OrbView-3 satellite will be able to map 20,000 square kilometers in a single
10-minute pass. Similarly, countries around the world that are unable or
unwilling to establish their own space programs can conduct complete border
surveillance only in the areas over which aerial photographers can safely fly.
The Company expects that the high-resolution OrbView satellites will be able to
image areas that are not accessible by airplanes because the air space is
restricted or they are too remote. In addition, up-to-date maps are key for
serving certain high-technology segments of the national security market, such
as digital terrain modeling for aircraft and missile guidance. ORBIMAGE believes
the real-time global imagery from the high-resolution OrbView satellites will
allow customers to efficiently and cost-effectively map areas of the world that
have never been photographed commercially or for which existing maps are now
obsolete, and will permit users to frequently monitor agricultural, forestry and
fishing areas to provide timely information to enhance business and government
effectiveness.
BUSINESS STRATEGY
ORBIMAGE's business strategy is to (i) penetrate existing markets, (ii)
create new markets to sustain long-term growth, (iii) provide imagery at prices
lower than other satellite and aerial-based imagery,
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(iv) achieve global distribution, (v) provide worldwide coverage on a timely
basis, (vi) establish an electronic imagery archive with broad and diverse
imagery products and (vii) leverage the expertise of Orbital, including
Orbital's existing satellite imagery technology and product infrastructure, to
promote rapid market acceptance.
Penetrate Existing Markets. The Company believes that its existing
addressable markets consist of numerous applications, including new construction
site selection, oil, gas, and mineral exploration activities, utility
infrastructure monitoring, scientific and environmental monitoring and U.S.
national security applications. In each of these market applications, ORBIMAGE
believes it should be able to gain market share rapidly because it expects its
imagery to be priced below that of existing aerial imagery and planned satellite
imagery and to be of higher spatial and spectral resolution than existing
satellite imagery.
Create New Markets. Through the introduction of affordable,
high-resolution satellite imagery, the Company believes it will stimulate the
development of new markets. For example, ORBIMAGE's marketing efforts to date
indicate that certain market segments do not currently have access to dedicated
high-resolution imagery, such as the foreign national security and commercial
fishing markets. The Company believes that such markets will develop rapidly as
commercial high-resolution imagery becomes available. Furthermore, the Company
believes it can develop new commercial applications for satellite-based imagery
including, among other uses, real estate assessment, travel planning and
entertainment applications.
Provide Low Priced Imagery. The Company believes that the expected cost to
construct its high-resolution OrbView satellites and related ground systems, the
principal components of which will be furnished by Orbital under a fixed-price
contract, will be less than or competitive with the announced costs of its
competitors' high-resolution satellite systems. The Company believes that the
cost of its satellites and related ground systems will afford it pricing
flexibility for its imagery products and services, allowing it to pursue a
strategy of pricing aggressively while still realizing attractive returns.
ORBIMAGE believes that the high-resolution OrbView satellites should be able to
provide a lower-priced imagery alternative to existing aerial photography.
Achieve Global Distribution. The Company believes that it can expand its
market share by providing imagery to end users both directly and through third
party distribution channels, such as foreign regional distributors and VARs. The
Company intends to focus its direct distribution efforts on larger customers in
the commercial/consumer and scientific/environmental markets and on the U.S.
national security market. The Company expects that VARs will perform
application-specific processing and analysis of the Company's imagery for
various commercial applications. The Company believes that utilizing these
distribution channels simultaneously will enhance the distribution of its
products and services.
ORBIMAGE believes that the most effective way to penetrate foreign markets
is to enter into relationships with strong regional partners who have existing
marketing and distribution infrastructures and are able to overcome local
regulatory barriers. The Company expects these distributors to purchase or
upgrade and operate the ground imagery receiving and processing stations in
their territories and attain the necessary regulatory and approvals to operate
in their territories. ORBIMAGE has entered into distribution agreements with
regional distributors in Chile and Canada for OrbView-2 imagery and has entered
into the Samsung Agreement to distribute high-resolution imagery of the Korean
peninsula. The Company is also in negotiations with potential regional
distributors for high-resolution OrbView imagery in the Middle East, Europe,
Asia, Southern Africa, South America and Australia.
Provide Worldwide Coverage on a Timely Basis. All the OrbView satellites
are designed to provide timely product delivery, either through real-time
imagery downlinking to a distributor's or customer's local ground receiving
station, or through delivery of processed imagery from ORBIMAGE's central U.S.
ground station by overnight courier or via the Internet. OrbView-2 provides
global imagery on a daily basis. OrbView-3 is designed to image virtually any
location on Earth with a "revisit" time of three days or less. Upon the launch
of OrbView-4, the effective "revisit" time of the high-resolution OrbView
satellites should be reduced to less than two days.
Establish Electronic Imagery Archive. The Company is developing the OrbNet
Digital Archive, a database that will collect, store and distribute imagery
derived from satellite and aerial sources. OrbView-2
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imagery can be viewed on the Company's website and is expected to become
available for sale over the Internet. ORBIMAGE intends to expand its imagery
catalogue with aerial and existing satellite imagery products prior to the
launch of its OrbView-3 satellite by entering into strategic alliances with
existing imaging satellite operators, aerial photography firms and imagery VARs.
The Company intends to deliver imagery to customers over the Internet, on CD or
on computer tape for a per image fee.
Leverage Expertise of Orbital. Orbital, the Company's majority
shareholder, is a space technology and satellite services company with extensive
experience in the design and construction of remote imaging satellites and
ground stations. ORBIMAGE has used, and will continue to use, the integrated
space capabilities, infrastructure and experience of Orbital to develop its
business cost effectively, including leveraging certain of Orbital's existing
customer relationships and product lines.
PRODUCTS AND SERVICES
Through the operation of the OrbView-1, OrbView-2, and high-resolution
OrbView satellites and associated U.S. and foreign ground systems, ORBIMAGE
provides and will provide a wide range of imagery products and services.
Weather and Atmospheric Monitoring. The Company's OrbView-1 satellite
provides the U.S. government with daily atmospheric and weather conditions
images, including images showing both clouds and global lightning information
that can be used to improve tornado and hurricane forecasting, and for weather
monitoring and meteorological research. The OrbView-1 satellite also provides
information on the atmosphere near the Earth's horizon to develop atmospheric
temperature, pressure, and water vapor profiles which facilitate the efficient
gathering of worldwide atmospheric information.
Ocean and Land Multispectral Imagery. The OrbView-2 satellite detects
subtle color changes in the Earth's oceans and land areas. Under a five-year
contract, NASA and its researchers may directly downlink certain OrbView-2
imagery to use for their own research purposes. ORBIMAGE is also marketing
licenses to university researchers and other primarily scientific users around
the world to enable them to directly downlink OrbView-2 imagery.
In addition, OrbView-2 provides value-added products that generally can be
delivered within 24 hours of collecting the data. Such products measure
phytoplankton and sediment concentration in oceans and lakes, as well as the
vegetative health of crops and forests on land. Scientists and environmentalists
can use these and other similar imagery products to assess environmental factors
that affect the oceans (including pollution levels and toxic algae events) and
to facilitate "before and after" comparisons of land areas showing, for example,
changes in agricultural crop and forestry growth or the erosion of coastal
zones.
The Company also uses OrbView-2 imagery to generate fishing maps. ORBIMAGE
initially is offering two types of fishing maps, a coastal product targeted at
sport and coastal commercial fishing customers and a deep ocean product targeted
at larger, high seas fishing fleets.
High Spatial Resolution Imagery. High-resolution OrbView imagery will
enable a user to discern an object one-meter in size (the size of a phone booth)
from space. The Company plans to sell its high-resolution imagery products in
the form of hard copies and electronic copies that can be stored and processed
on a computer. ORBIMAGE intends to base its product pricing, in part, on the
level of processing required and the customer's delivery-time requirements.
Sales of unprocessed imagery are targeted to sophisticated end-users, such as
the U.S. and foreign national security customers or VARs who have internal
capability to perform their own imagery enhancement and processing. While the
Company intends to make unprocessed imagery available for sale through the
OrbNet Digital Archive, ORBIMAGE believes that military and intelligence
customers will procure the necessary software from ORBIMAGE to upgrade their
ground stations so that they can directly downlink and process such imagery from
the satellite.
ORBIMAGE may also offer various value-added precision-corrected products.
The Company believes that these products will have applications in all four
target markets, discussed below. Precision-corrected imagery is processed based
upon known geographic points, terrain, elevation and topography to enable the
user to identify the position of the image on the Earth's surface. These
products will address the needs of customers
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who require detailed topographical and elevation information. One example of
such a product is a digital elevation model used by military planners for
aircraft flight simulation. Other examples include maps that analyze the health
of vegetation in farm and forest areas, and land use maps that can segment land
tracts based on population density, construction projects and other land uses.
Hyperspectral Imagery. Hyperspectral imagery provides enhanced color and
enhanced infrared imagery for additional applications, including more precise
crop health analysis and analysis of the presence of minerals that will enable
mining and natural resource exploration companies to more efficiently detect the
location of precious minerals such as gold and silver, and other natural
resources such as oil. In addition, the U.S. Air Force has stated that it
intends to use hyperspectral imagery to assist in detecting, tracking and
monitoring military vehicles and assets.
TARGET MARKETS
The Company targets its imagery product and service offerings toward four
distinct markets: the commercial/consumer market, the scientific/environmental
market, the U.S. national security market and the foreign national security
market. These markets are currently serviced by aerial photography or lower-
resolution government-operated satellite imagery systems.
Commercial/Consumer Market
The Company believes that the near-term commercial/consumer market segment
will include domestic and foreign companies and local governmental entities such
as municipalities that currently use aerial photographs and medium-resolution
satellite imagery products. In the long term the Company expects this market
will also include individual consumers who will use satellite imagery from the
OrbNet Digital Archive in various consumer oriented applications such as real
estate assessment, travel planning, education and entertainment. ORBIMAGE has
already begun targeting the market applications described below, which the
Company believes represent attractive near-term marketing opportunities.
Fishing. The Company believes that fishing maps designed to assist the
commercial ocean fishing industry are among the Company's most promising
near-term commercial market applications. OrbView-2's multispectral sensor has
been specifically designed to distinguish the phytoplankton-rich oceanic regions
from the clear oceanic regions. Many commercially important surface-feeding
fish, such as tuna and swordfish, congregate at the phytoplankton/clear water
boundary. At present, fishing fleets have no means of accurately identifying
this boundary in a timely fashion. Many fishing vessels currently use on-board
helicopters to conduct aerial searches of broadly identified areas. ORBIMAGE
believes its fishing maps will significantly reduce search time and related
hardware and operating costs, will be more accurate, and will cover a broader
area than existing alternatives.
In October 1997, ORBIMAGE commenced a series of beta tests for its
internally developed fishing maps. Seventeen fishing companies with
approximately 50 fishing vessels are currently participating in the
demonstration. Fishing captains view the maps transmitted daily over a satellite
link to their vessels with a personal computer using ORBIMAGE's proprietary
software, or receive the maps in a hard copy format via facsimile. Two fishing
companies, including the largest commercial fishing operator in the Philippines,
have entered into subscription agreements for the service. Additional phases of
the beta testing in the Central and South Eastern Pacific Ocean will be
conducted throughout the first half of 1998.
Mapping and Surveying. The key mapping and surveying markets targeted by
the Company are new construction site selection, utility infrastructure
monitoring and local and regional tax assessment. High-resolution imagery is
used for planning the optimal location for construction projects such as
wireless communication towers, retail development, new housing developments and
highways. For example, telecommunications providers use high-resolution imagery
extensively to determine the topography and land use/land cover classifications
within a region under consideration for new wireless service. This information
enables optimal placement of new communications towers based on the radio signal
transmission characteristics of the region. The Company believes that
high-resolution imagery can also help retail businesses to select the optimal
locations for new businesses by providing valuable information such as
population density, residential
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versus industrial land use patterns, locations of competitive businesses, and
other factors useful in the site selection process.
In addition, the Company believes that its high-resolution OrbView imagery
will be used by gas and electric utilities, which are among the largest current
high-resolution aerial imagery users. Spatial data, such as high-resolution maps
showing precise locations of surface features, is critical to planning, design,
construction, operation, marketing and regulatory compliance in connection with
utilities' widely dispersed networks. Finally, ORBIMAGE believes its
high-resolution imagery will be useful to city, county and state tax authorities
in monitoring taxable activities such as residential add-on construction and
tree-cutting on public and private lands.
Agricultural. ORBIMAGE expects agricultural applications to represent a
growing market opportunity, driven by large, commercial farming customers
interested in obtaining up-to-date data on the condition of their crops and
fields. Today, most agricultural customers either are unable to obtain the
requisite imagery, or must rely on direct on-site inspection or aerial
photography at substantial expense. The Company believes products based on
multispectral and hyperspectral satellite imagery will provide timely and
valuable information on the health of crops and assist in managing the
allocation of water, fertilizer and pesticides. In addition, the Company
believes its broad-area multispectral and hyperspectral imagery could increase
the accuracy of crop-yield forecasts and benefit insurance companies, commodity
traders and agricultural products brokers.
Forestry. To date, demand for aerial imagery products in the forestry
industry has been modest due to the high cost, poor resolution and lack of
appropriate revisit time of existing alternatives. The availability of
ORBIMAGE's high-resolution, low-cost imagery products is expected to drive
forestry industry demand for satellite imagery. In particular, ORBIMAGE believes
the multispectral imagery generated by OrbView-2 and the high-resolution OrbView
satellites will be beneficial in monitoring the overall health of forests, and
OrbView-4's hyperspectral imagery will be useful in distinguishing tree
plantations of different species and ages through pattern recognition
techniques. The Company believes this information will be beneficial both to
private forest product companies and to government agencies such as the U.S.
Forest Service.
Mineral Exploration. The Company believes high-resolution OrbView
satellite imagery will also be valuable for oil, gas and mineral exploration
companies for planning operations in remote regions of the world. In many
locations where such exploration occurs there is a great need for improved
mapping information for such activities as planning equipment transport, seismic
field testing and drilling operations. Also, the hyperspectral imagery from
OrbView-4 will be useful for identifying promising locations for new oil, gas
and mineral reserves. Spectral matching techniques will be used to identify
specific "pathfinder minerals" which signify high probability locations for oil,
gas and other mineral reserves.
Scientific/Environmental Market
The scientific/environmental market is comprised of government entities
that use satellite imagery to monitor environmental, climate-related and
meteorological phenomena, both in real-time and over extended time periods, as
well as commercial entities such as airlines, oil and gas companies and
insurance companies who need accurate, timely environmental information over
wide geographic areas. ORBIMAGE is marketing imagery from OrbView-2 to national
government agencies such as NASA, the U.S. Navy, and the Department of
Agriculture. All these agencies currently use aerial and satellite imagery for
diverse applications, including weather prediction, monitoring of ocean
conditions, natural disaster assessment, environmental impact studies and
similar applications. Since 1995, OrbView-1 has generated information that has
improved the meteorological community's ability to predict the timing and
location of severe storms including tornadoes and hurricanes. The Company
believes OrbView-2's ability to monitor phytoplankton levels in the world's
oceans on a global basis will be valuable to scientists in studying global
climate change and to coastal fisheries in tracking dangerous and costly "red
tide" events. The Company believes its high-resolution and hyperspectral imagery
will be helpful to government agencies in a variety of environmental
applications including assessment of the damage from natural disasters such as
floods, forest fires, earthquakes and severe storms and the environmental impact
of industrial activities.
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U.S. National Security Market
The U.S. government has publicly stated that demand for high-resolution
imagery, especially for use by tactical military commanders in the field, far
exceeds the supply currently provided by its dedicated surveillance satellites.
The Company believes that anticipated additional cutbacks in DoD and NRO
budgets, together with the greater number of areas around the world in which the
U.S. has a military interest, may further drive government agencies' need for
commercially available high-resolution imagery and cause them to place increased
reliance on lower-cost commercial providers. Commercial satellite imagery can
augment current classified government satellite programs which use data, imagery
and related products and services for mapping, reconnaissance, surveillance,
trend analysis, mission planning, and targeting of conventional and "smart"
weapons such as the "Tomahawk" cruise missile. ORBIMAGE believes that it can
capture a significant share of this market once either of the high-resolution
OrbView satellites are operational. ORBIMAGE is performing under a $33 million
contract (with up to $8 million in contract options) to provide real-time
hyperspectral imagery from OrbView-4 to the U.S. Air Force. The U.S. Navy has
also expressed an interest in procuring OrbView-2 imagery for measuring water
clarity and for similar applications. The imagery would assist the U.S. Navy in
determining optimal times, locations and depths for performing laser and sonar
operations relating to mine detection and submarine communication.
Foreign National Security Market
Many countries have a strong national security interest in obtaining
real-time high-resolution satellite imagery to help monitor borders, gather
intelligence on potential adversaries, identify and target enemy troops and
assets, plan missions and deploy resources, and assess battle damage. Many
countries have aerial reconnaissance aircraft, but such aircraft are at risk if
they penetrate foreign air space. The vast majority of foreign countries neither
own nor have access to satellites that generate high-resolution imagery.
Therefore, these countries have only three possible options to collect
high-resolution satellite imagery: (i) develop the technology and build and
launch their own satellites, (ii) purchase and operate a turn-key satellite
system, or (iii) purchase "time-share" capacity from a satellite imagery
company. Developing the technology and manufacturing expertise and then
constructing a dedicated high-resolution satellite system and the infrastructure
to support it requires a sizable financial investment and may require a
substantial time commitment. Purchasing a turn-key high-resolution satellite
system from a company in the United States or another country may be difficult
due to export controls and safeguards relating to national security interests
and licensing requirements. Purchasing a portion of the total capacity of a
commercial satellite while it orbits a foreign government customer's area of
interest provides the same high-resolution imagery capability as other
alternatives, but is less expensive and more readily attainable. This "time
share" arrangement is the one being offered by ORBIMAGE to its regional
high-resolution OrbView imagery distributors.
ORBIMAGE is currently in discussions with several potential regional
distributors in Asia, Europe, the Middle East, Australia, South America and
Southern Africa, and has already entered into the Samsung Agreement for imagery
of the Korean peninsula. The interest expressed by potential regional
distributors during the course of these discussions strengthens ORBIMAGE's
belief that there exists substantial unmet demand for such imagery. The Company
believes that its products and services will provide an effective means for
foreign governments to acquire high-resolution imagery for national security
purposes.
MARKETING AND DISTRIBUTION
The Company currently plans to market and distribute imagery from
ORBIMAGE's satellite network through (i) ORBIMAGE's direct sales force, (ii)
market- or application-specific VARs, (iii) foreign regional distributors, and
(iv) the OrbNet Digital Archive.
Direct Sales. ORBIMAGE's initial strategy for direct sales is to market
and sell its basic imagery products to U.S. government agencies or to companies
with internal image processing capabilities (e.g. large oil and gas producers).
Since mid-1995, ORBIMAGE has delivered OrbView-1 atmospheric imagery directly to
NASA on a daily basis. Since October 1997, NASA and its authorized researchers
have been directly downlinking OrbView-2 imagery at their own ground receiving
stations. ORBIMAGE may also directly
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market and will distribute its products and services, such as fishing maps to
commercial and scientific customers worldwide.
ORBIMAGE will continue to market its products and services directly to the
U.S. military services, U.S. intelligence gathering agencies, other U.S.
governmental customers and foreign governments that do not wish to purchase
imagery products through a regional distributor. The Company anticipates that
imagery for these customers will either be downlinked directly to the customers'
existing ground receiving stations (which will be upgraded to be
OrbView-compatible), or to ORBIMAGE's U.S. central ground station and then
delivered to the applicable end user.
Value-Added Resellers. While ORBIMAGE expects to perform certain
value-added services internally (as it is doing with certain OrbView-2 products
such as the fishing maps), the Company also intends to distribute its imagery to
end users through VARs who process it into complex maps and other types of
products for specific markets or applications. Currently, there are numerous
VARs located in the United States and other countries processing imagery derived
from existing satellite imagery providers and aerial photographers. The Company
intends to work with VARs who have technological expertise and know-how to
produce more complex products, and who have a strong presence within and
knowledge of a certain industry. ORBIMAGE is currently in discussion with a
number of VARs located around the world with expertise in industries such as
agriculture , mining and oil and gas exploration, as well as with several VARs
who process raw imagery into specific product types, such as digital elevation
maps, for a broad base of customers.
Foreign Regional Distributors. The Company expects to sell high-resolution
OrbView satellites imagery in the international market principally through
exclusive arrangements with various regional distributors. The Company expects
that its distribution agreements will give foreign regional distributors
priority in "tasking" the satellite's camera while the satellite is over its
geographic region. ORBIMAGE generally expects to retain the right to market and
sell imagery of a distributor's territories, although the Company will pay the
distributor a royalty for these sales. In certain cases, the Company may agree
that a distributor's approval is required for certain sales of imagery,
including sales to specified customers or of specific areas. It is anticipated
that a single geographic distribution region normally will have a maximum radius
of approximately 2,400 kilometers from the ground station (this is the maximum
range that the satellite can communicate with the ground station on a given
orbital pass), although the precise size of each region will be negotiable.
ORBIMAGE has OrbView-2 distributors in Canada and Chile, and is in
discussions with potential OrbView-2 distributors in Asia and Europe. ORBIMAGE
has entered into the Samsung Agreement for imagery of the Korean peninsula and
is in discussions with potential regional distributors in the Middle East,
Europe, Asia, Australia, South America and Southern Africa for high-resolution
OrbView imagery.
The Company anticipates that its regional distribution agreements will
generally provide for significant annual minimum guaranteed royalty payments,
additional royalties for taskings or image purchases above agreed minimums, and
the purchase of a regional ground station. ORBIMAGE will also provide training
and technical support services to regional distributors, the extent and price of
which will be negotiated on a case-by-case basis.
OrbNet Digital Archive and Database. The fourth method of marketing
imagery is an on-line electronic catalog called the OrbNet Digital Archive. The
OrbNet Digital Archive will be a comprehensive, digital-imagery database in
which the Company collects, stores and distributes imagery derived from its
satellites and other satellite and aerial sources. The Company may then deliver
the images to customers over the Internet, on CD or computer tape. Through
strategic alliances with existing imaging satellite operators, aerial
photography firms and imagery VARs, ORBIMAGE intends to gain early recognition
as an electronic depository for a comprehensive digital imagery catalogue
consisting of a broad range of diverse imagery products primarily targeted to
the commercial/consumer and scientific/environmental markets. The Company is in
preliminary discussions with one existing satellite company and various aerial
imaging companies regarding imagery distribution opportunities through the
OrbNet Digital Archive.
Imagery will be directed from the satellites to ground receiving stations
or VARs, where images will be processed, copies made and images forwarded to the
central archive. OrbView-2 imagery is directly
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downlinked from the satellite to individual satellite receiving stations
strategically located around the world and forwarded to the central OrbNet
Digital Archive in Dulles, Virginia. The Company expects the OrbNet Digital
Archive will commence operation in early 1998 offering OrbView-2 imagery
products.
RISK MITIGATION
ORBIMAGE has adopted a comprehensive strategy to mitigate the financial,
business and technical risks associated with market development and satellite
development, satellite construction, launch and operations.
Market Development. ORBIMAGE has reduced, and seeks to continue to reduce,
the financial risks associated with constructing and operating its fleet of
satellites by negotiating pre-launch contracts with customers and/or
distributors. Customers have entered into imagery contracts providing for
minimum payments to the Company totaling approximately $100 million, of which
the Company has received approximately $48 million to date. To further
facilitate market penetration, the Company is also seeking to develop strategic
alliances with VARs who currently provide imagery products to customers in
industries such as oil and gas exploration, mining, agriculture, forestry,
fishing and cartography.
Construction and Launch. ORBIMAGE has entered into the Procurement
Agreement with Orbital to build and launch the high-resolution OrbView
satellites, and to construct the related ground system. The majority of the
imagery technology and the sub-system components to be used in the
high-resolution OrbView satellites has been deployed in U.S. government
surveillance and other space programs prior to their use by ORBIMAGE. In
addition, the high-resolution OrbView satellites incorporate system redundancies
for certain critical components. Also, with an approximate 90% launch success
rate Orbital's Pegasus launch vehicle has a proven track record of successfully
launching satellites into their target orbit.
Operations. The OrbView-3 and OrbView-4 satellite systems have
substantially similar performance parameters, with OrbView-4 additionally having
hyperspectral imagery capability. The high-resolution OrbView satellites are
expected to be launched within a year of each other, thus reducing the business
risk from launch and operational failure and resulting in a more robust
satellite system.
SATELLITE AND GROUND SYSTEM OPERATIONS
ORBIMAGE's basic system architecture consists of several major components:
(i) a fleet of low-Earth orbit, advanced-technology small imaging satellites
carrying sophisticated sensors that collect specific types of land, ocean and
atmospheric imagery; (ii) a central U.S. ground system that controls the
satellites and that receives, processes and archives their imagery, and includes
electronic cataloging and distribution capabilities; and (iii) foreign regional
receiving and distribution centers with direct downlinking capabilities. The
Company believes that its system will provide global economies of scale in image
collection, processing and distribution. In particular, the Company believes the
system design will enable it to collect, produce and sell spatial and
spectral-resolution imagery on a worldwide scale every day, as the OrbView
satellites circle the Earth every 90-100 minutes and are "time shared" over many
different geographic areas.
OrbView-1 was launched in April 1995. It has operated successfully since
then and the Company now expects it to exceed its original three-year design
life. OrbView-2 was launched in August 1997 and initiated commercial operations
in October 1997. OrbView-3 and OrbView-4 are scheduled to be operational in the
second half of 1999 and mid-2000, respectively. The OrbView satellites represent
a progression in space imaging technology and demonstrate Orbital's use of
proven technologies and system experience. The incremental progression in both
spatial and spectral satellite imaging capabilities among the OrbView satellites
mitigates technical risks. The OrbView satellites employ lightweight structures,
advanced sensors, miniaturized electronics, and innovative technical processes
designed to provide high performance at relatively low cost. In the construction
of the high-resolution OrbView satellites, Orbital will draw upon its satellite
imaging experience not only from OrbView-1 and OrbView-2, but also from large
national satellite programs like Landsat 4 and Landsat 5 to minimize overall
program risk. The OrbView-1 and OrbView-2 satellites are, and the
high-resolution OrbView satellites will be, commanded and controlled from
ORBIMAGE's main operations center located in Dulles, Virginia.
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The following table summarizes the primary technical characteristics of the
four OrbView satellites.
<TABLE>
<CAPTION>
ORBVIEW-1 ORBVIEW-2 ORBVIEW-3 ORBVIEW-4
------------------ ------------------ --------------------- ---------------------
<S> <C> <C> <C> <C>
Principal Applications Weather, Weather, Fishing, Mapping, Agriculture, Mapping, Agriculture,
Scientific Agricultural, Oil and Gas, National Oil and Gas,
Research Scientific Security Forestry, Mining,
Research National Security
Best Ground Resolution 10 km Panchromatic 1 km Multispectral 1 m Panchromatic 1 m Panchromatic
4 m Multispectral 4 m Multispectral
8 m Hyperspectral
Scene-Width 1,300 km 2,800 km 8 km Panchromatic and 8 km Panchromatic and
Multispectral Multispectral
5 km Hyperspectral
Image Area N.A. N.A. 64 km(2) 64 km(2) Panchromatic
Panchromatic and and Multispectral
Multispectral 100 km(2)
Hyperspectral
On-Board Storage 80 Megabytes 128 Megabytes 4 Gigabytes 4 Gigabytes
Revisit Time 12 Days 1 Day <3 Days(1) <3 Days(1)
Orbital Altitude 740 km 705 km 470 km 470 km
Design Life 3 Years(2) 7 1/2 Years 5 Years 5 Years
</TABLE>
- ------------------------------
(1) The combined revisit time of both the high-resolution OrbView satellites
will be less than 2 days.
(2) Based on current performance, the Company expects the satellite to exceed
its design life.
ORBVIEW-1 SATELLITE
The OrbView-l satellite contains two atmospheric sensors providing
weather-related imagery to U.S. government customers. The first sensor, a
miniaturized camera, provides daily severe weather images and global lightning
information. It also records cloud-to-cloud lightning strikes that are not
observable from the ground and which provide information that may improve
tornado and hurricane prediction accuracy. OrbView-1 also measures variations in
radio signals through various parts of the atmosphere near the Earth's horizon
to develop atmospheric temperature, pressure, and water vapor profiles. This
technique enables efficient gathering of worldwide atmospheric temperature
information for domestic and international meteorological agencies and airline
operators, among other users.
The OrbView-1 satellite weighs 167 pounds and provides about 100 watts of
power with 55 watts available to its wide-field-of-view sensors. The on-board
solid state recorder memory permits storage of a half day's imagery for
transmission at two megabits per second to ORBIMAGE's primary U.S. ground
station. The satellite has a design life of three years, but is expected to be
operable for a somewhat longer period into 1999 or 2000.
ORBVIEW-2 SATELLITE
The OrbView-2 satellite was launched in August 1997 and is believed to be
the world's only operational satellite providing global color imagery of the
entire Earth's surface on a daily basis. OrbView-2 uses eight spectral bands in
the visible and near-infrared spectrum to detect subtle color changes on the
Earth's surface. It is expected to perform for at least 7 1/2 years due to its
advanced redundancy architecture. The 660-pound OrbView-2 was launched into a
sun-synchronous orbit at an altitude of 705 kilometers, which together with its
wide-field-of-view sensor allows for complete global coverage every day.
OrbView-2 delivers ocean and land color imagery at both one-kilometer resolution
and at four-kilometer resolution. OrbView-2 is capable of downlinking imagery to
both ORBIMAGE's primary and backup ground stations and to various regional
receiving stations around the world. Orbital owns the OrbView-2 satellite and
the Company operates the OrbView-2 satellite under the OrbView-2 License.
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HIGH-RESOLUTION ORBVIEW SATELLITES (ORBVIEW-3 AND ORBVIEW-4)
The high-resolution OrbView satellites, the first of which is currently
targeted to be operational in the second half of 1999, have been designed to
provide one-meter panchromatic imagery and four-meter multispectral imagery of
the Earth's surface. OrbView-4 will have similar capabilities to OrbView-3 and,
in addition, will provide eight-meter hyperspectral imagery. The high-resolution
OrbView satellites will have substantially similar performance capabilities,
reducing the impact of a satellite failure and increasing revisit frequency,
thus improving ORBIMAGE's overall capacity to supply timely imagery to its
customers. Imagery will be either downlinked in real-time to regional ground
stations or stored on board the satellite and subsequently downlinked to the
U.S. central ground station. Copies of most imagery downlinked to regional
ground stations will be forwarded to the OrbNet Digital Archive.
The partially redundant designs of the high-resolution OrbView satellites
provide an expected life of at least five years for each satellite. This system
builds upon the technical accomplishments of earlier ORBIMAGE and other Orbital
satellites, further refining the lightweight structures and microprocessor-based
high performance electronics used in these satellites. The high-resolution
OrbView satellites are designed to provide maximum maneuvering agility together
with a stable optical platform for high quality image collection. The compact
design is expected to facilitate the satellite's maneuverability and agility,
while short solar arrays are expected to help keep unwanted satellite motion and
vibration to negligible values.
The high-resolution OrbView satellites each will have an orbital altitude
of 470 kilometers and polar inclination. This should enable each satellite to
image any point on the Earth within three days or less. Once both satellites are
in orbit, the effective revisit time is expected to be less than two days. The
polar inclination will keep the orbit sun-synchronous and will have an orbital
orientation that places the satellite over the imaging area at approximately
10:30 a.m. "solar time" every orbit. The orbital path of the high-resolution
OrbView satellites is expected to pass over the territory covered by a typical
regional ground station an average of 1.7 times each day, providing 12 1/2
minutes of imagery time (assuming 25 degrees latitude ground station location)
and producing approximately 200 images per day (assuming a certain mix of image
types per territory). While each satellite is within communications range of the
regional ground station every day, each satellite is designed to revisit any
specific target every three days or less. This is because the satellite's
high-resolution "seeing" range (approximately 940 kilometers in diameter) is
less than its communications range (approximately 4,800 kilometers in diameter).
The Company expects the total annual realizable capacity of each of the
high-resolution OrbView satellites to be approximately 400,000 to 500,000
images, depending on customer preferences for the various images available and
certain operating assumptions, including cloud cover of targeted areas and
availability of regional ground systems.
GROUND OPERATIONS CENTERS AND IMAGE PROCESSING FACILITIES
ORBIMAGE's central U.S. ground stations monitor the OrbView satellites
while they are in orbit and commands the satellites as required to ensure that
proper orbits are maintained, that battery power stays within acceptable limits
and that appropriate communications links are maintained. For the
high-resolution OrbView satellites, ORBIMAGE will also transmit commands to the
sensor on board the satellite providing the longitude and latitude of areas to
be imaged on upcoming orbital passes. This latter function involves receiving,
prioritizing and uplinking to the satellite the image requests received from
ORBIMAGE's domestic customers and foreign regional distributors.
The image receiving and processing center for the family of OrbView
satellites is also located at ORBIMAGE's U.S. facility and will consist of
several ground antennas capable of receiving down-linked imagery from the
satellites and numerous work stations where the digital imagery streams from the
satellites are processed and converted into useful imagery products. The center
is being designed to be capable of processing and archiving 6,500
high-resolution OrbView satellite images per day. It is also designed to process
a sample of each image for placement in the OrbNet Digital Archive accessible by
customers using the Internet.
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The imagery collected by OrbView-2 and the high-resolution OrbView
satellites is designed to either downlink directly to a user or be stored
on-board for later downlink to an ORBIMAGE ground station located in the United
States. OrbView-2 and the high-resolution OrbView satellites have been designed
to image and downlink simultaneously, so users with a compatible ground station
can receive real-time imagery for the full time that the satellite is in view of
a ground station. With one station in Dulles, Virginia and a planned second
station in Alaska, high-resolution and hyperspectral OrbView imagery is expected
to be downlinked on three of every four passes for subsequent processing,
archiving and distribution by ORBIMAGE. This procedure ensures timely delivery
of imagery to even those customers without a dedicated ground station. The
high-gain directional antenna on board the high-resolution OrbView satellites,
which continually tracks the ground station, is expected to provide a strong
signal to the ground with resulting very low transmission errors. Even with
compression and encryption of the signal, coding and transmission errors are
expected to be insignificant.
COMPETITION
ORBIMAGE's satellite and aerial imaging competitors include (i) small,
regional aerial photography firms, (ii) a limited number of existing satellite
imagery providers, and (iii) other anticipated high-resolution satellite imagery
providers.
Existing Aerial Photography Firms. The major source of commercial
high-resolution imagery today is aerial photography. This market is very
fragmented, with numerous small, regional firms located all over the world. Most
aerial photography firms currently use film-based technology rather than the
digital camera technology used by OrbView satellites. ORBIMAGE expects that its
satellites will provide customers with higher resolution and/or lower cost
imagery than is provided by existing aerial photography firms.
Existing Satellite Imagery Providers. OrbView-1 and OrbView-2 have no
existing direct competitors for their daily panchromatic and multispectral
imagery. There are four existing satellite-based providers of low-resolution
imagery: (i) SPOTImage S.A., a French-owned company, currently produces
unprocessed imagery using three satellites with resolution capability of 10
meters panchromatic and 20 meters multispectral; (ii) Space Imaging EOSAT's
Landsat 4 and Landsat 5 satellites, provide coverage in seven spectral bands
covering the visible to infrared parts of the spectrum, but, the best resolution
of these satellites is 30 meters in multispectral; (iii) Radarsat-I, operated by
the Canadian Space Agency, provides radar imagery with a resolution that varies
between 10 and 100 meters (Radarsat-II, which will provide three-meter radar
imagery, is scheduled for launch in 2001); (iv) KVR-1000, a Russian government
satellite, provides film-based, two-meter resolution panchromatic images; and
(v) IRS-IC, an Indian Space Agency satellite, provides six-meter panchromatic
and 25 meter multispectral imagery. ORBIMAGE currently views these providers as
indirect competitors to the high-resolution OrbView satellites in certain
markets. See "Risk Factors--Technological, Development and Implementation
Risks."
Future Satellite Competitors. The high-resolution OrbView satellites are
expected to face future competition in the satellite imagery market from two
U.S. satellite competitors who are planning imaging satellites that will have
one-meter panchromatic and four-meter multispectral capability: Space Imaging
EOSAT, which is owned by Lockheed Martin Corporation, Raytheon Company and
Mitsubishi Corporation; and EarthWatch, which is owned by Ball Aerospace and
Technology Corporation, Telespazio and Hitachi, Ltd. In addition, the U.S.
government and foreign governments may fund the development, construction,
launch and operation of remote imaging satellite systems that may compete with
OrbView-2 as well as the high-resolution OrbView satellites. For example, NASA's
Earth Science Program is sponsoring a satellite scheduled for launch next year
that will provide imagery similar to that of OrbView-2.
EMPLOYEES
As of March 31, 1998, the Company had 37 employees, all of whom are based
in the Company's Dulles, Virginia office. None of the Company's employees is
represented by a collective bargaining agreement.
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PROPERTIES
The Company currently leases approximately 15,000 square feet of office and
operations space in Dulles, Virginia from Orbital, at Orbital's cost. See
"Relationship with Orbital Sciences Corporation--Services Agreement."
LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings. For a
discussion of regulatory issues affecting the Company, see "Regulation."
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REGULATION
The satellite remote imaging industry is a highly regulated industry, both
domestically and internationally. In the United States, remote imaging
satellites generally require licenses from the Department of Commerce ("DoC")
and from the Federal Communications Commission ("FCC"). In addition, in order to
operate internationally, remote imaging satellites generally require licenses
from the governments of foreign countries in which imagery will be directly
downlinked.
UNITED STATES REGULATION
DoC REGULATION. The DoC, through the National Oceanic and Atmospheric
Administration ("NOAA"), is responsible for granting commercial imaging
satellite operating licenses, coordinating satellite imaging applications among
several governmental agencies to ensure that any license addresses all U.S.
national security concerns and complying with all international obligations of
the United States. Under the provisions of the Company's DoC licenses, the U.S.
government reserves the right to interrupt service during periods of national
emergency when U.S. national security interests are affected. The threat of such
interruptions of service could adversely affect the Company's ability to market
its products to certain foreign distributors or end-user customers. In addition,
the DoC has the right to review and approve the terms of agreements with the
Company's international customers and distributors. The OrbView-1 satellite is
not subject to DoC-NOAA regulation since its imagery can be sold only to the
U.S. government.
Orbital currently holds the DoC license for OrbView-2 because of the terms
of its agreement with NASA. This arrangement however, does not affect the
Company's rights under the OrbView-2 License. ORBIMAGE currently has a DoC
license for two one-meter high-resolution satellites. ORBIMAGE also filed an
application with the DoC to permit the Company to make OrbView-4 hyperspectral
imagery available commercially. The Company expects its amendment request to be
granted well in advance of the launch of OrbView-3. However, there can be no
assurance that DoC will grant the amendment request, or that the agency will
take such action in a manner consistent with the Company's planned schedule for
launch and operation of OrbView-4. If the DoC fails to grant the Company's
amendment request regarding its ability to sell hyperspectral imagery
commercially, ORBIMAGE would be limited to selling such imagery to U.S.
government customers.
The DoC licenses for OrbView-2 and the high-resolution OrbView satellites
expire in 2004. While the Company believes that the DoC would renew its licenses
at that time, the DoC's failure to do so with respect to the high-resolution
OrbView satellites could materially affect the Company's business.
NTIA AND FCC REGULATION. The DoC also regulates federal governmental use
of certain imagery satellite systems through the National Telecommunications and
Information Administration ("NTIA"). The NTIA regulates and manages domestic use
of the radio frequency spectrum by U.S. federal agencies. An NTIA license
permits a downlink only to a federal governmental agency, although the federal
agency is not generally restricted as to subsequent distribution of its imagery.
The FCC is responsible for licensing the radio frequencies used by commercial
satellite imagery systems. In general, the FCC grants licenses to commercial
satellite systems that conform to the technical, legal and financial
requirements for such systems as set forth by the FCC.
The OrbView-1 satellite operates in a government exclusive frequency and,
accordingly, is regulated by NTIA. The NTIA license for OrbView-1 is contingent
on NASA retaining full operational control of the OrbView-1 satellite, and the
data collected from the OrbView-1 sensors are the property of the United States.
The operation of OrbView-2 is regulated by both the NTIA and the FCC.
Orbital has an FCC license to operate and receive 1-kilometer imagery from
OrbView-2. In addition, NASA has the NTIA license to downlink 4-kilometer
OrbView-2 imagery on a government-only frequency. The imagery downlinked by NASA
is used by government researchers and also is currently provided to ORBIMAGE for
ORBIMAGE's commercial customers.
In early February 1998, the Company filed an application with the FCC for a
license to launch and operate the high-resolution OrbView satellites, and to
obtain a frequency allocation in the FCC's Earth
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Exploration-Satellite Service ("EESS"), in order to transmit wideband imagery
directly to Earth for commercial use and to perform telemetry, tracking and
command ("TT&C") of the satellites. Currently, two of the Company's potential
satellite-based competitors, EarthWatch and Space Imaging EOSAT, hold licenses
to use the same frequency band that the Company intends to use for such imagery
transmissions, and the band is allocated by the FCC for use by other EESS
licensees, as well as terrestrial fixed and mobile services. These other primary
users of the spectrum will have the opportunity to comment on the feasibility
and public policy benefits of an FCC approval of the Company's application. The
Company believes that a spectrum sharing arrangement among ORBIMAGE, EarthWatch,
Space Imaging EOSAT and other primary users of the requested frequency
allocation may be necessary, and if so, that successful sharing and coordination
will be achievable with the other users' systems through techniques such as time
sharing and frequency diversity, with no adverse impact on the Company's ability
or plans to operate the high-resolution OrbView satellites. There can be no
assurance, however, that the Company will be able to coordinate successfully
with other spectrum users, or more generally, that the Company will receive the
necessary FCC authorization to launch and operate the high-resolution OrbView
satellites as planned. Failure of ORBIMAGE to do so could have a material
adverse effect on its business.
The Company could in the future be subjected to new laws, policies or
regulations, or changes in the interpretation or application of existing laws,
policies and regulations, that modify the present regulatory environment in the
United States. In November 1997, for example, the DoC issued a notice of
proposed rulemaking regarding regulations governing the licensing and operation
of remote imaging satellite systems, which remains pending. There can be no
assurance that limitations applicable to other countries, or other regulatory
limitations affecting satellite remote sensing operations, will not be imposed
by U.S. regulators. Any such limitations could adversely affect the Company's
business.
INTERNATIONAL REGULATION
All satellite systems operating internationally are subject to general
international regulations and the specific laws of the countries in which
satellite imagery is downlinked. Applicable regulations include (i)
International Telecommunications Union ("ITU") regulations, which define, for
each service, the technical operating parameters (including maximum transmitter
power, maximum interference to other services and users, and the minimum
interference the user must operate under for that service), (ii) the Intelsat
and Inmarsat agreements which provide that in order to conform with
international treaties and obligations the operators of international satellite
systems must demonstrate that they will not cause technical harm to Intelsat and
Inmarsat, and (iii) regulations of foreign countries that require that satellite
operators secure appropriate licenses and operational authority for utilization
of the required spectrum in each country.
The United States government, on behalf of the Company, is required to
coordinate the frequencies used by OrbView-2 and the high-resolution OrbView
satellites, which will operate internationally. ITU frequency coordination is a
necessary prerequisite to international registration, which provides
interference protection from other international EESS satellite systems. In
addition, it is a necessary prerequisite for the issuance of approvals and
licenses from certain foreign countries. The ITU coordination process has been
completed for OrbView-2, and the Company intends to have the U.S. government
initiate the ITU coordination process for the high-resolution OrbView satellites
as quickly as possible. The Company believes that the ITU registration process
will not prevent it from obtaining necessary foreign licenses on a timely basis.
In addition to compliance with ITU regulations and coordination processes,
the Company must also demonstrate that it will not cause technical harm to
Intelsat and Inmarsat, pursuant to the Intelsat and Inmarsat Agreements signed
under international treaty. The Company has completed this process for
OrbView-2, and believes that because of the frequencies it intends to use, the
high-resolution OrbView satellites will not cause any technical harm to the
Intelsat or Inmarsat systems.
Within foreign countries, the Company expects that its regional
distributors or customers will secure appropriate licenses and operational
authority for utilization of the required spectrum in each country into which
the the high-resolution OrbView satellite imagery will be downlinked. For the
most part, the Company
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anticipates that these activities will be performed by its distributors or
customers, with the Company's assistance when required.
While the Company believes that it will be able to obtain all U.S. and
international licenses and authorizations necessary to operate effectively,
there can be no assurance that it will be successful in doing so. The failure of
the Company to obtain some or all necessary licenses or approvals could have a
material adverse effect on the Company's business.
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<PAGE> 62
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the directors and executive officers of
ORBIMAGE as of the date of this Prospectus.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ------------------- --- ---------------------------------------------
<S> <C> <C>
David W. Thompson 44 Chairman of the Board and Chief Executive
Officer
Gilbert D. Rye 56 President and Chief Operating Officer
Edward D. Nicastri 50 Vice President, Engineering and Operations
Armand D. Mancini 40 Vice President, Chief Financial Officer
Bruce W. Ferguson 43 Director
Richard Reiss, Jr. 53 Director
William W. Sprague 39 Director
</TABLE>
DAVID W. THOMPSON is the Chairman and Chief Executive Officer of ORBIMAGE
and the Chairman, President and Chief Executive Officer of Orbital. Mr. Thompson
co-founded Orbital in 1982. Prior to founding Orbital, Mr. Thompson was employed
by Hughes Electronics Corporation as Special Assistant to the President of its
Missile Systems Group and by NASA at the Marshall Space Flight Center as a
project manager and engineer, and also worked at the Charles Stark Draper
Laboratory on the Space Shuttle's autopilot design.
GILBERT D. RYE is the President and Chief Operating Officer of ORBIMAGE, a
position he has held since 1993. From 1990 to 1993, he was Orbital's Senior Vice
President for Marketing and Business Development. Between 1985 and 1989, Mr. Rye
was President of Comsat Government Systems (a subsidiary of Comsat Corporation)
and Vice President and General Manager of Space and Technology for BDM
International. Mr. Rye is a retired Colonel from the U.S. Air Force with over 25
years of experience in various intelligence and space-related program management
and policy-making positions.
EDWARD D. NICASTRI has been the Vice President of Engineering and
Operations for ORBIMAGE since 1997. From 1994 to early 1997, Mr. Nicastri served
as Vice President for Advanced Projects with Orbital's Space Systems Division.
Prior to joining Orbital in 1994, Mr. Nicastri was Director of Space Systems at
the Defense Advanced Research Projects Agency (DARPA) from 1988 to 1993. Prior
to that Mr. Nicastri served as a Colonel in the U.S. Air Force, holding
positions in the development and operation of several military, satellites and
other national space systems.
ARMAND D. MANCINI was appointed Vice President, Chief Financial Officer of
the Company in March 1998. He had been the Vice President of Finance since
October 1994. From September 1991 to September 1994, Mr. Mancini was the Vice
President of Finance for Orbital's Communications and Information Systems Group
and Space Systems Division. Prior to that, Mr. Mancini worked as a senior
manager with various defense contractors who provide training and classified
weapons systems to the U.S. government.
BRUCE W. FERGUSON has been a member of the Board of Directors since 1993.
Mr. Ferguson is a co-founder of Orbital and a member of its Board of Directors.
He has been Senior Vice President, Special Projects of Orbital since 1997.
Previously, he was Executive Vice President and General Manger/Communications
and Information Services Group of Orbital from 1993 until 1997. Mr. Ferguson was
Executive Vice President and Chief Operating Officer of Orbital from 1989 to
1993 and Senior Vice President/Finance and Administration and General Counsel of
Orbital from 1985 to 1989. Mr. Ferguson is a Fellow at the Center for
International Science and Technology Policy and Center for Space Policy at The
George Washington University.
RICHARD REISS, JR. has been a member of the Board of Directors since 1997.
Mr. Reiss founded Georgica Advisors LLC in 1997, a private investment firm, to
make both public and private investments in the
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<PAGE> 63
communications, media and entertainment industries. From 1982 to 1997, Mr. Reiss
was the Managing Partner of Cumberland Associates, a private investment firm,
which he joined in 1978, and Cumberland Partners and LongView Partners, both
investment partnerships. From 1969 to 1977, Mr. Reiss was Senior Vice President
and Director of Research for Shearson Lehman Brothers. Mr. Reiss is a Trustee
and Treasurer of Barnard College and a Trustee of the Manhattan Institute. He is
also a Director of The Lazard Funds, Inc., a Director of nStor Technologies and
Chairman of the Executive Committee and a Director of O'Charley's.
WILLIAM W. SPRAGUE has been a member of the Board of Directors since 1997.
Mr. Sprague is the founder and President of Crest International Holdings LLC, a
private investment firm that invests in media and communications companies. From
1989 to 1996, Mr. Sprague served in various positions at Smith Barney, Inc.,
including as a Managing Director and Head of the Media and Telecommunications
Group, as Co-head of the Mergers and Acquisitions Group and as a senior member
of Smith Barney Inc.'s high yield group. From 1985 to 1989, Mr. Sprague was a
Vice President at Kidder Peabody & Co. Incorporated in the High Yield/Merchant
Banking Group. Mr. Sprague is currently a director of Centennial Communication
Inc., Ethan Allan Interiors Inc., TelQuest Ventures LLC, Wave Transnational LLC,
and One-On-One Sports, Inc.
EXECUTIVE COMPENSATION
The following table sets forth all compensation earned for services
rendered to the Company in the fiscal year ended December 31, 1997, by its Chief
Executive Officer and the four most highly compensated executive officers in all
capacities in which they served (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
1997 1997
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- -----------------------------
SECURITIES
UNDERLYING
OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS (#) COMPENSATION (1)
--------------------------- -------- -------- ---------- ----------------
<S> <C> <C> <C> <C>
David W. Thompson.............................. $ -- $ -- 40,000 $ --
Chairman and Chief Executive Officer (2)
Gilbert D. Rye................................. 200,000 110,000 50,000 11,658
President and Chief Operating Officer
Edward D. Nicastri............................. 116,000 64,500 90,000 8,488
Vice President, Engineering
Armand D. Mancini.............................. 115,000 39,300 15,000 6,789
Vice President, Chief Financial Officer
</TABLE>
- ------------------------------
(1) Includes matching and profit-sharing contributions earned under a 401(k)
Plan.
(2) Mr. Thompson's salary, bonus and long-term compensation (other than options)
are paid by Orbital.
STOCK OPTION PLAN
In November 1996, the Board adopted the Stock Option Plan, which provides
for grants of either incentive or non-qualified stock options to officers,
directors and employees of ORBIMAGE and Orbital. Under the terms of the Stock
Option Plan, incentive stock options may not be granted at less than 100% of the
fair market value at the date of grant, and non-qualified options may not be
granted at less than 85% of the fair market value at the date of grant. Each
option under the Stock Option Plan vests at a rate set by the Board in each
individual's option agreement, generally in one-third increments over a
three-year period following the date of grant. Options expire no more than ten
years following the grant date.
As of March 31, 1998, there were 2,401,000 options for Common Stock
outstanding under the Stock Option Plan at exercise prices ranging from $3.60 to
$5.10 per share.
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<PAGE> 64
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is information on grants of stock options to the Named Officers
pursuant to the Stock Option Plan during the fiscal year ended December 31,
1997, which options are reflected in the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
PERCENT OF POTENTIAL REALIZED VALUE
TOTAL OPTIONS AT ASSUMED ANNUAL
NUMBER OF GRANTED RATES OF STOCK PRICE
SECURITIES TO EMPLOYEES EXERCISE APPRECIATION FOR OPTION
UNDERLYING IN OR TERM
OPTIONS FISCAL YEAR BASE PRICE EXPIRATION -------------------------
NAME GRANTED(1) 1997 PER SHARE DATE 5% 10%
---- ----------- ------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
David W. Thompson............. 40,000 8% $4.17 6/30/07 $104,900 $265,836
Gilbert D. Rye................ 50,000 10 4.17 6/30/07 131,125 332,295
Edward D. Nicastri............ 90,000 18 4.17 6/30/07 236,024 598,132
Armand D. Mancini............. 15,000 3 4.17 6/30/07 39,337 99,689
</TABLE>
- ------------------------------
(1) Options vest in one-third increments over a three-year period.
The Board has implemented an incentive bonus plan. Members of senior
management are eligible for bonuses equal to between 10% to 50% of their base
salary, based upon their success in meeting certain team and individual
incentives that are defined by the Board.
In September 1997, the Company awarded annual compensation in the amount of
5,000 stock options to certain non-employee directors of ORBIMAGE.
AGGREGATED OPTIONS YEAR END OPTION VALUES
The following table sets forth the number of options and the value of
unexercised and exercised options held by them as of December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED IN-
UNEXERCISED OPTIONS AT THE-MONEY OPTIONS AT
DECEMBER 31, 1997 DECEMBER 31, 1997
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
David W. Thompson.............................. 100,000 140,000 $57,000 $57,000
Gilbert D. Rye................................. 125,000 175,000 71,250 71,250
Edward D. Nicastri............................. -- 90,000 -- --
Armand D. Mancini.............................. 50,000 65,000 28,500 28,500
</TABLE>
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<PAGE> 65
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock and Series A Preferred Stock as of March 31, 1998,
and as adjusted to reflect conversion of the Series A Preferred Stock: (i) by
each person who is known by the Company to own beneficially more than five
percent of the Common Stock and the Series A Preferred Stock, (ii) by each
director and Named Officer, and (iii) by all executive officers and directors as
a group. All persons listed below have an address in care of the Company's
principal executive offices unless otherwise noted.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
---------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
------------------------ ---------- -------
<S> <C> <C>
Orbital Sciences Corporation................................ 25,200,000 63%
21700 Atlantic Boulevard
Dulles, VA 20166
Crest Funding Partners, L.P.(2)(3).......................... 4,248,873 11
320 Park Avenue
New York, New York 10022
Merrill Lynch KECALP L.P. 1997(2)........................... 3,499,065(4) 9
225 Liberty Street
South Tower, 23rd Floor
New York, New York 10080-6123
Morgan Guaranty Trust
Company of New York(2).................................... 3,129,089(5) 8
522 Fifth Avenue
New York, New York 10036
Export Development Corporation.............................. 1,809,832 5
151 O'Connor
Ottawa, Canada K1A IK3
David W. Thompson(6)........................................ 100,000 *
Gilbert D. Rye(6)........................................... 125,000 *
Armand D. Mancini........................................... 50,000 *
Edward D. Nicastri(6)....................................... -- --
Bruce W. Ferguson(6)(7)..................................... 100,000 *
William W. Sprague(3)....................................... -- --
Richard Reiss, Jr.(6) ...................................... -- --
All executive officers and directors as a group(6)(7)....... 375,000 *
</TABLE>
- ------------------------------
* Less than one percent.
(1) The persons named in this table have sole voting power with respect to all
shares of Common Stock shown as beneficially owned by them, except as
indicated in other footnotes to this table. In computing the number of
shares beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock subject to options held by that person that
are currently exercisable or exercisable within 60 days after March 31,
1998, are deemed outstanding. Such shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of any
other person.
(2) Each of Crest Funding Partners, L.P., Merrill Lynch KECALP L.P. 1997 or
Morgan Guaranty Trust Co. or their respective affiliates, currently own
shares of Series A Preferred Stock. Assumes a conversion price of $4.17 for
each share of Series A Preferred Stock. See "Description of Capital
Stock--Preferred Stock--Series A Preferred Stock--Conversion Rights."
(3) William W. Sprague, a director of the Company, is the founder and President
of Crest International Holdings LLC, the manager of Crest Funding Partners,
L.P.
(4) Represents 25,321 shares of Series A Preferred Stock, convertible into
607,219 shares of Common Stock, owned by KECALP, Inc. and 120,590 shares of
Series A Preferred Stock, convertible into 2,891,846 shares of Common Stock
owned by Merrill Lynch KECALP L.P. 1997, a Merrill Lynch employee limited
partnership.
(5) Represents (i) 97,862 shares of Series A Preferred Stock, convertible into
2,346,811 shares of Common Stock, owned by Morgan Guaranty Trust Company of
New York, as Trustee of the Comingled Pension Trust Fund (Multi-Market
Special Investment Fund II) of Morgan Guaranty Trust Company of New York;
(ii) 13,048 shares of Series A Preferred Stock, convertible into 312,902
shares of Common Stock, owned by Morgan Guaranty Trust Company of New York,
as Trustee of the Multi-Market Special Investment Trust Fund of Morgan
Guaranty Trust Company of New York; and (iii) 19,573 shares of Series A
Preferred Stock, convertible into 469,376 shares of Common Stock, owned by
Morgan Guaranty Trust Company of New York, as Investment Manager and Agent
for the Alfred P. Sloan Foundation (Multi-Market Account).
(6) Includes shares of Common Stock issuable upon the exercise of options.
(7) Includes 14,000 shares of common stock issued pursuant to option exercises.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCK PURCHASE AGREEMENT
On May 7, 1997 and July 3, 1997, ORBIMAGE sold a total of 372,705 shares of
its Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock")
for $100 per share to the Series A Holders
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<PAGE> 66
pursuant to the Stock Purchase Agreement (the "Initial Sale"). The proceeds of
this sale, approximately $37 million, were used, and will be used, by ORBIMAGE
for funding a portion of the purchase of the OrbView satellite systems and the
OrbView-2 License, and for initial operating expenses and other general
corporate purposes.
The Series A Holders have purchased an additional $22.7 million of Series A
Preferred Stock pursuant to their rights under the Stock Purchase Agreement.
This Series A Offering was consummated concurrently with the Units Offering,
generating net proceeds of approximately $21 million.
Capital Contributions. As part of the Initial Sale, Orbital made a $34
million payment to the Company consisting of capital contributions of
approximately $88 million plus a payment of $41 million representing payments
previously received by Orbital for OrbView-1 and OrbView-2 data, offset by
approximately $95 million owed by ORBIMAGE to Orbital under the Procurement
Agreement and the Services Agreement. See, "--Procurement Agreement," and
"--Services Agreement."
Board of Directors. Pursuant to the Stock Purchase Agreement, certain
Series A Holders are permitted to attend all meetings of the Board of Directors
as non-voting observers and advisors, and to participate in discussions.
Change of Control. Upon a Change of Control prior to the latest of (i) the
successful in-orbit checkout of OrbView-3, (ii) the closing, under certain
circumstances, of a Qualifying Public Offering (as defined), or (iii) the
culmination of a 180-day period in which the average price of the Common Stock
exceeds a certain level relative to the Conversion Price (as defined), then the
Company shall offer to purchase, subject to the rights of the holders of Notes,
all shares of Series A Preferred Stock then outstanding at a purchase price per
share, in cash, equal to the sum of (x) 101% of the Liquidation Amount and (y)
if such Change of Control occurs prior to the fourth anniversary of the initial
issuance of the Series A Preferred Stock, an amount equal to the dividends that
would have accrued on the shares of Series A Preferred Stock from the date of
purchase pursuant to a Change of Control through and including the fourth
anniversary of the initial issuance of shares of Series A Preferred Stock. A
Change of Control is defined to include: (i) the failure by Orbital to hold at
least 12,600,000 shares of Common Stock of the Company (being 50% of the shares
of Common Stock held by Orbital on May 8, 1997, adjusted for stock splits, stock
combinations and the like,) (ii) the failure by Orbital to hold at least thirty
percent (30%) of the Common Stock of the Company on a fully diluted basis,
without giving effect to the conversion of Capital Stock of the Company issued
as a dividend with respect to shares of Series A Preferred Stock or Capital
Stock of the Company issued pursuant to options granted under the Stock Option
Plan or any other option plan adopted for the benefit of the Company's employees
or directors; (iii) the indirect or direct acquisition of Voting Equity
Interests of the Company by any Person or group of Persons acting in concert of
beneficial ownership in an amount greater than or equal to the amount of Voting
Equity Interests held contemporaneously by Orbital, except (x) purchases by
record holders of Series A Preferred Stock as of the Issue date (and their
affiliates, to the extent that such holders are permitted to transfer their
shares of Series A Preferred Stock to affiliates under the Amended and Restated
Stock Purchase Agreement (the "Series A Affiliates") from other holders of
Series A Preferred Stock or their Series A Affiliates and (y) purchases
permitted pursuant to the Series A Holders' subscription rights under Section
4.1 of the Stockholders' Agreement; (iv) the acquisition of the Company, or the
sale, lease, transfer, conveyance or other disposition, in one transaction or a
series of related transactions, directly or indirectly, including through a
liquidation or dissolution, of all or substantially all of the assets of the
Company and its Restricted Subsidiaries by, or the combination of the Company or
all or substantially all its assets with, another Person (other than any such
transfer to any wholly owned subsidiary of the Company) unless the acquiring or
surviving Person shall be a corporation more than fifty percent (50%) of the
combined voting power of which corporation's then outstanding Voting Equity
Interests, after such acquisition or combination, are owned, immediately after
such acquisition or combination, by the owners of the Voting Equity Interests of
the Company outstanding immediately prior to such acquisition or combination;
(v) the adoption of a plan relating to the liquidation or dissolution of the
Company (other than any such liquidation or dissolution to or for the benefit of
any wholly owned subsidiary of the Company); (vi) the failure by the Company to
obtain any applicable License (or License amendment, as applicable) so that it
is in full force and effect within thirty (30) days prior to the scheduled
launch of either of the OrbView Satellites; (vii) the revocation of any
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<PAGE> 67
License necessary to operate OrbView-2 the high-resolution OrbView satellites
consistent with the Company's current and planned commercial operations and
which revocation is not cured within thirty (30) days of the occurrence thereof
or such later date when all applicable appeals have been finally determined, if
during such appeal period the Company has received regulatory approval to
continue operations under the License pending the outcome of such appeal after
exhausting all administrative remedies; or (viii) unless consented to in writing
by the holders of at least fifty percent (50%) of the shares of Series A
Preferred Stock then outstanding, the acquisition by any Person or group of
Persons acting in concert of beneficial ownership, direct or indirect, of
securities of Orbital representing thirty five percent (35%) or more of the
combined voting power of Orbital's then outstanding equity interests and at any
time thereafter either (x) less than a majority of Orbital's board of directors
shall be Continuing Directors (as defined) or (y) there shall be an announcement
by Orbital or such acquiring Person or group of Persons or the approval of a
business plan by Orbital's Board of Directors, in either case that indicates an
intention to de-emphasize or curtail the relationship between the Company and
Orbital.
STOCKHOLDERS' AGREEMENT
In connection with the Initial Sale, ORBIMAGE, Orbital and the Series A
Holders agreed, pursuant to the Stockholders' Agreement, to certain voting
rights and restrictions upon transfer of the Series A Preferred Stock.
Board of Directors. The Stockholders' Agreement provides that the Board
will consist of up to five (5) members, of which the majority of the Series A
Holders have the right to elect the two Series A Directors (and, may be entitled
to elect two additional board members upon an "Election Event," as more fully
described in "Description of Capital Stock--Series A Preferred Stock--Voting")
and the majority of the holders of the Common Stock (the "Common Holders," and
together with the Series A Holders, the "Shareholders") have the right to elect
two members (the "Common Directors"). The fifth member of the Board is to be an
independent director, elected by the majority vote of the Shareholders, where
each Series A Holder is entitled to vote the number of shares of Common Stock
into which such holder's Series A Preferred Stock would be convertible.
Notwithstanding the foregoing, so long as Orbital retains ownership of fifty
percent (50%) of the voting stock of ORBIMAGE, it has the right to appoint the
final member of the Board with the consent of one of the Series A Directors, and
further, so long as Orbital retains ownership of twenty percent (20%) of the
voting stock of ORBIMAGE, it has the right to appoint one of the two Common
Directors. The majority of a quorum of the Board, including in some cases the
affirmative vote of at least one Series A Director is required before ORBIMAGE
approves certain transactions, including without limitation and subject to
certain exceptions, (i) approve any merger, consolidation or liquidation or sale
of all or substantially all the assets of ORBIMAGE; (ii) approve any
modifications to the Stock Purchase Agreement, the Stockholders' Agreement, the
Procurement Agreement, the Services Agreement or the OrbView-2 License that
affect satellite performance or increase cost by more than $1.0 million, (iii)
issue or commit to issue equity securities or securities convertible into or
exchangeable or exercisable for equity securities, (iv) incur indebtedness for
borrowed money or any capital lease in excess of $0.5 million, (v) select,
approve or remove any officer or (vi) declare any dividends on the Common Stock.
Restrictions on Transfer. Subject to limited exceptions, the Shareholders
have agreed not to transfer, pledge, mortgage, hypothecate or otherwise encumber
any shares of Common Stock or the Series A Preferred Stock. Furthermore, under
certain circumstances, any Shareholder desiring to transfer its Common Stock or
Series A Preferred Stock must give Orbital the right to purchase such shares
subject to transfer upon the same terms as proposed. Conversely, Orbital must
give the Shareholders the right to purchase a proportionate amount of the Common
Stock or Series C Preferred Stock ("Series C Preferred") in the event Orbital
offers or accepts an offer to transfer such Common Stock or Series C Preferred.
In the event Orbital proposes to transfer any shares of Common Stock or Series C
Preferred, the Series A Holders will have the right to sell a proportionate
amount of their Series A Preferred Stock ("Tag-Along Rights"). Additionally, if
seventy percent (70%) of the Common Holders (on a fully diluted basis) propose
to transfer seventy percent (70%) or more of the Common Stock (on a fully
diluted basis), the Series A Holders may be required to convert their
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<PAGE> 68
Series A Preferred Stock into Common Stock and transfer such Common Stock to the
proposed transferee ("Drag-Along Rights").
Subscription Rights. Upon certain non-public issuances of any equity
securities (including any warrants, options or other rights to acquire equity
securities) of the Company (excluding the issuance of the Warrants hereby and
subject to other certain exceptions), ORBIMAGE must first (i) give all Series A
Preferred Holders written notice of the terms of the offering and (ii) offer to
issue to such Series A Preferred Holders a proportionate amount of the offering
based upon each Series A Preferred Holders current ownership in ORBIMAGE. The
rights described in this paragraph will expire upon a public offering of the
Common Stock.
Registration Rights. Certain holders of more than thirty-five percent
(35%) of the then issued and outstanding Common Stock may demand that the
Company file up to three (3) registration statements that would permit the sale
and distribution of such Common Stock after 180 days of an initial public
offering of Common Stock or at any time after June 30, 2002 if the Company has
not consummated an initial public offering of Common Stock registered under the
Securities Act, subject to customary underwriter's cutback requirements.
Furthermore, if the Company determines to register any of its Common Stock
(excluding the registration of Common Stock incidental to the registration of
convertible securities), except for registrations on, among others, Form S-8 or
Form S-4, the Common Holders may include their Common Stock within such
registration statement, subject to customary underwriter's cutback requirements.
PROCUREMENT AGREEMENT
ORBIMAGE and Orbital have entered into the Procurement Agreement, pursuant
to which Orbital agreed to provide to ORBIMAGE: (i) the design, development,
construction and launch of the OrbView-1 satellite; (ii) the OrbView-2 License
to market OrbView-2 imagery, including the right to receive all payments
received by Orbital under Orbital's contract with NASA; (iii) the design,
development, construction and launch of the high-resolution OrbView satellites;
and (iv) the U.S. central imagery receiving, processing, and command and control
ground segment for all four OrbView satellites. Orbital (or its subcontractors)
will retain ownership of all intellectual property rights underlying the
OrbView-1, OrbView-2, the high-resolution OrbView satellites and ground systems,
and has granted ORBIMAGE a license to use the necessary intellectual property
for the operating OrbView satellites.
The total cost of the OrbView-1 and the high-resolution OrbView satellites,
the OrbView-2 License and the U.S. ground system is estimated to be
approximately $297 (of which $295 is provided for in the Procurement Agreement)
million, which includes all satellite design, construction and launch costs and
hyperspectral capability, but excludes insurance costs. Of this amount, the
Company has spent approximately $133 million as of December 31, 1997. The
Company expects to spend approximately $142 million to complete the
high-resolution OrbView satellites and $22 million to complete modifications to
the U.S. ground system. ORBIMAGE generally pays the costs under the Procurement
Agreement in accordance with a monthly schedule that is based upon Orbital's
costs incurred, with the balance of the remaining costs paid upon completion of
certain specified project milestones such as critical design review and launch
events. Furthermore, ORBIMAGE has agreed to pay Orbital an extended performance
incentive of $1 million per year (or a pro rata amount thereof) in the event the
high-resolution OrbView satellites remain operational in orbit beyond their five
year contracted life. While the modifications to OrbView-4 to add hyperspectral
capability will be paid for by ORBIMAGE under the Procurement Agreement,
ORBIMAGE's payment obligations are limited to advance contract payments it
receives from the U.S. Air Force for hyperspectral imagery. See "Risk
Factors--Contracts."
Delivery by Orbital and passing of the risk of loss from Orbital to
ORBIMAGE of the OrbView-3 satellite will occur upon separation of the Pegasus
launch vehicle from its carrier aircraft. Delivery and passing of the risk of
loss from Orbital to ORBIMAGE of the OrbView-4 satellite will occur upon
intentional ignition of the launch vehicle. The OrbView-2 ground command and
control segment has been delivered to ORBIMAGE. The high-resolution OrbView
satellite ground receiving, processing, and command and control segments will be
delivered consistent with the high-resolution OrbView satellite launch dates,
although risk of loss of the command and control and the data processing
segments will pass to ORBIMAGE on successful
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completion of specified acceptance test procedures. Orbital will not be liable
to ORBIMAGE for any costs with respect to schedule delays.
ORBIMAGE has the right, at any time, to make changes to the Specifications
or Statement of Work, method of packing or shipment, place or time of delivery,
quantity or type of items to be delivered or services required to be performed,
subject to Orbital's right to demand negotiations for "equitable adjustment" to
the price. However, pursuant to the Stockholders' Agreement, the Company may not
without the approval of a majority of a quorum of the Board, which majority
shall include at least one Series A Director, approve certain modifications to
the Procurement Agreement. See "Certain Relationships and Related Transactions--
Stockholders' Agreement." Price adjustments due to any changes requested by
ORBIMAGE will be negotiated between Orbital and ORBIMAGE. Failure to agree to
terms of the price adjustment will be resolved through arbitration in accordance
with the terms of the Procurement Agreement.
The Procurement Agreement may be terminated by ORBIMAGE if Orbital fails to
comply with the material terms thereof and does not cure such failure within 60
days of notice of noncompliance. Orbital may terminate the Procurement Agreement
if ORBIMAGE fails to make payments in accordance with the terms of the
Procurement Agreement.
For the high-resolution OrbView satellites, following launch, ORBIMAGE's
sole remedy for launch failure, defects, failure to conform with applicable
specifications or any other requirements is limited to insurance proceeds. In
addition, with respect to the command and control segments of the OrbView-2 and
high-resolution OrbView satellites and the ground receiving and processing
segments of the high-resolution OrbView satellites, Orbital made certain
warranties of one year in duration directly to ORBIMAGE and has assigned all
applicable third party warranties to ORBIMAGE. Orbital's liability to ORBIMAGE
under the Procurement Agreement is limited to $10 million.
SERVICES AGREEMENT
ORBIMAGE and Orbital entered into the Services Agreement under which
Orbital will provide to ORBIMAGE, to the extent requested by ORBIMAGE for a term
of three years from the date of launch of each OrbView satellite: (i) general
and administrative, accounting, tax, legal, regulatory and other similar
services on a cost-reimbursable basis with no additional fee; (ii) office and
other facilities-related services on a cost-reimbursable basis with no
additional fee; and (iii) in-orbit satellite operations for the OrbView-1,
OrbView-2, and the high-resolution OrbView satellites on a cost plus 10% fee
basis. All services will be provided upon ORBIMAGE's reasonable request and in
accordance with Orbital's customary standards at the time of delivery of the
services.
NON-COMPETITION AND TEAMING AGREEMENT
Under the Non-Compete Agreement, ORBIMAGE and Orbital have agreed that
Orbital will not enter into, and shall cause its affiliates not to enter into,
one or more contracts to construct and deliver an integrated remote sensing
satellite-based system, consisting of satellite bus, payload, launch services
and ground systems. Under certain circumstances, Orbital may respond to a
request for proposal for such an integrated system only if the response provides
that Orbital will have primary responsibility for the hardware and software
requirements, and ORBIMAGE will have primary responsibility for the provision of
imagery services. Orbital will be free to provide components for such systems or
subsystems, but under no circumstance will Orbital design, develop and/or
construct sensors capable of generating imagery substantially similar, or
technologically superior, in spatial and spectral resolution, to the imagery of
OrbView-2, the high-resolution OrbView satellites or any satellite purchased by
ORBIMAGE from Orbital or an affiliate of Orbital. Subject to certain exceptions,
Orbital has also agreed not to make, and it shall cause its affiliates not to
make, investments in excess of $10 million in any person engaged or proposed to
be engaged in the gathering and distributing of satellite-based imagery
substantially similar, or technologically superior, in spatial and spectral
resolution, to the imagery of OrbView-2, the high-resolution OrbView satellites,
or any similar satellite purchased by the Company from Orbital or its
affiliates. In addition, Orbital must offer to ORBIMAGE any satellite-based
remote imaging project that emerges from the research and development stage. The
Non-Compete Agree-
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ment will terminate on the earlier of June 30, 2003, the date on which the
Procurement Agreement is terminated, the first anniversary of an initial public
offering by the Company, or the end of a 180-day period in which the Company's
average Common Stock price exceeds certain thresholds.
ORBVIEW-2 LICENSE
Pursuant to the Procurement Agreement, Orbital and ORBIMAGE have entered
into a license agreement with regard to the OrbView-2 satellite. In
consideration of a license fee of approximately $63 million, Orbital has granted
an exclusive world-wide license to ORBIMAGE to use and sell OrbView-2 imagery,
and to license third parties to distribute such imagery, subject to the
limitations imposed by Orbital's contract with NASA to provide imagery from
OrbView-2 and the DoC license applicable to OrbView-2. Under this agreement,
Orbital has agreed to use reasonable commercial efforts to obtain and maintain
all material regulatory permits and licenses necessary for the continued
operation of the OrbView-2 satellite. Orbital also has assigned to ORBIMAGE all
amounts that are due or which will become due to Orbital under Orbital's
contract with NASA.
The OrbView-2 License terminates either automatically upon the assignment
of Orbital's contract with NASA to ORBIMAGE or upon any of the following: (i)
ORBIMAGE's discretionary determination that the OrbView-2 satellite has failed;
(ii) at ORBIMAGE's option, upon Orbital's uncured breach of Orbital's contract
with NASA or (iii) by either party upon the other's insolvency. In addition,
Orbital retains a special right of access to ORBIMAGE's ground station
facilities to perform certain of its obligations under Orbital's contract with
NASA in the event of ORBIMAGE's uncured failure to perform these same
obligations.
OTHER AGREEMENTS
Earth Observation Sciences, Ltd., a subsidiary of Orbital ("EOS"),
developed OrbView-2 fishing software for ORBIMAGE and provides maintenance and
support of such software on a time and materials basis. In addition to the
provisions in the Procurement Agreement, ORBIMAGE may contract in the future
with EOS or Orbital or its other subsidiaries for the development, support and
maintenance of software for processing, archiving or distributing OrbView
imagery products.
The distributorship contracts that ORBIMAGE expects to offer to foreign
high-resolution imagery distributors may include the purchase from ORBIMAGE of
an imagery ground station or an OrbView upgrade to an existing ground station.
ORBIMAGE is contractually obligated to procure such ground stations or upgrades
from MacDonald, Dettwiler and Associates Ltd., an Orbital subsidiary, provided
that the price is commercially competitive.
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DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
ORBIMAGE has authorized 75,000,000 shares of Common Stock, of which
25,214,000 shares are issued and outstanding. Subject to the powers, preferences
and rights of any holder of preferred stock, the Common Holders are entitled to
receive such dividends as may be declared from time to time by the Board from
funds legally available therefor. Upon liquidation, dissolution or winding-up of
ORBIMAGE, the Common Holders will be entitled to share ratably in all assets
available for distribution to Shareholders after payment of liabilities, subject
to prior distribution rights of holders of preferred stock then outstanding.
There are no redemption or sinking fund provisions applicable to the Common
Stock. All shares of Common Stock into which the Warrants may be converted upon
completion of the Units Offering, will be fully paid and non-assessable. The
rights, preferences and privileges of Common Holders will be subject to the
rights, preferences and privileges of any preferred stock and of any other
series of preferred stock which the Company may issue in the future.
PREFERRED STOCK
The Company has authorized 10,000,000 shares of preferred stock, $0.01 par
value per share, of which: (a) 2,000,000 shares of the Series A Preferred Stock
have been authorized (but no more than 600,000 shares of which may be issued,
except in the form of dividends paid in-kind) and (i) 372,705 shares of Series A
Preferred Stock have been issued pursuant to the Stock Purchase Agreement, (ii)
an additional 227,295 shares of Series A Preferred Stock have been issued in the
Series A Offering which will close concurrently with the Units Offering and
(iii) 20,182 shares of Series A Preferred Stock have been issued as a
paid-in-kind dividend on the Series A Preferred Stock; (b) 2,000,000 of the
Series B Preferred Stock have been authorized, none of which have been issued;
and (c) 2,000,000 of the Series C Stock Preferred have been authorized, none of
which have been issued. The Board is authorized to issue preferred stock from
time to time in one or more series, each of such series to have such voting
powers, full or limited, or no voting powers, and such designations, preferences
and relative participating, optional or other special rights, and such
qualifications, limitations or restrictions thereof, as shall be determined by
the Board in a resolution or resolutions providing for the issuance of such
preferred stock other than as a paid-in-kind dividend. Except for the Series A
Offering, the Board currently has no plans for the issuance of preferred stock.
The issuance of such stock could adversely affect the rights of holders of the
Exchange Notes.
SERIES A PREFERRED STOCK
Dividends. The Series A Preferred Stock is assigned a stated value of $100
per share (the "Series A Preferred Stated Value") and is entitled to a
cumulative dividend of 12% per annum payable semi-annually on May 1 and November
1 of each year, in cash or, in lieu thereof, payable in-kind in shares of Series
A Preferred Stock on the basis of one hundred twenty (120) shares of Series A
Preferred Stock for each one thousand (1,000) shares of Series A Preferred Stock
outstanding. On November 1, 1997, the Company declared and paid a dividend
in-kind to each Series A Holder. Upon a mandatory conversion prior to the fourth
anniversary of the issuance of any Series A Preferred Stock (see "Certain
Relationships and Related Transactions"--Series A Preferred Stock--Conversion
Rights"), a Series A Holder shall also receive the dividends with respect to the
Series A Preferred Stock that would have accrued from the date of the mandatory
conversion to the fourth anniversary of the initial issuance of the Series A
Preferred Stock.
Ranking. Series A Holders have certain preferences upon dividend
distributions, distributions upon liquidation or distributions upon merger,
consolidation or sale of assets over the holders of Series B Preferred (if and
when issued), Series C Preferred (if and when issued), the Common Holders, and
any other class of stock ranking junior to the Series A Preferred Stock.
Voting Rights. Each Series A Holder is entitled to such number (rounded to
the nearest whole number) of votes as such Series A Holder would be entitled if
such Series A Holder had converted its Series A Preferred Stock into shares of
Common Stock. See "Certain Relationships and Related Transactions--Shareholders'
Agreement." Furthermore, the Series A Holders have the right to elect two
additional
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directors to the Board upon the occurrence of an "Election Event." An "Election
Event" is the failure by ORBIMAGE: (i) to declare and pay dividends on the
Series A Preferred Stock on any May 1 or November 1 which remains uncured for
more than thirty (30) day; (ii) to repurchase the Series A Preferred Stock upon,
among other things, a Change of Control (see "Certain Relationships and Related
Transactions--Stock Purchase Agreement--Change of Control"); (iii)(a) to conduct
a critical design review of the OrbView-3 spacecraft pursuant to the Procurement
Agreement by October 31, 1998, (b) to commence by March 15, 1999 the integration
and testing of the OrbView-3 spacecraft or (c) to commence by November 15, 1999
the integration and testing of the OrbView-4 spacecraft. The dates specified in
this paragraph may be extended by up to thirty (30) days in the discretion of
the President of the Company (in consultation with the Series A Directors) that
such delay is advisable. See "Certain Relationships and Related
Transactions--Procurement Agreement." The Directors elected upon the occurrence
of an Election Event shall serve only so long as such Election Event continues.
Certain transactions, including certain additional issuances of securities by
the Company, require the consent of the holders of at least two thirds of the
outstanding Series A Preferred Stock.
Conversion Rights. The Series A Holders have the option, at any time, or
from time to time, to convert their Series A Preferred Stock into fully paid and
non-assessable shares of Common Stock. The number of shares of Common Stock
issued upon such conversion will be determined by multiplying each Series A
Holder's number of Series A Preferred Stock by a fraction, the numerator of
which is the Series A Preferred Stock Stated Value and the denominator of which
is a conversion price, subject to anti-dilutive adjustments (as adjusted, the
"Conversion Price"). The Conversion Price is currently $4.17. The Series A
Preferred Stock shall be automatically converted into shares of Common Stock
upon the earliest to occur of any one of the following events: (i) the closing,
under certain circumstances, of a public offering of the Common Stock; (ii) the
culmination of a 180-day period in which the average price of the Common Stock
exceeds a certain level relative to the Conversion Price; or (iii) the proposed
sale of no less than 70% of the Common Stock (on a fully diluted basis) as more
fully described in "Certain Relationships and Related
Transactions--Stockholders' Agreement--Restrictions on Transfer."
SERIES B AND SERIES C PREFERRED STOCK
No shares of Series B Preferred Stock or Series C Preferred Stock have been
issued by ORBIMAGE.
RELATIONSHIP WITH ORBITAL SCIENCES CORPORATION
Formed in 1982, Orbital is a space and information systems company that
designs, manufactures, operates and markets a broad range of space-related
products and services. Orbital's 1997 revenues were approximately $600 million
and Orbital and its subsidiaries employ approximately 4,000 people. Orbital's
products and services are grouped into three business sectors: (i) space and
ground infrastructure systems; (ii) satellite access products; and (iii)
satellite-delivered services. Space and ground infrastructure systems include
launch vehicles, satellites, electronics and sensor systems and ground systems.
Satellite access products include hand-held satellite-based navigation and
communications products and transportation management systems.
Satellite-delivered services include satellite-based two-way mobile data
communications. Orbital operates launch vehicle, satellite and electronics
engineering, manufacturing and test facilities in Dulles and McLean, Virginia,
Germantown and Greenbelt, Maryland and Chandler, Arizona; a launch vehicle and
satellite integration and test facility at Vandenberg Air Force Base,
California; a space sensors and instruments facility in Pomona, California; a
ground systems and software facility in Vancouver, British Columbia, and
facilities for its navigation and communications products in San Dimas and
Sunnyvale, California and in Rochester Hills, Michigan.
ORBIMAGE utilizes certain of Orbital's employees and centralized systems
for corporate and administrative services pursuant to the Services Agreement.
ORBIMAGE anticipates that each of its executive officers will generally devote a
sufficient portion of his or her time to the business of ORBIMAGE. However, any
ORBIMAGE executive officer who is an Orbital employee also may devote a
significant portion of his or her time to the business of Orbital and its other
subsidiaries.
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POLICIES AND PROCEDURES FOR ADDRESSING CONFLICTS
The ongoing relationships between ORBIMAGE and Orbital may present certain
conflict situations for David W. Thompson, who serves as Chairman of the Board
of Directors and Chief Executive Officer of ORBIMAGE, and also serves as
Chairman of the Board, President and Chief Executive Officer of Orbital. Other
officers and directors of Orbital also serve as officers and directors of the
Company. Mr. Thompson, as well as other executive officers and directors of
Orbital, own (or have options or other rights to acquire) a significant number
of shares of common stock in both ORBIMAGE and Orbital. Certain ORBIMAGE
employees including its executive officers have options to acquire Orbital
common stock. ORBIMAGE and Orbital have adopted appropriate policies and
procedures to be followed by the Board of Directors of each company to limit the
involvement of Mr. Thompson (or such other officers and directors having a
significant ownership interest in the companies or who are serving in similar
capacities for both companies) in conflict situations, including matters
relating to contractual relationships or litigation between ORBIMAGE and
Orbital. Such procedures include requiring directors of both Orbital and
ORBIMAGE to abstain from voting as directors of each company with respect to
matters that present a significant conflict of interest between the companies.
Whether or not a significant conflict of interest situation exists is determined
on a case-by-case basis depending on such factors as the dollar value of the
matter and the likelihood that resolution of the matter has significant
strategic, operational or financial implications for the businesses of ORBIMAGE
or Orbital.
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DESCRIPTION OF EXCHANGE NOTES
GENERAL
The Original Notes were issued and the Exchange Notes will be issued
pursuant to the Indenture between the Company and Marine Midland Bank, as
trustee (the "Trustee"). Upon the issuance of the Exchange Notes, or the
effectiveness of a Shelf Registration Statement, the Indenture will be subject
to and governed by the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). The terms of the Exchange Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. The Notes are subject to all such terms, and holders of Exchange
Notes are referred to the Indenture and the Trust Indenture Act for a statement
thereof. The following summary of certain provisions of the Exchange Notes, the
Indenture and the Registration Rights Agreement do not purport to be complete
and are qualified in their entirety by reference to the Exchange Notes, the
Indenture and the Registration Rights Agreement, including the definitions in
each of such instruments and agreements of certain terms used below. A copy of
the Indenture and the Registration Rights Agreement will be made available to
holders of Original Notes upon request.
The Exchange Notes will be senior obligations of the Company, will rank
senior in right and priority of payment to all subordinated indebtedness of the
Company and will rank pari passu in right and priority of payment with all other
indebtedness of the Company which is not expressly so subordinated. The Exchange
Notes will be secured to the extent set forth below under "--Security." Upon
consummation of the Units Offering and the application of the net proceeds
therefrom, the Company has no indebtedness that is expressly subordinated in
right and priority of payment to the Original Notes.
As of the date of the Indenture, the Company has no Subsidiaries. Under
certain circumstances, the Company will be able to designate future Subsidiaries
that it creates or acquires as Restricted Subsidiaries or Unrestricted
Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the
restrictive covenants set forth in the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Exchange Notes will be issued in an aggregate principal amount of
$150,000,000. The Exchange Notes will mature on March 1, 2005. Interest on the
Exchange Notes will accrue at the rate of 11 5/8% per annum and will be payable
semi-annually in arrears on March 1 and September 1 of each year, commencing on
September 1, 1998, to holders of record on the immediately preceding February 15
and August 15. Interest on the Exchange Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
February 25, 1998 (the "Issue Date"). Interest on the Exchange Notes will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
Principal of, premium, if any, interest and Liquidated Damages, if any, on
the Exchange Notes, will be payable at the office or agency of the Company
maintained for such purpose or, at the option of the Company, payment of
interest and Liquidated Damages, if any, may be made by check mailed to the
holders of the Exchange Notes at their respective addresses set forth in the
register of holders of the Exchange Notes; provided that if the holder of any
Exchange Notes has given wire transfer instructions to the Company, the Company
will be required to make all payments with respect to such Exchange Notes by
wire transfer of immediately available funds to the account specified by such
holder. Until otherwise designated by the Company, the Company's office or
agency will be the office of the Trustee maintained for such purpose. The
Exchange Notes will be issued in denominations of $1,000 and integral multiples
thereof.
OPTIONAL REDEMPTION
The Notes will not be redeemable prior to March 1, 2002. Thereafter, the
Notes will be subject to redemption at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below, plus
accrued
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and unpaid interest and Liquidated Damages (if any) thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on March 1
of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2002........................................................ 105.8125%
2003........................................................ 102.9063%
2004 and thereafter......................................... 100.0000%
</TABLE>
Notwithstanding the foregoing, prior to March 1, 2001, the Company may, on
one or more occasions, redeem outstanding Notes with the net cash proceeds of
one or more sales of Capital Stock (other than Disqualified Stock) of the
Company to one or more Persons (but only to the extent the proceeds of such
sales of Capital Stock consist of cash or Cash Equivalents) at a redemption
price equal to 111.625% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages (if any) thereon to the redemption date;
provided, however, that: (i) not less than 65% of the aggregate principal amount
of the Notes initially issued remains outstanding immediately after any such
redemption; and (ii) such redemption shall occur within 60 days after the date
of closing of such sale of Capital Stock.
MANDATORY REDEMPTION
The Company will not be required to make mandatory redemption or sinking
fund payments with respect to the Notes. However, as described below, the
Company may be obligated, under certain circumstances, to make an offer to
purchase: (i) all outstanding Notes at a redemption price of 101% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages (if any) to the date of purchase, upon a Change of Control; and (ii)
outstanding Notes with a portion of the Net Proceeds of Asset Sales at a
redemption price of 100% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages (if any) to the date of purchase. See
"--Repurchase at the Option of Holders--Change of Control" and "--Limitation on
Sales of Assets and Subsidiary Interests."
SECURITY
Pursuant to the Indenture, the Company purchased and pledged to the
Collateral Agent for the benefit of the holders of the Notes the Pledged
Securities in such amount as will be sufficient upon receipt of scheduled
interest and principal payments of such securities, in the opinion of a
nationally recognized firm of independent certified public accountants selected
by the Company, to provide for payment in full of the first four scheduled
interest payments due on the Notes. The Company used approximately $32.9 million
of the net proceeds of the Units Offering to acquire the Pledged Securities. The
Pledged Securities are pledged by the Company to the Trustee as Collateral Agent
for the benefit of the holders of Notes pursuant to the Pledge Agreement and
will be held by the Collateral Agent in the Pledge Account. Pursuant to the
Pledge Agreement, immediately prior to an interest payment date on the Notes,
the Company may either deposit with the Collateral Agent from funds otherwise
available to the Company cash sufficient to pay the interest scheduled to be
paid on such date or the Company may direct the Collateral Agent to release from
the Pledge Account proceeds sufficient to pay interest then due. In the event
that the Company exercises the former option, the Company may thereafter direct
the Collateral Agent to release to the Company from the Pledge Account proceeds
or Pledged Securities in like amount.
Interest earned on the Pledged Securities will be added to the Pledge
Account. In the event that the funds or Pledged Securities held in the Pledge
Account exceed the amount sufficient, in the opinion of a nationally recognized
firm of independent certified public accountants selected by the Company, to
provide for payment in full of the first four scheduled interest payments due on
the Notes (or, in the event an interest payment or payments have been made, an
amount sufficient to provide for payment in full of any interest payments
remaining, up to and including the four scheduled interest payments), the
Collateral Agent will be permitted to release to the Company at the Company's
request any such excess amount. The Original Notes are and the Exchange Notes
will be secured by a first priority security interest in the Pledged Securities
and in the Pledge Account and, accordingly, the Pledged Securities and the
Pledge Account also secure repayment of
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the principal amount of the Original Notes and will secure repayment of the
principal amount of the Exchange Notes to the extent of such security. The
Pledge Agreement allows ORBIMAGE to substitute Marketable Securities for the
Government Securities originally pledged as collateral; provided, however, that
the Marketable Securities so substituted must have a value (measured at the date
of substitution), in the opinion of a nationally recognized firm of independent
public accountants selected by the Company, at least equal to 125.0% of the
amount of any of the first four scheduled interest payments on the Notes that
are unpaid (or the pro rata portion of such interest payments equal to the
percentage of such interest payments to be secured by such Marketable
Securities) as of the date such Marketable Securities are proposed to be
substituted as security for the Company's obligation under the Pledge Agreement.
Under the terms of the Pledge Agreement, assuming that the Company makes
the first four scheduled interest payments on the Notes in a timely manner, all
of the Pledged Securities will be released from the Pledge Account.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, each holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages (if any) thereon to the date of purchase (the
"Change of Control Payment"). Within ten days following any Change of Control,
the Company will mail a notice to each holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 40 days from the date such notice is mailed (the
"Change in Control Payment Date") pursuant to the procedures required by the
Indenture and described in such notice. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful:
(i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(ii) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Notes or portions thereof so tendered;
and
(iii) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the aggregate
principal amount of Notes or portions thereof being purchased by the
Company.
The Paying Agent will promptly mail to each holder of Notes so tendered the
Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each holder
a new note equal in principal amount to any unpurchased portion of the Note
surrendered; provided that each such new Note will be in a principal amount of
$1,000 or an integral multiple thereof. The Company will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date. Except as described above with respect to a
Change of Control, the Indenture does not contain provisions that permit the
holders of the Notes to require that the Company repurchase or redeem the Notes
in the event of a takeover, recapitalization or similar transaction.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the time and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
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Subject to the limitations discussed below, the Company could in the future
enter into certain transactions, including acquisitions, refinancings or other
recapitalizations, that would not constitute a Change of Control under the
Indenture, but that could increase the amount of Indebtedness outstanding at
such time or otherwise affect the Company's capital structure or credit ratings.
Due to the highly leveraged structure of the Company, the Company may not have
sufficient funds to be able to repurchase all of the Notes tendered in a Change
of Control Offer. The failure of the Company to purchase any Notes tendered in a
Change of Control Offer will constitute an Event of Default under the Indenture.
See "--Events of Default and Remedies."
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the Company's assets. Although there is a developing body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
holder of Notes to require the Company to repurchase such Notes as a result of a
sale, lease, transfer, conveyance or other disposition of less than all of the
assets of the Company to another Person may be uncertain.
Limitation on Sales of Assets and Subsidiary Interests
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to consummate an Asset Sale unless:
(i) the Company or such Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the assets sold or otherwise disposed of;
(ii) at least 75% of the consideration received in the Asset Sale by
the Company or such Restricted Subsidiary, as the case may be, consists of
(a) cash or Cash Equivalents or (b) the assumption of Indebtedness (other
than Indebtedness that is subordinated) of the Company or such Restricted
Subsidiary and the release of the Company and the Restricted Subsidiaries,
as applicable, from all liability on the Indebtedness assumed; and
(iii) the aggregate Fair Market Value of all non-Cash Consideration
received therefor by the Company or such Restricted Subsidiary, as the case
may be, when aggregated with the Fair Market Value of all other non-Cash
Consideration received by the Company and its Restricted Subsidiaries from
all other Asset Sales since the Issue Date that has not yet been converted
into cash or Cash Equivalents (in either case, in U.S. dollars or freely
convertible into U.S. dollars), does not exceed (without duplication) 5% of
the aggregate Consolidated Tangible Net Assets of the Company at the time
of such Asset Sale; provided, however, that any securities, notes or
similar obligations received by any of the Company or such Restricted
Subsidiaries from such transferees that are contemporaneously (subject to
ordinary settlement periods) converted by the Company or such Restricted
Subsidiaries into cash, shall be deemed to be cash (to the extent of the
net cash received) for purposes of clauses (ii) and (iii).
Within 270 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds to: (i) make capital expenditures or
acquire Business Assets, (ii) acquire 100% of the Equity Interests of a Related
Satellite Business, (iii) market imagery products and services, (iv) repay
Indebtedness under a Credit Facility, and (v) provide working capital. Pending
the final application of any such Net Proceeds, the Company may temporarily
invest such Net Proceeds in any manner that is not prohibited by the Indenture.
Any Net Proceeds from an Asset Sale that are not applied or invested as provided
in the first sentence of this paragraph will be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $7.5 million,
the Company will be required to make an offer to all holders of Notes (an "Asset
Sale Offer") to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds (and not solely the amount in excess of
$7.5 million), at an offer price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages (if any) thereon to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general business
purposes. If the aggregate amount of Notes surrendered by holders thereof
exceeds the amount of Excess
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Proceeds, the Trustee will select the Notes to be purchased on a pro rata basis
in accordance with the procedures set forth below. Upon completion of such offer
to purchase, the amount of Excess Proceeds will be reset at zero. The Asset Sale
Offer shall remain open for a period of 20 business days or such longer period
as may be required by law.
The foregoing provisions will not apply to the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company,
which will be governed by the provisions of the Indenture described below in
"--Merger, Consolidation or Sale of Assets" and "--Repurchase at the Option of
Holders."
SELECTION AND NOTICE OF NOTES FOR REDEMPTION OR REPURCHASE
If less than all of the Notes are to be redeemed or repurchased pursuant to
any purchase offer required under the Indenture at any time, selection of Notes
for redemption or repurchase will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis,
selected by lot or by such method as the Trustee shall deem fair and
appropriate; provided that no Note with a principal amount of $1,000 or less
shall be redeemed or repurchased in part.
Notices of redemption or repurchase shall be mailed by first class mail at
least 30 but not more than 60 days before the redemption or repurchase date to
each holder of Notes to be redeemed or repurchased at its registered address. If
any Note is to be redeemed or repurchased in part only, the notice that relates
to such Note shall state the portion of the principal amount thereof to be
redeemed or repurchased. A new Note in principal amount equal to the unredeemed
or unrepurchased portion will be issued in the name of the holder thereof upon
cancellation of the original Note. On and after the redemption or repurchase
date, interest will cease to accrue on the Notes or portions thereof called for
redemption or repurchase.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any distribution on account of
the Equity Interests of the Company (including, without limitation, any
payment in connection with any merger or consolidation involving the
Company or any of its Restricted Subsidiaries), other than dividends or
distributions declared and payable (a) in Equity Interests (other than
Disqualified Stock) of the Company or any of its Restricted Subsidiaries or
(b) to the Company or to any Restricted Subsidiary of the Company;
(ii) purchase, redeem, defease, retire for value or otherwise acquire
or return for value any Equity Interests of the Company, other than any
such Equity Interests owned by the Company or any Wholly Owned Restricted
Subsidiary of the Company;
(iii) make any principal payment on (except at maturity) or purchase,
redeem, defease or otherwise acquire or retire for value any Indebtedness
that is subordinated (whether pursuant to its terms, by operation of law,
structurally or otherwise) to the Notes; or
(iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless, at the time of
and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the immediately preceding fiscal quarter,
have been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the first
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paragraph set forth in the covenant entitled "Incurrence of Indebtedness or
Issuance of Disqualified Stock"; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries
after the Issue Date (excluding Restricted Payments permitted by clauses
(ii), (iii) and (iv) of the next succeeding paragraph), is less than the
sum, without duplication, of:
(1) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the Issue Date to the end of the
Company's most recently ended fiscal quarter for which financial
statements are available at the time of such Restricted Payment (or, if
such Consolidated Net Income for such period is a deficit, less 100% of
such deficit); plus
(2) 100% of the aggregate net cash proceeds received by the Company
since the date of the Indenture as a contribution to its common equity
capital or from the issue or sale of Equity Interests of the Company
(other than Disqualified Stock) or from the issue of Disqualified Stock
or debt securities of the Company that have been converted into such
Equity Interests (other than (A) Equity Interests (or Disqualified Stock
or convertible debt securities) sold to a Subsidiary of the Company, (B)
Disqualified Stock or debt securities that have been converted into
Disqualified Stock, (C) equity capital contributions described in clause
(vi) of the definition of "Permitted Investment," (D) to the extent that
the net cash proceeds of the issuance of such Equity Interests are used
to redeem the Notes as permitted under the section entitled "Optional
Redemption," and (E) Series A Preferred Stock issued in the Series A
Offering); plus
(3) to the extent that any Restricted Investment that was made
after the Issue Date is sold for cash or otherwise liquidated or repaid
for cash, the lesser of (A) the cash return of capital with respect to
such Restricted Investment (less the cost of disposition, if any) and
(B) the initial amount of such Restricted Investment; plus
(4) to the extent that any Unrestricted Subsidiary is designated by
the Company as a Restricted Subsidiary, an amount equal to the lesser of
(A) the Fair Market Value of such Restricted Investment and (B) the
Company's Investment in such Unrestricted Subsidiary at the time of such
designation.
The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the Indenture;
(ii) so long as no default has occurred and is continuing or will
arise therefrom, the redemption, repurchase, retirement or other
acquisition of any Equity Interests of the Company in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of other Equity Interests of the Company (other
than any Disqualified Stock); provided that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase, retirement
or other acquisition shall be excluded from clause (2) of the preceding
paragraph;
(iii) so long as no default has occurred and is continuing or will
arise therefrom, the repayment, defeasance, redemption or repurchase of
Intercompany Indebtedness (as defined in clause (vi) of the covenant
entitled "Incurrence of Indebtedness or Issuance of Disqualified Stock") or
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness or the substantially concurrent sale (other than
to a Subsidiary of the Company) of Equity Interests of the Company (other
than Disqualified Stock); provided that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase, retirement
or other acquisition shall be excluded from clause (2) of the preceding
paragraph;
(iv) the issuance of shares of Series A Preferred Stock as
paid-in-kind dividends in accordance with the terms of the Series A
Preferred Stock as in effect on the date of the Indenture;
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(v) the purchase, redemption or retirement by the Company of shares of
its Common Stock held by an employee or former employee of the Company or
its Subsidiaries issued under the Stock Option Plan; provided that the
amount of any such payments in any fiscal year does not exceed $1,000,000;
and provided, further, that the limitation set forth in the foregoing
proviso does not apply to the purchase, redemption or retirement of shares
of common stock with funds or other property or amounts paid by the Company
for which the Company receives concurrent reimbursement from any other
Person (other than the Company's Subsidiaries); and
(vi) payments made in respect of (x) the cancellation of fractional
shares of Common Stock in connection with the conversion of the Series A
Preferred Stock and the exercise of the Warrants and (y) the repurchase or
redemption of any shares of Series A Preferred Stock in an amount not to
exceed $500,000.
In determining the amount of Restricted Payments permissible under clause
(c) above, amounts expended pursuant to clauses (i), (v) and (vi) in the
preceding paragraph shall be included as Restricted Payments. Notwithstanding
the foregoing, payments made by the Company to Orbital pursuant to the Orbital
Agreements shall not be deemed Restricted Payments.
The Company may designate any of its Restricted Subsidiaries to be an
Unrestricted Subsidiary if such designation would not cause a Default and, at
the time of and after giving effect to such designation, the Company could incur
$1.00 of additional Indebtedness under the applicable provisions of the first
paragraph of the covenant entitled "Incurrence of Indebtedness or Issuance of
Disqualified Stock"; provided, that, in no event shall all or any portion of the
material assets or properties (other than cash) owned by the Company on the
Issue Date be transferred to or held by an Unrestricted Subsidiary of the
Company; and provided, further, that such ability to incur $1.00 of additional
Indebtedness shall not be required in the case of any newly created Unrestricted
Subsidiary funded solely with an Investment described in clause (vi) of the
definition of "Permitted Investment." For purposes of making such determination,
all outstanding Investments by the Company and its Restricted Subsidiaries
(except to the extent repaid in cash and except for Investments described in
clause (vi) of the definition of "Permitted Investment") in the Subsidiary so
designated will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
the first paragraph of this covenant. All such outstanding Investments will be
deemed to constitute Investments in an amount equal to the greatest of:
(i) the net book value of such Investments at the time of such
designation;
(ii) the Fair Market Value of such Investments at the time of such
designation; and
(iii) the original Fair Market Value of such Investments at the time
they were made.
Such designation will only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments, if not made in cash, shall be the
Fair Market Value on the date of the Restricted Payment of the asset(s) proposed
to be transferred by the Company or such Restricted Subsidiary, as the case may
be, pursuant to the Restricted Payment. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this covenant were computed,
which calculations may be based upon the latest available financial statements
of the Company.
Incurrence of Indebtedness or Issuance of Disqualified Stock
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guaranty or otherwise become directly or indirectly liable, contingently
or otherwise, with respect to (collectively, "incur") any Indebtedness
(including Acquired Debt) or any Disqualified Stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock and the Restricted Subsidiaries may incur Indebtedness
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if, after giving pro forma effect to the incurrence of such Indebtedness and the
use of proceeds thereof, the aggregate Indebtedness to Cash Flow Ratio of the
Company does not exceed 4.0 to 1. Notwithstanding the foregoing, prior to June
30, 2001, the Company or any Restricted Subsidiary may incur Indebtedness if
immediately after giving pro forma effect to the incurrence of such Indebtedness
and the receipt and application of the proceeds thereof, the Indebtedness to
Capital Ratio would be less than or equal to 65.0%.
The foregoing provisions will not apply to:
(i) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness under Credit Facilities; provided that the
aggregate principal amount of all Indebtedness (with letters of credit
being deemed to have a principal amount equal to the maximum potential
liability of the Company and its Subsidiaries thereunder) outstanding under
all Credit Facilities after giving effect to such incurrence does not
exceed an amount equal to the greater of (A) $25 million and (B) 85% of
Eligible Receivables;
(ii) the incurrence by the Company of Indebtedness represented by the
Notes and the Indenture or the issuance of shares of Series A Preferred
Stock accrued or issued as paid-in-kind dividends;
(iii) Existing Indebtedness;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness under (A) Hedging Obligations, provided that
(1) the notional principal amount of any interest rate protection agreement
does not significantly exceed the principal amount of the Indebtedness to
which such interest rate protection agreement relates and (2) any
agreements related to fluctuations in currency rates do not increase the
outstanding Indebtedness other than as result of fluctuations in foreign
currency exchange rates, and (B) performance, surety and workers'
compensation bonds or other obligations of a like nature incurred in the
ordinary course of business;
(v) the incurrence by any Unrestricted Subsidiary of the Company of
Non-Recourse Debt; provided that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary such event shall be deemed
to constitute an incurrence of Indebtedness by a Restricted Subsidiary;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness owed to and held by the Company or any of its
Wholly Owned Restricted Subsidiaries (the Indebtedness incurred pursuant to
this clause (vi) being hereafter referred to as "Intercompany
Indebtedness"); provided that an incurrence of Indebtedness shall be deemed
to have occurred upon (i) any sale or other disposition of Intercompany
Indebtedness to a Person other than the Company or any of its Restricted
Subsidiaries, (ii) any sale or other disposition of Equity Interests of the
Company's Restricted Subsidiaries which holds Intercompany Indebtedness
such that such Restricted Subsidiary ceases to be a Restricted Subsidiary
after such sale or other disposition or (iii) designation of a Restricted
Subsidiary as an Unrestricted Subsidiary;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Non-Recourse Debt to finance purchase money obligations;
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness ("Permitted Refinancing Indebtedness")
incurred to refinance, replace or refund Indebtedness
("Refinanced Indebtedness") incurred pursuant to the first paragraph of
this covenant or pursuant to clause (i) or (iii) of this covenant; provided
that:
(a) the aggregate principal amount of such Permitted Refinancing
Indebtedness does not exceed the aggregate principal amount of the
Refinanced Indebtedness (including accrued and unpaid interest thereon);
(b) such Permitted Refinancing Indebtedness shall have a final
maturity equal to or later than, and a Weighted Average Life to Maturity
equal to or greater than, the final maturity and Weighted Average Life
to Maturity of the Refinanced Indebtedness, respectively; and
(c) such Permitted Refinancing Indebtedness shall rank no higher
relative to the Notes than the Refinanced Indebtedness and in no event
may any Indebtedness of the Company, or any of its
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Restricted Subsidiaries be refinanced with Indebtedness of any
Restricted Subsidiary under this clause (viii);
(ix) the incurrence by the Company or any of its Restricted
Subsidiaries of Capital Lease Obligations in an aggregate amount for all
such Persons not to exceed $15 million at any one time outstanding;
(x) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness not to exceed $15 million outstanding at any
time pursuant to a Fixed Asset Financing; and
(xi) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in addition to that described in clauses (i)
through (x) above, so long as the aggregate principal amount of all such
Indebtedness, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this
clause (xi), shall not exceed $10 million outstanding at any one time in
the aggregate.
Liens
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien on any asset or property now owned or hereafter
acquired, or any income or profits therefrom, or assign or convey any right to
receive income therefrom, unless (i) in the case of Liens securing obligations
subordinate to the Notes, the Notes are secured by a valid, perfected Lien on
such asset or property that is senior in priority to such Liens, (ii) in the
case of Liens securing obligations subordinate to a Subsidiary Guarantee, such
Subsidiary Guarantee is secured by a valid, perfected Lien on such asset or
property that is senior in priority to such Liens, and (iii) in all other cases,
the Notes (and, if such Lien secures obligations of a Restricted Subsidiary, a
Subsidiary Guarantee of such Restricted Subsidiary) are equally and ratably
secured; provided, however, that the foregoing shall not prohibit or restrict
Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary to:
(i) pay dividends or make any other distributions to the Company or
any of its Restricted Subsidiaries on its Capital Stock or with respect to
any other interest or participation in, or measured by, its profits;
(ii) pay any Indebtedness owed to the Company or any of its Restricted
Subsidiaries;
(iii) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(iv) transfer any of its properties or assets to the Company or any of
its Restricted Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of:
(a) the Indenture, the Pledge Agreement or the Notes;
(b) Existing Indebtedness;
(c) applicable law;
(d) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Restricted Subsidiaries as
in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the
Person, or the property or assets of the Person, so acquired;
(e) customary non-assignment provisions in leases or other
agreements entered into in the ordinary course of business;
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(f) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature
described in clause (iv) above on the property so acquired;
(g) Permitted Refinancing Indebtedness; provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those contained in
the agreements governing the Refinanced Indebtedness; or
(h) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business;
(i) secured Indebtedness otherwise permitted to be incurred
pursuant to the provisions of the covenant described above under the
caption "--Liens" that limits the right of the debtor to dispose of the
assets securing such Indebtedness; or
(j) in the case of clauses (a), (b), (d), (e), (f), (g), (h) and
(i) above, any amendments, modifications, restatements, renewals,
increases, supplements, modifications, restatements or refinancings
thereof, provided that such amendments, modifications, restatements or
refinancings are not materially more restrictive with respect to such
dividend and other payment restrictions than those contained in such
instruments as in effect on the date of their incurrence.
Merger, Consolidation or Sale of Assets
The Indenture provides the Company may not consolidate or merge with or
into (whether or not the Company is the surviving Person), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, another Person
unless:
(i) the Company is the surviving Person or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or
to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized and existing
under the laws of the United States, any state thereof or the District of
Columbia;
(ii) the Person formed by or surviving any such consolidation or
merger (if other than the Company) or the entity or Person to which such
sale, assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all the obligations of the Company under the Notes,
the Indenture and the Pledge Agreement pursuant to a supplemental indenture
in form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction, no Default or Event of
Default exists;
(iv) the Company, or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have
been made will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the
Company immediately preceding the transaction; and
(v) the Company, or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have
been made, at the time of such transaction and after giving pro forma
effect thereto as if such transaction had occurred at the beginning of the
immediately preceding fiscal quarter, will be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the first paragraph of the
covenant entitled "Incurrence of Indebtedness or Issuance of Disqualified
Stock."
Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, sell, lease transfer or otherwise dispose of
any of their properties or assets to, or purchase any property or
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assets from, or enter into or make any contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction"), unless:
(i) such Affiliate Transaction is on terms that are no less favorable
to the Company or such Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person;
(ii) the Company delivers to the Trustee:
(a) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $2.5 million, (x) a determination by the
disinterested members of the Board of Directors of the Company made in
good faith (evidenced by a resolution approved by at least a majority of
the disinterested members of the Board of Directors of the Company and
set forth in an Officers' Certificate delivered to the Trustee) or (y)
an opinion as to the fairness of such Affiliate Transaction to the
Company or Restricted Subsidiary involved in such Affiliate Transaction
from a financial point of view issued by an Independent Financial
Advisor or, with respect to development, launch and operations of
satellites and remote imaging-related matters, a nationally recognized
expert in the respective applicable industry; and
(b) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $10 million, an opinion as to the fairness of
such Affiliate Transaction to the Company or Restricted Subsidiary
involved in such Affiliate Transaction from a financial point of view
issued by an Independent Financial Advisor or, with respect to
development, launch and operations of satellites and remote
imaging-related matters, a nationally recognized expert in the
respective applicable industry;
provided, however, that the following shall be deemed not to be Affiliate
Transactions:
(1) any employment agreement, stock option or stock purchase
agreement entered into by the Company or any of its Restricted
Subsidiaries with any of their respective employees in the ordinary
course of business;
(2) transactions between or among the Company and/or its Wholly
Owned Restricted Subsidiaries;
(3) Restricted Payments permitted by clauses (i), (ii), (iv), (v)
and (vi) of the second paragraph of the covenant entitled "Restricted
Payments" and Permitted Investments of a type referred to in clauses
(i), (iii) and (vi) of the definition of Permitted Investments;
(4) the sale of common Equity Interests (other than Disqualified
Stock, except as contemplated by the Stock Purchase Agreement) of the
Company for cash to an Affiliate of the Company;
(5) transactions pursuant to agreements entered into with resellers
of the Company's products and services on terms substantially the same
as the Company's standard agreements entered into with such parties in
the ordinary course of business;
(6) transactions pursuant to the Orbital Agreements, including
transactions pursuant to any amendments to the Procurement Agreement
with respect to the selection of the launch vehicle for the satellite
designated on the Issue Date as the OrbView-4 satellite;
(7) amendments, supplements or other modifications to the Orbital
Agreements that do not involve the payment of cash by the Company or any
of its Restricted Subsidiaries;
(8) payment of reasonable directors fees to Persons who are not
otherwise Affiliates of the Company; and
(9) the sale of securities (other than common Equity Interests) of
the Company for cash to an Affiliate of the Company; provided that:
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(A) an amount of such securities at least equal to the amount
sold to such Affiliate have been or are being sold substantially
simultaneously to Persons that are not Affiliates of the Company;
(B) the price per security paid by such Affiliate is no less
than the price paid by such non-Affiliates; and
(C) the Company shall not have entered into any other
arrangement with such non-Affiliates to induce such non-Affiliates to
purchase such securities.
Maintenance of Insurance
The Indenture provides that the Company shall obtain or maintain (as
applicable) in full force and effect:
(i) launch and in-orbit checkout insurance with respect to each
OrbView Satellite, which insurance shall be procured promptly prior to the
launch of each such satellite and shall be in effect on the launch date and
remain in effect through the launch and the initial check-out period of
such OrbView Satellite, in an amount sufficient to provide for the
construction, launch and insurance of a Replacement Satellite to be payable
in the event of a launch or satellite failure during the initial check-out
period; provided, however, that at the time the Company is required to
procure launch and in-orbit check-out insurance with respect to an OrbView
Satellite, the Company may reduce the amount to be insured if another
OrbView Satellite is fully operational, is being used in commercial service
and is insured in accordance with clause (ii) below, by (x) the amount of
cash, cash equivalents and short-term investments (excluding proceeds of
the Offering and the Series A Offering and amounts allocated or expected to
be allocated for capital expenditures) currently available to the Company
to construct a Replacement Satellite as determined in good faith by the
Board of Directors of the Company (evidenced by a resolution approved by at
least a majority of the Board of Directors of the Company and set forth in
an Officers' Certificate delivered to the Trustee), and (y) the value of
any long lead-time spare parts that the Company has procured to date for
any satellite that is comparable to the technological capability of the
OrbView Satellite being insured, as such value is determined in good faith
by the Board of Directors of the Company (evidenced by a resolution
approved by at least a majority of the Board of Directors of the Company
and set forth in an Officers' Certificate delivered to the Trustee).
(ii) in-orbit operations insurance with respect to each OrbView
Satellite, at all times following the date an OrbView Satellite is placed
in commercial service, representing the value of such satellite (taking
into account the foregone useful life of such satellite) and the pro rata
cost of a launch vehicle, payable in the event that such satellite ceases
to be used for commercial revenue producing service (provided that such
insurance may contain customary provisions for deductible payments and
minimum thresholds for satellite failure); provided, however, that at the
time the Company is required to procure or renew in-orbit operations
insurance with respect to an OrbView Satellite, the Company may reduce the
amount to be insured if another OrbView Satellite is fully operational, is
being used in commercial service, and is insured in accordance with this
clause (ii), by (x) the amount of cash, Cash Equivalents and short-term
investments (excluding proceeds of the Offering and the Series A Offering
and amounts allocated or expected to be allocated for capital
expenditures), currently available to the Company to construct a
Replacement Satellite as determined in good faith by the Board of Directors
of the Company (evidenced by a resolution approved by at least a majority
of the Board of Directors of the Company and set forth in an Officers'
Certificate delivered to the Trustee), and (y) the value of any long
lead-time spare parts that the Company has procured to date for any
satellite that is comparable to the technological capability of the OrbView
Satellite being insured, as such value is determined in good faith by the
Board of Directors of the Company (evidenced by a resolution approved by at
least a majority of the Board of Directors of the Company and set forth in
an Officers' Certificate delivered to the Trustee).
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The obligation of the Company to maintain insurance pursuant to this
covenant may be satisfied by any combination of:
(i) insurance commitments obtained from any recognized insurance
provider,
(ii) insurance commitments obtained from any entity other than an
entity referred to in clause (i) if the Board of Directors of the Company
determines in good faith (evidenced by a majority resolution of the Board
of Directors of the Company and set forth in an Officer's Certificate
delivered to the Trustee) that such entity is creditworthy and otherwise
capable of bearing the financial risk of providing such insurance and
making payments in respect of any claims on a timely basis; and
(iii) unrestricted cash segregated and maintained by the Company in a
segregated account established with an Eligible Institution (the "Insurance
Account") solely for disbursement in accordance with the terms of this
covenant ("Cash Insurance"), and to be held in trust for the sole and
express benefit of the holders of the Notes.
Within 30 days following any date on which the Company is required to
obtain insurance pursuant to the Indenture, the Company will deliver to the
Trustee an insurance certificate certifying the amount of insurance then
carried, and in full force and effect, and an Officer's Certificate stating that
such insurance, together with any other insurance or Cash Insurance maintained
by the Company, complies with the Indenture. In addition, the Company will cause
to be delivered to the Trustee no less than once each year an insurance
certificate setting forth the amount of insurance then carried, which insurance
certificate shall entitle the Trustee to:
(i) notice of any claim under any such insurance policy; and
(ii) at least 30 days' notice from the provider of such insurance
prior to the cancellation of any such insurance and an Officers'
Certificate that complies with the first sentence of this paragraph.
In the event that the Company maintains any Cash Insurance in satisfaction
of any part of their obligation to maintain insurance pursuant to this covenant,
the Company shall deliver, in lieu of any insurance certificate otherwise
required by this covenant, an Officers' Certificate to the Trustee certifying
the amount of such Cash Insurance.
In the event that the Company receives any proceeds of any insurance that
it is required to maintain pursuant to this covenant, the Company shall promptly
deposit such proceeds into an escrow account established with an Eligible
Institution for such purpose. If the Company maintains any Cash Insurance in
satisfaction of any part of its obligation to maintain insurance pursuant to
this covenant, the Company shall transfer the cash maintained in the Insurance
Account to such escrow account upon the occurrence of the event (e.g., a launch
failure) that would have entitled the Company to the payment of insurance had
the Company purchased insurance from a recognized insurance provider. The
Company may use monies on deposit in such escrow account for the design,
development, construction, procurement, launch and insurance of any Replacement
Satellite if: (i) the Company delivers to the Trustee a certificate of the
Company's President certifying that such Replacement Satellite is comparable to
the technological capability of the satellite being replaced, (ii) within 30
days following the receipt of such insurance proceeds, the Company delivers to
the Trustee an Officers' Certificate certifying that (A) the Company will use
its reasonable best efforts to ensure that such Replacement Satellites are
launched within 24 months following delivery from the escrow account of such
insurance proceeds; and (B) the Company will have sufficient funds to service
the Company's projected debt service requirements until the scheduled launch of
such Replacement Satellite and to develop, construct, launch and insure such
Replacement Satellite.
Business Activities and Construction of OrbView Satellites
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, engage in any business other than that which
is related to the design, development and operation of remote imaging satellites
and the worldwide marketing and sales of remote imagery-based products and
services.
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Limitations on Sale and Leaseback Transactions
The Indenture provides that the Company will not, and will not permit any
Subsidiary of the Company to, directly or indirectly, enter into any Sale and
Leaseback Transaction with respect to any property or assets (whether now owned
or hereafter acquired), except for a Sale and Leaseback Transaction not
exceeding 365 days, unless (i) the sale or transfer of such property or assets
to be leased is treated as an Asset Sale and complies with the "--Limitations on
Sales of Assets and Subsidiary Interests" covenant and (ii) the Company or such
Subsidiary would be entitled under the "Incurrence of Indebtedness or Issuance
of Disqualified Stock" covenant to incur any Indebtedness (with the lease
obligations being treated as Indebtedness for purposes of ascertaining
compliance with this covenant) in respect of such Sale and Leaseback
Transaction.
Additional Guarantors
The Indenture provides that the Company shall cause each Person that
becomes a Restricted Subsidiary after the date of the Indenture, upon becoming a
Restricted Subsidiary, to become a Subsidiary Guarantor with respect to the
Notes. Any such person shall become a Subsidiary Guarantor by executing and
delivering to the Trustee (a) a supplemental indenture, in form and substance
satisfactory to the Trustee, which subjects such person to the provisions of the
Indenture as a Subsidiary Guarantor and (b) an opinion of counsel to the effect
that such supplemental indenture has been duly authorized and executed by such
Subsidiary Guarantor.
The Indenture contains provisions the intent of which is to provide that
the obligations of any Subsidiary Guarantor will be limited to the maximum
amount that will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from, rights to receive contribution from, or payments made by or on
behalf of any other Subsidiary Guarantor in respect of the obligations of such
other Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its
contribution obligations under the Indenture, result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under any applicable federal,
state, or foreign law. Any Subsidiary Guarantor that makes a payment or
distribution under a Subsidiary Guarantee shall be entitled to contribution from
each other Subsidiary Guarantor so long as the exercise of such right does not
impair the rights of the holders of the Notes under the Subsidiary Guarantees.
Limitation on Sale of Capital Stock of Subsidiaries
The Indenture provides that the Company may not, and may not permit any
Restricted Subsidiary to, issue, transfer, convey, lease or otherwise dispose of
any shares of Capital Stock or other ownership interests in a Restricted
Subsidiary or securities convertible or exchangeable into, or options, warrants,
rights or other interest with respect to, Capital Stock of or other ownership
interests in a Restricted Subsidiary to any Person (other than to the Company or
a Wholly Owned Restricted Subsidiary) except in a transaction that consists of a
sale of all of the Capital Stock of or other ownership interests in such
Subsidiary owned by the Company and any Subsidiary of the Company that complies
with the provisions described under "Repurchase at the Option of
Holders--Limitations on Sales of Assets and Subsidiary Interests" above to the
extent such provisions apply.
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
will furnish to the holders of Notes:
(i) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and
10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of
operations of the Company and its Restricted Subsidiaries and, with respect
to the annual information only, a report thereon by the Company's
independent certified public accountants; and
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(ii) all information that would be required to be filed with the
Commission on Form 8-K if the Company was required to file such reports.
In addition, following the consummation of the Exchange Offer, whether or
not required by the rules and regulations of the Commission, but only if then
permitted by the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability and make
such information available to securities analysts and prospective investors upon
request. In addition, for so long as any Notes remain outstanding, the Company
will furnish to the holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default:
(i) default for 30 days in the payment when due of interest on, or
Liquidated Damages (if any) with respect to, the Notes;
(ii) default in payment when due (whether at maturity, upon redemption
or repurchase, or otherwise) of the principal of or premium, if any, on the
Notes;
(iii) default in the payment of principal and interest or Liquidated
Damages, if any, on Notes required to be purchased pursuant to the
provisions described under the captions "--Repurchase at the Option of
Holders--Change of Control," "--Repurchase at the Option of
Holders--Limitations on Sales of Assets and Subsidiary Interests", or
failure by the Company to comply with the provisions described under
"--Certain Covenants--Merger, Consolidation or Sale of Assets,"
(iv) failure by the Company or any of its Restricted Subsidiaries for
30 days after notice to the Company by the Trustee or to the Company and
the Trustee by the Holders of at least 25% of the outstanding principal
amount of the Notes, to comply with any of their other covenants in the
Indenture for the Notes;
(v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Restricted Subsidiaries), whether such Indebtedness or guarantee now
exists, or is created after the date of the Indenture, which default:
(a) is caused by a failure to pay principal of, or premium, if any,
or interest on, such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a
"Payment Default"); or
(b) results in the acceleration (which acceleration has not been
rescinded) of such Indebtedness prior to its express maturity, and, in
each case described in clauses (a) and (b) of this paragraph, the
principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated,
aggregates $5 million or more;
(vi) failure by the Company or any of its Restricted Subsidiaries to
pay final judgments (other than any judgments as to which a reputable
insurance company has accepted full liability and whose bond, premium or
similar charge therefor is not in excess of $5 million) aggregating in
excess of $5 million, which judgments are not paid, discharged or stayed
within 60 days after their entry,
(vii) breach by the Company of any representation or warranty set
forth in the Pledge Agreement, or default by the Company in the performance
of any covenant set forth in the Pledge Agreement, or repudiation by the
Company of any of its obligations under the Pledge Agreement or the
unenforceability of the Pledge Agreement against the Company for any reason
which in any one case or in the aggregate results in a material impairment
of the rights intended to be afforded thereby; and
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(viii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Restricted Subsidiaries.
If any Event of Default occurs and is continuing with respect to the Notes,
the Trustee or the holders of at least 25% of the aggregate principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency with respect to the
Company, any Significant Subsidiary or any group of Restricted Subsidiaries
that, taken together, would constitute a Significant Subsidiary, all outstanding
Notes will become due and payable without further action or notice. Holders of
the Notes may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable upon the acceleration of the
Notes. If an Event of Default occurs prior to March 1, 2002 by reason of any
such willful action (or inaction), by or on behalf of the Company with the
intention of avoiding the prohibition on redemption of the Notes prior to March
1, 2002, then the premium specified in the Indenture shall also become
immediately due and payable to the extent permitted by law upon the acceleration
of the Notes.
The holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture, except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required, upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, PARTNERS, OFFICERS, EMPLOYEES, INCORPORATORS
AND STOCKHOLDERS
No director, officer, employee, incorporator, stockholder or authorized
representative of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, the Indenture or the Pledge
Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each holder of Notes, by accepting a Note, waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of their
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for:
(i) the rights of holders of outstanding Notes to receive payments in
respect of the principal of, and premium (if any), interest and Liquidated
Damages (if any) on, such Notes when such payments are due from the trust
referred to below;
(ii) the Company's obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost
or stolen Notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
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(iii) the rights, powers, trusts, duties and immunities of the
Trustee, and the Company's obligations in connection therewith; and
(iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or Event
of Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (other than non-payment, bankruptcy, receivership, rehabilitation
and insolvency events) described under "--Events of Default" will no longer
constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance with
respect to the Notes:
(i) the Company must irrevocably deposit with the Trustee, in trust
for the benefit of the holders of the Notes, cash in U.S. dollars,
non-callable Government Securities or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent certified public accountants, to pay the principal of,
and premium if any, interest and Liquidated Damages, if any, on, the
outstanding Notes on the Stated Maturity or on the applicable redemption
date, as the case may be, and the Company must specify whether the Notes
are being defeased to maturity or to a particular redemption date;
(ii) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that:
(A) the Company has received from, or there has been published by,
the Internal Revenue Service a ruling, or
(B) since the date of the Indenture, there has been a change in the
applicable federal income tax law,
in either case to the effect, and based thereon such opinion of counsel shall
confirm, that the holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the holders of the
outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance
had not occurred;
(iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(v) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute default under any material agreement
or instrument (other than the Indenture) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound;
(vi) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day (or such other applicable
date) following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally;
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(vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the holders of Notes over the other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and
(viii) the Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Notes
selected for redemption. Also, the Company is not required to transfer or
exchange any Notes for a period of 15 days before a selection of Notes to be
redeemed.
The registered holder of a Note will be treated as the owner of such Note
for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next succeeding paragraph, the Indenture, the
Notes and the Pledge Agreement may be amended or supplemented with the consent
of the holders of at least a majority in principal amount of the Notes then
outstanding (including consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture, the Notes or the Pledge
Agreement may be waived with the consent of the holders of a majority in
principal amount of the then outstanding Notes (including consents obtained in
connection with a purchase of, or tender offer or exchange offer for Notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Note held by a non-consenting holder):
(i) reduce the principal amount of Notes whose holders must consent to
an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other
than provisions relating to the covenants described above under the caption
"Repurchase at the Option of Holders--Change in Control" and "Limitation on
Sales of Assets and Subsidiary Interests");
(iii) reduce the rate of or change the time for payment of interest on
any Note;
(iv) waive a Default or Event of Default in the payment of principal
of, premium (if any), interest or Liquidated Damages (if any) on, the Notes
(except a rescission of acceleration of the Notes by the holders of at
least a majority in aggregate principal amount of the Notes and a waiver of
the payment default that resulted from such acceleration);
(v) make any Note payable in money other than that stated in the
Notes;
(vi) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of holders of Notes to receive
payments of principal of, premium (if any), interest or Liquidated Damages
on, the Notes;
(vii) waive a redemption payment with respect to any Note (other than
a payment required by one of the covenants described above under the
caption "--Repurchase at the Option of holders"); or
(viii) make any change in the foregoing amendment and waiver
provisions.
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Notwithstanding the foregoing, without the consent of any holder of Notes,
the Company and the Trustee may amend or supplement the Indenture, the Notes or
the Pledge Agreement to cure any ambiguity, defect or inconsistency, to provide
for uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to holders of Notes in
the case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the holders of Notes or that does not adversely
affect the legal rights under the Indenture of any such holder, or to comply
with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if the Trustee acquires any conflicting interest, it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.
The holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any holder of Notes, unless such holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company entered into the Registration Rights Agreement with the Initial
Purchasers pursuant to which the Company will, at its expense, for the benefit
of the holders of the Original Notes, (i) use its best efforts to file within 45
days after the Closing Date, this Exchange Offer Registration Statement with the
Commission with respect to a registered offer to exchange the Original Notes for
the Exchange Notes, which will have terms identical in all material respects to
the Original Notes (except that the Exchange Notes will not contain terms with
respect to transfer restrictions) and (ii) unless the Exchange Offer would not
be permitted by applicable law or Commission policy, use its best efforts to
cause the Exchange Offer Registration Statement to be declared effective under
the Securities Act within 150 days after the Closing Date. Upon the Exchange
Offer Registration Statement being declared effective, the Company will offer
the Exchange Notes in exchange for surrender of the Original Notes. The Company
will keep the Exchange Offer open for not less than 30 days (or longer if
required by applicable law) after the date notice of the Exchange Offer is
mailed to the holders of the Original Notes. For each Original Note surrendered
to the Company pursuant to the Exchange Offer, the holder of such Original Note
will receive an Exchange Note having a principal amount equal to that of the
surrendered Original Note, which shall be canceled. Under existing
interpretations by the staff of the Commission, the Exchange Notes would in
general be freely transferable after the Exchange Offer without further
registration under the Securities Act; provided that broker-dealers
("Participating Broker-Dealers") receiving Exchange Notes in the Exchange Offer
will have a prospectus delivery requirement with respect to resales of such
Exchange Notes. The Commission has taken the position that Participating
Broker-Dealers may fulfill their prospectus delivery requirements with respect
to the Exchange Notes (other than a resale of an unsold allotment from the
original sale of the Original Notes) with the prospectus contained in the
Exchange Offer Registration Statement. Under the Registration Rights Agreement,
the Company is required to allow Participating Broker-Dealers and other persons,
if any, with similar prospectus delivery requirements to use the prospectus
contained in the Exchange Offer Registration Statement in connection with the
resale of such Exchange Notes. The Company will agree for a period of at least
180 days after the consummation of the Exchange Offer to make available a
prospectus meeting the requirements of the Securities Act to any Participating
Broker-Dealer for use in connection with any resale of any such Exchange Notes.
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Each holder of Original Notes (other than certain specified holders) who
wishes to exchange such Original Notes for Exchange Notes in the Exchange Offer
will be required to make certain representations, including representations that
any Exchange Notes to be received by it will be acquired in the ordinary course
of its business and that at the time of the commencement of the Exchange Offer
it has no arrangement with any person to participate in a distribution (within
the meaning of the Securities Act) with respect to the Exchange Notes.
The Company has agreed to pay all reasonable expenses incident to the
Exchange Offer (excluding the fees of counsel to the Initial Purchasers) and
will indemnify the Initial Purchasers against certain liabilities, including
liabilities under the Securities Act.
In the event that, based upon applicable interpretations of the Securities
Act by the staff of the Commission, the Company concludes that it cannot effect
the Exchange Offer, or if for any other reason the Exchange Offer is not
consummated within 180 days of the Closing Date, or if a holder of the Original
Notes is not permitted by applicable law to participate in the Exchange Offer,
the Company will use its best efforts to file a shelf registration statement
(the "Shelf Registration Statement") with the Commission on or prior to 45 days
after such filing obligation arises, cause the Shelf Registration Statement to
be declared effective by the Commission on or prior to 150 days after such
obligation arises and use their best efforts to keep such Shelf Registration
Statement continuously effective until two years after the Closing Date.
In the event that either: (i) the Exchange Offer Registration Statement or
the Shelf Registration Statement is not filed with the Commission on or prior to
the date specified for such filing; (ii) the Exchange Offer Registration
Statement or the Shelf Registration Statement has not been declared effective by
the Commission on or prior to the date specified for such effectiveness; (iii)
the Exchange Offer is not consummated on or prior to the date specified for such
consummation; or (iv) following the date such Exchange Offer Registration
Statement or Shelf Registration Statement is declared effective by the
Commission, it shall cease to be effective without being restored to
effectiveness by amendment or otherwise within the time period specified in the
Registration Rights Agreement, (each such event referred to in clauses (i)
through (iv), a "Registration Default"), the Company shall pay as liquidated
damages ("Liquidated Damages") to each holder of the Original Notes an amount
(the "Damage Amount") equal to 0.25% per annum of the face amount of the
Original Notes during the first 90-day period or any portion thereof immediately
following the occurrence of such Registration Default. The Damage Amount will be
increased by an additional 0.25% per annum of the face amount of the Original
Notes for each subsequent 90-day period that any such Damage Amount continues to
accrue, and the Damage Amount will accrue at the rate specified above until such
Registration Default is cured; provided that in no event shall the Damage Amount
be increased by more than 1% of the face amount of the Original Notes. In
certain circumstances, if the Shelf Registration Statement ceases to be
effective for certain periods, then Liquidated Damages shall be payable.
The Original Notes and the Exchange Notes will be considered collectively
to be a single class for all purposes under the Indenture, including, without
limitation, waivers, amendments, redemptions and offers to repurchase under the
circumstances described herein.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Attributable Debt" means, with respect to any sale and leaseback
transaction, the present value at the time of determination (discounted at a
rate consistent with accounting guidelines, as determined in good faith by the
Company) of the payments during the remaining term of the lease (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended) or until the earliest date on which the lessee may
terminate such lease without penalty or upon payment of a penalty (in which case
the rental payments shall include such penalty, after excluding all amounts
required to be paid on account of maintenance and repairs, insurance, taxes,
assessments, water, utilities and similar charges).
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"Acquired Debt" means, with respect to any specified Person:
(i) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Restricted Subsidiary of such
specified Person, including, without limitation, Indebtedness incurred in
connection with, or in contemplation of, such other Person merging with or
into or becoming a Restricted Subsidiary of such specified Person; and
(ii) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of Voting Equity Interests, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Equity Interests (or the
equivalent) of a Person shall be deemed to be control.
"Asset Sale" means:
(i) the sale, lease, license, conveyance or other disposition of any
assets or rights (including, without limitation, by way of a Sale and
Leaseback or similar arrangement) by the Company or a Restricted Subsidiary
(a "disposition"), provided that the disposition of all or substantially
all of the assets of the Company and its Restricted Subsidiaries taken as a
whole will be governed by the provisions of the Indenture described above
under the caption "--Repurchase at the Option of Holders--Change of
Control" and/or the provisions described above under the caption "--Certain
Covenants--Merger, Consolidation or Sale of Assets" and not by the
provisions of the Asset Sale covenant); and
(ii) except to the extent excluded by clause (i) above, the issuance
or disposition by the Company or any of its Restricted Subsidiaries of
Equity Interests of the Company's Restricted Subsidiaries,
in the case of either clause (i) or (ii) above, whether in a single transaction
or a series of related transactions: (a) that have a Fair Market Value in excess
of $2.5 million; or (b) for net proceeds in excess of $2.5 million.
Notwithstanding the foregoing: (i) sales of imagery, imagery distribution
or satellite tasking rights, software or rights in software for processing and
storing imagery, license grants to imagery value-added resellers or distributors
and other associated rights, and sales of services, products or inventory in the
ordinary course of business; (ii) a transfer of assets by the Company to any of
its Restricted Subsidiaries or by a Restricted Subsidiary to the Company; (iii)
an issuance of Equity Interests by a Restricted Subsidiary to the Company or to
a Wholly Owned Restricted Subsidiary of the Company; (iv) an exchange of an
asset held by the Company or a Restricted Subsidiary for an asset of a third
party upon a determination by the disinterested members of the Board of
Directors of the Company made in good faith (evidenced by a resolution approved
by a majority of the disinterested members of the Board of Directors of the
Company and set forth in an Officers' Certificate delivered to the Trustee) that
the asset received by the Company or a Restricted Subsidiary in such exchange
(x) is a Related Asset, (y) has a Fair Market Value at least equal to the fair
market value of the asset transferred by the Company or such Restricted
Subsidiary and (z) is usable in the ordinary course of the Company's business to
at least the same extent as the asset transferred by the Company or such
Restricted Subsidiary; (v) sales or dispositions of damaged, worn out or other
obsolete property in the ordinary course of business so long as such property is
no longer necessary for the proper conduct of the business of the Company or any
of its Restricted Subsidiaries; and (vi) a Restricted Payment that is permitted
by the covenant entitled "Restricted Payments" will not be deemed to be Asset
Sales.
"Business Assets" means any hardware, software, technology, intellectual
property, or other rights in or assets (or, in the case of clause (vi),
inventory) relating to (i) the remote imaging satellites owned and/or operated
by ORBIMAGE on the Issue Date, (ii) the OrbView Satellites, (iii) the
Replacement Satellites, (iv) any other remote imaging satellites developed,
constructed or acquired by ORBIMAGE, (v) the ground segment (or any components
thereof) related to the operation of, and processing of data from, the
satellites described in clauses (i)-(v) above, and (vi) the Company's imagery
catalogue and archive.
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"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(i) in the case of a corporation, corporate stock;
(ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(iii) in the case of a partnership, partnership interests (whether
general or limited); and
(iv) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Consideration" means any consideration received from an Asset Sale in
the form of cash or Cash Equivalents, in either case in U.S. dollars or freely
convertible into U.S. dollars.
"Cash Equivalents" means:
(i) United States dollars;
(ii) Government Securities;
(iii) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances or money market deposit accounts with maturities not exceeding
six months and overnight bank deposits, in each case with any Eligible
Institution;
(iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any Eligible Institution;
(v) commercial paper having the highest rating obtainable from Moody's
or S&P and in each case maturing within six months after the date of
acquisition; and
(vi) mutual funds or other pooled investment vehicles investing solely
in investments of the types described in (i) through (v) above.
"Change of Control" means:
(i) the failure by Orbital to hold at least 12,600,000 shares of
Common Stock of the Company (being 50% of the shares of Common Stock held
by Orbital on May 8, 1997), adjusted for stock splits, stock combinations
and the like;
(ii) the failure by Orbital to hold at least thirty percent (30%) of
the Common Stock of the Company on a fully diluted basis, without giving
effect to the conversion of Capital Stock of the Company issued as a
dividend paid-in-kind with respect to shares of Series A Preferred Stock or
Capital Stock of the Company issued pursuant to options granted under the
Stock Option Plan or any other option plan adopted for the benefit of the
Company's employees or directors;
(iii) the direct or indirect acquisition of beneficial ownership of
Voting Equity Interests of the Company by any Person or group of Persons
acting in concert, in an amount greater than the amount of Voting Equity
Interests held contemporaneously by Orbital except (x) purchases by record
holders of Series A Preferred Stock as of the Issue Date (and their
affiliates, to the extent that such holders are permitted to transfer their
shares of Series A Preferred Stock to affiliates under the Amended and
Restated Stock Purchase Agreement, dated February 25, 1998 ("Series A
Affiliates")) from other holders of Series A Preferred Stock and their
Series A Affiliates and (y) purchases permitted pursuant to the Series A
Holders' subscription rights under Section 4.1 of the Stockholders'
Agreement;
(iv) the acquisition of the Company, or the sale, lease, transfer,
conveyance or other disposition, in one transaction or a series of related
transactions, directly or indirectly, including through a liquidation or
dissolution, of all or substantially all of the assets of the Company and
its Restricted Subsidiaries or the
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combination of the Company or all or substantially all its assets with
another Person (other than any such transfer to any Wholly Owned Restricted
Subsidiary of the Company), unless the acquiring or surviving Person shall
be a corporation more than fifty percent (50%) of the combined voting power
of which corporation's then outstanding Voting Equity Interests, after
giving effect to such acquisition or combination, are owned, immediately
after such acquisition or combination, by the owners of the Voting Equity
Interests of the Company outstanding immediately prior to such acquisition
or combination;
(v) the adoption of a plan relating to the liquidation or dissolution
of the Company (other than any such liquidation or dissolution to or for
the benefit of any Wholly Owned Restricted Subsidiary of the Company);
(vi) the failure by the Company to obtain any applicable License (or
License amendment, as applicable) so that it is in full force and effect
within thirty (30) days prior to the scheduled launch of any of the OrbView
Satellites;
(vii) the revocation of any License necessary to operate OrbView-2 or
the OrbView Satellites consistent with the Company's current and planned
commercial operations and which revocation is not cured within thirty (30)
days of the occurrence thereof or such later date when all applicable
appeals have been finally determined, if during such appeal period the
Company has received regulatory approval to continue operations under the
License pending the outcome of such appeals; or
(viii) at any time prior to the latest to occur of (a) the successful
in-orbit checkout of the imaging satellite known as OrbView-3, (b) a
Qualifying Public Offering or (c) the business day next following the end
of a 180 consecutive day period during which the average closing price per
share of the Company's Common Stock shall have exceeded the Threshold Price
(as defined in the definition of "Qualifying Public Offering" below) then
in effect, and unless consented to in writing by the holders of at least
fifty percent (50%) of the shares of Series A Preferred Stock then
outstanding, the acquisition by any Person or group of Persons acting in
concert of beneficial ownership, direct or indirect, of securities of
Orbital representing thirty-five percent (35%) or more of the combined
voting power of Orbital's then outstanding equity securities and at any
time thereafter either (x) less than a majority of Orbital's board of
directors shall be Continuing Directors or (y) there shall be an
announcement by Orbital or such acquiring Person or group of Persons or the
approval of a business plan by Orbital's Board of Directors, in either case
that indicates an intention to de-emphasize or curtail the relationship
between the Company and Orbital.
"Collateral Agent" means the collateral agent under the Pledge Agreement.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period,
(a) plus, to the extent deducted or otherwise excluded in computing such
Consolidated Net Income:
(i) an amount equal to any extraordinary loss plus any net loss
realized in connection with a sale of assets;
(ii) provision for taxes based on income or profits of such Person and
its Restricted Subsidiaries for such period;
(iii) Consolidated Interest Expense; and
(iv) depreciation, amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash charges (excluding any
such non-cash charge to the extent that it represents an accrual of or
reserve for cash charges in any future period or amortization of a prepaid
cash expense that was paid in a prior period) of such Person and its
Restricted Subsidiaries for such period;
(b) minus, to the extent added or otherwise included in computing
Consolidated Net Income, consolidated interest income of such Person and its
Restricted Subsidiaries for such period and non-cash items increasing such
Consolidated Net Income (including, without limitation, (x) unrealized currency
exchange
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gains and (y) amortized non-cash contract revenues related to (i) cash received
prior to the Issue Date and (ii) cash received subsequent to the date hereof
that is specifically intended to fund capital expenditures, including, but not
limited to that certain contract between Orbital and the U.S. Air Force with
respect to hyperspectral imagery, in each case, on a consolidated basis and
determined in accordance with GAAP). Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation and
amortization and other non-cash charges of, a Restricted Subsidiary of any such
Person shall be added to Consolidated Net Income to compute Consolidated Cash
Flow only to the extent (and in the same proportion) that the Net Income of such
Restricted Subsidiary was included in calculating the Consolidated Net Income of
such Person and only if a corresponding amount would be permitted at the date of
determination to be distributed by dividend to such Person by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.
"Consolidated Interest Expense" means, with respect to any Person for any
period, (a) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financing, and net payments (if any) pursuant
to Hedging Obligations) plus (b) the aggregate amount for such period of cash or
non-cash dividends on any Disqualified Stock of the Company and its
Subsidiaries.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that:
(i) the Net Income of any Person that is not a Subsidiary Guarantor or
that is accounted for by the equity method of accounting shall be included
only to the extent of the amount of dividends or distributions actually
paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary
thereof;
(ii) the Net Income of any Restricted Subsidiary that is not a
Subsidiary Guarantor shall be excluded to the extent that the declaration
or payment of dividends or similar distributions by such Restricted
Subsidiary of such Net Income is not at the date of determination permitted
without any prior governmental approval (which has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary or its
stockholders;
(iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded;
(iv) the cumulative effect of a change in accounting principles shall
be excluded; and
(v) the Net Income of any Unrestricted Subsidiary shall be included
only to the extent of the amount of dividends or distributions actually
paid in cash to the referent Person or a Restricted Subsidiary thereof.
"Consolidated Net Worth" means, with respect to any Person as of any date:
(i) the consolidated equity of the equity holders of such Person and
its consolidated Restricted Subsidiaries as of such date; plus
(ii) the respective amounts reported on such Person's balance sheet as
of such date with respect to any series of preferred Equity Interests
(other than Disqualified Stock) that by its terms is not entitled to the
payment of dividends unless such dividends may be declared and paid only
out of net earnings in
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respect of the year of such declaration and payment, but only to the extent
of any cash received by such Person upon issuance of such preferred stock;
minus
(iii) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going-concern
business made within 12 months after the acquisition of such business)
subsequent to the date of the Indenture in the book value of any asset
owned by such Person or a consolidated Subsidiary of such Person; minus
(iv) all investments as of such date in unconsolidated Subsidiaries
and in Persons that are not Restricted Subsidiaries; minus
(v) all unamortized debt discount and expense and unamortized deferred
charges as of such date.
"Consolidated Tangible Net Assets" means, with respect to any Person, the
Consolidated Net Worth of such Person less goodwill and any other intangible
assets shown on the consolidated balance sheet of such Person and its Restricted
Subsidiaries.
"Continuing Director" means a director of Orbital that is a director on the
Issue Date or is nominated as a director by a majority of Orbital's Board of
Directors, which majority consists of directors in place for at least 12 months
(other than in connection with replacements or vacancies occurring in the
ordinary course) prior to the acquisition representing 35% or more of the
combined voting power of Orbital's outstanding equity securities.
"Credit Facilities" means, with respect to the Company, one or more debt
facilities or commercial paper facilities with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event: (i) matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise at the option of the holder thereof; or (ii) is
redeemable or is convertible or exchangeable for Indebtedness at the option of
the holder thereof, in whole or in part, on or prior to the date on which the
Notes are repaid, redeemed or retired in full; provided however, that
Disqualified Stock shall not include any Capital Stock that would constitute
Disqualified Stock solely because the holders thereof have the right to require
the Company to repurchase such Capital Stock if the terms of such Capital Stock
provide that the Company may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with
the covenant described above under the caption "--Certain Covenants--Restricted
Payments." The Series A Preferred Stock shall not be Disqualified Stock.
"Eligible Institution" means a domestic commercial banking institution that
has combined capital and surplus of not less than $500 million or its equivalent
in foreign currency, whose debt is rated "A" or higher according to S&P or
Moody's at the time as of which any investment or rollover therein is made.
"Eligible Receivables" means the accounts receivable of the Company (net of
accounts more than 90 days past due and reserves and allowances for doubtful
accounts determined in accordance with GAAP).
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Company in existence on
the Issue Date, until such amounts are repaid.
"Fair Market Value" means, with respect to any asset, the sale value that
would be obtained in an arm's-length free market transaction, between a willing
seller and a willing buyer, neither of which is under pressure
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or compulsion to complete the transaction; provided that the Fair Market Value
of any such asset or assets shall be determined by the Board of Directors of the
Company, acting in good faith and by unanimous resolution, and which
determination shall be evidenced by an Officers' Certificate delivered to the
Trustee.
"Fixed Asset Financing" means Indebtedness that is secured by ground-based
equipment and other tangible assets of the Company or a sale and leaseback
transaction with respect to such assets, in which case the Attributable Debt
shall be treated as Indebtedness for purposes of this definition.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession and which are in effect on the Issue Date.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" or "guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under: (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements; (ii) foreign currency hedge
obligations; and (iii) other agreements or arrangements designed to protect such
Person against fluctuations in interest and foreign currency rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or bankers' acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable to the
extent that any such accrued expense or trade payable is not more than 90 days
overdue or is otherwise being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, if and to the extent any of the
foregoing indebtedness (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, as well as all indebtedness of others secured by a Lien on
any asset of such Person (whether or not such indebtedness is assumed by such
Person and, in the event such indebtedness is not assumed by, and is otherwise
non-recourse to, such Person, the amount of such indebtedness shall be deemed to
equal the greater of book value or Fair Market Value), all obligations to
purchase, redeem, retire, defease or otherwise acquire for value any
Disqualified Stock or any warrants, rights or options to acquire such
Disqualified Stock valued, in the case of Disqualified Stock, at the greatest
amount payable in respect thereof on a liquidation (whether voluntary or
involuntary) plus accrued and unpaid dividends, the liquidation value of any
preferred stock issued by Subsidiaries of such Person, plus accrued and unpaid
dividends, and, to the extent not otherwise included, the Guarantee by such
Person of any indebtedness of any other Person; and provided, that
"Indebtedness" shall be calculated without duplication and after elimination of
Intercompany Indebtedness (as defined in clause (vi) of the covenant entitled
"Incurrence of Indebtedness or Issuance of Disqualified Stock").
"Indebtedness to Capital Ratio" means, on any date of determination for the
Company and its Restricted Subsidiaries, on a consolidated basis, the ratio
(expressed as a percentage) of Indebtedness on such date to Total Invested
Capital on such date.
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"Indebtedness to Cash Flow Ratio" means, with respect to any Person as of
any date of determination, the ratio of:
(i) total Indebtedness of such Person and its Restricted Subsidiaries
as of such date; to
(ii) two times Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for the two most recently ended fiscal quarters for
which financial statements of such Person are available (the "Measurement
Period");
provided, however, that: (a) in making such computation, the total Indebtedness
of such Person and its Restricted Subsidiaries shall include the total amount of
funds outstanding under any credit facilities; and (b) in the event such Person
or any of its Restricted Subsidiaries consummates a material acquisition or sale
of assets, or issues or redeems Disqualified Stock subsequent to the
commencement of the Measurement Period, then the Indebtedness to Cash Flow Ratio
shall be calculated giving pro forma effect to such material acquisition, sale
of assets or issuance or redemption of Disqualified Stock as if the same had
occurred at the beginning of the Measurement Period. For purposes of this
definition, whenever the pro forma effect is to be given to a transaction, the
pro forma calculations shall be made in good faith by a responsible financial or
accounting officer of the Company.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the good
faith judgment of the Board of Directors of the Company (evidenced by a
resolution of the majority of the Board of Directors of the Company as set forth
in an Officers' Certificate delivered to the Trustee), qualified to perform the
task for which it has been engaged and is disinterested and independent with
respect to the Company and its Affiliates.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans, guarantees, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities and all other items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP; provided that an acquisition of assets, Equity Interests
or other securities by the Company for consideration consisting of common Equity
Interests (other than Disqualified Stock) of the Company shall not be deemed to
be an Investment. Notwithstanding the foregoing, Investments shall not include
advance payments for satellite capacity or imagery related services or products
in the ordinary course of business.
"Joint Venture" means a Person in a Related Business in which the Company
or one of its Subsidiaries holds 50% or less of the Voting Equity Interests.
"License" means any Federal Communications Commission license or Department
of Commerce license issued to the Company relating to the operation of OrbView-2
or the OrbView Satellites (including the Department of Commerce license and the
Federal Communications Commission license currently owned by Orbital relating to
the operation of OrbView-2).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Marketable Securities" means: (i) Government Securities or, for purpose of
determining whether such Government Securities may serve as substitute Pledged
Securities, Government Securities having a maturity date on or before the date
on which the payments of interest (or principal) on the Notes to which such
Government Securities are pledged occur; (ii) any certificate of deposit
maturing not more than 270 days after the date of acquisition issued by, or time
deposit of, an Eligible Institution; (iii) commercial paper maturing not more
than 270 days after the date of acquisition issued by a corporation (other than
an Affiliate of the
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Company) with a rating at the time as of which any investment therein is made,
of "A-1" (or higher) according to S&P or "P-1" (or higher) according to Moody's;
(iv) any banker's acceptances or money market deposit accounts issued or offered
by an Eligible Institution; and (v) any fund investing exclusively in
investments of the types described in clauses (i) through (iv) above.
"Moody's" means Moody's Investors Service, Inc.
"Net Income" means, with respect to any Person, the net income (or loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however,
(i) any gain (but not loss), together with any related provision for
taxes on such gain (but not loss), realized in connection with:
(a) any sale of assets (including, without limitation, dispositions
pursuant to Sale and Leaseback Transactions); or
(b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of
such Person or any of its Restricted Subsidiaries; and
(ii) any extraordinary or nonrecurring gain (but not loss), together
with any related provision for taxes on such extraordinary or nonrecurring
gain (but not loss).
"Net Proceeds" means (a) with respect to any Asset Sale, the aggregate cash
proceeds received by the Company or any of its Restricted Subsidiaries in
respect of such Asset Sale (including, without limitation, any cash received
upon the sale or other disposition of any non-cash consideration received in any
Asset Sale), net of the direct costs relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements and provided that any
such amount not so required to be paid for taxes shall be deemed to constitute
Net Proceeds at the time such amount is not retained for such purpose), amounts
required to be applied to the repayment of Indebtedness secured by a Lien on the
asset or assets (including Equity Interests) that were the subject of such Asset
Sale and any reserve for adjustment in respect of the sale price of such asset
or assets (including Equity Interests) established in accordance with GAAP
(provided that the amount of any such reserve shall be deemed to constitute Net
Proceeds at the time such reserve shall have been released or is not otherwise
required to be retained for such purpose) and (b) with respect to any issuance
or sale of Capital Stock, the proceeds of such issuance or sale in the form of
cash or Cash Equivalents, including payments in respect of deferred payment
obligations (to the extent corresponding to the principal, but not interest,
component thereof) when received in the form of cash or Cash Equivalents (except
to the extent such obligations are financed or sold with recourse to the Company
or any Restricted Subsidiary of the Company) and proceeds from the conversion of
other property received when converted to cash or Cash Equivalents, net of
legal, accounting and investment banking fees, discounts and sales commissions
and net of taxes paid or payable as a result thereof.
"Non-Recourse Debt" means Indebtedness:
(i) as to which neither the Company nor any of its Restricted
Subsidiaries:
(a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness);
(b) is directly or indirectly liable (as a guarantor or otherwise);
or
(c) constitutes the lender;
(ii) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of
any other Indebtedness of the Company or any of its Restricted Subsidiaries
to declare a default on such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its Stated Maturity; and
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(iii) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of any of the Company or
any of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chief Executive Officer or President and the chief financial and
accounting officer of such Person.
"Orbital" means Orbital Sciences Corporation, a Delaware corporation, or
any successor entity whether by merger, sale of all or substantially all its
assets or otherwise.
"Orbital Agreements" means each of the Procurement Agreement between the
Company and Orbital, dated as of November 18, 1996, as amended on May 8, 1997
and December 31, 1997, the Amended and Restated ORBIMAGE Services Agreement
between Orbital and the Company, dated as of December 31, 1997; the Non-Compete
and Teaming Agreement between the Company and Orbital, dated as of May 8, 1997;
the OrbView-2 License Agreement between the Company and Orbital, dated as of May
8, 1997; the Software License Agreement between the Company and Earth
Observation Sciences dated March 14, 1996, as amended; and the Software
Maintenance and Support Agreement between the Company and Earth Observation
Sciences, dated as of October 1, 1997; each agreement as in effect as of the
Issue Date and as amended from time to time if such amendment is not prohibited
by the Indenture.
"OrbView Satellites" means each of the high-resolution satellites currently
designated as OrbView-3 and OrbView-4 under the Procurement Agreement, and any
Replacement Satellite.
"Permitted Investment" means:
(i) any Investments in the Company or any Wholly Owned Restricted
Subsidiary of the Company;
(ii) any Investments in cash or Cash Equivalents;
(iii) Investments by the Company or any of its Restricted Subsidiaries
in a Person if, as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of the Company; or
(b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or any Restricted Subsidiary of the
Company;
(iv) any Investment made as a result of the receipt of non-Cash
Consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "Repurchase
at the Option of Holders--Limitation on Sales of Assets and Subsidiary
Interests";
(v) any Investment made with Excess Proceeds remaining after the
consummation of an Asset Sale Offer as described above under the caption
"Repurchase at the Option of Holders--Limitation on Sales of Assets and
Subsidiary Interests;"
(vi) any Investment made by the Company or any of its Restricted
Subsidiaries in any Unrestricted Subsidiary using the proceeds of a
substantially concurrent contribution to the equity capital of the Company;
and
(vii) any Investment made by the Company or any of its Restricted
Subsidiaries in a Related Business, Related Satellite Business or a Joint
Venture; provided that at the time any such Investment is made, such
Investment will not cause the aggregate amount of Investments at any one
time outstanding (x) $10 million or (y) 7.5% of the Consolidated Net Worth
of the Company.
"Permitted Liens" means:
(i) Liens securing the Notes;
(ii) Liens in favor of the Company;
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(iii) Liens on property of a Person existing at the time such Person
is merged into or consolidated with the Company or any of its Restricted
Subsidiaries; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company or its Restricted Subsidiary;
(iv) Liens on property existing at the time of acquisition thereof by
the Company or any of its Restricted Subsidiaries, provided that such Liens
were in existence prior to the contemplation of such acquisition;
(v) Liens to secure the performance of statutory obligations, surety,
appeal or performance bonds or other obligations of a like nature or
mechanics' or purchase money Liens incurred in the ordinary course of
business;
(vi) Liens existing on the Issue Date;
(vii) Liens on inventory, accounts receivable or domestic and/or
international ground operation centers and related systems securing
Indebtedness incurred under clause (i), (vii), (x) or (xi) of the covenant
entitled "Incurrence of Indebtedness or Issuance of Disqualified Stock", or
securing Permitted Refinancing Indebtedness incurred pursuant to the
Indenture to refinance Indebtedness incurred under clause (i), (viii), (x)
or (xi) of the covenant entitled "Incurrence of Indebtedness or Issuance of
Disqualified Stock";
(viii) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(ix) Liens incurred in the ordinary course of business of the Company
or any Subsidiary of the Company with respect to obligations that do not
exceed $5 million at any one time outstanding and that (a) are not incurred
in connection with the borrowing of money or the obtaining of advances or
credit (other than trade credit in the ordinary course of business), (b) do
not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by the
Company or its Subsidiaries and (c) are not for the benefit of an Affiliate
of the Company; and
(x) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Pledge Account" means the account established with the Collateral Agent
pursuant to the terms of the Pledge Agreement for the deposit of the Pledged
Securities.
"Pledge Agreement" means the Pledge Agreement dated as of the date of the
Indenture by and between the Company and the Collateral Agent governing the
Pledge Account.
"Pledged Securities" means the U.S. government securities purchased by the
Company with a portion of the net proceeds from the Units Offering to be
deposited in the Pledge Account and pledged as security for the Notes.
"Qualifying Public Offering" means a public offering of Common Stock
registered under the Securities Act (i)(a) that shall have resulted in an
aggregate price to the public of not less than $30 million or (b) that involves
the sale to the public of Common Stock constituting at least twenty percent
(20%) of the Common Stock immediately outstanding after the offering, in either
case at a price per share of Common Stock equal to or greater than the Threshold
Price and (ii) that shall have resulted in listing or admission to trading of
the Common Stock on the New York Stock Exchange, a national securities exchange,
the NASDAQ National Market System or NASDAQ over-the-counter market. For the
purposes of this definition, Threshold Price means (i) as of any date through
May 1, 1999, 100% of the then current Conversion Price, (ii) from May 2,
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1999 through May 1, 2000, the then current Conversion Price, multiplied by the
amount (expressed as a percentage) equal to 100% plus the result of 30% times a
fraction, the numerator of which is the number of days after May 1, 1999 the
calculation of the Threshold Price occurs and the denominator of which is 365,
(iii) from May 2, 2000 through May 1, 2001, the then current Conversion Price,
multiplied by the amount (expressed as a percentage) equal to 130% plus the
result of 20% times a fraction, the numerator of which is the number of days
after May 1, 2000, the calculation of the Threshold Price occurs and the
denominator of which is 365, and (iv) from May 2, 2001 forward, 150% of the then
current Conversion Price.
"Related Asset" means any asset used in connection with a Related Business
or Related Satellite Business.
"Related Business" means any Related Satellite Business and any business
relating to the worldwide acquisition, marketing, processing and sales of remote
imagery-based products and services.
"Related Satellite Business" means any business relating to the design,
development, and operation of remote imaging satellites and the worldwide
marketing and sales of satellite-based remote imagery-based products and
services.
"Replacement Satellite" means any satellite constructed to replace an
OrbView Satellite in the event of a failure of such OrbView Satellite; provided,
however, that any such Replacement Satellite shall not include hyperspectral
imagery capacity, if it is determined in good faith by the Board of Directors of
the Company (evidenced by a resolution approved by at least a majority of the
Board of Directors of the Company and set forth in an Officers' Certificate
delivered to the Trustee) that hyperspectral imagery is not required to maintain
the competitiveness of the Company's satellites.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of such Person
that is not an Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
pursuant to which any property (other than Capital Stock) or assets is sold by a
Person or a Subsidiary and is thereafter leased back from the purchaser or
transferee thereof by such Person or one or more of its Subsidiaries, except a
Fixed Asset Financing.
"S&P" means Standard & Poor's Ratings Services.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" means the Series A Cumulative Convertible
Preferred Stock, $.01 par value, of the Company.
"Series A Offering" means the sale of additional shares of Series A
Preferred Stock that will be consummated concurrent with the closing of the
Units Offering.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article I, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"Stated Maturity" means, when used with respect to any Note, March 1, 2005.
"Stock Purchase Agreement" means the Series A Preferred Stock Purchase
Agreement, dated May 7, 1997, as amended, by and among the Company and the
purchasers of Series A Preferred Stock, as in effect on the Issue Date.
"Stockholders' Agreement" means the agreement by and among the Company and
its stockholders, dated May 8, 1997, as amended, as in effect on the Issue Date.
"Stock Option Plan" means the Orbital Imaging Corporation 1996 Stock Option
Plan, adopted as of November 15, 1996 and any successor stock option plan
adopted for the benefit of the Company's directors and/or employees.
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"Subsidiary" means, with respect to any Person:
(i) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of such Person (or a combination thereof); and
(ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or
(b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means any Guarantee of the Company's obligations
under the Indenture and the Notes given by a Subsidiary Guarantor.
"Subsidiary Guarantor" means any Person that becomes a Restricted
Subsidiary after the date of the Indenture.
"Total Invested Capital" means, as of any date of determination, the sum of
(a) total Indebtedness as of such date and (b) $88 million plus the aggregate
proceeds received by the Company or any Restricted Subsidiary in respect of the
issuance of Capital Stock (other than Disqualified Stock) of the Company or such
Restricted Subsidiary, including the fair value of property other than cash (as
determined in good faith by the Board of Directors of the Company (evidenced by
a resolution approved by at least a majority of the Board of Directors of the
Company and set forth in an Officers' Certificate delivered to the Trustee),
less any redemptions of, or dividends or other distributions on, Capital Stock
of the Company made after the Issue Date and on or prior to the date of
determination.
"Unrestricted Subsidiary" of a Person means any Subsidiary of such Person
that is designated by such Person as an Unrestricted Subsidiary, but only if and
for so long as such Subsidiary:
(i) has no Indebtedness other than Non-Recourse Debt;
(ii) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary unless the
terms of any such agreement, contract, arrangement or understanding are no
less favorable to the Company or such Restricted Subsidiary than those that
might be obtained at the time from Persons who are not Affiliates of the
Company;
(iii) is a Person with respect to which neither the Company nor any of
its Restricted Subsidiaries has any direct or indirect obligation:
(1) to subscribe for additional Equity Interests; or
(2) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results;
(iv) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of any of the Company or any of its
Restricted Subsidiaries; and
(v) in the case of a corporate entity or limited liability company,
has at least one director on its board of directors and at least one
executive officer, in each case who is not a director or executive officer
of the Company or any of its Restricted Subsidiaries.
"Voting Equity Interests" means the Equity Interest in a corporation or
other Person with voting power under ordinary circumstances entitling the
holders thereof to elect or appoint the board of directors, executive committee
or other governing body of such corporation or Person, whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(i) the sum of the products obtained by multiplying: (a) the amount of
each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment; by
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(ii) the then outstanding principal of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person and one or more other Wholly Owned Restricted
Subsidiaries of such Person.
PROVISIONS APPLICABLE TO ALL SECURITIES
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the Exchange Notes will
initially be issued in the form of one or more Global Notes (the "Global
Notes"). The Global Notes will be deposited on the date of the closing of the
sale of the Exchange Notes offered hereby (the "Exchange Closing Date") with, or
on behalf of, the Depositary and registered in the name of Cede & Co., as
nominee for the Depositary (such nominee being referred to herein as the "Global
Note Holder").
Exchange Notes that are issued as described below under "--Certificated
Securities" will be issued in registered form (the "Certificated Securities").
Upon the transfer of Certificated Securities, such Certificated Securities may,
unless the Global Notes have previously been exchanged for Certificated
Securities, be exchanged for an interest in a Global Note representing the
principal amount of Notes being transferred.
The Depositary is a limited-purpose trust company which was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers (including the Initial
Purchaser), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depositary's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only through the Depositary's
Participants or the Depositary's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Notes, the Depositary will credit the
accounts of Participants with portions of the principal amount of the Global
Notes and (ii) ownership of the Exchange Notes evidenced by the Global Notes
will be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by the Depositary (with respect to the interests of
the Depositary's Participants), the Depositary' Participants and the
Depositary's Indirect Participants. Prospective purchasers are advised that the
laws of some states require that certain Persons take physical delivery in
definitive form of securities that they own. Consequently, the ability to
transfer Exchange Notes evidenced by the Global Notes will be limited to such
extent.
So long as the Global Note Holder is the registered owner of any Exchange
Notes, the Global Note Holder will be considered the sole owner or holder of
such Exchange Notes outstanding under the Indenture. Beneficial owners of
Exchange Notes evidenced by the Global Note will not be considered the owners or
holders thereof under the Indenture for any purpose, including with respect to
the giving of any directions, instructions or approvals to the Trustee
thereunder. The ability of a Person having a beneficial interest in Exchange
Notes represented by a Global Note to pledge such interest to Persons or
entities that do not participate in the Depositary's system or to otherwise take
actions in respect of such interest, may be affected by the lack of a physical
certificate evidencing such interest.
None of the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of Exchange Notes by the Depositary, or for maintaining, supervising or
reviewing any records of the Depositary relating to such Exchange Notes.
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Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Exchange Notes registered in the name of a
Global Note Holder on the applicable record date will be payable by the Trustee
to or at the direction of such Global Note Holder in its capacity as the
registered holder under the Indenture. Under the terms of the Indenture, the
Company and the Trustee may treat the Persons in whose names the Exchange Notes,
including the Global Notes, are registered as the owners thereof for the purpose
of receiving such payments and for any and all other purposes whatsoever.
Consequently, none of the Company nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of Exchange Notes (including principal, premium, if any, interest and Liquidated
Damages, if any).
The Company believes, however, that it is currently the policy of the
Depositary to immediately credit the accounts of the relevant Participants with
such payment, in amounts proportionate to their respective holdings in principal
amount of beneficial interests in the relevant security as shown on the records
of the Depositary. Payments by the Depositary's Participants and the
Depositary's Indirect Participants to the beneficial owners of Exchange Notes
will be governed by standing instructions and customary practice and will be the
responsibility of the Depositary's Participants or the Depositary's Indirect
Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, any Person having a beneficial interest in a
Global Note may, upon request to the Company or the Trustee, exchange such
beneficial interest for Exchange Notes in the form of Definitive Notes. Upon any
such issuance, the Trustee is required to register such Exchange Notes in the
name of, and cause the same to be delivered to, such Person or Persons. In
addition, if (i) the Company notifies the Trustee in writing that the Depositary
is no longer willing or able to act as a depositary and the Company is unable to
appoint a qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Exchange
Notes in the form of Definitive Notes under the Indenture, then, upon surrender
by the relevant Global Note Holder of its Global Note, Exchange Notes in such
form will be issued to each Person that the Depositary identifies as the
beneficial owner of the related Exchange Notes.
Neither the Company nor the Trustee shall be liable for any delay by the
Depositary in identifying the beneficial owners of the related Exchange Notes
and each such Person may conclusively rely on, and shall be protected in relying
on, instructions from the Depositary for all purposes (including with respect to
the registration and delivery, and the respective principal amounts, of the
Exchange Notes to be issued).
SAME DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Exchange Notes
represented by the Global Securities (including principal, premium, if any,
interest and Liquidated Damages, if any) be made by wire transfer of immediately
available funds to the accounts specified by the Global Security Holder. With
respect to Certificated Securities, the Company will make all payments of
principal, premium, if any, interest and Liquidated Damages, if any, by wire
transfer of immediately available funds to the accounts specified by the holders
thereof or, if no such account is specified, by mailing a check to each such
holder's registered address. The Exchange Notes represented by the Global Notes
are expected to trade in the Depositary's Same Day Funds Settlement System, and
any permitted secondary market trading activity in such Exchange Notes will
therefore be required by the Depositary to be settled in immediately available
funds. The Company expects that secondary trading in the Certificated Securities
will also be settled in immediately available funds.
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CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain U.S. federal tax
consequences relevant to the exchange of Original Notes for Exchange Notes and
the ownership and disposition of Exchange Notes by persons who (a) acquired
Original Notes on original issue for cash and (b) hold Original Notes and
Exchange Notes as capital assets (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended (the "Code"). The discussion is based upon the Code, Treasury
Regulations, Internal Revenue Service ("IRS") rulings and pronouncements, and
judicial decisions now in effect, all of which are subject to change at any time
by legislative, administrative, or judicial action, possibly with retroactive
effect. The discussion does not discuss every aspect of U.S. federal taxation
that may be relevant to a particular taxpayer in light of their personal
circumstances or to persons who are otherwise subject to a special tax treatment
(including, without limitation, banks, broker-dealers, insurance companies,
pension and other employee benefit plans, tax exempt organizations and entities,
persons holding Notes as a part of a hedging or conversion transaction or a
straddle, certain hybrid entities and owners of interests therein and holders
whose functional currency is not the U.S. dollar) and it does not discuss the
effect of any applicable U.S. state and local or non-U.S. tax laws. The Company
has not sought and will not seek any rulings from the IRS concerning the tax
consequences of the exchange of Original Notes for Exchange Notes and the
ownership and disposition of Exchange Notes and, accordingly, there can be no
assurance that the IRS will not successfully challenge the tax consequences
described below. EACH HOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR
WITH RESPECT TO THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF EXCHANGING ORIGINAL
NOTES FOR EXCHANGE NOTES AND OWNING AND DISPOSING EXCHANGE NOTES, AS WELL AS ANY
TAX CONSEQUENCES APPLICABLE UNDER THE LAWS OF ANY U.S. STATE, LOCAL, OR NON-U.S.
TAXING JURISDICTION.
U.S. HOLDERS
This Section summarizes certain U.S. federal income tax consequences of the
exchange of Original Notes for Exchange Notes and the ownership and disposition
of Exchange Notes by "U.S. Holders." The term "U.S. Holder" refers to a person
that is classified for U.S. federal tax purposes as a United States person. For
this purpose, a United States person includes (i) a citizen or resident of the
United States, (ii) a corporation, limited liability company, or partnership
created or organized in the United States or under the laws of the United States
or of any state or political subdivision thereof, unless in the case of a
partnership, Treasury Regulations provide otherwise, (iii) an estate whose
income is includible in gross income for U.S. federal income tax purposes
regardless of its source, or (iv) a trust whose administration is subject to the
primary supervision of a United States court and which has one or more United
States persons who have the authority to control all substantial decisions of
the trust. Notwithstanding the preceding sentence, to the extent provided in
Treasury Regulations, certain trusts in existence on August 20, 1996, and
treated as United States persons prior to such date that elect to continue to be
treated as United States persons, shall also be considered U.S. Holders.
Exchange of Notes. The exchange of Original Notes for the Exchange Notes
pursuant to the Exchange Offer should not be treated as an "exchange" for
federal income tax purposes, because the Exchange Notes should not be considered
to differ materially in kind or extent from the Original Notes. Accordingly, the
exchange of Original Notes for Exchange Notes should not be a taxable event to
holders for federal income tax purposes. Moreover, the Exchange Notes should
have the same tax attributes and tax consequences to holders as the Original
Notes had to holders, including, without limitation, the same issue price,
adjusted issue price, original issue discount ("OID"), adjusted tax basis and
holding period. The tax attributes and tax consequences of ownership and
disposition of the Original Notes and, thus, of the Exchange Notes
(collectively, the "Notes"), are summarized below.
Stated Interest. Stated interest paid or accrued on the Notes will be
taxable to a U.S. Holder as ordinary income in accordance with the holder's
method of accounting for federal income tax purposes.
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Original Issue Discount. The Original Notes were issued with OID for U.S.
federal income tax purposes. The amount of OID on an Original Note equals the
excess of the "stated redemption price at maturity" of an Original Note over its
"issue price." The "stated redemption price at maturity" of an Original Note
will equal the sum of its principal amount plus all other payments thereunder,
other than payments of "qualified stated interest" (defined generally as stated
interest that is unconditionally payable in cash or other property (other than
debt instruments of the Company) at least annually at a single fixed rate). The
Company has determined that the portion of the purchase price originally paid
for each Unit which was properly allocable to each Original Note and, thus, the
"issue price" of each $1,000 Original Notes, equaled $940. Although this
allocation is not binding on the IRS, each U.S. Holder is bound by the Company's
allocation, unless a disclosure statement is attached to the timely filed U.S.
federal income tax return of the U.S. Holder for its taxable year in which it
acquired the Original Notes.
Each U.S. Holder (whether reporting on the cash or accrual basis of
accounting for tax purposes) will be required to include in taxable income for
any particular taxable year the daily portion of the OID described in the
preceding paragraph that accrues on the Note for each day during the taxable
year on which such U.S. Holder holds the Note. Thus, a U.S. Holder will be
required to include OID in income in advance of the receipt of the cash to which
such OID is attributable. The daily portion is determined by allocating to each
day of an accrual period (generally, the period between interest payments or
compounding dates) a pro rata portion of the OID allocable to such accrual
period. The amount of OID that will accrue during an accrual period is the
product of the "adjusted issue price" of the Note at the beginning of the
accrual period multiplied by the yield to maturity of the Note less the amount
of any qualified stated interest allocable to such accrual period. The "adjusted
issue price" of a Note at the beginning of an accrual period will equal its
issue price, increased by the aggregate amount of OID that has accrued on the
Note in all prior accrual periods, and decreased by any payments made during all
prior accrual periods of amounts included in the stated redemption price at
maturity of the Note.
Applicable High Yield Discount Obligations. If the Notes are considered to
have "significant original issue discount" and if the yield to maturity on the
Notes equals or exceeds the sum of 5% and the "applicable federal rate" (within
the meaning of Section 1274(d) of the Code) in effect for the month in which the
Notes are issued ("AFR"), the Notes will be considered "applicable high yield
discount obligations" within the meaning of Section 163(i) of the Code. In such
a case, the Company will not be permitted to take a deduction for U.S. federal
income tax purposes for OID accrued on the Notes until such OID is actually
paid. Moreover, to the extent that the yield to maturity of the Notes exceeds
the sum of 6% and the AFR, such excess (the "Dividend-Equivalent Interest") will
not be deductible at any time by the Company for U.S. federal income tax
purposes (regardless of whether the Company actually pays such
Dividend-Equivalent Interest) and a corporate U.S. Holder may be entitled to
treat such Dividend-Equivalent Interest as a dividend to the extent of the
current and accumulated earnings and profits of the Company, which may then
qualify for the dividends received deduction. In such event, corporate U.S.
Holders should consult with their tax advisors concerning the availability of
the dividends received deduction.
Sale, Retirement, or Other Taxable Disposition of Notes. Upon the sale,
retirement or other taxable disposition of a Note, a U.S. Holder will recognize
gain or loss to the extent of the difference between the sum of the cash and the
fair market value of any property received in exchange therefor (except to the
extent attributable to the payment of accrued and unpaid interest on the Notes,
which generally will be taxed as ordinary income), and the U.S. Holder's
adjusted tax basis in the Notes. A U.S. Holder's tax basis in a Note will
initially equal the price paid for such Note and will subsequently be increased
by the OID includible in such U.S. Holder's taxable income under the rules
described in "--Original Issue Discount," above, and will be reduced by any
payments received on the Note of amounts included in the stated redemption price
at maturity of the Note. Any such gain or loss recognized by a U.S. Holder upon
the sale, retirement or other taxable disposition of a Note will be capital gain
or loss. In the case of a non-corporate U.S. Holder, such capital gain will be
subject to tax at a reduced rate if the Note is held for more than one year, and
will be eligible for a further reduced rate if the Note is held more than 18
months.
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<PAGE> 110
Holders of Notes should be aware that the market discount rules may affect
resale of the Notes. If a subsequent purchaser of a Note purchases the Note at a
"market discount" and thereafter recognizes gain upon its disposition, such gain
will be taxable as ordinary interest income (rather than capital gain) to the
extent of the "market discount" that has accrued (and has not otherwise been
included in income pursuant to an election made by such subsequent purchaser)
during the period the subsequent purchaser held such Note. Generally, "market
discount" will exist on the purchase of a Note if the purchase price is less
than the adjusted issue price of the Note and any such market discount will
accrue over the remaining term of the Note on a straight line basis or, at the
election of the subsequent purchaser, on a constant yield to maturity basis.
Liquidated Damages. The Company intends to take the position that the
Liquidated Damages described above under "Description of the Notes and
Description of Warrants--Registration Rights; Liquidated Damages" are taxable to
U.S. Holders as ordinary income in accordance with the U.S. Holder's usual
method of income tax accounting. The IRS may take a different position, however,
which could affect the timing of a U.S. Holder's income with respect to the
Liquidated Damages.
Information Reporting; Backup Withholding. The Company is required to
furnish to record holders of the Notes, other than corporations and other exempt
holders, and to the IRS, information with respect to interest paid and the
amount of OID accrued on the Notes.
Certain U.S. Holders may be subject to backup withholding at the rate of
31% with respect to interest and OID paid on the Notes or with respect to
proceeds received from a disposition of the Notes. Generally, backup withholding
applies only if (i) the payee fails to furnish a correct taxpayer identification
number ("TIN") to the payor in the manner required or fails to demonstrate that
it otherwise qualifies for an exemption, (ii) the IRS notifies the payor that
the TIN furnished by the payee is incorrect, (iii) the payee has failed to
report properly the receipt of a "reportable payment" on one or more occasions
and the IRS has notified the payor that withholding is required, or (iv) the
payee fails (in certain circumstances) to provide a certified statement, signed
under penalties of perjury, that the TIN furnished is the correct number and
that such holder is not subject to backup withholding. Backup withholding is not
an additional tax but, rather, is a method of tax collection. U.S. Holders will
be entitled to credit any amounts withheld under the backup withholding rules
against their actual tax liabilities provided the required information is
furnished to the IRS.
NON-U.S. HOLDERS
The following is a general discussion of certain United States federal
income and estate tax consequences of the exchange of Original Notes for
Exchange Notes and the ownership and disposition of Exchange Notes by "Non-U.S.
Holders." The term "Non-U.S. Holder" refers to a person that is not classified
for U.S. federal tax purposes as a "United States person," as defined in "--U.S.
Holders," above. Prospective investors who are Non-U.S. Holders are urged to
consult their tax advisors regarding the United States federal income tax
consequences that may arise under the laws of any foreign, state, local or other
taxing jurisdiction.
Exchange of Notes. The exchange of Original Notes for the Exchange Notes
pursuant to the Exchange Offer should not be a taxable event to Non-U.S. Holders
for U.S. federal income tax purposes.
Interest and OID. In general, a Non-U.S. Holder will not be subject to
U.S. federal income tax or regular withholding tax with respect to stated
interest or OID received or accrued on the Notes so long as (a) the interest and
OID is not effectively connected with the conduct of a trade or business within
the United States, (b) the Non-U.S. Holder does not actually or constructively
own 10% or more of the total combined voting power of all classes of stock of
the Company entitled to vote, (c) the Non-U.S. Holder is not a controlled
foreign corporation that is related to the Company actually or constructively
through stock ownership, and (d) the Non-U.S. Holder certifies, under penalties
of perjury that such Holder is not a U.S. Holder and provides such Holder's name
and address.
Gain on Disposition of Notes. Non-U.S. Holders generally will not be
subject to U.S. federal income taxation on gain recognized on a disposition of
Notes so long as (i) the gain is not effectively connected with the conduct by
the Non-U.S. Holder of a trade or business within the United States and (ii) in
the case of a
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<PAGE> 111
Non-U.S. Holder who is an individual, such Non-U.S. Holder is not present in the
United States for 183 days or more in the taxable year of disposition and
certain other requirements are met.
Federal Estate Taxes. A Note held by an individual who, at the time of
death, is not a citizen or resident of the United States generally will not be
subject to U.S. federal estate tax as a result of such individual's death if (i)
the individual does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled to vote
and, (ii) at the time of the individual's death, interest payments with respect
to such Note would not have been effectively connected with the conduct by such
individual of a trade or business in the United States.
U.S. Information Reporting Requirements and Backup Withholding
Tax. Generally, payments of interest, OID, premium or principal on the Notes to
Non-U.S. Holders will not be subject to information reporting or backup
withholding if the Non-U.S. Holder certifies, under penalties of perjury, that
such Holder is not a U.S. Holder and provides such Holder's name and address.
Non-U.S. Holders will not be subject to information reporting or backup
withholding with respect to the payment of proceeds from the disposition of
Notes effected by, to or through the foreign office of a broker; provided,
however, that if the broker is a U.S. person or a U.S.-related person,
information reporting (but not backup withholding) would apply unless the broker
has documentary evidence in its records as to the Non-U.S. Holder's foreign
status (and has no actual knowledge to the contrary), or the Non-U.S. Holder
certifies as to its non-U.S. status under penalty of perjury or otherwise
establishes an exemption. Non-U.S. Holders will be subject to information
reporting and backup withholding at a rate of 31% with respect to the payment of
proceeds from the disposition of Notes, effected by, to or through the U.S.
office of a broker, unless the Non-U.S. Holder certifies as to its non-U.S.
status under penalty of perjury or otherwise establishes an exemption.
Amounts withheld under the backup withholding rules do not constitute a
separate U.S. federal income tax. Rather, amounts withheld under the backup
withholding rules from a payment to a Non-U.S. Holder will be allowed as a
credit against such Non-U.S. Holder's U.S. federal income tax liability and any
amounts withheld in excess of such Non-U.S. Holder's U.S. federal income tax
liability would be refunded, provided that the required information is furnished
to the IRS.
Recently, the Treasury Department promulgated final regulations regarding
the withholding and information reporting rules discussed above. In general, the
final regulations do not significantly alter the substantive withholding and
information reporting requirements but unify certain certification procedures
and forms and clarify reliance standards. Under the final regulations, special
rules apply which permit the shifting of primary responsibility for withholding
to certain financial intermediaries acting on behalf of beneficial owners. The
final regulations would generally be effective for payments made after December
31, 1999, subject to certain transition rules.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account in connection with the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by Participating Broker-Dealers during the period referred to below in
connection with resales of Exchange Notes received in exchange for Original
Notes where such Original Notes were acquired by such Participating
Broker-Dealers for their own accounts as a result of market-making activities or
other trading activities (other than a resale of an unsold allotment from the
original sale of Original Notes). The Company has agreed that this Prospectus,
as it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of such Exchange Notes
for a period ending 180 days from the date on which the Exchange Offer
Registration Statement is declared effective. However, a Participating Broker-
Dealer who intends to use this Prospectus in connection with the resale of
Exchange Notes received in exchange for Original Notes pursuant to the Exchange
Offer must notify the Company, or cause the Company to be notified, on or prior
to the Expiration Date, that it is a Participating Broker-Dealer. Such notice
may be
105
<PAGE> 112
given in the space provided for that purpose in the Letter of Transmittal or may
be delivered to the Exchange Agent at one of the addresses set forth in the
Letter of Transmittal. See "The Exchange Offer--Resales of Exchange Notes."
The Company will not receive any proceeds from the issuance of the Exchange
Notes offered hereby. Exchange Notes received by Participating Broker-Dealers
for their own accounts in connection with the Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any Participating Broker-Dealer that resells Exchange Notes that
were received by it for its own account in connection with the Exchange Offer
and any broker or dealer that participates in a distribution of such Exchange
Notes may be deemed to be an "underwriter" within the meaning of the Securities
Act, and any profit on any such resale of Exchange Notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period ending 180 days from the date on which the Exchange Offer
Registration Statement is declared effective, the Company will promptly send
additional copies of this Prospectus and any amendment or supplement to this
Prospectus to any Participating Broker-Dealer that requests such documents in
the Letter of Transmittal.
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon for
the Company by Latham & Watkins, Washington, D.C.
EXPERTS
The financial statements of the Company as of December 31, 1997 and 1996,
and for each of the years in the three-year period ended December 31, 1997, have
been included herein and in the registration statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
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<PAGE> 113
INDEX TO FINANCIAL STATEMENTS
ORBITAL IMAGING CORPORATION
<TABLE>
<S> <C>
Independent Auditors' Report................................ F-2
Statements of Operations.................................... F-3
Balance Sheets.............................................. F-4
Statements of Stockholders' Equity.......................... F-5
Statements of Cash Flows.................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>
F-1
<PAGE> 114
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Orbital Imaging Corporation:
We have audited the accompanying balance sheets of Orbital Imaging
Corporation (the "Company") as of December 31, 1997 and 1996, and the related
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Orbital Imaging Corporation
as of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
January 16, 1998
Washington, D.C.
F-2
<PAGE> 115
ORBITAL IMAGING CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-----------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenues............................................ $ 4,566,667 $ 1,055,000 $ 2,061,655
Direct costs........................................ 7,997,741 4,319,914 6,311,816
----------- ----------- -----------
Gross profit (loss)................................. (3,431,074) (3,264,914) (4,250,161)
Selling, general and administrative expenses........ 2,370,899 1,629,874 2,844,355
----------- ----------- -----------
Loss from operations................................ (5,801,973) (4,894,788) (7,094,516)
Interest income..................................... -- -- 1,260,762
----------- ----------- -----------
Loss before benefit for income taxes................ (5,801,973) (4,894,788) (5,833,754)
Benefit for income taxes............................ -- -- 1,751,468
----------- ----------- -----------
Net loss............................................ $(5,801,973) $(4,894,788) $(4,082,286)
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 116
ORBITAL IMAGING CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ -- $ 10,883,142
Short-term investments, at market, which approximates
cost................................................... -- 11,336,751
Receivables............................................... 50,000 134,163
------------ ------------
Total current assets................................... 50,000 22,354,056
Property, plant and equipment, at cost, less accumulated
depreciation of $3,486,260 and $5,144,194, respectively... 9,506,629 11,053,898
Satellites and related rights, at cost, less accumulated
depreciation and amortization of $9,070,578 and
$12,947,213, respectively................................. 62,284,878 104,226,147
Other assets................................................ 486,468 115,416
------------ ------------
Total assets........................................... $ 72,327,975 $137,749,517
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses..................... $ -- $ 4,335,026
Current portion of deferred revenue....................... 5,669,294 7,725,141
Deferred tax liabilities, net............................. 53,275 467,550
------------ ------------
Total current liabilities.............................. 5,722,569 12,527,717
Deferred revenue, net of current portion.................... 29,717,769 29,667,469
Deferred tax liabilities, net............................... 10,607,953 10,193,678
------------ ------------
Total liabilities...................................... 46,048,291 52,388,864
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.01, 10,000,000 shares
authorized;
Series A $100 cumulative convertible, 2,000,000 shares
authorized, 0 shares and 392,887 shares issued and
outstanding, respectively (liquidation value is $0
and $40,074,474 at December 31, 1996 and 1997,
respectively)........................................ -- 3,929
Series B cumulative, 2,000,000 shares authorized; no
shares issued and outstanding........................ -- --
Series C cumulative convertible, 2,000,000 shares
authorized; no shares issued and outstanding......... -- --
Common stock, par value $.01, 75,000,000 shares
authorized; 25,214,000 shares issued and outstanding... -- 252,140
Additional paid-in-capital................................ 45,920,943 108,828,129
Accumulated deficit....................................... (19,641,259) (23,723,545)
------------ ------------
Total stockholders' equity............................. 26,279,684 85,360,653
------------ ------------
Total liabilities and stockholders' equity........ $ 72,327,975 $137,749,517
============ ============
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 117
ORBITAL IMAGING CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SERIES A PREFERRED
STOCK COMMON STOCK ADDITIONAL
------------------ --------------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TOTAL
-------- ------- ---------- -------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994....... -- $ -- -- $ -- $ 20,470,019 $ (8,944,498) $11,525,521
Capital contributed............ -- -- -- -- 19,180,785 -- 19,180,785
Tax-sharing charge............. -- -- -- -- (4,947,880) -- (4,947,880)
Net loss....................... -- -- -- -- -- (5,801,973) (5,801,973)
------- ------ ---------- -------- ------------ ------------ -----------
BALANCE, DECEMBER 31, 1995....... -- -- -- -- 34,702,924 (14,746,471) 19,956,453
Capital contributed............ -- -- -- -- 13,624,941 -- 13,624,941
Tax-sharing charge............. -- -- -- -- (2,406,922) -- (2,406,922)
Net loss....................... -- -- -- -- -- (4,894,788) (4,894,788)
------- ------ ---------- -------- ------------ ------------ -----------
BALANCE, DECEMBER 31, 1996....... -- -- -- -- 45,920,943 (19,641,259) 26,279,684
Shares issued in private
offering, net................ 372,705 3,727 -- -- 33,542,767 -- 33,546,494
Issuance of common stock to
Orbital...................... -- -- 25,200,000 252,000 31,065,829 -- 31,317,829
Issuance of common stock to
director..................... -- -- 14,000 140 50,260 -- 50,400
Preferred stock dividends paid
in shares.................... 20,182 202 -- -- (202) -- --
Tax-sharing charge............. -- -- -- -- (1,751,468) -- (1,751,468)
Net loss....................... -- -- -- -- -- (4,082,286) (4,082,286)
------- ------ ---------- -------- ------------ ------------ -----------
BALANCE, DECEMBER 31, 1997....... 392,887 $3,929 25,214,000 $252,140 $108,828,129 $(23,723,545) $85,360,653
======= ====== ========== ======== ============ ============ ===========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 118
ORBITAL IMAGING CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1996 1997
------------- ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS........................................ $ (5,801,973) $ (4,894,788) $ (4,082,286)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Depreciation and amortization expense........ 7,777,282 3,981,176 5,536,108
Loss on disposal of fixed assets............. -- -- 4,244
Deferred tax benefit......................... -- -- (1,751,468)
CHANGES IN ASSETS AND LIABILITIES:
(Increase) decrease in receivables........... (200,000) 150,000 (84,163)
(Increase) decrease in other assets.......... (67,513) (418,955) 371,052
Increase in accounts payable and accrued
expenses................................... -- -- 4,335,026
Increase (decrease) in deferred revenue...... (1,900,018) 175,000 2,005,547
------------- ------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES............................ (192,222) (1,007,567) 6,334,060
------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................ (9,869,134) (4,657,403) (40,837,560)
Purchase of OrbView-2 license................... (9,119,429) (7,959,971) (8,191,330)
Purchases of available-for-sale investment
securities................................... -- -- (115,750,801)
Maturities of available-for-sale investment
securities................................... -- -- 102,441,541
Sales of available-for-sale investment
securities................................... -- -- 1,972,509
------------- ------------ ------------
NET CASH USED IN INVESTING ACTIVITIES... (18,988,563) (12,617,374) (60,365,641)
------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of preferred stock in private
offering, net of offering expenses......... -- -- 33,546,494
Issuance of common stock..................... 19,180,785 13,624,941 31,368,229
------------- ------------ ------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES............................ 19,180,785 13,624,941 64,914,723
------------- ------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS......... -- -- 10,883,142
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.... -- -- --
------------- ------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD.......... $ -- $ -- $ 10,883,142
============= ============ ============
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE> 119
ORBITAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(1) NATURE OF OPERATIONS
In 1991, the ORBIMAGE operating division of Orbital Sciences Corporation
("Orbital") was established to manage the development of remote imaging
satellites that would collect, process, and distribute digital imagery of land
areas, oceans and the atmosphere. In 1992, Orbital Imaging Corporation
("ORBIMAGE" or the "Company") was incorporated in Delaware as a wholly-owned
subsidiary of Orbital. On May 8, 1997 and July 3, 1997, ORBIMAGE issued
preferred stock to private investors to fund a significant portion of the
remaining costs of existing projects (the "Private Placement").
Contemporaneously with the Private Placement, ORBIMAGE executed certain
contracts with Orbital whereby all assets and liabilities of Orbital's operating
division, ORBIMAGE, were sold to the Company. Accordingly, the accompanying
financial statements incorporate the historical accounts and operations of the
operating division prior to May 8, 1997, as predecessor financial statements of
ORBIMAGE.
ORBIMAGE has two contracts with Orbital: the ORBIMAGE System Procurement
Agreement dated November 18, 1996, as amended (the "System Procurement
Agreement"), and the Amended and Restated Administrative Services Agreement
dated May 8, 1997 (the "Administrative Services Agreement"). Under the System
Procurement Agreement, ORBIMAGE is purchasing (i) the OrbView-1 satellite, (ii)
an exclusive license entitling ORBIMAGE to all of the economic rights and
benefits of the OrbView-2 satellite, (iii) the OrbView-3 satellite and launch
service, (iv) the OrbView-4 satellite and launch service, and (v) the ground
segment assets used to command and control the satellites as well as receive and
process imagery. Under the Administrative Services Agreement, ORBIMAGE is
reimbursing Orbital for all management, accounting, legal, and financial
services, office space, and other administrative services, as well as certain
direct operating services provided by Orbital.
The OrbView-1 satellite was launched in 1995 and provides severe weather
and atmospheric images, including global lightning information and measurements
used in analyzing atmospheric temperature information.
The OrbView-2 satellite was launched on August 1, 1997 and completed its
on-orbit checkout in October 1997. The satellite provides multispectral imagery
to detect changes in the coloration of Earth's oceans and land areas. ORBIMAGE
has entered into an imagery sales contract with the National Aeronautics and
Space Administration ("NASA") and will provide OrbView-2 imagery to NASA for
five years. In addition, ORBIMAGE has initiated a commercial fishing
demonstration program using OrbView-2 processed imagery with the participation
of approximately 50 domestic and international high-seas and coastal fishing
vessels, mainly in the South Pacific.
The OrbView-3 satellite is currently scheduled to begin operations in
mid-1999 and will provide 1-meter panchromatic and 4-meter multispectral imagery
of the Earth. The OrbView-4 satellite will provide 1-meter and 2-meter
panchromatic, 4-meter multispectral, and 8-meter hyperspectral imagery of the
Earth and is expected to be operational in mid-2000. The U.S. Air Force has
agreed to pay approximately $31 million to cover ORBIMAGE's cost of developing
hyperspectral capability. The imagery provided by both OrbView-3 and OrbView-4
will have a broad range of applications for U.S. and foreign national security
and many commercial and scientific markets.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.
F-7
<PAGE> 120
ORBITAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Certain reclassifications have been made to the 1996 and 1995 financial
statements to conform to the 1997 financial statement presentation.
Revenue Recognition
ORBIMAGE's principal source of revenue is the sale of satellite imagery to
customers, value-added resellers, and distributors. Such sales often require
ORBIMAGE to provide imagery over the term of a multi-year sales contract.
Accordingly, ORBIMAGE recognizes revenues on imagery contracts as imagery is
delivered over the term of the contract. Deferred revenue represents contract
receipts in advance of the delivery of imagery.
Services Provided by Orbital
A substantial part of ORBIMAGE's administrative services, including legal,
accounting, human resources, and purchasing is provided to ORBIMAGE at cost by
Orbital. ORBIMAGE believes that the cost of these services, as provided for in
the accompanying statements of operations, approximates the cost of similar
services if obtained directly by ORBIMAGE.
Income Taxes
ORBIMAGE recognizes income taxes using the asset and liability method.
Under the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Stock Based Compensation
On January 1, 1996, ORBIMAGE adopted Statement of Financial Accounting
Standards 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), which
requires companies to (i) recognize as expense the fair value of all stock-based
awards on the date of grant, or (ii) continue to apply the provisions of
Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to
Employees" ("APB 25") and provide pro forma net income (loss) disclosures for
employee stock option grants made in 1995 and future years as if the
fair-value-based method defined in SFAS 123 had been applied. ORBIMAGE has
elected to continue to apply the provisions of APB 25 and provide the pro forma
disclosure provisions of SFAS 123 (See Note 9).
Cash and Cash Equivalents and Short-Term Investments
ORBIMAGE considers all highly liquid investments with original maturities
of three months or less to be cash equivalents. Investments in securities that
do not meet the definition of cash equivalents are classified as short-term
investments. Since ORBIMAGE does not intend to hold its investments in debt and
equity securities until maturity and does not actively trade the securities to
maximize trading gains, ORBIMAGE classifies these securities as "available for
sale" and, accordingly, reports such securities at fair value plus accrued
interest. Any temporary excess (deficiency) of market value over (under) the
underlying cost of the short-term investment is excluded from current period
earnings and is reported as unrealized gains (losses) as a separate component of
stockholders' equity.
F-8
<PAGE> 121
ORBITAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Satellites and Related Rights and Property, Plant and Equipment
ORBIMAGE is purchasing the OrbView-1, OrbView-3, and OrbView-4 satellites,
the OrbView-2 license, and the ground segment assets pursuant to the System
Procurement Agreement. ORBIMAGE is self-constructing a digital imagery archive
and processing system, which supports OrbView-2 and will support OrbView-3 and
OrbView-4 imagery processing and distribution. ORBIMAGE capitalizes certain
direct and indirect costs incurred in the construction of this system.
Amortization of the capitalized costs will begin when the system is placed in
service. No amortization expense is included in the accompanying statements of
operations as the system was not operational at December 31, 1997.
Depreciation, Amortization, and Recoverability of Long-Lived Assets
Depreciation and amortization are provided using the straight-line method
over the estimated useful lives of the satellites (three years for OrbView-1 and
seven and one-half years for OrbView-2), and over eight years for ground segment
assets.
In 1995, ORBIMAGE adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" ("SFAS 121"), which (i) requires that assets "to be held and
used" be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable, (ii)
requires that long-lived assets "to be disposed of" be reported at the lower of
carrying amount or fair value less cost to sell, and (iii) provides guidelines
and procedures for measuring an impairment loss that are significantly different
from previous guidelines and procedures. In 1995, ORBIMAGE recorded $5,000,000
of additional depreciation expense, which is included in direct expenses in the
accompanying statement of operations, related to the estimated net realizable
value of the OrbView-1 satellite.
(3) RELATED PARTY TRANSACTIONS
Pursuant to the System Procurement Agreement, ORBIMAGE has committed to
purchase various satellites, rights, and ground systems for approximately $295
million over approximately three years. ORBIMAGE incurred costs of approximately
$18,989,000, $12,617,000, and $47,604,000 for the years ended December 31, 1995,
1996, and 1997, respectively, under the System Procurement Agreement. ORBIMAGE
incurred costs of approximately $2,591,000, $1,969,000, and $3,168,000 for the
years ended December 31, 1995, 1996, and 1997, respectively, under the
Administrative Services Agreement.
Under the terms of the Stock Purchase Agreement, dated May 7, 1997, Orbital
has agreed to purchase additional shares of ORBIMAGE preferred stock (Series B
and C) in an amount up to approximately $42 million in the event ORBIMAGE is
unsuccessful in obtaining additional financing needed by the Company.
(4) MAJOR CUSTOMER
Pursuant to imagery contracts with NASA, ORBIMAGE recognized revenues of
approximately $4,070,000, $800,000, and $1,957,000 for the years ended December
31, 1995, 1996, and 1997, respectively, representing approximately 89%, 76%, and
95%, respectively, of total revenues recognized during those periods.
F-9
<PAGE> 122
ORBITAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1997
----------- -----------
<S> <C> <C>
Land............................................ $ 212,684 $ 212,684
Ground segment assets........................... 12,780,205 15,985,408
Accumulated depreciation........................ (3,486,260) (5,144,194)
----------- -----------
Total................................. $ 9,506,629 $11,053,898
=========== ===========
</TABLE>
(6) SATELLITES AND RELATED RIGHTS
Satellites and related rights consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1996 1997
----------- ------------
<S> <C> <C>
In service:
OrbView-1.................................... $12,327,040 $ 12,327,002
Accumulated depreciation..................... (9,070,578) (11,512,924)
----------- ------------
3,256,462 814,078
----------- ------------
OrbView-2 license............................ 56,351,670 64,543,000
Accumulated amortization..................... -- (1,434,289)
----------- ------------
56,351,670 63,108,711
----------- ------------
Satellites in process.......................... 2,676,746 40,303,358
----------- ------------
Total................................ $62,284,878 $104,226,147
=========== ============
</TABLE>
(7) INCOME TAXES
ORBIMAGE recorded a deferred benefit for income taxes of $1,751,468 for the
year ended December 31, 1997 and had no current or deferred provision or benefit
for income taxes for the years ended December 31, 1996 and 1995. ORBIMAGE's
losses for income tax purposes for the period January 1 through May 7, 1997 and
for the years 1996 and 1995 (during which ORBIMAGE was an operating division,
and was included in the consolidated tax return, of Orbital) were significantly
greater than pre-tax financial statement losses, primarily due to expenses
associated with satellites and related rights deducted currently for income tax
purposes. Prior to May 8, 1997, the Company had a tax-sharing arrangement with
Orbital under which tax deductions for satellites and related rights, and the
associated net operating loss carryforwards, remained with Orbital. As a result,
the Company recorded a tax-sharing charge of $4,947,880, $2,406,922, and
$1,751,468 for the years ended December 31, 1995, 1996, and 1997, respectively,
as a direct charge to additional paid-in capital.
F-10
<PAGE> 123
ORBITAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The tax effects of significant temporary differences at December 31, 1997
and 1996 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1997
----------- -----------
<S> <C> <C>
Deferred tax assets:
Revenue recognition........................... $14,154,825 $14,949,332
Net operating loss carryforward............... -- 584,905
Other......................................... -- 62,367
----------- -----------
Deferred tax assets, net...................... $14,154,825 $15,596,604
=========== ===========
Deferred tax liabilities:
Differences in the tax treatment of satellites
and related rights......................... $24,816,053 $26,257,832
=========== ===========
</TABLE>
The income tax provision (benefit) for the years ended December 31, 1995,
1996, and 1997, is different from that computed using statutory U.S. Federal
income tax rates solely due to differences associated with net operating loss
carry-forwards generated prior to May 8, 1997 and state tax benefits. As of
December 31, 1997, the Company has a net operating loss carryforward for income
tax purposes of approximately $1.5 million, which will be used to offset future
taxable income over the next 15 years.
(8) COMMON AND PREFERRED STOCK
In 1997, ORBIMAGE consummated the Private Placement in which it sold
372,705 shares of Series A cumulative convertible preferred stock (the
"Preferred Stock") generating gross proceeds of approximately $37 million. Each
share of Preferred Stock entitles its holder to receive annual cumulative
dividends of 12% per annum. The Preferred Stock is convertible into ORBIMAGE
common stock in an amount equal to $100 per share of Preferred Stock, divided by
the Series A Conversion Price, which is $4.17 per share of Preferred Stock. The
Series A Conversion Price is subject to adjustment under certain circumstances.
Each holder of Series A Preferred Stock is entitled to voting rights equal to
that of a common stockholder; for this purpose each share of Preferred Stock is
treated as if converted to common stock (rounded to the nearest whole number)
immediately prior to a vote.
Dividends on the Preferred Stock are cumulative, have priority over
dividends on common stock, Series B preferred stock, and Series C preferred
stock, and must be paid in the event of liquidation and before any distribution
to holders of common stock or Series B preferred stock and Series C preferred
stock. Dividends are payable on a semi-annual basis in May and November, and can
be paid in either cash or additional shares of Preferred Stock. On September 30,
1997, the ORBIMAGE Board of Directors declared dividends, payable in their
entirety in additional shares of Preferred Stock. The dividends (20,182 shares)
were paid on November 1, 1997. At December 31, 1997, cumulative Preferred Stock
dividends in arrears amounted to approximately 8,000 shares.
The Board of Directors is authorized to issue Series B cumulative preferred
stock and Series C cumulative convertible preferred stock, although at December
31, 1997, no such preferred stock had been issued. The specific attributes and
terms of the Series B and Series C preferred stock are defined in the Amended
and Restated Certificate of Incorporation of the Company as filed with the
Delaware Secretary of State on May 8, 1997.
In addition, in 1997, Orbital increased its common equity investment in
ORBIMAGE, bringing its total equity invested to approximately $87,900,000 and
its ownership of common stock to 25,200,000 shares.
F-11
<PAGE> 124
ORBITAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(9) STOCK OPTION PLAN
During 1996, ORBIMAGE adopted the 1996 Stock Option Plan (the "ORBIMAGE
Plan") pursuant to which incentive or non-qualified options to purchase up to
2,800,000 shares of ORBIMAGE common stock may be granted to ORBIMAGE and Orbital
employees, consultants or advisors. Under the ORBIMAGE Plan, stock options may
not be granted with an exercise price less than 85% of the stock's fair market
value at the date of grant as determined by the Board of Directors. The ORBIMAGE
options generally vest ratably over a three-year period. The following table
summarizes the activity relating to the ORBIMAGE Plan:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF OPTION PRICE AVERAGE OUTSTANDING AND
SHARES PER SHARE EXERCISE PRICE EXERCISABLE
--------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
OUTSTANDING AT DECEMBER 31, 1995..... -- -- -- --
Granted............................ 1,408,000 $3.60 $3.60
Exercised.......................... -- -- --
Cancelled or Expired............... -- -- --
---------
OUTSTANDING AT DECEMBER 31, 1996..... 1,408,000 $3.60 $3.60 352,000
Granted............................ 498,000 $4.17 $4.17
Exercised.......................... (14,000) $3.60 $3.60
Cancelled or Expired............... (8,000) $3.60 $3.60
---------
OUTSTANDING AT DECEMBER 31, 1997..... 1,884,000 $3.60 -- $4.17 $3.75 707,250
========= ============= ===== =======
</TABLE>
ORBIMAGE applies APB No. 25 and related interpretations in accounting for
its plans. No compensation cost has been recognized in connection with stock
option grants in the accompanying statements of operations.
Stock Based Compensation
On January 1, 1996, ORBIMAGE adopted SFAS 123 (see Note 2). ORBIMAGE uses
the Black-Scholes option-pricing model to determine the pro forma impact to its
net income. The model utilizes certain information, such as the interest rate on
a risk-free security maturing generally at the same time as the option being
valued, and requires certain assumptions, such as the expected amount of time an
option will be outstanding until it is exercised or it expires, to calculate the
weighted-average fair value per share of stock options granted. This information
and the assumptions used in the option-pricing model for 1996 and 1997,
respectively, are as follows: volatility, 30% and 30%; dividend yield, 0% and
0%; risk-free interest rate, 5.8% and 6.0%; average expected life, 4.5 years and
4.5 years; additional shares available, 1,392,000 and 902,000; and
weighted-average exercise price per share, $3.60 and $3.75.
Had ORBIMAGE determined compensation cost based on the fair value at the
grant date for its stock options in accordance with the fair value method
prescribed by SFAS 123, ORBIMAGE's net loss would have been approximately
$5,305,000 and $5,031,000 for the years ended December 31, 1996 and 1997,
respectively. The pro forma net loss reflects only options granted in 1996 and
1997 and therefore may not be representative of the effects for future periods.
(10) SUPPLEMENTAL DISCLOSURES
At December 31, 1997, ORBIMAGE employees were participating in the Deferred
Salary Profit Sharing Plan for Employees of Orbital Imaging Corporation, a
defined contribution plan (the "Plan") in accordance with Section 401(k) of the
Internal Revenue Code of 1986, as amended. Company contributions to the Plan are
made based on
F-12
<PAGE> 125
ORBITAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
certain plan provisions and at the discretion of the Board of Directors, and in
1997, were approximately $28,000.
(11) EVENTS (UNAUDITED) SUBSEQUENT TO THE DATE OF THE REPORT OF THE INDEPENDENT
AUDITOR
On February 25, 1998, the Company consummated a private placement of Units
consisting of $150 million 11 5/8% Senior Notes due 2005 (the "Notes") and
warrants to purchase 1,312,746 shares of Common Stock, and issued an additional
227,295 shares of Series A Preferred Stock to existing preferred stockholders.
The Company received net proceeds of approximately $144.5 million and $21
million from the sales of Units and preferred stock, respectively, using
approximately $32.9 million to fund the purchase of pledged securities to
provide for payment in full of the first four scheduled interest payments on the
Notes. The Company expects to use the remaining proceeds to fund its planned
satellite construction and operations.
F-13
<PAGE> 126
GLOSSARY OF TERMS
CHECK-OUT INSURANCE -- Insurance placed into effect following the deployment of
the satellite which remains in effect until the satellite is placed into
commercial service.
COMMON STOCK -- The common stock of the Company, par value $.01 per share.
COMPANY -- Orbital Imaging Corporation, a Delaware corporation.
DESIGN LIFE -- The expected functional life of a satellite based on the specific
design employed.
DoC -- The U.S. Department of Commerce.
DoD -- The U.S. Department of Defense.
EESS -- Earth Exploration-Satellite Service, a radio-communication service
between ground stations and one or more satellites which obtains information on
the Earth and its natural phenomena from active sensors or passive sensors on
satellites.
EARTHWATCH -- EarthWatch Incorporated, a commercial remote sensing company
sponsored by Ball Aerospace and Technologies Corporation, CTA Incorporated, and
Hitachi, Ltd.
FCC -- The Federal Communications Commission, an independent government agency
charged with regulating interstate and international communications by radio,
television, wire, satellite, and cable.
HIGH-RESOLUTION ORBVIEW SATELLITES -- the OrbView-3 and OrbView-4 satellites
INMARSAT -- International Maritime Satellite Organization, an organization
responsible for providing international maritime telephony via communication
satellites.
IN-ORBIT INSURANCE -- Insurance covering the period following the date a
satellite has been placed into commercial service.
INTELSAT AND INMARSAT AGREEMENT -- An international agreement requiring
coordination to the extent that any party or signatory or person within the
jurisdiction of a party intends to establish, acquire, or utilize space segment
facilities separate from the Intelsat space segment facilities to meet its
domestic public telecommunications services requirements.
IRS-1C -- India Remote Sensing Satellite.
ITU -- International Telecommunications Union, which is the telecommunications
agency of the United Nations established to provide standardized communications
procedures and practices including frequency allocation and radio regulations on
a worldwide basis.
NASA -- National Aeronautics and Space Administration.
NIMA -- National Imagery and Mapping Agency.
NOAA -- National Oceanic and Atmospheric Administration, an agency of the DoC.
NRO -- The U.S. National Reconnaissance Office.
NTIA -- National Telecommunications and Information Administration, an agency of
the DoC.
ORBIMAGE -- Orbital Imaging Corporation, a Delaware corporation (the "Company").
ORBITAL -- Orbital Sciences Corporation, a Delaware corporation.
ORBVIEW-1 -- The satellite launched in April 1995 that is providing
meteorological data on severe weather lightning strikes and measurements of
other atmospheric properties.
ORBVIEW-2 -- The satellite launched in the second quarter of 1997, that is
providing 1-kilometer resolution imagery of the Earth's surface in eight
spectral bans.
G-1
<PAGE> 127
ORBVIEW-2 LICENSE -- The OrbView-2 License Agreement between Orbital and
ORBIMAGE, which provides ORBIMAGE with the economic equivalent of ownership of
the OrbView-2 satellite.
ORBVIEW-3 -- The satellite scheduled for launch in 1999, that is designed to
provide for both one-meter resolution panchromatic imagery, and four-meter
resolution multispectral imagery in 4 spectral bands of the Earth's surface.
ORBVIEW-4 -- The satellite scheduled for launch in the second quarter of 2000,
that is designed to provide for one-meter resolution panchromatic imagery,
four-meter resolution multispectral imagery and eight-meter resolution
hyperspectral imagery.
PEGASUS -- Orbital's air-launched rocket designed to launch small satellites
into low-Earth orbit.
RADARSAT -- Radarsat International Inc., a Canadian company operating a
commercial radar imaging satellite.
SAMSUNG AEROSPACE -- Samsung Aerospace Industries, Ltd..
SPACE IMAGING EOSAT -- Space Imaging EOSAT, a commercial remote sensing company
sponsored by Lockheed Martin, Raytheon and Mitsubishi.
STOCK OPTION PLAN -- The Company's 1996 Stock Option Plan, which provides for
grants of incentive or non-qualified stock options to officers, directors and
employees of the Company.
TAURUS -- Orbital's ground launched rocket designed for launching small to
medium satellites into space.
UCAR -- University Corporation for Atmospheric Research.
VARS -- Value added resellers.
G-2
<PAGE> 128
ORBITAL IMAGING CORPORATION
All tendered Original Notes, executed Letters of Transmittal, and other
related documents should be directed to the Exchange Agent. Requests for
assistance and for additional copies of the Prospectus, the Letter of
Transmittal and other related documents should be directed to the Exchange
Agent.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS
MARINE MIDLAND BANK
by Facsimile:
(212) 658-6425
Attention: Frank J. Godino
Confirm by telephone
(212) 658-6044
By Registered or Certified Mail:
Marine Midland Bank
140 Broadway
12th Floor
New York, New York 10005-1180
Att: Corporate Trust Services
By Hand:
Marine Midland Bank
140 Broadway
12th Floor
New York, New York 10005-1180
Att: Corporate Trust Services
By Overnight Courier:
Marine Midland Bank
140 Broadway
12th Floor
New York, New York 10005-1180
Att: Corporate Trust Services
(212) 658-6084
<PAGE> 129
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is a Delaware corporation and its Second Amended and Restated
Certificate of Incorporation and Bylaws provide for indemnification of its
officers and directors to the fullest extent permitted by law. Section 102(b)(7)
of the Delaware General Corporation Law (the "DGCL") permits a corporation in
its certificate of incorporation to eliminate the liability of a cooperation's
directors to a corporation or its stockholders, except for liabilities related
to breach of duty of loyalty, actions not in good faith and certain other
liabilities.
Section 145 of the DGCL provides that a corporation may indemnify directors
and officers as well as other employees and individuals against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with specified actions, suits or proceedings, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation, a "derivative action") if they acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, if they had no reasonable cause to believe their conduct was
unlawful. A similar standard is applicable in the case of derivative actions,
except that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with the defense or settlement of such actions, and the
status requires court approval before there can be any indemnification where the
person seeking indemnification has been found liable to the corporation. The
statute provides that it is not exclusive of other indemnification that may be
granted by a corporation's bylaws, disinterested director vote, stockholder
vote, agreement or otherwise.
Delaware law also permits a corporation to purchase and maintain insurance
on behalf of any person who is or was a director or officer against any
liability asserted against him and incurred by him in such capacity or arising
out of his status as such, whether or not the corporation has the power to
indemnify him against that liability under Section 145 of the DGCL.
The above discussion of the Company's Second Amended and Restated
Certificate of Incorporation and Bylaws is not intended to be exhaustive and is
respectively qualified in its entirety by such documents.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
3.1 Second Amended and Restated Certificate of Incorporation of
the Company.
3.2 Bylaws of the Company
4.1 Specimen certificate of 11 5/8% Series A Senior Note due
2005 (included in Exhibit 4.3 hereto).
4.2 Specimen certificate of 11 5/8% Series B Senior Note due
2005 (substantially in the same form as Exhibit 4.1)
4.3 Indenture dated as of February 25, 1998, by and among the
Company and Marine Midland Bank, as Trustee, with respect to
the 11 5/8% Senior Notes due 2005 of the Company.
4.4 Warrant Agreement dated as of February 25, 1998, by and
between the Company and Marine Midland Bank as Warrant Agent
4.5 Registration Rights Agreement, dated as of February 25, 1998
by and among the Company, Bear, Stearns & Co. Inc., Merrill
Lynch & Co. and NationsBanc Montgomery Securities LLC as the
Initial Purchasers.
4.6 Warrant Registration Rights Agreement, dated as of February
25, 1998 by and among the Company, Bear, Stearns & Co. Inc.,
Merrill Lynch & Co. and NationsBanc Montgomery Securities
LLC as the Initial Purchasers.
4.7 Pledge Agreement dated February 25, 1998, by and between the
Company and Marine Midland Bank as Collateral Agent.
</TABLE>
II-1
<PAGE> 130
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.8* Amended and Restated Stock Purchase Agreement dated as of
February 25, 1998, by and among the Company, Orbital
Sciences Corporation and the holders of Series A Preferred
Stock named therein
4.9* Amended and Restated Stockholders' Agreement dated as of
February 25, 1998, by and among the Company, Orbital
Sciences Corporation and the holders of Series A Preferred
Stock named therein
5.1* Opinion of Latham & Watkins regarding the validity of the
Exchange Notes, including consent.
8.1* Opinion of Latham & Watkins regarding certain federal income
tax matters, including consent.
10.1 Purchase Agreement, dated as of February 20, 1998 by and
among the Company, Bear, Stearns & Co. Inc., Merrill Lynch &
Co. and NationsBanc Montgomery Securities LLC as the Initial
Purchasers.
10.2* Amended and Restated Procurement Agreement dated February
26, 1998 by and between the Company and Orbital
10.3* Amended and Restated Administrative Services Agreement dated
December 31, 1997 by and between the Company and Orbital.
10.4* NonCompetition and Teaming Agreement dated as of May 8, 1997
by and between the Company and Orbital.
10.5* OrbView-2 License Agreement dated as of May 8, 1997 by and
between the Company and Orbital.
10.6* Distributor Licensee Agreement dated as of January 31, 1997,
as amended from time to time, by and between the Company and
Samsung Aerospace Industries, Ltd.
10.7* Form of Indemnification Agreement between the Company and
its directors and officers.
10.8* ORBIMAGE 1996 Stock Option Plan.
12 Statements re Computations of Ratios
23.1 Consent of KPMG Peat Marwick, LLP, independent certified
public accountants.
23.2 Consent of Latham & Watkins (included in Exhibit 5.1)
24 Powers of Attorney of directors and officers of the Company
(included on signature page to their Registration
Statement).
25.1 Statement of Eligibility of Trustee on Form T-1.
27 Financial Data Schedule
99.1 Form of Letter of Transmittal
99.2* Form of Notice of Guaranteed Delivery
</TABLE>
- ---------------
* To be filed by amendment
(b) Financial Statements
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
registrant undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
The registrant undertakes that every prospectus: (i) that is filed pursuant
to the immediately preceding paragraph, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act of 1933, and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
II-2
<PAGE> 131
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provision described under Item 20 or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 132
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of Loudoun, Commonwealth of Virginia, on April 7,
1998.
ORBITAL IMAGING CORPORATION
By: /s/ GILBERT D. RYE
------------------------------------
Gilbert D. Rye
President and Chief Operating
Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Gilbert D. Rye. Armand D. Mancini and Susan Herlick, or any of them, their true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for them and in their name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement and to file the same with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
they might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on April 7, 1998 by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GILBERT D. RYE President and Chief Operating Officer April 7, 1998
- ------------------------------------------------ (Principal Executive Officer)
GILBERT D. RYE
/s/ ARMAND D. MANCINI Vice President, Finance (Principal April 7, 1998
- ------------------------------------------------ Financial and Accounting Officer)
ARMAND D. MANCINI
/s/ BRUCE W. FERGUSON Director April 7, 1998
- ------------------------------------------------
BRUCE W. FERGUSON
/s/ RICHARD REISS, JR. Director April 7, 1998
- ------------------------------------------------
RICHARD REISS, JR.
/s/ WILLIAM W. SPRAGUE Director April 7, 1998
- ------------------------------------------------
WILLIAM W. SPRAGUE
/s/ DAVID W. THOMPSON Director April 7, 1998
- ------------------------------------------------
DAVID W. THOMPSON
</TABLE>
II-4
<PAGE> 133
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
3.1 Second Amended and Restated Certificate of Incorporation of
the Company.
3.2 Bylaws of the Company
4.1 Specimen certificate of 11 5/8% Series A Senior Note due
2005 (included in Exhibit 4.3 hereto)
4.2 Specimen certificate of 11 5/8% Series B Senior Note due
2005 (substantially in the form as Exhibit 4.1)
4.3 Indenture dated as of February 25, 1998, by and among the
Company and Marine Midland Bank, as Trustee, with respect to
the 11 5/8% Senior Notes due 2005 of the Company.
4.4 Warrant Agreement, dated as of February 25, 1998, by and
between the Company and Marine Midland Bank as Warrant
Agent.
4.5 Registration Rights Agreement, dated as of February 25, 1998
by and among the Company, Bear, Stearns & Co. Inc., Merrill
Lynch & Co. and NationsBanc Montgomery Securities LLC as the
Initial Purchasers.
4.6 Warrant Registration Rights Agreement, dated as of February
25, 1998 by and among the Company, Bear, Stearns & Co. Inc.,
Merrill Lynch & Co. and NationsBanc Montgomery Securities
LLC as the Initial Purchasers.
4.7 Pledge Agreement dated February 25, 1998, by and between the
Company and Marine Midland Bank as Collateral Agent.
4.8* Amended and Restated Stock Purchase Agreement dated as of
February 25, 1998, by and among the Company, Orbital
Sciences Corporation and the holders of Series A Preferred
Stock named therein
4.9* Amended and Restated Stockholders' Agreement dated as of
February 25, 1998, by and among the Company, Orbital
Sciences Corporation and the holders of Series A Preferred
Stock named therein
5.1* Opinion of Latham & Watkins regarding the validity of the
Exchange Notes, including consent.
8.1* Opinion of Latham & Watkins regarding certain federal income
tax matters, including consent.
10.1 Purchase Agreement, dated as of February 20, 1998 by and
among the Company, Bear, Stearns & Co. Inc., Merrill Lynch &
Co. and NationsBanc Montgomery Securities LLC as the Initial
Purchasers.
10.2* Amended and Restated Procurement Agreement dated February
26, 1998 by and between the Company and Orbital
10.3* Amended and Restated Administrative Services Agreement dated
May 8, 1997 by and between the Company and Orbital.
10.4* NonCompetition and Teaming Agreement dated as of May 8, 1997
by and between the Company and Orbital.
10.5* OrbView-2 License Agreement dated as of May 8, 1997 by and
between the Company and Orbital.
10.6* Distributor Licensee Agreement dated as of January 31, 1997,
as amended from time to time, by and between the Company and
Samsung Aerospace Industries, Ltd.
10.7* Form of Indemnification Agreement between the Company and
its directors and officers.
10.8* ORB IMAGE 1996 Stock Option Plan.
12 Statements re Computations of Ratios
23.1 Consent of KPMG Peat Marwick, LLP, independent certified
public accountants.
23.2* Consent of Latham & Watkins (included in Exhibit 5.1)
24 Powers of Attorney of directors and officers of the Company
(included on signature page to this Registration Statement)
25.1 Statement of Eligibility of Trustee on Form T-1.
27 Financial Data Schedule
99.1 Form of Letter of Transmittal
99.2* Form of Notice of Guaranteed Delivery
</TABLE>
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* To be filed by amendment
<PAGE> 1
Exhibit 3.1
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ORBITAL IMAGING CORPORATION
The undersigned Armand D. Mancini certifies that he is the
Vice-President of Orbital Imaging Corporation, a corporation organized and
existing under the laws of the State of Delaware and does hereby further certify
as follows:
1. The name of the Corporation is Orbital Imaging Corporation.
The Certificate of Incorporation of Orbital Imaging Corporation was originally
filed with the Secretary of State of the State of Delaware on November 13, 1992,
and was amended by the Certificate of Amendment to the Certificate of
Incorporation filed with the Secretary of State of the State of Delaware on
December 2, 1996, and was amended and restated by that Amended and Restated
Certificate of Incorporation filed with the Secretary of State of the State of
Delaware on May 8, 1997, and was amended again by that Amendment to the Amended
and Restated Certificate of Incorporation filed with the Secretary of State of
the State of Delaware on February 10, 1998.
2. This Second Amended and Restated Certificate of
Incorporation of Orbital Imaging Corporation has been duly adopted in accordance
with the provisions of Sections 228, 242 and 245 of the General Corporation Law
of the State of Delaware.
3. The text of the Certificate of Incorporation of the
Corporation is hereby amended and restated to read in its entirety as follows:
ARTICLE I.
NAME
The name of the corporation is Orbital Imaging Corporation
(the "Corporation").
ARTICLE II.
REGISTERED OFFICE AND AGENT
The registered office of the Corporation in the State of
Delaware is located at 1013 Centre Road in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is Corporation Service
Company.
ARTICLE III.
PURPOSE
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.
ARTICLE IV.
CAPITAL STOCK
Section 1. Designation. The Corporation shall have two classes
of stock, Common Stock, $0.01 par value per share, and Preferred Stock, $0.01
par value per share. The total number of shares that the Corporation shall have
authority to issue is 75,000,000 shares of Common Stock and 10,000,000
<PAGE> 2
shares of Preferred Stock. Subject to the limitations prescribed by law and the
provisions of this Second Amended and Restated Certificate of Incorporation, the
Board of Directors of the Corporation is authorized to issue the Preferred Stock
from time to time in one or more series, each of such series to have such voting
powers, full or limited, or no voting powers, and such designations, preferences
and relative participating, optional or other special rights, and such
qualifications, limitations or restrictions thereof, as shall be determined by
the Board of Directors in a resolution or resolutions providing for the issue of
such Preferred Stock. Subject to the powers, preferences and rights of any
Preferred Stock, including any series thereof, having any preference or priority
over, or rights superior to, the Common Stock and except as otherwise provided
by law, the holders of the Common Stock shall have and possess all powers and
voting and other rights pertaining to the stock of this Corporation and each
share of Common Stock shall be entitled to one vote.
Section 2. Series A Cumulative Convertible Preferred Stock
(i) Designation and Amount. The designation of one series of
the Preferred Stock shall be "Series A Cumulative Convertible Preferred Stock"
(the "Series A Preferred Stock"). The number of shares of Series A Preferred
Stock shall be 2,000,000; provided, however, that no shares of such series may
be issued in excess of 600,000 shares other than as dividends on such series.
The Series A Preferred Stock shall be assigned a stated value of $100 per share
(the "Series A Stated Value").
(ii) Dividends. (a) Rate, etc. (1) The holders of shares of
Series A Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available therefor, dividends
from the date of issue thereof at the rate of 12% per annum (calculated by
reference to the Series A Stated Value), accruing on a daily basis, payable
semi-annually in arrears, on May 1 and November 1 (a "Dividend Payment Date"),
in each year, commencing on November 1, 1997. Such dividends shall be payable as
the Board of Directors may determine; provided, however, that such dividends may
be payable in shares of Series A Preferred Stock (on the basis of one hundred
twenty (120) shares of Series A Preferred Stock for each thousand (1,000) shares
of Series A Preferred Stock outstanding), rounded to the nearest whole share, or
in cash, or cash in part and shares of Series A Preferred Stock in part (such
option being in the sole discretion of the Corporation, as determined by the
Board of Directors so long as the 11 5/8% Notes due 2005, issued pursuant to the
Indenture dated February 25, 1998 between the Company and the Trustee named
therein (the "Notes"), are outstanding, and thereafter as determined by the
Directors elected by the Series A Holders (the "Series A Directors"), provided
that the Series A Directors shall take into consideration the anticipated cash
requirements of the Corporation). Such dividends shall be cumulative with
respect to each share from the date of original issuance or deemed issuance
(with respect to shares issued as dividends), whether or not earned or declared.
(2) In addition, the holders of
shares of Series A Preferred Stock shall be entitled to receive, in the event of
an automatic conversion of the shares of Series A Preferred Stock described in
clause (vi)(b) of this Section 2 occurring prior to the fourth anniversary of
the initial issuance of any shares of Series A Preferred Stock, dividends,
payable immediately prior to the occurrence of such automatic conversion in
shares of Series A Preferred Stock, rounded to the nearest whole share, or in
cash, or cash in part and shares of Series A Preferred Stock in part (such
option being in the sole discretion of the Corporation, as determined by the
Board of Directors so long as the Notes are outstanding, and thereafter as
determined by the Series A Directors, provided that the Series A Directors shall
take into consideration the anticipated cash requirements of the Corporation),
in an amount equal to the dividends that would have accrued on the shares of
Series A Preferred Stock so automatically converted, calculated from the date of
such automatic or mandatory conversion through
2
<PAGE> 3
and including the fourth anniversary of the initial issuance of shares of Series
A Preferred Stock as if such shares of Series A Preferred Stock had remained
outstanding through such fourth anniversary.
(3) After dividends on the Series A
Preferred Stock, including, without limitations, dividends described in the
immediately preceding clause (1) and (2), have been declared and paid or set
apart in any fiscal year of the Corporation, if the Board of Directors
thereafter elects to declare additional dividends in the same fiscal year out of
funds legally available therefor, such additional dividends shall be declared on
both the Common Stock (as defined below) and the Series A Preferred Stock, with
each share of Series A Preferred Stock entitling the holder thereof to receive
an amount equal to the dividend payable to each share of Common Stock multiplied
by the number of shares of Common Stock into which such share of Series A
Preferred Stock may then be converted.
(b) Rank, etc. Unless full cumulative
dividends on all outstanding shares of Series A Preferred Stock or any other
class of preferred stock ranking on a parity with the Series A Preferred Stock
as to dividends and upon Liquidation (as defined in clause (iii)(a) of this
Section 2) at the time such dividends are payable ("Series A Parity Stock") have
been paid or are contemporaneously declared and paid (or declared and a sum
sufficient for the payment thereof set apart for such payment), the Corporation
shall not (1) declare or pay any dividend on the Series B Cumulative Preferred
Stock of the Corporation, $0.01 par value (the "Series B Preferred Stock"), if
and when such Series B Preferred Stock is duly issued, the Series C Cumulative
Convertible Preferred Stock of the Corporation, $0.01 par value (the "Series C
Preferred Stock"), if and when such Series C Preferred Stock is duly issued, the
Common Stock of the Corporation or on any other class of stock ranking junior to
the Series A Preferred Stock as to dividends and upon Liquidation (the Series B
Preferred Stock, the Series C Preferred Stock, the Common Stock and any such
junior class being the "Series A Junior Stock") or make any payment on account
of, or set apart money for, a sinking or other analogous fund for the purchase,
redemption or other retirement of, any Series A Junior Stock or make any
distribution in respect thereof, either directly or indirectly and whether in
cash or property or in obligations or shares of the Corporation (other than in
shares of Series A Junior Stock) or (2) purchase any shares of Series A
Preferred Stock or Series A Parity Stock (except for consideration payable in
Series A Junior Stock) or redeem fewer than all of the shares of Series A
Preferred Stock or Series A Parity Stock then outstanding. Unless and until all
dividends accrued and payable but unpaid on the Series A Preferred Stock and any
Series A Parity Stock at the time outstanding have been paid in full, all
dividends declared by the Corporation upon such Series A Preferred Stock or
Series A Parity Stock shall be declared pro rata with respect to all Series A
Preferred Stock and Series A Parity Stock then outstanding, so that the amounts
of any dividends declared on the Series A Preferred Stock and such Series A
Parity Stock shall in all cases bear to each other the same ratio that, at the
time of such declaration, all accrued and payable but unpaid dividends on the
Series A Preferred Stock and such other Series A Parity Stock, respectively,
bear to each other.
(iii) Liquidation. (a) Preference on Liquidation. In
the event of any liquidation, dissolution or winding up of the affairs of the
Corporation (any or all of such events, a "Liquidation"), whether voluntary or
involuntary, except as otherwise provided in clause (iii)(b) of this Section 2,
and, in all events, so long as the Notes are outstanding, subject at all times
to the terms and conditions of the Indenture dated as of February 25, 1998 (the
"Indenture") between the Corporation and the trustee named therein pursuant to
which the Notes were issued, the holders of shares of Series A Preferred Stock
then outstanding shall be entitled, pari passu as if members of a single class
of securities with the holders of other Series A Parity Stock, to be paid out of
the assets of the Corporation, before any payment shall be made to the holders
of the Series A Junior Stock or Common Stock or the holders of
3
<PAGE> 4
any other capital stock of the Corporation, an amount per share equal to the
Series A Stated Value plus an amount equal to the dividends accrued and unpaid
thereon to the payment date (the "Series A Liquidation Amount"). In addition,
after an amount equal to the amounts, if any, payable to holders of the Series B
Preferred Stock, the Series C Preferred Stock and any other Series A Junior
Stock other than the Common Stock shall have been set aside for payment and
after payment of an equivalent per share amount with respect to the Series A
Preferred Stock (calculated on an as-converted basis at the then current Series
A Conversion Price (as defined below in this Section 2)) and the Series C
Preferred Stock (calculated on an as-converted basis at the then current Series
C Conversion Price (as defined below in Section 4)) shall have been set aside
for payment to the holders of Common Stock, the holders of shares of Series A
Preferred Stock and the Series C Preferred Stock then outstanding shall be
entitled to receive, together with the holders of shares of Common Stock, pro
rata based on the number of shares of Common Stock then outstanding and the
number of shares of Common Stock into which the Series A Preferred Stock (at the
then current Series A Conversion Price) and the Series C Preferred Stock (at the
then Series C Conversion Price) are convertible, the remaining cash and/or other
property of the Corporation.
(b) Preference on Merger, Consolidation or
Sale of Assets. In the event of a Liquidation pursuant to clause (iii)(e) of
this Section 2 of Article IV, a holder of shares of Series A Preferred Stock
shall be entitled to an amount per share equal to the greater of (1) the Series
A Liquidation Amount and (2) the amount that such holder would be entitled to
receive upon consummation of such transaction assuming conversion of all of such
holder's shares of Series A Preferred Stock into shares of Common Stock in
accordance with clause (vi) of Section 2 of this Article IV.
(c) Insufficient Assets. If, upon any
Liquidation of the Corporation, the assets of the Corporation are insufficient
to pay the holders of shares of the Series A Parity Stock then outstanding the
full amounts to which they shall be entitled, such assets shall be distributed
to the holders of the Series A Parity Stock pro rata in proportion to the
amounts to which they shall be entitled.
(d) Rights of Other Holders. In the event of
any Liquidation, after payment shall have been made to the holders of the Series
A Preferred Stock and other Series A Parity Stock of all preferential amounts to
which they shall be entitled, the holders of shares of Series A Junior Stock and
Common Stock and other capital stock of the Corporation shall receive such
amounts as to which they are entitled by the terms thereof.
(e) Consolidation, Merger or Sale of Assets.
A consolidation or merger of the Corporation with or into any other corporation
(excluding a merger in which the Corporation is the surviving entity or a merger
into a wholly owned subsidiary of the Corporation), or a sale or transfer of all
or substantially all of the Corporation's assets for cash or securities or a
statutory share exchange in which stockholders of the Corporation may
participate shall be considered a Liquidation of the Corporation within the
meaning of this clause (iii).
(iv) [Intentionally omitted]
(v) Voting Rights. Excepting the rights specified
below in this clause (v) or otherwise required by law, the holders of the Series
A Preferred Stock shall be entitled to vote together with the holders of shares
of Series C Preferred Stock and shares of Common Stock as a single class. Each
holder of Series A Preferred Stock shall be entitled to such number (rounded to
the nearest whole number) of votes as such holder would be entitled if such
holder had converted the shares of Series A
4
<PAGE> 5
Preferred Stock held by such holder into shares of Common Stock pursuant to
clause (vi) of this Section 2 immediately prior to such vote.
(a) Additional Board Seats. (1) Upon the
occurrence of an Election Event (as defined below), then, and in any such event,
the number of Directors then constituting the entire Board of Directors of the
Corporation shall automatically be increased by two Directors and the holders of
shares of Series A Preferred Stock, voting as a single class, shall be entitled
to fill such newly created directorships by written consent in lieu of a meeting
or at a special meeting of holders of Series A Preferred Stock convened promptly
upon the occurrence of such Election Event. Such right to vote as a single class
to elect two Directors shall, when vested, continue until no event constituting
an Election Event shall exist and, when no such event shall any longer exist,
such right to elect two Directors separately as a class shall cease and the
number of Directors then constituting the entire Board of Directors of the
Corporation shall automatically be reduced by two Directors, subject, always, to
the same provisions for the vesting of such right to elect two Directors
separately as a class in the case of future Election Event occurrences. For
purposes hereof, an "Election Event" shall mean any of the following: (1) any
failure by the Corporation to declare and pay dividends on the shares of Series
A Preferred on any May 1 or November 1 which remains uncured for more than 30
days; (2) the failure of the Corporation for any reason (including illegality)
to purchase all the outstanding shares of Series A Preferred Stock pursuant to
Section 4I of the Amended and Restated Stock Purchase Agreement dated February
25, 1998, among the Corporation, Orbital Sciences Corporation ("Orbital") and
the purchasers of the Series A Preferred Stock (the "Stock Purchase Agreement"),
upon the occurrence of a Change in Control Event, as defined in the Stock
Purchase Agreement; or (3) the failure of Orbital (i) to conduct a critical
design review of the spacecraft currently designated as OrbView-3 (one-meter
panchromatic, four-meter multispectral) (the "OrbView-3 spacecraft") under the
ORBIMAGE System Procurement Agreement between the Corporation and Orbital in
effect on the date hereof (as amended from time to time, the "Procurement
Agreement") by October 31, 1998, (ii) to have commenced by March 15, 1999, the
integration and testing of the OrbView-3 spacecraft under the Procurement
Agreement or (iii) to have commenced by November 15, 1999 the integration and
testing of the spacecraft currently designated as OrbView-4 (one-meter
panchromatic, four-meter multispectral, and hyperspectral capability) under the
Procurement Agreement. The date specified for each event described in the
immediately preceding clause 3 may be extended by up to thirty (30) days if, in
the discretion of the President of the Corporation (in consultation with the
Series A Directors), he determines that such delay is advisable to ensure that
the milestone is achieved in a form consistent with the continued progress in
the OrbView spacecraft construction schedule.
(2) So long as any shares of Series
A Preferred Stock are outstanding, the number of Directors of the Corporation
shall at all times be such that the exercise, by the holders of shares of Series
A Preferred Stock, of the right to elect Directors under the circumstances
provided in paragraph (1) of this subclause (a) will not contravene any
provisions of the Delaware General Corporation Law or this Second Amended and
Restated Certificate of Incorporation.
(3) Directors elected pursuant to
paragraph (1) of this subclause (a) shall serve until the earlier of (A) the
next annual meeting of the stockholders of the Corporation and the election (by
the holders of shares of Series A Preferred Stock) and qualification of their
respective successors or (B) the date upon which no event constituting an
Election Event shall exist. Directors elected pursuant to paragraph (1) of this
subclause (a) may be removed by, and shall not be removed except by, the vote of
the holders of record of a majority of the outstanding shares of Series A
Preferred Stock, voting together as a single class without regard to series, at
a meeting of the stockholders, or the holders of shares of Series A Preferred
Stock, at a meeting called for that purpose.
5
<PAGE> 6
If, prior to the end of the term of any Director elected as aforesaid, a vacancy
in the office of such Director shall occur during the continuance of an Election
Event by reason other than removal, such vacancy shall be filled for the
unexpired term by the appointment by the remaining Director elected as aforesaid
of a new Director for the unexpired term of such former Director.
(b) Additional Capital Stock, etc. The
Corporation shall not, without the affirmative consent or approval of the
holders of shares representing at least two-thirds (2/3) of the Series A
Preferred Stock then outstanding, voting as a single class (such consent or
approval to be given by written consent in lieu of a meeting or by vote at a
meeting called for such purpose for which notice shall have been given to the
holders of the Series A Preferred Stock): (i) authorize the issuance of any new,
or increase the authorized number of shares of any existing, class of capital
stock of the Corporation which would be senior or superior as to dividends and
upon Liquidation to the Series A Preferred Stock, (ii) increase the number of
shares of preferred stock authorized in this Second Amended and Restated
Certificate of Incorporation or create any other class of stock (or any other
series of preferred stock) ranking on a parity with the Series A Preferred Stock
as to dividends and upon Liquidation, (iii) authorize or issue shares of stock
of any class or any bonds, debentures, notes or other obligations convertible
into or exchangeable for, or having rights to purchase, any shares of stock of
the Corporation which would be senior or superior to, or rank on a parity with,
the Series A Preferred Stock as to dividends or upon Liquidation, (iv) reissue
any shares of Series A Preferred Stock that have been redeemed or purchased by
the Corporation, (v) take any action to cause any amendment, alteration or
repeal of any of the provisions of this Second Amended and Restated Certificate
of Incorporation that may adversely affect the rights of holders of Series A
Preferred Stock, (vi) consummate, or commit to consummate, any merger,
consolidation or sale or other disposition of all or substantially all of the
assets of the Corporation, or (vii) enter into any line of business not
significantly related to its currently existing or contemplated lines of
business.
(vi) Conversion Rights. (a) Optional Conversion of
Series A Preferred Stock. The holder of any shares of Series A Preferred Stock
shall have the right, at such holder's option, at any time or from time to time
to convert any or all of such holder's shares of Series A Preferred Stock into
such number of fully paid and nonassessable shares of Common Stock (the "Series
A Conversion Shares") as is determined by dividing the Series A Stated Value by
the "Series A Conversion Price" in effect at the time of such conversion. The
"Series A Conversion Price" shall initially be $4.17 per share of Series A
Preferred Stock, and thereafter shall be subject to the adjustments set forth
herein; provided, however, that if there has failed to be a successful in-orbit
checkout of the satellite known as OrbView-2 on or prior to December 31, 1997,
the Series A Conversion Price shall be adjusted on January 1, 1998 to $3.66, as
adjusted by any adjustment to the Series A Conversion Price prior to such date.
The Corporation and each of the holders of Series A Preferred Stock (as
evidenced by its acceptance thereof) intends that the adjustment, if any, to the
Series A Conversion Price described in the preceding sentence be a "purchase
price adjustment" within the meaning of Treasury Regulation Section 1.305-1(c).
The Corporation and each of the holders of Series A Preferred Stock (as
evidenced by its acceptance thereof) agrees that, except as otherwise required
by law, it shall not take any position inconsistent with the treatment of such
adjustment as a purchase price adjustment, whether in any governmental filing or
otherwise. The Series A Conversion Shares and the Series A Conversion Price are
subject to certain adjustments as set forth herein, and the terms Series A
Conversion Shares and Series A Conversion Price as used herein shall as of any
time be deemed to include all such adjustments to be given effect as of such
time in accordance with the terms hereof.
Upon the exercise of the option of the holder of any shares of
Series A Preferred Stock to convert Series A Preferred Stock into Common Stock,
the holder of such shares of Series A Preferred
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<PAGE> 7
Stock to be converted shall surrender the certificates representing the shares
of Series A Preferred Stock so to be converted in the manner provided in clause
(vi)(c) below of this Section 2.
(b) Automatic Conversion. Each share of
Series A Preferred Stock shall automatically be converted (but only upon payment
of any dividend required by clause (ii)(a)(2) of this Section 2) into shares of
Common Stock at the Series A Conversion Price then in effect upon the occurrence
of (i) the closing of a Qualifying Public Offering (as defined below), (ii) the
business day next following the end of a period of 180 consecutive days during
which the average closing price of the Corporation's Common Stock shall have
exceeded the Threshold Price or (iii) a transaction described in Section 3.5 of
the Stockholders Agreement dated May 8, 1997 among the Corporation, Orbital and
certain purchasers of Series A Preferred Stock. For purposes hereof, "Qualifying
Public Offering" shall mean a public offering of Common Stock registered under
the Securities Act of 1933, as amended (the "Securities Act"), (x)(A) that shall
have resulted in an aggregate price to the public of not less than $30,000,000
or (B) that involves the sale to the public of Common Stock constituting at
least twenty percent (20%) of the Common Stock immediately outstanding after the
offering, in either case at a price per share of Common Stock equal to or
greater than the Threshold Price and (y) that shall have resulted in listing or
admission to trading of the Common Stock on the New York Stock Exchange, a
national securities exchange, the NASDAQ National Market System or NASDAQ
over-the-counter market. For purposes hereof, "Threshold Price" shall mean (i)
as of any date through May 1, 1999, 100% of the then current Series A Conversion
Price, (ii) from May 2, 1999 through May 1, 2000, the then current Series A
Conversion Price, multiplied by the amount (expressed as a percentage) equal to
100% plus the result of 30% times a fraction, the numerator of which is the
number of days after May 1, 1999 the calculation of the Threshold Price occurs
and the denominator of which is 365, (iii) from May 2, 2000 through May 1, 2001,
the then current Series A Conversion Price, multiplied by the amount (expressed
as a percentage) equal to 130% plus the result of 20% times a fraction, the
numerator of which is the number of days after May 1, 2000 the calculation of
the Threshold Price occurs and the denominator of which is 365, and (iv) from
May 2, 2001 forward, 150% of the then current Series A Conversion Price.
(c) Delivery of Stock Certificates; No
Fractional Shares. The holder of any shares of Series A Preferred Stock may
exercise the conversion right pursuant to clause (vi)(a) above of this Section 2
by delivering to the Corporation during regular business hours at the office of
the Corporation the certificate or certificates for the shares to be converted,
duly endorsed or assigned either in blank or to the Corporation (if required by
it), accompanied by written notice stating that such holder elects to convert
such shares. Upon the occurrence of an automatic conversion pursuant to clause
(vi)(b) above of this Section 2, the holder of any shares of Series A Preferred
Stock shall deliver to the Corporation at the office of the Corporation the
certificate or certificates for shares that have been converted, duly endorsed
or assigned either in blank or to the Corporation (if requested by it).
Conversion shall be deemed to have been effected (i) in the case of an optional
conversion pursuant to clause (vi)(a) above of this Section 2, on the date when
the aforesaid delivery is made, (ii) in the case of an automatic conversion
pursuant to clause (vi)(b) above of this Section 2, upon the effective date of
the event triggering such automatic conversion, and such date is referred to
herein as the "Series A Conversion Date." As promptly as practicable thereafter
the Corporation shall issue and deliver to or upon the written order of such
holder, to the place designated by such holder, a certificate or certificates
for the number of full shares of Common Stock to which such holder is entitled
and a check or cash in respect of any fractional interest in a share of Common
Stock, as provided below, payable with respect to the shares of Series A
Preferred Stock so converted; provided, however, that in the case of a
conversion in connection with Liquidation, no such certificates need be issued.
The person in whose name the certificate or certificates for Common Stock are to
be issued shall be deemed to have become the stockholder of record in respect of
such Common Stock on the applicable Series A Conversion Date
7
<PAGE> 8
unless the transfer books of the Corporation are closed on that date, in which
event such holder shall be deemed to have become the stockholder of record in
respect of such Common Stock on the next succeeding date on which the transfer
books are open, but the Series A Conversion Price shall be that in effect on the
Series A Conversion Date. Upon conversion of only a portion of the number of
shares covered by a certificate representing shares of Series A Preferred Stock
surrendered for conversion, the Corporation shall issue and deliver to or upon
the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate covering the
number of shares of Series A Preferred Stock representing the unconverted
portion of the certificate so surrendered. If the new certificate or
certificates are to be issued to a person who is not the registered holder of
the certificate delivered for conversion, any transfer taxes applicable to the
transaction shall be paid by such transferee.
(d) No Fractional Shares of Common Stock.
(i) No fractional shares of Common Stock shall be issued upon conversion of
shares of Series A Preferred Stock. Instead of any fractional share of Common
Stock which would otherwise be issuable upon conversion of any shares of Series
A Preferred Stock, the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to the then current Market Price (as
defined in clause (vi)(e)(8) below of this Section 2) of a share of Common Stock
multiplied by such fractional interest. The holders of fractional interests
shall not be entitled to any rights as stockholders of the Corporation in
respect of such fractional interests. In determining the number of shares of
Common Stock and the payment, if any, in lieu of fractional shares that a holder
of Series A Preferred Stock shall receive, the total number of shares of Series
A Preferred Stock surrendered for conversion by such holder shall be aggregated.
(ii) The Corporation shall forthwith
upon conversion of all or any portion of the Series A Preferred Stock
pay all dividends accrued on such Series A Preferred Stock to the date
of such conversion.
(e) Adjustment of Series A Conversion Price
Upon Issuance of Common Stock. If and whenever after the date hereof the
Corporation shall issue or sell any shares of its Common Stock (except upon
conversion of the Series A Preferred Stock or Series C Preferred Stock) for a
consideration per share less than, under certain circumstances, the Series A
Conversion Price in effect immediately prior to the time of such issue or sale,
then, forthwith upon such issue or sale, the Series A Conversion Price shall be
reduced (but not increased, except as otherwise specifically provided in
paragraph (3) below of this clause (e)) to the price (calculated to the nearest
cent) determined by dividing (i) an amount equal to the sum of (A) the aggregate
number of shares of Common Stock outstanding immediately prior to such issue or
sale multiplied by the then existing Series A Conversion Price and (B) the
consideration, if any, received by the Corporation upon such issue or sale, by
(ii) the aggregate number of shares of Common Stock of all classes outstanding
immediately after such issue or sale.
No adjustment of the Series A Conversion Price, however, shall
be made in an amount less than $.10 per share, but any such lesser adjustment
shall be carried forward and shall be made upon the earlier of (i) the third
anniversary of the issuance (or deemed issuance) of the securities requiring
such adjustment hereunder, and (ii) the time of and together with the next
subsequent adjustment.
For the purposes of this clause (vi)(e) of this Section 2, the
following paragraphs (1) through (9) shall also be applicable:
(1) Issuance of Rights or Options -
In case at any time after
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the date hereof the Corporation shall in any manner grant (whether
directly or by assumption in a merger or otherwise, except in the
circumstances described in clause (vi)(f) below of this Section 2) any
rights to subscribe for or to purchase, or any options for the purchase
of, Common Stock or any stock or securities convertible into or
exchangeable for Common Stock (such convertible or exchangeable stock
or securities being herein called "Convertible Securities"), whether or
not such rights or options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such
rights or options or upon conversion or exchange of such Convertible
Securities (determined by dividing (i) the total amount, if any,
received or receivable by the Corporation as consideration for the
granting of such rights or options, plus the minimum aggregate amount
of additional consideration, if any, payable to the Corporation upon
the exercise of such rights or options, plus, in the case of such
rights or options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of such rights or options or upon the
conversion or exchange of all such Convertible Securities issuable upon
the exercise of such rights or options) shall be less than the Series A
Conversion Price in effect immediately prior to the time of the
granting of such rights or options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such rights or
options or upon conversion or exchange of all such Convertible
Securities issuable upon the exercise of such rights or options shall
(as of the date of granting of such rights or options) be deemed to be
outstanding and to have been issued for such price per share. Except as
provided in paragraph (3) of this clause (vi)(e), no further adjustment
of the Series A Conversion Price shall be made upon the actual issue of
such Common Stock or of such Convertible Securities upon exercise of
such rights or options or upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities.
(2) Issuance of Convertible
Securities - In case at any time after the date hereof the Corporation
shall in any manner issue (whether directly or by assumption in a
merger or otherwise) or sell any Convertible Securities, whether or not
the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable
upon such conversion or exchange (determined by dividing (i) the total
amount received or receivable by the Corporation as consideration for
the issue or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof, by (ii) the total
maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities) shall be less than the
Series A Conversion Price in effect immediately prior to the time of
such issue or sale, then the total maximum number of shares of Common
Stock issuable upon conversion or exchange of all such Convertible
Securities shall (as of the date of the issue or sale of such
Convertible Securities) be deemed to be outstanding and to have been
issued for such price per share; provided, however, that (a) except as
otherwise provided in paragraph (3) of this clause (vi)(e), no further
adjustment of the Series A Conversion Price shall be made upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities, and (b) if any such issue or sale of such
Convertible Securities is made upon exercise of any rights to subscribe
for or to purchase or any option to purchase any such Convertible
Securities for which adjustments of the Series A Conversion Price have
been or are to be made pursuant to other provisions of this clause
(vi)(e), no further adjustment of the Series A Conversion Price shall
be made by reason of such issue or sale.
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(3) Change in Option Price or
Conversion Rate - Upon the happening of any of the following events,
namely, if the purchase price provided for in any right or option
referred to in paragraph (1) of this clause (vi)(e), the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in paragraph (1) or (2) of this
clause (vi)(e), or the rate at which any Convertible Securities
referred to in paragraph (1) or (2) of this clause (vi)(e) are
convertible into or exchangeable for Common Stock shall change (other
than under or by reason of provisions designed to protect against
dilution), the Series A Conversion Price then in effect hereunder shall
forthwith be readjusted (increased or decreased, as the case may be) to
the Series A Conversion Price which would have been in effect at such
time had such rights, options or Convertible Securities still
outstanding provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold. On the expiration of any such option
or right referred to in paragraph (1) of this clause (vi)(e) or the
termination of any such right to convert or exchange any such
Convertible Securities referred to in paragraph (1) or (2) of this
clause (vi)(e), the Series A Conversion Price then in effect hereunder
shall forthwith be readjusted (increased or decreased, as the case may
be) to the Series A Conversion Price which would have been in effect at
the time of such expiration or termination had such right, option or
Convertible Securities, to the extent outstanding immediately prior to
such expiration or termination, never been granted, issued or sold, and
the Common Stock issuable thereunder shall no longer be deemed to be
outstanding. If the purchase price provided for in any such right or
option referred to in paragraph (1) of this clause (vi)(e) or the rate
at which any Convertible Securities referred to in paragraph (1) or (2)
of this cause (vi)(e) are convertible into or exchangeable for Common
Stock shall be reduced at any time under or by reason of provisions
with respect thereto designed to protect against dilution, then in case
of the delivery of shares of Common Stock upon the exercise of any such
right or option or upon conversion or exchange of any such Convertible
Securities, the Series A Conversion Price then in effect hereunder
shall, if not already adjusted pursuant to another provision of this
clause (vi)(e), forthwith be adjusted to such amount as would have
obtained had such right, option or Convertible Securities never been
issued as to such shares of Common Stock and had adjustments been made
upon the issuance of the shares of Common Stock delivered as aforesaid,
but only if as a result of such adjustment the Series A Conversion
Price then in effect hereunder is thereby reduced.
(4) Stock Dividends - In case at any
time the Corporation shall declare a dividend or make any other
distribution upon any class or series of stock of the Corporation
payable in shares of Common Stock or Convertible Securities, any shares
of Common Stock or Convertible Securities, as the case may be, issuable
in payment of such dividend or distribution shall be deemed to have
been issued or sold without consideration; provided, however, that this
clause 4 shall not apply to dividends paid in Common Stock, Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock
with respect to the Series A Preferred Stock or the Series C Preferred
Stock.
(5) Consideration for Stock -
Anything herein to the contrary notwithstanding, in case at any time
any shares of Common Stock or Convertible Securities or any rights or
options to purchase any such Common Stock or Convertible Securities
shall be issued or sold for cash, the consideration received therefor
shall be deemed to be the amount received by the Corporation therefor,
without deduction therefrom of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Corporation in connection therewith.
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In case at any time any shares of
Common Stock or any class of Convertible Securities or any rights or
options to purchase any such shares of Common Stock or Convertible
Securities shall be issued or sold for a consideration other than cash,
the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration
as determined reasonably and in good faith by the Board of Directors of
the Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Corporation in connection therewith. In case at any time any shares of
Common Stock or any class or Convertible Securities or any rights or
options to purchase such shares of Common Stock or Convertible
Securities shall be issued in connection with any merger or
consolidation in which the Corporation is the surviving corporation,
the amount of consideration received therefor shall be deemed to be the
fair value as determined reasonably and in good faith by the Board of
Directors of the Corporation of such portion of the assets and business
of the nonsurviving corporation as such Board may determine to be
attributable to such shares of Common Stock, Convertible Securities,
rights or options, as the case may be. In case at any time any rights
or options to purchase any shares of Common Stock or Convertible
Securities shall be issued in connection with the issue and sale of
other securities of the Corporation, together comprising one integral
transaction in which no consideration is allocated to such rights or
options by the parties thereto, such rights or options shall be deemed
to have been issued for an amount of consideration equal to the fair
value thereof as determined reasonably and in good faith by the Board
of Directors of the Corporation.
(6) Record Date - In case the
Corporation shall take a record of the holders of its Common Stock for
the purpose of entitling them (i) to receive a dividend or other
distribution payable in shares of Common Stock or in Convertible
Securities, or (ii) to subscribe for or purchase shares of Common Stock
or Convertible Securities, then such record date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed to
have been issued or sold as a result of the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
(7) Treasury Shares - The number of
shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Corporation, and the
disposition of any such shares shall be considered an issue or sale of
Common Stock for the purposes of this clause (vi)(e).
(8) Definition of Market Price -
Unless otherwise set forth in this Second Amended and Restated
Certificate of Incorporation, "Market Price" shall mean, for any day,
the average of the closing prices of the Common Stock sales on all
exchanges on which the Common Stock may at the time be listed, or, if
there shall have been no sales on any such exchange on any such day,
the average of the bid and asked prices at the end of such day, or, if
the Common Stock shall not be so listed, the average of the bid and
asked prices at the end of the day in the domestic over-the-counter
market, in each such case, unless otherwise provided herein, averaged
over a period of 20 consecutive business days ending 2 days prior to
the day as of which "Market Price" is being determined. If at any time
the Common Stock is not listed on any exchange or quoted in the
domestic over-the-counter market, the "Market Price" shall be deemed to
be the fair value thereof, as determined in good faith by the Board of
Directors.
(9) Adjustment to Determination of
Series A Conversion Price. When making the calculations and
determinations described in clause (vi)(e)(1) through
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clause (vi)(e)(8) of this Section 2, the exercise of options
outstanding on May 8, 1997 shall not be taken into account.
(f) Liquidating Dividends; Purchase Rights.
(i) [Intentionally omitted.]
(ii) If at any time or from time to time on or after
the date hereof, the Corporation shall grant, issue or sell any options
or rights (other than Convertible Securities) to purchase stock,
warrants, securities or other property pro rata to the holders of
Common Stock of all classes ("Purchase Rights"), and if the holder
shall be entitled to an adjustment pursuant to clause (vi)(e) above of
this Section 2, then in lieu of such adjustment, each holder of Series
A Preferred Stock shall be entitled, at such holder's option, to
acquire (whether or not such holder's Series A Preferred Stock shall
have been converted), upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of shares of Common Stock
issuable upon conversion of such Series A Preferred Stock immediately
prior to the time or times at which the Corporation granted, issued or
sold such Purchase Rights.
(g) Subdivision or Combination of Stock. In
case the Corporation shall at any time subdivide its outstanding shares of
Common Stock into a greater number of shares, the Series A Conversion Price in
effect immediately prior to such subdivision shall be proportionately reduced,
and conversely, in case the outstanding shares of Common Stock of the
Corporation shall be combined into a smaller number of shares, the Series A
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
(h) Changes in Common Stock. If any capital
reorganization or reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with another corporation (other than
any merger in which there shall be no alteration in the rights of the Common
Stock), or the sale, transfer or other disposition of all or substantially all
of its properties to another corporation, shall be effected, then, as a
condition of such reorganization, reclassification, consolidation, merger, sale,
transfer or other disposition, lawful and adequate provision shall be made
whereby each holder of Series A Preferred Stock shall thereafter have the right
to purchase and receive upon the basis and upon the terms and conditions herein
specified and in lieu of the shares of the Common Stock of the Corporation
immediately theretofore issuable upon conversion of the Series A Preferred
Stock, such shares of stock, securities or properties as may be issuable or
payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of shares of such Common Stock immediately
theretofore issuable upon conversion of the Series A Preferred Stock had such
reorganization, reclassification, consolidation, merger, sale, transfer or other
disposition not taken place, and in any such case appropriate provisions shall
be made with respect to the rights and interests of each holder of Series A
Preferred Stock to the end that the provisions hereof (including without
limitation provisions for adjustment of the Series A Conversion Price) shall
thereafter be applicable, as nearly equivalent as may be practicable in relation
to any shares of stock, securities or properties thereafter deliverable upon the
exercise thereof. The Corporation shall not effect any such consolidation,
merger, sale, transfer or other disposition, unless prior to or simultaneously
with the consummation thereof the successor corporation (if other than the
Corporation) resulting from such consolidation or merger or the corporation
purchasing or otherwise acquiring such properties shall assume, by written
instrument executed and mailed or delivered to the holders of Series A Preferred
Stock at the last address of such holders appearing on the books of the
Corporation, the obligation to deliver to such holders such shares of stock,
securities or properties as, in accordance with the foregoing
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provisions, such holders may be entitled to acquire. The above provisions of
this subparagraph shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers, or other
dispositions.
(i) Certain Events. If any event occurs as
to which in the opinion of the Board of Directors of the Corporation the other
provisions of this clause (vi) are not strictly applicable or if strictly
applicable would not fairly protect the conversion rights of the holders of the
Series A Preferred Stock in accordance with the essential intent and principles
of such provisions, then such Board of Directors shall appoint a firm of
independent certified public accountants (which may be the regular auditors of
the Corporation) of recognized national standing, which shall give their opinion
upon the adjustment, if any, on a basis consistent with such essential intent
and principles, necessary to preserve, without dilution, the rights of the
holders of the Series A Preferred Stock. Upon receipt of such opinion by the
Board of Directors, the Corporation shall forthwith make the adjustments
described therein; provided, however, that no such adjustment shall have the
effect of increasing the Series A Conversion Price as otherwise determined
pursuant to this clause (vi) except in the event of a combination of shares of
the type contemplated in clause (vi)(g) of this Section 2 and then in no event
to an amount larger than the Series A Conversion Price as adjusted pursuant to
clause (vi)(g) of this Section 2.
(j) Prohibition of Certain Actions. The
Corporation will not (i) authorize or issue, or agree to authorize or issue, any
shares of its capital stock of any class preferred as to dividends or as to the
distribution of assets upon voluntary or involuntary Liquidation of the
Corporation unless the rights of the holders thereof shall be limited to a fixed
sum or percentage of par value in respect of participation in dividends and in
the distribution of such assets, (ii) authorize, issue or permit to remain
outstanding any class of its capital stock (including, without limitation, the
Common Stock but not including the Series A Preferred Stock, the Series B
Preferred Stock or the Series C Preferred Stock) having the right to vote for
the election of directors or in respect of any other matter, which class is
entitled to less than or more than one vote per share, or (iii) take any action
which would result in any adjustment of the Series A Conversion Price if the
total number of shares of Common Stock issuable after such action upon
conversion of all of the Series A Preferred Stock would exceed the total number
of shares of Common Stock then authorized by this Second Amended and Restated
Certificate of Incorporation.
(k) Stock to be Reserved. The Corporation
will at all times reserve and keep available out of its authorized Common Stock,
solely for the purpose of issue upon the conversion of Series A Preferred Stock
as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding Series A Preferred Stock, and
the Corporation will maintain at all times all other rights and privileges
sufficient to enable it to fulfill all its obligations hereunder. The
Corporation covenants that all shares of Common Stock which shall be so issuable
shall, upon issuance, be duly authorized, validly issued, fully paid and
nonassessable, free from preemptive or similar rights on the part of the holders
of any shares of capital stock or securities of the Corporation, and free from
all Liens and charges with respect to the issue thereof; and without limiting
the generality of the foregoing, the Corporation covenants that it will from
time to time take all such action as may be requisite to assure that the par
value, if any, per share of the Common Stock is at all times equal to or less
than the then effective Series A Conversion Price. The Corporation will take all
such action as may be necessary to assure that such shares of Common Stock may
be so issued without violation by the Corporation of any applicable law or
regulation, or of any requirements of any domestic securities exchange upon
which the Common Stock may be listed. Without limiting the foregoing, the
Corporation will take all such action as may be necessary to assure that, upon
conversion of any of the
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Series A Preferred Stock, an amount equal to the lesser of (i) the par value of
each share of Common Stock outstanding immediately prior to such conversion, or
(ii) the Series A Conversion Price shall be credited to the Corporation's stated
capital account for each share of Common Stock issued upon such conversion, and
that, if clause (i) above is applicable, the balance of the Series A Conversion
Price of Series A Preferred Stock converted shall be credited to the
Corporation's capital surplus account.
(l) Registration and Listing of Common
Stock. If any shares of Common Stock required to be reserved for purposes of
conversion of Series A Preferred Stock hereunder require registration with or
approval of any governmental authority under any Federal or state law (other
than the Securities Act) before such shares may be issued upon conversion, the
Corporation will, at its expense and as expeditiously as possible, use its best
efforts to cause such shares to be duly registered or approved, as the case may
be. If and so long as the Common Stock is listed on any national securities
exchange, the Corporation will, at its expense, obtain promptly and maintain the
approval for listing on each such exchange upon official notice of issuance, of
shares of Common Stock issuable upon conversion of the then outstanding Series A
Preferred Stock and maintain the listing of such shares after their issuance;
and the Corporation will also list on such national securities exchange, will
register under the Exchange Act and will maintain such listing of, any other
securities that at any time are issuable upon conversion of the Series A
Preferred Stock, if and at the time that any securities of the same class shall
be listed on such national securities exchange by the Corporation.
(m) Closing of Books. The Corporation will
at no time close its transfer books against the transfer of any Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
Series A Preferred Stock in any manner which interferes with the timely
conversion of such Series A Preferred Stock.
(n) Statement of Adjustment of Series A
Conversion Price. Whenever the Series A Conversion Price shall be adjusted as
provided in clause (vi)(e) above of this Section 2, the Corporation shall
forthwith file at its office a statement, signed by its independent certified
public accountants, showing in detail the facts requiring such adjustment and
the Conversion Price that shall be in effect after such adjustment. The
Corporation shall also cause a copy of such statement to be sent by certified
mail, return receipt requested, to each holder of shares of Series A Preferred
Stock to such holder's address appearing on the Corporation's records. Where
appropriate, such copy may be given in advance and may be included as part of a
notice required to be mailed under the provisions of clause (vi)(o) below of
this Section 2.
(o) Notice. In the event the Corporation
shall propose to take any action of the types described in clause (vi)(e) above
of this Section 2, the Corporation shall give notice to each holder of shares of
Series A Preferred Stock, in the manner set forth in clause (vi)(n) above of
this Section 2, which notice shall specify the record date, if any, with respect
to any such action and the date on which such action is to take place. Such
notice shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Series A Conversion Price
and the number, kind or class of shares or other securities or property which
shall be deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of shares of Series A Preferred Stock. In the case
of any action which would require the fixing of a record date, such notice shall
be given at least 20 days prior to the date so fixed, and in case of all other
action, such notice shall be given at least 30 days prior to the taking of such
proposed action.
(p) Taxes. The Corporation shall pay all
documentary, stamp or
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other transactional taxes attributable to the issuance or delivery of shares of
capital stock of the Corporation upon conversion of any shares of Series A
Preferred Stock, except as otherwise provided in clause (vi)(c) of this Section
2.
Section 3. Series B Cumulative Preferred Stock.
(i) Designation and Amount. The designation of one
series of the Preferred Stock shall be "Series B Cumulative Preferred Stock"
(the "Series B Preferred Stock"). The number of shares of Series B Preferred
Stock shall be 2,000,000; provided, however, that no shares of such series may
be issued in excess of 325,000 shares other than as dividends on such series.
The Series B Preferred Stock shall be assigned a stated value of $100 per share
(the "Series B Stated Value").
(ii) Dividends. (a) Rate, etc. (1) The holders of
shares of Series B Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available therefor,
dividends from the date of issue thereof at the rate of 15% per annum
(calculated by reference to the Series B Stated Value thereof), accruing on a
daily basis, payable semi-annually, in arrears, on each Dividend Payment Date in
each year, commencing on May 1, 1998. Such dividends shall be payable as the
Board of Directors may determine; provided, however, that such dividends may be
payable in shares of Series B Preferred Stock (on the basis of one hundred fifty
(150) shares of Series B Preferred Stock for each thousand (1,000) shares of
Series B Preferred Stock outstanding), rounded to the nearest whole share, or in
cash, or cash in part and shares of Series B Preferred Stock in part (such
option being in the sole discretion of the Corporation, as determined by the
Board of Directors so long as the Notes are outstanding, and thereafter as
determined by the Series A Directors, provided that the Series A Directors shall
take into consideration the anticipated cash requirements of the Corporation);
provided, however, that at any time when shares of Series A Preferred Stock are
outstanding, with respect to each distribution of dividends, dividends shall be
payable to holders of Series B Preferred Stock in shares of Series B Preferred
Stock in at least the same proportion as dividends payable to holders of Series
A Preferred Stock shall have been paid to such holders in shares of Series A
Preferred Stock. Such dividends shall be cumulative with respect to each share
from the date of original issuance or deemed issuance (with respect to shares
issued as dividends), whether or not earned or declared.
(b) Rank, etc. Unless full cumulative
dividends on all outstanding shares of Series B Preferred Stock or any other
class of preferred stock ranking on a parity with the Series B Preferred Stock
as to dividends and upon Liquidation at the time such dividends are payable
("Series B Parity Stock") have been paid or are contemporaneously declared and
paid (or declared and a sum sufficient for the payment thereof set apart for
such payment), the Corporation shall not (1) declare or pay any dividend on the
Common Stock or on any other class of stock ranking junior to the Series B
Preferred Stock as to dividends and upon Liquidation (the Common Stock and any
such junior class being the "Series B Junior Stock") or make any payment on
account of, or set apart money for, a sinking or other analogous fund for the
purchase, redemption or other retirement of, any Series B Junior Stock or make
any distribution in respect thereof, either directly or indirectly and whether
in cash or property or in obligations or shares of the Corporation (other than
in shares of Series B Junior Stock) or (2) purchase any shares of Series B
Preferred Stock or Series B Parity Stock (except for consideration payable in
Series B Junior Stock) or redeem fewer than all of the shares of Series B
Preferred Stock or Series B Parity Stock then outstanding. Unless and until all
dividends accrued and payable but unpaid on the Series B Preferred Stock and any
Series B Parity Stock at the time outstanding have been paid in full, all
dividends declared by the Corporation upon such Series B Preferred Stock or
Series B Parity Stock shall be declared pro rata with respect to all Series B
Preferred Stock and Series B Parity Stock then
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outstanding, so that the amounts of any dividends declared on the Series B
Preferred Stock and such Series B Parity Stock shall in all cases bear to each
other the same ratio that, at the time of such declaration, all accrued and
payable but unpaid dividends on the Series B Preferred Stock and such other
Series B Parity Stock, respectively, bear to each other.
(iii) Liquidation. (a) Preference on Liquidation. In
the event of any Liquidation, whether voluntary or involuntary, except as
otherwise provided in clause (iii)(b) of this Section 3 of this Article Four,
and, in all events, so long as the Notes are outstanding, subject at all times
to the terms and conditions of the Indenture between the Corporation and the
trustee named therein pursuant to which the Notes were issued, the holders of
shares of Series B Preferred Stock then outstanding shall be entitled, pari
passu as if members of a single class of securities with the holders of other
Series B Parity Stock, to be paid out of the assets of the Corporation, before
any payment shall be made to the holders of the Series B Junior Stock (but after
any payment shall have been made to the holders of Series A Preferred Stock and
Series C Cumulative Convertible Preferred Stock of the Corporation, $0.01 par
value), an amount per share equal to the Series B Stated Value plus an amount
equal to the dividends accrued and unpaid thereon to the payment date (the
"Series B Liquidation Amount").
(b) Preference on Merger, Consolidation or
Sale of Assets. In the event of Liquidation pursuant to clause (iii)(e) of
Section 2 of this Article Four, a holder of shares of Series B Preferred Stock
shall be entitled to an amount per share equal to the Series B Liquidation
Amount.
(c) Insufficient Assets. If, upon any
Liquidation of the Corporation, the assets of the Corporation are insufficient
to pay the holders of shares of the Series B Parity Stock then outstanding the
full amounts to which they shall be entitled, such assets shall be distributed
to the holders of the Series B Parity Stock pro rata in proportion to the
amounts to which they shall be entitled.
(d) Rights of Other Holders. In the event of
any Liquidation, after payment shall have been made to the holders of the Series
B Preferred Stock and other Series B Parity Stock of all preferential amounts to
which they shall be entitled, the holders of shares of Series B Junior Stock and
other capital stock of the Corporation shall receive such amounts as to which
they are entitled by the terms thereof.
(e) Consolidation, Merger or Sale of Assets.
A consolidation or merger of the Corporation with or into any other corporation
(excluding a merger in which the Corporation is the surviving entity or a merger
into a wholly owned subsidiary of the Corporation), or a sale or transfer of all
or substantially all of the Corporation's assets for cash or securities or a
statutory share exchange in which stockholders of the Corporation may
participate shall be considered a Liquidation, dissolution or winding up of the
Corporation within the meaning of this clause (iii).
(iv) Redemption. (a) Optional and Mandatory
Redemption Rights. The Series B Preferred Stock shall be subject to redemption,
at the option of the Corporation, in whole or from time to time in part, at any
time prior to 12:00 a.m. (E.S.T.), May 2, 2006. All outstanding shares of Series
B Preferred Stock shall be redeemed by the Corporation on May 2, 2006. In each
case, such redemption shall be at a per share redemption price equal to the
Series B Liquidation Amount.
(b) Notice of Redemption. The Corporation
shall give each holder of Series B Preferred Stock written notice of each
redemption pursuant to clause (iv)(a) of this Section 3
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<PAGE> 17
not less than thirty (30) days nor more than forty-five (45) days prior to any
redemption date, specifying such redemption date and the number of shares to be
redeemed on such date. Notice of redemption having been given as aforesaid, the
number of shares to be redeemed as specified in such notice shall be so redeemed
on the redemption date specified.
(c) Effect of Redemption. On or after the
date established for redemption, all rights in respect of the shares of Series B
Preferred Stock to be redeemed, except the right to receive the applicable
redemption price, including premium, if any, plus accrued dividends, if any, to
the date of redemption, shall (unless default shall be made by the Corporation
in the payment of the applicable redemption price, including premium, if any,
plus accrued dividends, if any, in which event such rights shall be exercisable
until such default is cured) cease and terminate, and such shares shall no
longer be deemed to be outstanding, notwithstanding that any certificates
representing such shares shall not have been surrendered to the Corporation.
(v) Voting Rights. Except as required by law, the
holders of shares of the Series B Preferred Stock shall have no voting powers.
(vi) No Conversion Rights. The holders of shares of
Series B Preferred Stock shall not have the right to convert any or all of their
shares of Series B Preferred Shares into Common Stock or any other capital stock
of the Corporation.
Section 4. Series C Cumulative Convertible Preferred Stock
(i) Designation and Amount. The designation of the
series of one Preferred Stock shall be "Series C Cumulative Convertible
Preferred Stock". The number of shares of Series C Preferred Stock shall be
2,000,000. The Series C Preferred Stock shall be assigned a stated value of $100
per share (the "Series C Stated Value").
(ii) Dividends. (a) Rate, etc. (1) The holders of
shares of Series C Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available therefor,
dividends from the date of issue thereof at the rate of 12% per annum
(calculated by reference to the Series C Stated Value), accruing on a daily
basis, payable semi-annually in arrears, on each Dividend Payment Date,
commencing on November 1, 1998. Such dividends shall be payable as the Board of
Directors may determine; provided, however, that such dividends may be payable
in shares of Series C Preferred Stock (on the basis of one hundred twenty (120)
shares of Series C Preferred Stock for each thousand (1,000) shares of Series C
Preferred Stock outstanding), rounded to the nearest whole share, or in cash, or
cash in part and shares of Series C Preferred Stock in part(such option being in
the sole discretion of the Corporation, as determined by the Board of Directors
so long as the Notes are outstanding, and thereafter as determined by the Series
A Directors, provided that the Series A Directors shall take into consideration
the anticipated cash requirements of the Corporation); provided, however, that
at any time when shares of Series A Preferred Stock are outstanding, with
respect to each distribution of dividends, dividends shall be payable to holders
of Series C Preferred Stock in shares of Series C Preferred Stock in at least
the same proportion as dividends payable to holders of Series A Preferred Stock
shall have been paid to such holders in shares of Series A Preferred Stock. Such
dividends shall be cumulative with respect to each share from the date of
original issuance or deemed issuance (with respect to shares issued as
dividends), whether or not earned or declared.
(2) In addition, the holders of
shares of Series C Preferred Stock shall be entitled to receive, in the event of
an automatic conversion of the shares of Series C
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<PAGE> 18
Preferred Stock described in clause (vi)(b) of this Section 4 occurring prior to
the second anniversary of the initial issuance of any shares of Series C
Preferred Stock, dividends, payable immediately prior to the occurrence of such
automatic conversion in shares of Series C Preferred Stock, rounded to the
nearest whole share, or in cash, or cash in part and shares of Series C
Preferred Stock in part (such option being in the sole discretion of the
Corporation, as determined by the Board of Directors so long as the Notes are
outstanding, and thereafter as determined by the Series A Directors, provided
that the Series A Directors shall take into consideration the anticipated cash
requirements of the Corporation), in an amount equal to the dividends that would
have accrued on the shares of Series C Preferred Stock so automatically
converted, calculated from the date of such automatic or mandatory conversion
through and including the second anniversary of the initial issuance of shares
of Series C Preferred Stock as if such shares of Series C Preferred Stock had
remained outstanding through such second anniversary.
(3) After dividends on the Series C
Preferred Stock, including, without limitation, dividends described in the
immediately preceding clause (1) and (2), have been declared and paid or set
apart in any fiscal year of the Corporation, if the Board of Directors
thereafter elects to declare additional dividends in the same fiscal year out of
funds legally available therefor, such additional dividends shall be declared on
both the Common Stock (as defined below) and the Series C Preferred Stock, with
each share of Series C Preferred Stock entitling the holder thereof to receive
an amount equal to the dividend payable to each share of Common Stock multiplied
by the number of shares of Common Stock into which such share of Series C
Preferred Stock may then be converted.
(b) Rank, etc. Unless full cumulative
dividends on all outstanding shares of Series C Preferred Stock or any other
class of preferred stock ranking on a parity with the Series C Preferred Stock
as to dividends and upon Liquidation at the time such dividends are payable
("Series C Parity Stock") have been paid or are contemporaneously declared and
paid (or declared and a sum sufficient for the payment thereof set apart for
such payment), the Corporation shall not (1) declare or pay any dividend on the
Series B Preferred Stock, the Common Stock or on any other class of stock
ranking junior to the Series C Preferred Stock as to dividends and upon
Liquidation (the Series B Preferred Stock, the Common Stock and any such junior
class being the "Series C Junior Stock") or make any payment on account of, or
set apart money for, a sinking or other analogous fund for the purchase,
redemption or other retirement of, any Series C Junior Stock or make any
distribution in respect thereof, either directly or indirectly and whether in
cash or property or in obligations or shares of the Corporation (other than in
shares of Series C Junior Stock) or (2) purchase any shares of Series C
Preferred Stock or Series C Parity Stock (except for consideration payable in
Series C Junior Stock) or redeem fewer than all of the shares of Series C
Preferred Stock or Series C Parity Stock then outstanding. Unless and until all
dividends accrued and payable but unpaid on the Series C Preferred Stock and any
Series C Parity Stock at the time outstanding have been paid in full, all
dividends declared by the Corporation upon such Series C Preferred Stock or
Series C Parity Stock shall be declared pro rata with respect to all Series C
Preferred Stock and Series C Parity Stock then outstanding, so that the amounts
of any dividends declared on the Series C Preferred Stock and such Series C
Parity Stock shall in all cases bear to each other the same ratio that, at the
time of such declaration, all accrued and payable but unpaid dividends on the
Series C Preferred Stock and such other Series C Parity Stock, respectively,
bear to each other.
(iii) Liquidation. (a) Preference on Liquidation. In
the event of any Liquidation, whether voluntary or involuntary, except as
otherwise provided in clause (iii)(b) of this Section 4 of Article Four, and, in
all events, so long as the Notes are outstanding, subject at all times to the
terms and conditions of the Indenture between the Corporation and the trustee
named therein
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<PAGE> 19
pursuant to which the Notes were issued, the holders of shares of Series C
Preferred Stock then outstanding shall be entitled, pari passu as if members of
a single class of securities with the holders of other Series C Parity Stock, to
be paid out of the assets of the Corporation, before any payment shall be made
to the holders of the Series C Junior Stock (but after payment shall have been
made to the holders of Series A Preferred Stock), an amount per share equal to
the Series C Stated Value plus an amount equal to the dividends accrued and
unpaid thereon to the payment date (the "Series C Liquidation Amount"). In
addition, after an amount equal to the amounts, if any, payable to holders of
the Series B Preferred Stock and any other Series C Junior Stock other than the
Common Stock shall have been set aside for payment and after payment of an
equivalent per share amount with respect to the Series A Preferred Stock
(calculated on an as-converted basis at the then current Series A Conversion
Price) and the Series C Preferred Stock (calculated on an as-converted basis at
its then current Series C Conversion Price) shall have been set aside for
payment to the holders of Common Stock, the holders of shares of Series A
Preferred Stock and the Series C Preferred Stock then outstanding shall be
entitled to receive, together with the holders of shares of Common Stock, pro
rata based on the number of shares of Common Stock then outstanding and the
number of shares of Common Stock into which the Series A Preferred Stock (at the
then current Series A Conversion Price) and the Series C Preferred Stock (at the
then current Series C Conversion Price) are convertible, the remaining cash
and/or other property of the Corporation.
(b) Preference on Merger, Consolidation or
Sale of Assets. In the even of a Liquidation pursuant to clause (iii)(e) of
Section 4 of Article Four, a holder of shares of Series C Preferred Stock shall
be entitled to an amount per share equal to the greater of (1) the Series C
Liquidation Amount and (2) the amount that such holder would be entitled to
receive upon consummation of such transaction assuming conversion of all of such
holder's shares of Series C Preferred Stock into shares of Common Stock in
accordance with clause (vi) of this Section 4 of Article Four.
(c) Insufficient Assets. If, upon any
Liquidation of the Corporation, the assets of the Corporation are insufficient
to pay the holders of shares of the Series C Parity Stock then outstanding the
full amounts to which they shall be entitled, such assets shall be distributed
to the holders of the Series C Parity Stock pro rata in proportion to the
amounts to which they shall be entitled.
(d) Rights of Other Holders. In the event of
any Liquidation, after payment shall have been made to the holders of Series C
Preferred Stock and other Series C Parity Stock of all preferential amounts to
which they shall be entitled, the holders of shares of Series C Junior Stock and
other capital stock of the Corporation shall receive such amounts as to which
they are entitled by the terms thereof.
(e) Consolidation, Merger or Sale of Assets.
A consolidation or merger of the Corporation with or into any other corporation
(excluding a merger in which the Corporation is the surviving entity or a merger
into a wholly owned subsidiary of the Corporation), or a sale or transfer of all
or substantially all of the Corporation's assets for cash or securities or a
statutory share exchange in which stockholders of the Corporation may
participate shall be considered a Liquidation, dissolution or winding up of the
Corporation within the meaning of this clause (iii).
(iv) [Intentionally omitted]
(v) Voting Rights. Excepting the rights specified
below in this clause (v) or otherwise required by law or other provisions of
this Article Four, the holders of Series C Preferred
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<PAGE> 20
Stock shall be entitled to vote together with the holders of shares of Series A
Preferred Stock and shares of Common Stock as a single class. Each holder of
Series C Preferred Stock shall be entitled to such number (rounded to the
nearest whole number) of votes as such holder would be entitled if such holder
had converted the shares of Series C Preferred Stock held by such holder into
shares of Common Stock pursuant to clause (vi) of this Section 4 hereof
immediately prior to such vote.
(a) [Intentionally omitted]
(b) Additional Capital Stock, etc. The
Corporation shall not, without the affirmative consent or approval of the
holders of shares representing at least two-thirds (2/3) of the Series C
Preferred Stock then outstanding, voting as a single class (such consent or
approval to be given by written consent in lieu of a meeting or by vote at a
meeting called for such purpose for which notice shall have been given to the
holders of the Series C Preferred Stock): (i) other than the Series A Preferred
Stock, authorize the issuance of any new, or increase the authorized number of
shares of any existing, class of capital stock of the Corporation which would be
senior or superior as to dividends and upon Liquidation to the Series C
Preferred Stock, (ii) increase the number of shares of preferred stock
authorized in the Certificate of Incorporation or create any other class of
stock (or any other series of preferred stock) ranking on a parity with the
Series C Preferred Stock as to dividends and upon Liquidation, (iii) other than
the Series A Preferred Stock, authorize or issue shares of stock of any class or
any bonds, debentures, notes or other obligations convertible into or
exchangeable for, or having rights to purchase, any shares of stock of the
Corporation which would be senior or superior to, or rank on a parity with, the
Series C Preferred Stock as to dividends or upon Liquidation or (iv) reissue any
shares of Series C Preferred Stock that have been redeemed or purchased by the
Corporation.
(vi) Conversion Rights. (a) Optional Conversion of
Series C Preferred Stock. The holder of any shares of Series C Preferred Stock
shall have the right, at such holder's option, at any time or from time to time
to convert any or all of such holder's shares of Series C Preferred Stock into
such number of fully paid and nonassessable shares of Common Stock (the "Series
C Conversion Shares") as is determined by dividing the Series C Stated Value of
such Series C Preferred Stock by the "Series C Conversion Price" in effect at
the time of such conversion. The "Series C Conversion Price" shall initially be
$4.17 per share of Series C Preferred Stock, and thereafter shall be subject to
the adjustments set forth herein. The Series C Conversion Shares and the Series
C Conversion Price are subject to certain adjustments as set forth herein, and
the terms Series C Conversion Shares and Series C Conversion Price as used
herein shall as of any time be deemed to include all such adjustments to be
given effect as of such time in accordance with the terms hereof.
Upon the exercise of the option of the holder of any shares of
Series C Preferred Stock to convert Series C Preferred Stock into Common Stock,
the holder of such shares of Series C Preferred Stock to be converted shall
surrender the certificates representing the shares of Series C Preferred Stock
so to be converted in the manner provided in clause (vi)(c) below of this
Section 4.
(b) Automatic Conversion. Each share of
Series C Preferred Stock shall automatically be converted (but only upon payment
of any dividend required by clause (ii)(a)(2) of this Section 4) into shares of
Common Stock at the Series C Conversion Price then in effect upon the occurrence
of (i) the closing of a Qualifying Public Offering, (ii) the business day next
following the end of a period of 180 consecutive days during which the average
closing price of the Corporation's Common Stock shall have exceeded the
Threshold Price, (iii) a transaction described in Section 3.5 of the
Stockholders Agreement dated May 8, 1997 among the Corporation, Orbital and
certain purchasers of Series A Preferred Stock or (iv) the second anniversary of
the initial issuance of shares of Series C
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<PAGE> 21
Preferred Stock.
(c) Delivery of Stock Certificates; No
Fractional Shares. The holder of any shares of Series C Preferred Stock may
exercise the conversion right pursuant to clause (vi)(a) above of this Section 4
by delivering to the Corporation during regular business hours at the office of
the Corporation the certificate or certificates for the shares to be converted,
duly endorsed or assigned either in blank or to the Corporation (if required by
it), accompanied by written notice stating that such holder elects to convert
such shares. Upon the occurrence of an automatic conversion pursuant to clause
(vi)(b) above of this Section 4, the holder of any shares of Series C Preferred
Stock shall deliver to the Corporation at the office of the Corporation the
certificate or certificates for shares that have been converted, duly endorsed
or assigned either in blank or to the Corporation (if requested by it).
Conversion shall be deemed to have been effected (i) in the case of an optional
conversion pursuant to clause (vi)(a) above of this Section 4, on the date when
the aforesaid delivery is made, (ii) in the case of an automatic conversion
pursuant to clause (vi)(b) above of this Section 4, upon the effective date of
the event triggering such automatic conversion, and such date is referred to
herein as the "Series C Conversion Date." As promptly as practicable thereafter
the Corporation shall issue and deliver to or upon the written order of such
holder, to the place designated by such holder, a certificate or certificates
for the number of full shares of Common Stock to which such holder is entitled
and a check or cash in respect of any fractional interest in a share of Common
Stock, as provided below, payable with respect to the shares of Series C
Preferred Stock so converted; provided, however, that in the case of a
conversion in connection with Liquidation, no such certificates need be issued.
The person in whose name the certificate or certificates for Common Stock are to
be issued shall be deemed to have become the stockholder of record in respect of
such Common Stock on the applicable Series C Conversion Date unless the transfer
books of the Corporation are closed on that date, in which event such holder
shall be deemed to have become the stockholder of record in respect of such
Common Stock on the next succeeding date on which the transfer books are open,
but the Series C Conversion Price shall be that in effect on the Series C
Conversion Date. Upon conversion of only a portion of the number of shares
covered by a certificate representing shares of Series C Preferred Stock
surrendered for conversion, the Corporation shall issue and deliver to or upon
the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate covering the
number of shares of Series C Preferred Stock representing the unconverted
portion of the certificate so surrendered. If the new certificate or
certificates are to be issued to a person who is not the registered holder of
the certificate delivered for conversion, any transfer taxes applicable to the
transaction shall be paid by such transferee.
(d) No Fractional Shares of Common Stock.
(i) No fractional shares of Common Stock shall be issued upon conversion of
shares of Series C Preferred Stock. Instead of any fractional share of Common
Stock which would otherwise be issuable upon conversion of any shares of Series
C Preferred Stock, the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to the then current Market Price of
a share of Common Stock multiplied by such fractional interest. The holders of
fractional interests shall not be entitled to any rights as stockholders of the
Corporation in respect of such fractional interests. In determining the number
of shares of Common Stock and the payment, if any, in lieu of fractional shares
that a holder of Series C Preferred Stock shall receive, the total number of
shares of Series C Preferred Stock surrendered for conversion by such holder
shall be aggregated.
(ii) The Corporation shall forthwith
upon conversion of all or any portion of the Series C Preferred Stock
pay all dividends accrued on such Series C
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<PAGE> 22
Preferred Stock to the date of such conversion.
(e) Adjustment of Conversion Price Upon
Issuance of Common Stock. If and whenever after the date hereof the Corporation
shall issue or sell any shares of its Common Stock (except upon conversion of
the Series A Preferred Stock or Series C Preferred Stock) for a consideration
per share less than, under certain circumstances, the Series C Conversion Price
in effect immediately prior to the time of such issue or sale, then, forthwith
upon such issue or sale, the Series C Conversion Price shall be reduced (but not
increased, except as otherwise specifically provided in paragraph (3) below of
this Section 4) to the price (calculated to the nearest cent) determined by
dividing (i) an amount equal to the sum of (A) the aggregate number of shares of
Common Stock outstanding immediately prior to such issue or sale multiplied by
the then existing Series C Conversion Price and (B) the consideration, if any,
received by the Corporation upon such issue or sale, by (ii) the aggregate
number of shares of Common Stock of all classes outstanding immediately after
such issue or sale.
No adjustment of the Series C Conversion Price, however, shall
be made in an amount less than $.10 per share, but any such lesser adjustment
shall be carried forward and shall be made upon the earlier of (i) the third
anniversary of the issuance (or deemed issuance) of the securities requiring
such adjustment hereunder, and (ii) the time of and together with the next
subsequent adjustment.
For the purposes of this clause (vi)(e) of this Section 4, the
following paragraphs (1) through (9) shall also be applicable:
(1) Issuance of Rights or Options. In case at any
time after the date hereof the Corporation shall in any manner grant
(whether directly or by assumption in a merger or otherwise, except in
the circumstances described in clause (vi)(f) below of this Section 4)
any rights to subscribe for or to purchase, or any options for the
purchase of, Common Stock or any Convertible Securities, whether or not
such rights or options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such
rights or options or upon conversion or exchange of such Convertible
Securities (determined by dividing (i) the total amount, if any,
received or receivable by the Corporation as consideration for the
granting of such rights or options, plus the minimum aggregate amount
of additional consideration, if any, payable to the Corporation upon
the exercise of such rights or options, plus, in the case of such
rights or options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of such rights or options or upon the
conversion or exchange of all such Convertible Securities issuable upon
the exercise of such rights or options) shall be less than the Series C
Conversion Price in effect immediately prior to the time of the
granting of such rights or options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such rights or
options or upon conversion or exchange of all such Convertible
Securities issuable upon the exercise of such rights or options shall
(as of the date of granting of such rights or options) be deemed to be
outstanding and to have been issued for such price per share. Except as
provided in paragraph (3) of this clause (vi)(e), no further adjustment
of the Series C Conversion Price shall be made upon the actual issue of
such Common Stock or of such Convertible Securities upon exercise of
such rights or options or upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities.
(2) Issuance of Convertible Securities. In case at
any time after the date
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<PAGE> 23
hereof the Corporation shall in any manner issue (whether directly or
by assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert thereunder
are immediately exercisable, and the price per share for which Common
Stock is issuable upon such conversion or exchange (determined by
dividing (i) the total amount received or receivable by the Corporation
as consideration for the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the conversion or exchange thereof, by
(ii) the total maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities) shall be
less than the Series C Conversion Price in effect immediately prior to
the time of such issue or sale, then the total maximum number of shares
of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall (as of the date of the issue or sale of
such Convertible Securities) be deemed to be outstanding and to have
been issued for such price per share; provided, however, that (a)
except as otherwise provided in paragraph (3), no further adjustment of
the Series C Conversion Price shall be made upon the actual issue of
such Common Stock upon conversion or exchange of such Convertible
Securities, and (b) if any such issue or sale of such Convertible
Securities is made upon exercise of any rights to subscribe for or to
purchase or any option to purchase any such Convertible Securities for
which adjustments of the Series C Conversion Price have been or are to
be made pursuant to other provisions of this clause (vi)(e), no further
adjustment of the Series C Conversion Price shall be made by reason of
such issue or sale.
(3) Change in Option Price or Conversion Rate. Upon
the happening of any of the following events, namely, if the purchase
price provided for in any right or option referred to in paragraph (1)
of this clause (vi)(e), the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities referred
to in paragraph (1) or (2) of this clause (vi)(e), or the rate at which
any Convertible Securities referred to in paragraph (1) or (2) of this
clause (vi)(e) are convertible into or exchangeable for Common Stock
shall change (other than under or by reason of provisions designed to
protect against dilution), the Series C Conversion Price then in effect
hereunder shall forthwith be readjusted (increased or decreased, as the
case may be) to the Series C Conversion Price which would have been in
effect at such time had such rights, options or Convertible Securities
still outstanding provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold. On the expiration of any such option
or right referred to in paragraph (1) of this clause (vi)(e) or the
termination of any such right to convert or exchange any such
Convertible Securities referred to in paragraph (1) or (2) of this
clause (vi)(e), the Series C Conversion Price then in effect hereunder
shall forthwith be readjusted (increased or decreased, as the case may
be) to the Series C Conversion Price which would have been in effect at
the time of such expiration or termination had such right, option or
Convertible Securities, to the extent outstanding immediately prior to
such expiration or termination, never been granted, issued or sold, and
the Common Stock issuable thereunder shall no longer be deemed to be
outstanding. If the purchase price provided for in any such right or
option referred to in paragraph (1) of this clause (vi)(e) or the rate
at which any Convertible Securities referred to in paragraph (1) or (2)
of this clause (vi)(e) are convertible into or exchangeable for Common
Stock shall be reduced at any time under or by reason of provisions
with respect thereto designed to protect against dilution, then in case
of the delivery of shares of Common Stock upon the exercise of any such
right or option or upon conversion or exchange of any such Convertible
Securities, the Series C Conversion Price then in effect hereunder
shall, if not already adjusted pursuant to another provision of this
clause (vi)(e), forthwith be adjusted to such amount as would have
obtained had such right, option or Convertible Securities never been
issued as to
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<PAGE> 24
such shares of Common Stock and had adjustments been made upon the
issuance of the shares of Common Stock delivered as aforesaid, but only
if as a result of such adjustment the Series C Conversion Price then in
effect hereunder is thereby reduced.
(4) Stock Dividends. In case at any time the
Corporation shall declare a dividend or make any other distribution
upon any class or series of stock of the Corporation payable in shares
of Common Stock or Convertible Securities, any shares of Common Stock
or Convertible Securities, as the case may be, issuable in payment of
such dividend or distribution shall be deemed to have been issued or
sold without consideration; provided, however, that this clause 4 shall
not apply to dividends paid in Common Stock, Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock with respect to
the Series A Preferred Stock or the Series C Preferred Stock.
(5) Consideration for Stock. Anything herein to the
contrary notwithstanding, in case at any time any shares of Common
Stock or Convertible Securities or any rights or options to purchase
any such Common Stock or Convertible Securities shall be issued or sold
for cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith.
In case at any time any shares of Common Stock or any
class of Convertible Securities or any rights or options to purchase
any such shares of Common Stock or Convertible Securities shall be
issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Corporation shall be
deemed to be the fair value of such consideration as determined
reasonably and in good faith by the Board of Directors of the
Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Corporation in connection therewith. In case at any time any shares of
Common Stock or any class or Convertible Securities or any rights or
options to purchase such shares of Common Stock or Convertible
Securities shall be issued in connection with any merger or
consolidation in which the Corporation is the surviving corporation,
the amount of consideration received therefor shall be deemed to be the
fair value as determined reasonably and in good faith by the Board of
Directors of the Corporation of such portion of the assets and business
of the nonsurviving corporation as such Board may determine to be
attributable to such shares of Common Stock, Convertible Securities,
rights or options, as the case may be. In case at any time any rights
or options to purchase any shares of Common Stock or Convertible
Securities shall be issued in connection with the issue and sale of
other securities of the Corporation, together comprising one integral
transaction in which no consideration is allocated to such rights or
options by the parties thereto, such rights or options shall be deemed
to have been issued for an amount of consideration equal to the fair
value thereof as determined reasonably and in good faith by the Board
of Directors of the Corporation.
(6) Record Date. In case the Corporation shall take a
record of the holders of its Common Stock for the purpose of entitling
them (i) to receive a dividend or other distribution payable in shares
of Common Stock or in Convertible Securities, or (ii) to subscribe for
or purchase shares of Common Stock or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold as a result
of the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription
or purchase, as the case may
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<PAGE> 25
be.
(7) Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Corporation, and the disposition of
any such shares shall be considered an issue or sale of Common Stock
for the purposes of this clause (vi)(e).
(8) [Intentionally omitted]
(9) Adjustment to Determination of Series C
Conversion Price. When making the calculations and determinations
described in clause (vi)(e)(1) through clause (vi)(e)(8) of this
Section 4, the exercise of options outstanding on May 8, 1997 shall not
be taken into account.
(f) Liquidating Dividends; Purchase Rights.
(i) [Intentionally omitted]
(ii) If at any time or from time to time on or after
the date hereof, the Corporation shall grant, issue or sell any
Purchase Rights, and if the holder shall be entitled to an adjustment
pursuant to clause (vi)(e) above of this Section 4, then in lieu of
such adjustment, each holder of Series C Preferred Stock shall be
entitled, at such holder's option, to acquire (whether or not such
holder's Series C Preferred Stock shall have been converted), upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights
which such holder could have acquired if such holder had held the
number of shares of Common Stock issuable upon conversion of such
Series C Preferred Stock immediately prior to the time or times at
which the Corporation granted, issued or sold such Purchase Rights.
(g) Subdivision or Combination of Stock. In
case the Corporation shall at any time subdivide its outstanding shares of
Common Stock into a greater number of shares, the Series C Conversion Price in
effect immediately prior to such subdivision shall be proportionately reduced,
and conversely, in case the outstanding shares of Common Stock of the
Corporation shall be combined into a smaller number of shares, the Series C
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
(h) Changes in Common Stock. If any capital
reorganization or reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with another corporation (other than
any merger in which there shall be no alteration in the rights of the Common
Stock), or the sale, transfer or other disposition of all or substantially all
of its properties to another corporation, shall be effected, then, as a
condition of such reorganization, reclassification, consolidation, merger, sale,
transfer or other disposition, lawful and adequate provision shall be made
whereby each holder of Series C Preferred Stock shall thereafter have the right
to purchase and receive upon the basis and upon the terms and conditions herein
specified and in lieu of the shares of the Common Stock of the Corporation
immediately theretofore issuable upon conversion of the Series C Preferred
Stock, such shares of stock, securities or properties as may be issuable or
payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of shares of such Common Stock immediately
theretofore issuable upon conversion of the Series C Preferred Stock had such
reorganization, reclassification, consolidation, merger, sale, transfer or other
disposition not taken place, and in any such case appropriate provisions shall
be made with respect to the
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rights and interests of each holder of Series C Preferred Stock to the end that
the provisions hereof (including without limitation provisions for adjustment of
the Series C Conversion Price) shall thereafter be applicable, as nearly
equivalent as may be practicable in relation to any shares of stock, securities
or properties thereafter deliverable upon the exercise thereof. The Corporation
shall not effect any such consolidation, merger, sale, transfer or other
disposition, unless prior to or simultaneously with the consummation thereof the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing or otherwise acquiring
such properties shall assume, by written instrument executed and mailed or
delivered to the holders of Series C Preferred Stock at the last address of such
holders appearing on the books of the Corporation, the obligation to deliver to
such holders such shares of stock, securities or properties as, in accordance
with the foregoing provisions, such holders may be entitled to acquire. The
above provisions of this subparagraph shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales, transfers,
or other dispositions.
(i) Certain Events. If any event occurs as
to which in the opinion of the Board of Directors of the Corporation the other
provisions of this clause (vi) are not strictly applicable or if strictly
applicable would not fairly protect the conversion rights of the holders of the
Series C Preferred Stock in accordance with the essential intent and principles
of such provisions, then such Board of Directors shall appoint a firm of
independent certified public accountants (which may be the regular auditors of
the Corporation) of recognized national standing, which shall give their opinion
upon the adjustment, if any, on a basis consistent with such essential intent
and principles, necessary to preserve, without dilution, the rights of the
holders of the Series C Preferred Stock. Upon receipt of such opinion by the
Board of Directors, the Corporation shall forthwith make the adjustments
described therein; provided, however, that no such adjustment shall have the
effect of increasing the Series C Conversion Price as otherwise determined
pursuant to this clause (vi) except in the event of a combination of shares of
the type contemplated in clause (vi)(g) of this Section 4 and then in no event
to an amount larger than the Series C Conversion Price as adjusted pursuant to
clause (vi)(g) of this Section 4.
(j) Prohibition of Certain Actions. The
Corporation will not (i) authorize or issue, or agree to authorize or issue, any
shares of its capital stock of any class preferred as to dividends or as to the
distribution of assets upon voluntary or involuntary Liquidation of the
Corporation unless the rights of the holders thereof shall be limited to a fixed
sum or percentage of par value in respect of participation in dividends and in
the distribution of such assets, (ii) authorize, issue or permit to remain
outstanding any class of its capital stock (including, without limitation, the
Common Stock but not including the Series A Preferred Stock, the Series B
Preferred Stock or the Series C Preferred Stock) having the right to vote for
the election of directors or in respect of any other matter, which class is
entitled to less than or more than one vote per share, or (iii) take any action
which would result in any adjustment of the Series C Conversion Price if the
total number of shares of Common Stock issuable after such action upon
conversion of all of the Series C Preferred Stock would exceed the total number
of shares of Common Stock then authorized by this Second Amended and Restated
Certificate of Incorporation.
(k) Stock to be Reserved. The Corporation
will at all times reserve and keep available out of its authorized Common Stock,
solely for the purpose of issue upon the conversion of Series C Preferred Stock
as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding Series C Preferred Stock, and
the Corporation will maintain at all times all other rights and privileges
sufficient to enable it to fulfill all its obligations hereunder. The
Corporation covenants that all shares of Common Stock which shall be so
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issuable shall, upon issuance, be duly authorized, validly issued, fully paid
and nonassessable, free from preemptive or similar rights on the part of the
holders of any shares of capital stock or securities of the Corporation, and
free from all Liens and charges with respect to the issue thereof; and without
limiting the generality of the foregoing, the Corporation covenants that it will
from time to time take all such action as may be requisite to assure that the
par value, if any, per share of the Common Stock is at all times equal to or
less than the then effective Series C Conversion Price. The Corporation will
take all such action as may be necessary to assure that such shares of Common
Stock may be so issued without violation by the Corporation of any applicable
law or regulation, or of any requirements of any domestic securities exchange
upon which the Common Stock may be listed. Without limiting the foregoing, the
Corporation will take all such action as may be necessary to assure that, upon
conversion of any of the Series C Preferred Stock, an amount equal to the lesser
of (i) the par value of each share of Common Stock outstanding immediately prior
to such conversion, or (ii) the Series C Conversion Price shall be credited to
the Corporation's stated capital account for each share of Common Stock issued
upon such conversion, and that, if clause (i) above is applicable, the balance
of the Series C Conversion Price of Series C Preferred Stock converted shall be
credited to the Corporation's capital surplus account.
(l) Registration and Listing of Common
Stock. If any shares of Common Stock required to be reserved for purposes of
conversion of Series C Preferred Stock hereunder require registration with or
approval of any governmental authority under any Federal or state law (other
than the Securities Act) before such shares may be issued upon conversion, the
Corporation will, at its expense and as expeditiously as possible, use its best
efforts to cause such shares to be duly registered or approved, as the case may
be. If and so long as the Common Stock is listed on any national securities
exchange, the Corporation will, at its expense, obtain promptly and maintain the
approval for listing on each such exchange upon official notice of issuance, of
shares of Common Stock issuable upon conversion of the then outstanding Series C
Preferred Stock and maintain the listing of such shares after their issuance;
and the Corporation will also list on such national securities exchange, will
register under the Exchange Act and will maintain such listing of, any other
securities that at any time are issuable upon conversion of the Series C
Preferred Stock, if and at the time that any securities of the same class shall
be listed on such national securities exchange by the Corporation.
(m) Closing of Books. The Corporation will
at no time close its transfer books against the transfer of any Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
Series C Preferred Stock in any manner which interferes with the timely
conversion of such Series C Preferred Stock.
(n) Statement of Adjustment of Conversion
Price. Whenever the Series C Conversion Price shall be adjusted as provided in
clause (vi)(e) above of this Section 4, the Corporation shall forthwith file at
its office a statement, signed by its independent certified public accountants,
showing in detail the facts requiring such adjustment and the Series C
Conversion Price that shall be in effect after such adjustment. The Corporation
shall also cause a copy of such statement to be sent by certified mail, return
receipt requested, to each holder of shares of Series C Preferred Stock to such
holder's address appearing on the Corporation's records. Where appropriate, such
copy may be given in advance and may be included as part of a notice required to
be mailed under the provisions of clause (vi)(o) below of this Section 4.
(o) Notice. In the event the Corporation
shall propose to take any action of the types described in clause (vi)(e) above
of this Section 4, the Corporation shall give notice to each holder of shares of
Series C Preferred Stock, in the manner set forth in clause (vi)(n) above of
this Section 4, which notice shall specify the record date, if any, with respect
to any such action and the date
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on which such action is to take place. Such notice shall also set forth such
facts with respect thereto as shall be reasonably necessary to indicate the
effect of such action (to the extent such effect may be known at the date of
such notice) on the Series C Conversion Price and the number, kind or class of
shares or other securities or property which shall be deliverable or purchasable
upon the occurrence of such action or deliverable upon conversion of shares of
Series C Preferred Stock. In the case of any action which would require the
fixing of a record date, such notice shall be given at least 20 days prior to
the date so fixed, and in case of all other action, such notice shall be given
at least 30 days prior to the taking of such proposed action.
(p) Taxes. The Corporation shall pay all
documentary, stamp or other transactional taxes attributable to the issuance or
delivery of shares of capital stock of the Corporation upon conversion of any
shares of Series C Preferred Stock, except as otherwise provided in clause
(vi)(c) of this Section 4 of Article IV.
ARTICLE V.
ELECTION OF DIRECTORS
The election of directors need not be by ballot except and to
the extent provided in the By-Laws of the Corporation.
ARTICLE VI.
BY-LAWS
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.
ARTICLE VII.
ELIMINATION OF CERTAIN LIABILITY OF DIRECTORS
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 it 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 Article VII 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.
ARTICLE VIII.
INDEMNIFICATION
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 competed 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 benefit plans, against
expenses (including attorney's fees and expenses), judgments, fines,
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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 or 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
Article VIII 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 Article VIII 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.
ARTICLE IX.
BOOKS
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."
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Signed this 25th day of February, 1998.
-----------------------------------
Armand D. Mancini
Vice President
-----------------------------------
Susan Herlick
Secretary
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Exhibit 3.2
AMENDED AND RESTATED BY-LAWS
OF
ORBITAL IMAGING CORPORATION
SECTION 1. LAW, CERTIFICATE OF INCORPORATION AND BY-LAWS
1.1. These By-laws are subject to the Amended and Restated
Certificate of Incorporation of the Corporation. In these By-Laws, references to
law, the Amended and Restated Certificate of Incorporation and By-Laws mean the
law, the provisions of the Amended and Restated 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 1:00 p.m. on the last Thursday in April in each year, unless that day
is a legal holiday at the place where the meeting is to be held, in which case
the meeting shall be held at the same hour on the next succeeding day not a
legal holiday, or at such other 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 Meeting. 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 than 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 Amended and Restated 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 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
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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 Amended and Restated 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 Amended and Restated 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 a proxy limits 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 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 aid 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
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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 Amended and Restated 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. Except as otherwise provided
in the Amended and Restated Certificate of Incorporation, the Board of Directors
shall consist of five 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; provided that so long as any shares of the
Corporation's Series A Cumulative Convertible Preferred Stock (the "Series A
Preferred Stock") are outstanding, and except as otherwise provided in the
Amended and Restated Certificate of Incorporation, the number of directors shall
not be fixed at any number other than five without approval of a majority of the
holders of Series A Preferred Stock. 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. Except as otherwise
provided in the Amended and Restated Certificate of Incorporation, 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 Amended
and Restated 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.
3.4. 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 sale of the Corporation to be
affixed to all
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papers which require it and the power and authority to declare dividends or to
authorize the issuance of stock; excepting, however, such powers which by law,
by the Amended and Restated 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 of
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. Notwithstanding anything in this Section 3.4 to the contrary, so long
as any shares of the Series A Preferred Stock are outstanding, each committee of
the Board of Directors shall have as a member at least one director nominated
for such directorship by the holders of a majority of the shares of Series A
Preferred Stock outstanding at such time (each such director, a "Series A
Director").
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
pace 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 directory 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 telegram
at least twenty-four (24) hours before the meetings, 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.
3.8. Quorum. Except as may be otherwise provided by law, by
the Amended and Restated 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 Amended and Restated 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; provided that so
long as any share of Series A Preferred Stock are outstanding, such a majority
shall include at least one Series A Director.
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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 Amended and Restated
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.
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.
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
under 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.
5
<PAGE> 6
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 designed 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.
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
therefore 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 of 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 director 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. A director or officer resigning and (except where a right to
receive compensation shall be expressly provided n a duly authorized written
agreement with the
6
<PAGE> 7
Corporation) no director or officer premoved 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 action 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 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 5.3 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 Amended and Restated 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,
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 Amended and Restated
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.
7
<PAGE> 8
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 precede the date upon 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
upon 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 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 request, 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 awful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon 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.
SECTION 10. EXECUTION OF PAPERS
8
<PAGE> 9
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, draft 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; provided, however, that so long as
any shares of Series A Preferred Stock are outstanding, Section 3.2, 3.3, 3.4,
3.9 and 5.1 of these By-Laws may not be amended or repealed without the written
consent of one Series A Director. Subject to the proviso in the preceding
sentence, any By-Law, whether adopted, amended or repealed by the stockholders
or directors, may be amended or reinstated by the stockholders or the directors.
9
<PAGE> 1
Exhibit 4.3
ORBITAL IMAGING CORPORATION
AND
MARINE MIDLAND BANK,
AS TRUSTEE
INDENTURE
DATED AS OF FEBRUARY 25, 1998
$150,000,000
11 5/8% SENIOR NOTES DUE 2005
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION............................ 1
Section 1.1 Definitions....................................................... 1
Section 1.2 Incorporation by Reference of Trust Indenture Act................. 23
Section 1.3 Rules of Construction............................................. 23
ARTICLE II THE NOTES .................................................................. 24
Section 2.1 Form and Dating................................................... 24
Section 2.2 Execution and Authentication...................................... 25
Section 2.3 Trustee, Registrar and Paying Agent............................... 26
Section 2.4 Paying Agent to Hold Money in Trust............................... 27
Section 2.5 Holder Lists...................................................... 27
Section 2.6 Transfer and Exchange............................................. 27
Section 2.7 Replacement Notes................................................. 35
Section 2.8 Outstanding Notes................................................. 35
Section 2.9 Treasury Notes.................................................... 36
Section 2.10 Temporary Notes................................................... 36
Section 2.11 Cancellation...................................................... 36
Section 2.12 Defaulted Interest................................................ 36
Section 2.13 Persons Deemed Owners............................................. 37
Section 2.14 CUSIP Numbers..................................................... 37
ARTICLE III REDEMPTION .................................................................. 37
Section 3.1 Optional Redemption............................................... 37
Section 3.2 Mandatory Redemption.............................................. 38
Section 3.3 Election to Redeem; Notice to Trustee............................. 38
Section 3.4 Notes to be Redeemed Pro Rata..................................... 38
Section 3.5 Notice of Redemption.............................................. 39
Section 3.6 Effect of Notice of Redemption.................................... 40
Section 3.7 Deposit of Redemption Price....................................... 40
Section 3.8 Notes Payable on Redemption Date.................................. 40
Section 3.9 Notes Redeemed in Part............................................ 40
ARTICLE IV COVENANTS .................................................................. 41
Section 4.1 Payment of Notes.................................................. 41
Section 4.2 Maintenance of Office or Agency................................... 41
Section 4.3 Corporate Existence............................................... 42
Section 4.4 Payment of Taxes and Other Claims................................. 42
Section 4.5 Maintenance of Properties and Insurance........................... 42
Section 4.6 Compliance Certificate; Notice of Default......................... 44
Section 4.7 Compliance with Laws.............................................. 45
</TABLE>
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Section 4.8 Reports........................................................... 45
Section 4.9 Waiver of Stay, Extension or Usury Laws........................... 46
Section 4.10 Limitation on Restricted Payments................................. 46
Section 4.11 Limitation on Transactions with Affiliates........................ 49
Section 4.12 Limitation on Incurrence of Indebtedness or
Issuance of Disqualified Stock.................................. 51
Section 4.13 Dividend and Other Payment Restrictions
Affecting Subsidiaries.......................................... 53
Section 4.14 Limitation on Change of Control................................... 54
Section 4.15 Limitation on Sales of Assets and Subsidiary
Interests....................................................... 56
Section 4.16 Limitation on Liens............................................... 58
Section 4.17 Business Activities and Construction of
OrbView Satellites.............................................. 59
Section 4.18 Limitations on Sale and Leaseback Transactions.................... 59
Section 4.19 Limitation on Sale of Capital Stock of Subsidiaries............... 59
ARTICLE V MERGER, CONSOLIDATION OR SALE OF ASSETS............................................ 60
Section 5.1 Mergers, Consolidations and Sales of Assets....................... 60
Section 5.2 Successor Substituted............................................. 61
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES..................................................... 61
Section 6.1 Events of Default................................................. 61
Section 6.2 Acceleration...................................................... 63
Section 6.3 Other Remedies.................................................... 64
Section 6.4 Waiver of Past Defaults........................................... 64
Section 6.5 Control by Majority............................................... 64
Section 6.6 Limitation on Suits............................................... 65
Section 6.7 Rights of Holders to Receive Payment.............................. 65
Section 6.8 Collection Suit by Trustee........................................ 66
Section 6.9 Trustee May File Proofs of Claim.................................. 66
Section 6.10 Priorities........................................................ 66
Section 6.11 Undertaking for Costs............................................. 67
ARTICLE VII TRUSTEE .................................................................. 67
Section 7.1 Duties of Trustee................................................. 67
Section 7.2 Rights of Trustee................................................. 68
Section 7.3 Individual Rights of Trustee and Agents........................... 69
Section 7.4 Trustee's Disclaimer.............................................. 69
Section 7.5 Notice of Default................................................. 69
Section 7.6 Reports by Trustee to Holders..................................... 70
Section 7.7 Compensation and Indemnity........................................ 70
</TABLE>
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Section 7.8 Resignation and Removal; Appointment of
Successor....................................................... 71
Section 7.9 Acceptance of Appointment by Successor............................ 72
Section 7.10 Successor Trustee by Merger, Etc.................................. 73
Section 7.11 Trustee Required; Eligibility; Disqualification................... 73
Section 7.12 Preferential Collection of Claims Against Company................. 73
ARTICLE VIII DEFEASANCE AND SATISFACTION AND DISCHARGE.......................................... 74
Section 8.1 Defeasance and Covenant Defeasance................................ 74
Section 8.2 Satisfaction and Discharge........................................ 76
Section 8.3 Survival of Certain Obligations................................... 76
Section 8.4 Acknowledgment of Discharge by Trustee............................ 77
Section 8.5 Application of Trust Moneys and Government
Securities...................................................... 77
Section 8.6 Repayment to the Company; Unclaimed Money......................... 77
Section 8.7 Reinstatement..................................................... 78
ARTICLE IX AMENDMENTS, SUPPLEMENTS AND WAIVERS................................................ 78
Section 9.1 Without Consent of Holders........................................ 78
Section 9.2 With Consent of Holders........................................... 79
Section 9.3 Execution of Supplemental Indentures.............................. 80
Section 9.4 Effect of Supplemental Indentures................................. 80
Section 9.5 Compliance with Trust Indenture Act............................... 81
Section 9.6 Reference in Notes to Supplemental Indentures..................... 81
Section 9.7 Revocation and Effect of Consents................................. 81
ARTICLE X SUBSIDIARY GUARANTEES.............................................................. 82
Section 10.1 Unconditional Guarantee........................................... 82
Section 10.2 Priority of Guarantee............................................. 83
Section 10.3 Severability...................................................... 83
Section 10.4 Limitation of Subsidiary Guarantor's Liability.................... 83
Section 10.5 Waiver of Subrogation............................................. 83
Section 10.6 Successors and Assigns............................................ 84
Section 10.7 No Waiver......................................................... 84
Section 10.8 Modification...................................................... 84
Section 10.9 Release of Subsidiary Guarantor................................... 84
Section 10.10 Execution of Supplemental Indenture by Future
Restricted Subsidiaries......................................... 85
Section 10.11 Waiver of Stay, Extension or Usury Laws........................... 85
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ARTICLE XI MISCELLANEOUS .................................................................. 85
Section 11.1 Trust Indenture Act Controls...................................... 85
Section 11.2 Notices to Company and Trustee.................................... 86
Section 11.3 Notices to Holders................................................ 86
Section 11.4 Trustee, Paying Agent and Registrar Procedures.................... 87
Section 11.5 Compliance Certificates and Opinions.............................. 87
Section 11.6 Form of Documents Delivered to Trustee............................ 87
Section 11.7 Acts of Holders; Registered Holders; Record Dates................. 88
Section 11.8 Successors and Assigns............................................ 89
Section 11.9 Severability...................................................... 89
Section 11.10 Benefits of Indenture............................................. 90
Section 11.11 Governing Law; Jurisdiction....................................... 90
Section 11.12 Legal Holidays.................................................... 90
Section 11.13 No Recourse Against Others; Limitation on Liability............... 90
Section 11.14 Counterparts...................................................... 91
</TABLE>
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INDENTURE, dated as of February 25, 1998, by and between Orbital
Imaging Corporation (the "Company" or "ORBIMAGE") with its principal office at
21700 Atlantic Boulevard, Dulles, Virginia 20166, and Marine Midland Bank, a New
York banking corporation and trust company, as trustee (the "Trustee").
RECITALS:
WHEREAS, the Company has duly authorized the issuance of $150,000,000
aggregate principal amount of its 11 5/8% Senior Notes Due 2005 (the "Notes") of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture; and
WHEREAS, all things necessary to make the Notes, when executed by the
Company and authenticated and delivered hereunder, duly issued by the Company,
the valid obligations of the Company, and to make this Indenture a valid and
binding agreement of Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH: for and in consideration of
the premises and the purchase of the Notes by the Holders (as hereinafter
defined) thereof, each party hereto hereby mutually covenants and agrees, for
the equal and proportionate benefit of all Holders of the Notes, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1 DEFINITIONS.
"Acceleration Notice" has the meaning set forth in Section 6.2(a).
"Acquired Debt" means, with respect to any specified Person:
(i) Indebtedness of any other Person existing at the time such
other Person is merged with or into or became a Restricted Subsidiary of such
specified Person, including, without limitation, Indebtedness incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Restricted Subsidiary of such specified Person; and
(ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Act" has the meaning set forth in Section 11.7(a).
<PAGE> 7
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of Voting Equity Interests, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Equity Interests (or the
equivalent) of a Person shall be deemed to be control.
"Affiliate Transaction" has the meaning set forth in Section 4.11.
"Agent Member" shall mean members of, or participants in, the
Depositary.
"Asset Sale" means:
(i) the sale, lease, license, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
Sale and Leaseback Transaction or similar arrangement) by the Company or a
Restricted Subsidiary (a "disposition"), provided that the disposition of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole will be governed by Sections 4.14 and/or 5.1 of this Indenture,
and not by Section 4.15.
(ii) except to the extent excluded by clause (i) above,
the issuance or disposition by the Company or any of its Restricted Subsidiaries
of Equity Interests of the Company's Restricted Subsidiaries.
in the case of either clause (i) or (ii) above, whether in a single transaction
or a series of related transactions: (a) that have a Fair Market Value in excess
of $2.5 million; or (b) for net proceeds in excess of $2.5 million.
Notwithstanding the foregoing: (i) sales of imagery, imagery
distribution or satellite tasking rights, software or rights in software for
processing and storing imagery, license grants to imagery value-added resellers
or distributors and other associated rights, and sales of services, products or
inventory in the ordinary course of business; (ii) a transfer of assets by the
Company to any of its Restricted Subsidiaries or by a Restricted Subsidiary to
the Company; (iii) an issuance of Equity Interests by a Restricted Subsidiary to
the Company or to a Wholly Owned Restricted Subsidiary of the Company; (iv) an
exchange of an asset held by the Company or a Restricted Subsidiary for an asset
of a third party upon a determination by the disinterested members of the Board
of Directors of the Company made in good faith (evidenced by a resolution
approved by a majority of the disinterested members of the Board of Directors of
the Company and set forth in an Officers' Certificate delivered to the Trustee)
that the asset received by the Company or a Restricted Subsidiary in such
exchange (x) is a Related Asset, (y) has a Fair Market Value at least equal to
the fair market value of the asset transferred by the Company or
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<PAGE> 8
such Restricted Subsidiary and (z) is usable in the ordinary course of the
Company's business to at least the same extent as the asset transferred by the
Company or such Restricted Subsidiary; (v) sales or dispositions of damaged,
worn out or other obsolete property in the ordinary course of business so long
as such property is no longer necessary for the proper conduct of the business
of the Company or any of its Restricted Subsidiaries; and (vi) a Restricted
Payment that is permitted under Section 4.10, will not be deemed to be Asset
Sales.
"Asset Sale Offer" has the meaning set forth in Section 4.15(a).
"Asset Sale Offer Trigger Date" has the meaning set forth in Section
4.15(a).
"Attributable Debt" means, with respect to any sale and leaseback
transaction, the present value at the time of determination (discounted at a
rate consistent with accounting guidelines, as determined in good faith by the
Company) of the payments during the remaining term of the lease (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended) or until the earliest date on which the lessee may
terminate such lease without penalty or upon payment of a penalty (in which case
the rental payments shall include such penalty, after excluding all amounts
required to be paid on account of maintenance and repairs, insurance, taxes,
assessments, water, utilities and similar charges).
"Business Assets" means any hardware, software, technology,
intellectual property, or other rights in or assets (or, in the case of clause
(vi), inventory) relating to (i) the remote imaging satellites owned and/or
operated by ORBIMAGE on the Issue Date, (ii) the OrbView Satellites, (iii) the
Replacement Satellites, (iv) any other remote imaging satellites developed,
constructed or acquired by ORBIMAGE, (v) the ground segment (or any components
thereof) related to the operation of, and processing of data from, the
satellites described in clauses (i)-(v) above, and (vi) the Company's imagery
catalogue and archive.
"Business Day" means any day other than a Saturday, Sunday or day on
which commercial banking institutions in The City of New York, New York are
authorized or obligated by law or executive order to close.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means: (i) in the case of a corporation, corporate
stock; (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock; (iii) in the case of a partnership, partnership
interests (whether general or limited); and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
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<PAGE> 9
"Cash Consideration" means any consideration received from an Asset
Sale in the form of cash or Cash Equivalents, in either case in U.S. dollars or
freely convertible into U.S. dollars.
"Cash Equivalents" means:
(i).United States dollars;
(ii)Government Securities;
(iii) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances or money market deposit accounts with maturities not exceeding six
months and overnight bank deposits, in each case with any Eligible Institution;
(iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clauses (ii) and
(iii) above entered into with any Eligible Institution;
(v) commercial paper having the highest rating obtainable
from Moody's or S&P and in each case maturing within six months after the date
of acquisition; and
(vi) mutual funds or other pooled investment vehicles
investing solely in investments of the types described in (i) through (v) above.
"Cash Insurance" has the meaning set forth in Section 4.5.
"Change of Control" means:
(i) the failure by Orbital to hold at least 12,600,000
shares of Common Stock of the Company (being 50% of the shares of Common Stock
held by Orbital on May 8, 1997), adjusted for stock splits, stock combinations
and the like;
(ii) the failure by Orbital to hold at least thirty
percent (30%) of the Common Stock of the Company on a fully diluted basis,
without giving effect to the conversion of Capital Stock of the Company issued
as a dividend paid-in-kind with respect to shares of Series A Preferred Stock or
Capital Stock of the Company issued pursuant to options granted under the Stock
Option Plan or any other option plan adopted for the benefit of the Company's
employees or directors;
(iii) the direct or indirect acquisition of beneficial
ownership of Voting Equity Interests of the Company by any Person or group of
Persons acting in concert, in an amount greater than the amount of Voting Equity
Interests held contemporaneously by Orbital except (x) purchases by record
holders of Series A Preferred Stock as of the Issue Date (and their Affiliates,
to the extent that such holders are permitted to transfer their shares of Series
A Preferred Stock to
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<PAGE> 10
Affiliates under the Stock Purchase Agreement ("Series A Affiliates")) from
other holders of Series A Preferred Stock and their Series A Affiliates and (y)
purchases permitted pursuant to the subscription rights of the holders of Series
A Preferred Stock under Section 4.1 of the Stockholders' Agreement;
(iv) the acquisition of the Company, or the sale, lease,
transfer, conveyance or other disposition, in one transaction or a series of
related transactions, directly or indirectly, including through a liquidation or
dissolution, of all or substantially all of the assets of the Company and its
Restricted Subsidiaries or the combination of the Company or all or
substantially all its assets with another Person (other than any such transfer
to any Wholly Owned Restricted Subsidiary of the Company), unless the acquiring
or surviving Person shall be a corporation more than fifty percent (50%) of the
combined voting power of which corporation's then outstanding Voting Equity
Interests, after giving effect to such acquisition or combination, are owned,
immediately after such acquisition or combination, by the owners of the Voting
Equity Interests of the Company outstanding immediately prior to such
acquisition or combination;
(v) the adoption of a plan relating to the liquidation or
dissolution of the Company (other than any such liquidation or dissolution to or
for the benefit of any Wholly Owned Restricted Subsidiary of the Company);
(vi) the failure by the Company to obtain any applicable
License (or License amendment, as applicable) so that it is in full force and
effect within thirty (30) days prior to the scheduled launch of any of the
OrbView Satellites;
(vii) the revocation of any License necessary to operate
OrbView-2 or the OrbView Satellites consistent with the Company's current and
planned commercial operations and which revocation is not cured within thirty
(30) days of the occurrence thereof or such later date when all applicable
appeals have been finally determined, if during such appeal period the Company
has received regulatory approval to continue operations under the License
pending the outcome of such appeals; or
(viii) at any time prior to the latest to occur of (a) the
successful in-orbit checkout of the imaging satellite known as OrbView-3, (b) a
Qualifying Public Offering or (c) the Business Day next following the end of a
180 consecutive day period during which the average closing price per share of
the Company's Common Stock shall have exceeded the Threshold Price (as defined
in the definition of "Qualifying Public Offering" below) then in effect, and
unless consented to in writing by the holders of at least fifty percent (50%) of
the shares of Series A Preferred Stock then outstanding, the acquisition by any
Person or group of Persons acting in concert of beneficial ownership, direct or
indirect, of securities of Orbital representing thirty-five percent (35%) or
more of the combined voting power of Orbital's then outstanding equity
securities and at any time thereafter either (x) less than a majority of
Orbital's board of directors shall be Continuing Directors or (y) there shall be
an announcement by Orbital or such acquiring Person or group of Persons or the
approval of a business plan by Orbital's
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<PAGE> 11
Board of Directors, in either case that indicates an intention to de-emphasize
or curtail the relationship between the Company and Orbital.
"Change of Control Date" has the meaning set forth in Section 4.14(b).
"Change of Control Offer" has the meaning set forth in Section 4.14(a).
"Change of Control Payment" has the meaning set forth in Section
4.14(a).
"Change of Control Payment Date" has the meaning set forth in Section
4.14(b).
"Collateral Agent" means the collateral agent under the Pledge
Agreement.
"Commission" means the Securities and Exchange Commission, or successor
body performing the duties now assigned to it under the TIA.
"Common Stock" means the common stock, $.01 par value, of the Company.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period,
(a) plus, to the extent deducted or otherwise excluded in
computing such Consolidated Net Income:
(i) an amount equal to any extraordinary loss plus any
net loss realized in connection with a sale of assets;
(ii) provision for taxes based on income or profits of
such Person and its Restricted Subsidiaries for such period;
(iii) Consolidated Interest Expense; and
(iv) depreciation, amortization (including amortization
of goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash charges (excluding
any such non-cash charge to the extent that it represents an accrual of or
reserve for cash charges in any future period or amortization of a prepaid cash
expense that was paid in a prior period) of such Person and its Restricted
Subsidiaries for such period;
(b) minus, to the extent added or otherwise included in
computing Consolidated Net Income, consolidated interest income of such Person
and its Restricted Subsidiaries for such period and non-cash items increasing
such Consolidated Net Income (including, without limitation, (x) unrealized
currency exchange gains and (y) amortized non-cash contract revenues related to
(i) cash received prior to the Issue Date and (ii) cash received
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<PAGE> 12
subsequent to the date hereof that is specifically intended to fund capital
expenditures, including, but not limited to that certain contract between
Orbital and the U.S. Air Force with respect to hyperspectral imagery, in each
case, on a consolidated basis and determined in accordance with GAAP).
Notwithstanding the foregoing, the provision for taxes on the income or profits
of, and the depreciation and amortization and other non-cash charges of, a
Restricted Subsidiary of any such Person shall be added to Consolidated Net
Income to compute Consolidated Cash Flow only to the extent (and in the same
proportion) that the Net Income of such Restricted Subsidiary was included in
calculating the Consolidated Net Income of such Person and only if a
corresponding amount would be permitted at the date of determination to be
distributed by dividend to such Person by such Restricted Subsidiary without
prior approval (that has not been obtained), pursuant to the terms of its
charter and all agreements, instruments, judgments, decrees, orders, statutes,
rules and governmental regulations applicable to such Restricted Subsidiary or
its stockholders.
"Consolidated Interest Expense" means, with respect to any Person for
any period, (a) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP, whether paid or accrued and whether or not capitalized
(including, without limitation, amortization of original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financing, and net payments
(if any) pursuant to Hedging Obligations) plus (b) the aggregate amount for such
period of cash or non-cash dividends on any Disqualified Stock of the Company
and its Subsidiaries.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(i) the Net Income of any Person that is not a Subsidiary
Guarantor or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions actually
paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary
thereof;
(ii) the Net Income of any Restricted Subsidiary that is
not a Subsidiary Guarantor shall be excluded to the extent that the declaration
or payment of dividends or similar distributions by such Restricted Subsidiary
of such Net Income is not at the date of determination permitted without any
prior governmental approval (which has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Restricted Subsidiary or its stockholders;
(iii) the Net Income of any Person acquired in a pooling
of interests transaction for any period prior to the date of such acquisition
shall be excluded;
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<PAGE> 13
(iv) the cumulative effect of a change in accounting
principles shall be excluded; and
(v) the Net Income of any Unrestricted Subsidiary shall
be included only to the extent of the amount of dividends or distributions
actually paid in cash to the referent Person or a Restricted Subsidiary thereof.
"Consolidated Net Worth" means, with respect to any Person as of any
date:
(i) the consolidated equity of the equity holders of such
Person and its consolidated Restricted Subsidiaries as of such date; plus
(ii) the respective amounts reported on such Person's
balance sheet as of such date with respect to any series of preferred Equity
Interests (other than Disqualified Stock) that by its terms is not entitled to
the payment of dividends unless such dividends may be declared and paid only out
of net earnings in respect of the year of such declaration and payment, but only
to the extent of any cash received by such Person upon issuance of such
preferred stock; minus
(iii) all write-ups (other than write-ups resulting from
foreign currency translations and write-ups of tangible assets of a
going-concern business made within 12 months after the acquisition of such
business) subsequent to the date of this Indenture in the book value of any
asset owned by such Person or a consolidated Subsidiary of such Person; minus
(iv) all investments as of such date in unconsolidated
Subsidiaries and in Persons that are not Restricted Subsidiaries; minus
(v) all unamortized debt discount and expense and
unamortized deferred charges as of such date.
"Consolidated Tangible Net Assets" means, with respect to any Person,
the Consolidated Net Worth of such Person less goodwill and any other intangible
assets shown on the consolidated balance sheet of such Person and its Restricted
Subsidiaries.
"Continuing Director" means a director of Orbital that is a director on
the Issue Date or is nominated as a director by a majority of Orbital's Board of
Directors, which majority consists of directors in place for at least 12 months
(other than in connection with replacements or vacancies occurring in the
ordinary course) prior to the acquisition representing 35% or more of the
combined voting power of Orbital's outstanding equity securities.
"Corporate Trust Office" means, with respect to the Trustee or any
agent, the principal corporate trust office of such Person.
"Covenant Defeasance" has the meaning set forth in Section 8.1(c).
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<PAGE> 14
"Credit Facilities" means, with respect to the Company, one or more
debt facilities or commercial paper facilities with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" has the meaning set forth in Section 2.6.
"Depository" means, with respect to the Notes issuable or issued in
whole or in part in the form of one or more Global Notes, The Depository Trust
Company, for so long as it shall be a clearing agency registered under the
Exchange Act, or such successor as the Company shall designate from time to time
in an Officers' Certificate delivered to the Trustee.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event: (i) matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise at the option of the holder thereof; or (ii) is
redeemable or is convertible or exchangeable for Indebtedness at the option of
the holder thereof, in whole or in part, on or prior to the date on which the
Notes are repaid, redeemed or retired in full; provided, however, that
Disqualified Stock shall not include any Capital Stock that would constitute
Disqualified Stock solely because the holders thereof have the right to require
the Company to repurchase such Capital Stock if the terms of such Capital Stock
provide that the Company may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with
Section 4.10 of this Indenture. The Series A Preferred Stock shall not be
Disqualified Stock.
"Eligible Institution" means a domestic commercial banking institution
that has combined capital and surplus of not less than $500 million or its
equivalent in foreign currency, whose debt is rated "A" or higher according to
S&P or Moody's at the time as of which any investment or rollover therein is
made.
"Eligible Receivables" means the accounts receivable of the Company
(net of accounts more than 90 days past due and reserves and allowances for
doubtful accounts determined in accordance with GAAP).
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
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<PAGE> 15
"Event of Default" has the meaning specified in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
(or any successor act) and the rules and regulations thereunder.
"Exchange Note" means any Note issued in exchange for an Original Note
pursuant to the Exchange Offer.
"Exchange Offer" means the offer to exchange and issuance by the
Company of a principal amount of Exchange Notes (which shall be registered
pursuant to the Exchange Offer Registration Statement) equal to the outstanding
principal amount of Original Notes that are validly tendered by such Holders in
connection with such exchange and issuance.
"Exchange Offer Registration Statement" means the Registration
Statement relating to the Exchange Offer, including the related Prospectus.
"Existing Indebtedness" means Indebtedness of the Company in existence
on the Issue Date, until such amounts are repaid.
"Fair Market Value" means, with respect to any asset, the sale value
that would be obtained in an arm's-length free market transaction, between a
willing seller and a willing buyer, neither of which is under pressure or
compulsion to complete the transaction; provided that the Fair Market Value of
any such asset or assets shall be determined by the Board of Directors of the
Company, acting in good faith and by unanimous resolution, and which
determination shall be evidenced by an Officers' Certificate delivered to the
Trustee.
"Fixed Asset Financing" means Indebtedness that is secured by
ground-based equipment and other tangible assets of the Company or a sale and
leaseback transaction with respect to such assets, in which case the
Attributable Debt shall be treated as Indebtedness for purposes of this
definition.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession and which are in effect on the Issue Date.
"Global Note" has the meaning set forth in Section 2.1.
"Government Securities" means securities that are direct obligations
of, or obligations fully guaranteed by, the United States of America for the
payment of which guarantee or obligations the full faith and credit of the
United States is pledged.
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<PAGE> 16
"Guarantee" or "guarantee" means a guarantee (other than by endorsement
of negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under: (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements; (ii) foreign currency
hedge obligations; and (iii) other agreements or arrangements designed to
protect such Person against fluctuations in interest and foreign currency rates.
"Holder" means a Person in whose name a Note is registered in the Note
Register.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or bankers' acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable to
the extent that any such accrued expense or trade payable is not more than 90
days overdue or is otherwise being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, if and to the extent
any of the foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all indebtedness of others secured
by a Lien on any asset of such Person (whether or not such indebtedness is
assumed by such Person and, in the event such indebtedness is not assumed by,
and is otherwise non-recourse to, such Person, the amount of such indebtedness
shall be deemed to equal the greater of book value or Fair Market Value), all
obligations to purchase, redeem, retire, defease or otherwise acquire for value
any Disqualified Stock or any warrants, rights or options to acquire such
Disqualified Stock valued, in the case of Disqualified Stock, at the greatest
amount payable in respect thereof on a liquidation (whether voluntary or
involuntary) plus accrued and unpaid dividends, the liquidation value of any
preferred stock issued by Subsidiaries of such Person, plus accrued and unpaid
dividends, and, to the extent not otherwise included, the Guarantee by such
Person of any indebtedness of any other Person; and provided, that
"Indebtedness" shall be calculated without duplication and after elimination of
Intercompany Indebtedness.
"Indebtedness to Capital Ratio" means, on any date of determination for
the Company and its Restricted Subsidiaries, on a consolidated basis, the ratio
(expressed as a percentage) of Indebtedness on such date to Total Invested
Capital on such date.
"Indebtedness to Cash Flow Ratio" means, with respect to any Person as
of any date of determination, the ratio of: (i) total Indebtedness of such
Person and its Restricted Subsidiaries as of such date; to (ii) two times
Consolidated Cash Flow of such Person and its Restricted Subsidiaries for the
two most recently ended fiscal quarters for which financial statements of such
Person are available (the "Measurement Period"); provided, however, that: (a) in
making
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<PAGE> 17
such computation, the total Indebtedness of such Person and its Restricted
Subsidiaries shall include the total amount of funds outstanding under any
credit facilities; and (b) in the event such Person or any of its Restricted
Subsidiaries consummates a material acquisition or sale of assets, or issues or
redeems Disqualified Stock subsequent to the commencement of the Measurement
Period, then the Indebtedness to Cash Flow Ratio shall be calculated giving pro
forma effect to such material acquisition, sale of assets or issuance or
redemption of Disqualified Stock as if the same had occurred at the beginning of
the Measurement Period. For purposes of this definition, whenever the pro forma
effect is to be given to a transaction, the pro forma calculations shall be made
in good faith by a responsible financial or accounting officer of the Company.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the good
faith judgment of the Board of Directors of the Company (evidenced by a
resolution of the majority of the Board of Directors of the Company as set forth
in an Officers' Certificate delivered to the Trustee), qualified to perform the
task for which it has been engaged and is disinterested and independent with
respect to the Company and its Affiliates.
"Initial Purchasers" means Bear, Stearns & Co. Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and NationsBanc Montgomery Securities LLC.
"Insurance Account" has the meaning set forth in Section 4.5.
"Intercompany Indebtedness" has the meaning set forth in Section
4.12(b).
"Interest Payment Date" means, with respect to any installment of
interest on the Notes, March 1 and September 1 of each year.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans, guarantees, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities and all other items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP; provided that an acquisition of assets, Equity Interests
or other securities by the Company for consideration consisting of common Equity
Interests (other than Disqualified Stock) of the Company shall not be deemed to
be an Investment. Notwithstanding the foregoing, Investments shall not include
advance payments for satellite capacity or imagery related services or products
in the ordinary course of business.
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<PAGE> 18
"Issue Date" means the date on which the Notes are first authenticated
and delivered under this Indenture.
"Joint Venture" means a Person in a Related Business in which the
Company or one of its Subsidiaries holds 50% or less of the Voting Equity
Interests.
"Legal Defeasance" has the meaning set forth in Section 8.1(b).
"License" means any Federal Communications Commission license or
Department of Commerce license issued to the Company relating to the operation
of OrbView-2 or the OrbView Satellites (including the Department of Commerce
license and the Federal Communications Commission license currently owned by
Orbital relating to the operation of OrbView-2).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" has the meaning set forth in the Registration
Rights Agreement, dated as of February 25, 1998, between the Company and the
Initial Purchasers, as the same may be amended, supplemented or otherwise
modified from time to time, and the Warrant Registration Rights Agreement, dated
as of February 25, 1998, between the Company and the Initial Purchasers, as the
same may be amended, supplemented or otherwise modified from time to time.
"Marketable Securities" means: (i) Government Securities or, for
purpose of determining whether such Government Securities may serve as
substitute Pledged Securities, Government Securities having a maturity date on
or before the date on which the payments of interest on the Notes to which such
Government Securities are pledged occur; (ii) any certificate of deposit
maturing not more than 270 days after the date of acquisition issued by, or time
deposit of, an Eligible Institution; (iii) commercial paper maturing not more
than 270 days after the date of acquisition issued by a corporation (other than
an affiliate of the Pledgor) with a rating at the time as of which any
investment therein is made, of "A-1" (or higher) according to S&P or "P-1" (or
higher) according to Moody's; (iv) any banker's acceptances or money market
deposit accounts issued or offered by an Eligible Institution; and (v) any fund
investing exclusively in investments of the types described in clauses (i)
through (iv) above; and in the case of (ii) through (iv) above, which have a
maturity date on or before the date on which the payments of interest on the
Notes to which such securities are pledged occur.
"Moody's" means Moody's Investors Service, Inc. or its successors.
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<PAGE> 19
"Net Income" means, with respect to any Person, the net income (or
loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however,
(i).any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in connection with:
(a) any sale of assets (including, without limitation, dispositions pursuant to
Sale and Leaseback Transactions); or (b) the disposition of any securities by
such Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries; and
(ii)any extraordinary or nonrecurring gain (but not
loss), together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"Net Proceeds" means (a) with respect to any Asset Sale, the aggregate
cash proceeds received by the Company or any of its Restricted Subsidiaries in
respect of such Asset Sale (including, without limitation, any cash received
upon the sale or other disposition of any non-cash consideration received in any
Asset Sale), net of the direct costs relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements and provided that any
such amount not so required to be paid for taxes shall be deemed to constitute
Net Proceeds at the time such amount is not retained for such purpose), amounts
required to be applied to the repayment of Indebtedness secured by a Lien on the
asset or assets (including Equity Interests) that were the subject of such Asset
Sale and any reserve for adjustment in respect of the sale price of such asset
or asset (including Equity Interests) established in accordance with GAAP
(provided that the amount of any such reserve shall be deemed to constitute Net
Proceeds at the time such reserve shall have been released or is not otherwise
required to be retained for such purpose) and (b) with respect to any issuance
or sale of Capital Stock, the proceeds of such issuance or sale in the form of
cash or Cash Equivalents, including payments in respect of deferred payment
obligations (to the extent corresponding to the principal, but not interest,
component thereof) when received in the form of cash or Cash Equivalents (except
to the extent such obligations are financed or sold with recourse to the Company
or any Restricted Subsidiary of the Company) and proceeds from the conversion of
other property received when converted to cash or Cash Equivalents, net of
legal, accounting and investment banking fees, discounts and sales commissions
and net of taxes paid or payable as a result thereof.
"Non-Recourse Debt" means Indebtedness:
(i) as to which neither the Company nor any of its
Restricted Subsidiaries: (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute Indebtedness); (b) is
directly or indirectly liable (as a guarantor or otherwise); or (c) constitutes
the lender;
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<PAGE> 20
(ii) no default with respect to which (including any
rights that the Holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its Stated Maturity; and
(iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of any of
the Company or any of its Restricted Subsidiaries.
"Note Custodian" means the Trustee, as custodian with respect to the
Global Notes, or any successor entity thereto.
"Note Register" has the meaning specified in Section 2.3.
"Notes" means the Exchange Notes and the Original Notes.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offer and sale by the Company to the Initial
Purchasers of an aggregate of 150,000 Units consisting of $150,000,000 in
aggregate principal amount at maturity of the Notes and warrants to purchase an
aggregate of 1,312,746 shares of Common Stock.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, President or a Vice-President
and the chief financial and accounting officer of such Person.
"Opinion of Counsel" means a written opinion of legal counsel
acceptable to the Trustee, and delivered to the Trustee.
"Orbital" means Orbital Sciences Corporation, a Delaware corporation,
or any successor entity whether by merger, sale of all or substantially all its
assets or otherwise.
"Orbital Agreements" means each of the Procurement Agreement; the
Amended and Restated ORBIMAGE Services Agreement between Orbital and the
Company, dated as of December 31, 1997; the Non-Compete and Teaming Agreement
between the Company and Orbital, dated as of May 8, 1997; the OrbView-2 License
Agreement between the Company and Orbital, dated as of May 8, 1997; the Software
License Agreement between the Company and Earth Observation Sciences dated March
14, 1996, as amended; and the Software Maintenance and Support Agreement between
the Company and Earth Observation Sciences, dated as of October 1, 1997; each
agreement as in effect as of the Issue Date and as amended from time to time if
such amendment is not prohibited by this Indenture.
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<PAGE> 21
"OrbView Satellites" means each of the high-resolution satellites
currently designated as OrbView-3 and OrbView-4 under the Procurement Agreement,
and any Replacement Satellite.
"Original Notes" means the Notes initially issued under this Indenture
prior to the issuance of the Exchange Notes.
"Paying Agent" has the meaning set forth in Section 2.3.
"Permitted Investment" means:
(i) any Investments in the Company or any Wholly Owned
Restricted Subsidiary of the Company;
(ii) any Investments in cash or Cash Equivalents;
(iii) Investments by the Company or any of its Restricted
Subsidiaries in a Person if, as a result of such Investment: (a) such Person
becomes a Restricted Subsidiary of the Company; or (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or any Restricted
Subsidiary of the Company;
(iv) any Investment made as a result of the receipt of
non-Cash Consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.15 of this Indenture;
(v) any Investment made with Excess Proceeds remaining after
the consummation of an Asset Sale Offer as described in Section 4.15 of this
Indenture;
(vi) any Investment made by the Company or any of its
Restricted Subsidiaries in any Unrestricted Subsidiary using the proceeds of a
substantially concurrent contribution to the equity capital of the Company; and
(vii) any Investment made by the Company or any of its
Restricted Subsidiaries in a Related Business, Related Satellite Business or a
Joint Venture; provided that at the time any such Investment is made, such
Investment will not cause the aggregate amount of Investments at any one time
outstanding under this clause (vii) to exceed the greater of (x) $10 million or
(y) 7.5% of the Consolidated Net Worth of the Company.
"Permitted Liens" means:
(i) Liens securing the Notes;
(ii) Liens in favor of the Company;
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(iii) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Company or any of its Restricted
Subsidiaries; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with the Company or
its Restricted Subsidiary;
(iv) Liens on property existing at the time of acquisition
thereof by the Company or any of its Restricted Subsidiaries; provided that such
Liens were in existence prior to the contemplation of such acquisition;
(v) Liens to secure the performance of statutory obligations,
surety, appeal or performance bonds or other obligations of a like nature or
mechanics' or purchase money Liens incurred in the ordinary course of business;
(vi) Liens existing on the Issue Date;
(vii) Liens on inventory, accounts receivable or domestic
and/or international ground operation centers and related systems securing
Indebtedness incurred pursuant to clause (i), (vii), (x) or (xi) of Section
4.12(b) of this Indenture, or securing Permitted Refinancing Indebtedness
incurred to refinance Indebtedness pursuant to clause (i), (viii), (x) or (xi)
of Section 4.12(b) of this Indenture;
(viii) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded; provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor;
(ix) Liens incurred in the ordinary course of business of the
Company or any Subsidiary of the Company with respect to obligations that do not
exceed $5 million at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business), (b) do not in the
aggregate materially detract from the value of the property or materially impair
the use thereof in the operation of business by the Company or its Subsidiaries
and (c) are not for the benefit of an Affiliate of the Company; and
(x) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries.
"Permitted Refinancing Indebtedness" has the meaning set forth in
Section 4.12(b)(viii).
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
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"Pledge Account" means the account established with the Collateral
Agent pursuant to the terms of the Pledge Agreement for the deposit of the
Pledged Securities.
"Pledge Agreement" means the Pledge Agreement dated as of the date of
this Indenture by and between the Company and the Collateral Agent governing the
Pledge Account.
"Pledged Securities" means the U.S. government securities purchased by
the Company with a portion of the net proceeds from the Offering to be deposited
in the Pledge Account and pledged as security for the Notes.
"Proceeds Purchase Date" has the meaning set forth in Section
4.15(b)(ii).
"Procurement Agreement" means the Procurement Agreement between the
Company and Orbital, dated as of November 18, 1996, as amended on May 8, 1997,
December 31, 1997 and February 25, 1998.
"QIB" means a "qualified institutional buyer" within the meaning of
Rule 144A under the Securities Act.
"Qualifying Public Offering" means a public offering of Common Stock
registered under the Securities Act (i)(a) that shall have resulted in an
aggregate price to the public of not less than $30 million or (b) that involves
the sale to the public of Common Stock constituting at least twenty percent
(20%) of the Common Stock immediately outstanding after the offering, in either
case at a price per share of Common Stock equal to or greater than the Threshold
Price and (ii) that shall have resulted in listing or admission to trading of
the Common Stock on the New York Stock Exchange, any other national securities
exchange, the Nasdaq National Market System or Nasdaq over-the-counter market.
For the purposes of this definition, Threshold Price means (i) as of any date
through May 1, 1999, 100% of the then current conversion price of the Series A
Preferred Stock, (ii) from May 2, 1999 through May 1, 2000, the then current
conversion price of the Series A Preferred Stock, multiplied by the amount
(expressed as a percentage) equal to 100% plus the result of 30% times a
fraction, the numerator of which is the number of days after May 1, 1999 the
calculation of the Threshold Price occurs and the denominator of which is 365,
(iii) from May 2, 2000 through May 1, 2001, the then current conversion price of
the Series A Preferred Stock, multiplied by the amount (expressed as a
percentage) equal to 130% plus the result of 20% times a fraction, the numerator
of which is the number of days after May 1, 2000, the calculation of the
Threshold Price occurs and the denominator of which is 365, and (iv) from May 2,
2001 forward, 150% of the then current conversion price of the Series A
Preferred Stock.
"Record Date" shall have the meaning set forth in the form of the Note
attached hereto as Exhibit A.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
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"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Refinanced Indebtedness" has the meaning set forth in Section
4.12(b)(viii).
"Registrar" has the meaning set forth in Section 2.3.
"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Related Asset" means any asset used in connection with a Related
Business or Related Satellite Business.
"Related Business" means any Related Satellite Business and any
business relating to the worldwide acquisition, marketing, processing and sales
of remote imagery-based products and services.
"Related Satellite Business" means any business relating to the design,
development, and operation of remote imaging satellites and the worldwide
marketing and sales of satellite-based remote imagery-based products and
services.
"Replacement Satellite" means any satellite constructed to replace an
OrbView Satellite in the event of a failure of such OrbView Satellite; provided,
however, that any such Replacement Satellite need not include hyperspectral
imagery capacity, if it is determined in good faith by the Board of Directors of
the Company (evidenced by a resolution approved by at least a majority of the
Board of Directors of the Company and set forth in an Officers' Certificate
delivered to the Trustee) that hyperspectral imagery is not required to maintain
the competitiveness of the Company's satellites.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Payment" has the meaning set forth in Section 4.10.
"Restricted Security" has the meaning set forth in Rule 144(a)(3) under
the Securities Act.
"Restricted Subsidiary" of a Person means any Subsidiary of such Person
that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"S&P" means Standard & Poor's Ratings Services, or its successors.
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"Sale and Leaseback Transaction" means any direct or indirect
arrangement pursuant to which any property (other than Capital Stock) or assets
is sold by a Person or a Subsidiary and is thereafter leased back from the
purchaser or transferee thereof by such Person or one or more of its
Subsidiaries, except a Fixed Asset Financing.
"Securities Act" means the Securities Act of 1933, as amended (or any
successor act) and the rules and regulations thereunder.
"Separation Date" means the date on which the Notes and the Warrants
comprising the Units are separable, which date shall occur on the earliest to
occur of (i) 90 days from the date of issuance; (ii) such date as the Initial
Purchasers may, in their discretion, deem appropriate; (iii) in the event of a
Change of Control occurs, the date the Company mails notice thereof to Holders
of the Notes; (iv) the date on which the Exchange Offer is consummated; and (v)
the effectiveness of the Shelf Registration Statement.
"Series A Offering" means the sale of additional shares of Series A
Preferred Stock that will be consummated concurrent with the closing of the
Offering.
"Series A Preferred Stock" means the Series A Cumulative Convertible
Preferred Stock, $.01 par value, of the Company.
"Shelf Registration Statement" means with respect the Notes, a shelf
registration statement pursuant to Rule 415 under the Securities Act relating to
the Transfer Restricted Securities.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article I, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Stated Maturity" means, when used with respect to any Note, March 1,
2005.
"Stock Purchase Agreement" means the Series A Preferred Stock Purchase
Agreement, dated May 7, 1997, as amended, by and among the Company and the
purchasers of Series A Preferred Stock, as in effect on the Issue Date.
"Stockholders' Agreement" means the agreement by and among the Company
and its stockholders, dated May 8, 1997, as amended, as in effect on the Issue
Date.
"Stock Option Plan" means the Orbital Imaging Corporation 1996 Stock
Option Plan, adopted as of November 15, 1996 and any successor stock option plan
adopted for the benefit of the Company's directors and/or employees.
"Subsidiary" means, with respect to any Person:
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(i) any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of such Person (or a combination thereof); and
(ii) any partnership (a) the sole general partner or the
managing general partner of which is such Person or a Subsidiary of such Person
or (b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means any Guarantee of the Company's obligations
under this Indenture and the Notes given by a Subsidiary Guarantor.
"Subsidiary Guarantor" means any Person that becomes a Restricted
Subsidiary of the Company after the date of this Indenture.
"Successor Note" of any particular Note means every Note issued after,
and evidencing all or a portion of the same debt as that evidenced by, such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 2.7 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.
"TIA" means the Trust Indenture Act of 1939, as amended, as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act is amended after such date, "TIA" means, to
the extent required by such amendment, the Trust Indenture Act of 1939 as so
amended.
"Transfer Restricted Security" means each Note, until the earliest to
occur of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Act, (b) the date on which such Note
has been disposed of in accordance with a Shelf Registration Statement, (c) the
date on which such Note is disposed of by a Broker-Dealer pursuant to the "Plan
of Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Note is distributed to the public pursuant to Rule 144 under the Act.
"Total Invested Capital" means, as of any date of determination, the
sum of (a) total Indebtedness as of such date and (b) $88 million plus the
aggregate proceeds received by the Company or any Restricted Subsidiary in
respect of the issuance of Capital Stock (other than Disqualified Stock) of the
Company or such Restricted Subsidiary, including the fair value of property
other than cash (as determined in good faith by the Board of Directors of the
Company (evidenced by a resolution approved by at least a majority of the Board
of Directors of the Company and set forth in an Officers' Certificate delivered
to the Trustee), less any redemptions
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of, or dividends or other distributions on, Capital Stock of the Company made
after the Issue Date and on or prior to the date of determination.
"Trustee" means Marine Midland Bank until a successor Trustee shall
have been appointed pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean such successor Trustee.
"Units" means 150,000 Units consisting of the Notes and the Warrants.
"Unit Legend" has the meaning set forth in Section 2.6(k).
"Unrestricted Subsidiary" of a Person means any Subsidiary of such
Person that is designated by such Person as an Unrestricted Subsidiary, but only
if and for so long as such Subsidiary:
(i) has no Indebtedness other than Non-Recourse Debt;
(ii) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary unless the terms of
any such agreement, contract, arrangement or understanding are no less favorable
to the Company or such Restricted Subsidiary than those that might be obtained
at the time from Persons who are not Affiliates of the Company;
(iii) is a Person with respect to which neither the Company
nor any of its Restricted Subsidiaries has any direct or indirect obligation:
(1) to subscribe for additional Equity Interests; or (2) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results;
(iv) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of any of the Company or any of its
Restricted Subsidiaries; and
(v) in the case of a corporate entity or limited liability
company, has at least one director on its board of directors and at least one
executive officer, in each case who is not a director or executive officer of
the Company or any of its Restricted Subsidiaries.
"Voting Equity Interests" means the Equity Interest in a
corporation or other Person with voting power under ordinary circumstances
entitling the holders thereof to elect or appoint the board of directors,
executive committee or other governing body of such corporation or Person,
whether at all times or only so long as no senior class of securities has such
voting power by reason of any contingency.
"Warrant Agent" means Marine Midland Bank, as Warrant Agent under the
Warrant Agreement, or its successors in such capacity.
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"Warrant Agreement" means that certain warrant agreement by and between
the Company and the Warrant Agent, dated as of February 25, 1998.
"Warrants" mean warrants to purchase an aggregate of 1,312,746 shares
of Common Stock issued pursuant to the Warrant Agreement.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing: (i) the sum
of the products obtained by multiplying: (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by (ii) the then outstanding principal
of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person and one or more other Wholly Owned Restricted
Subsidiaries of such Person.
SECTION 1.2. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings: (1)
"indenture securities" means the Notes; (2) "indenture security holder" means a
Holder; (3) "indenture to be qualified" means this Indenture; (4) "indenture
trustee" or "institutional trustee" means the Trustee; and (5) "obligor" on the
indenture securities means the Company or any other obligor on the Notes. All
other TIA terms used in this Indenture that are defined by the TIA, defined by
TIA reference to another statute or defined by Commission rule under the TIA and
not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.3. RULES OF CONSTRUCTION.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and, where appropriate, words of the masculine
gender shall mean and include correlative words of the feminine and neutral
genders and where applicable words in the singular shall mean and include the
plural, and vice versa;
(2) accounting terms used herein and not otherwise defined
have the meanings ascribed to them in accordance with GAAP;
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(3) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;
(4) Articles and Sections referred to by number shall mean the
corresponding Articles and Sections of this Indenture;
(5) any headings preceding the texts of the several Articles
and Sections of this Indenture, shall be solely for convenience of reference,
and shall not constitute a part of this Indenture, nor shall they affect its
meaning, construction or effect; and
(6) any reference to a statute shall be construed to include
any statutory provision consolidating, amending or replacing the statute
referred to.
ARTICLE II
THE NOTES
SECTION 2.1. FORM AND DATING.
(a) General Form of Notes. The Notes and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A
hereto, which Exhibit is part of this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be issued only in
registered form without coupons and only in minimum denominations of $1,000 and
integral multiples thereof. The terms and provisions contained in the Notes
shall constitute, and are hereby expressly made, a part of this Indenture and
the Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. The Notes
will initially be issued in global form (the "Global Notes"). One or more Global
Notes will be issued to evidence each of the following: (i) Notes sold in
reliance on Rule 144A under the Securities Act, (ii) Notes sold outside of the
United States to a non-U.S. Person in reliance on Regulation S under the
Securities Act, and (iii) Notes sold to an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) in reliance on an exemption from the registration requirements
of the Securities Act other than Rule 144A. Global Notes shall be substantially
in the form of Exhibit A attached hereto (including the text and schedule called
for by footnotes 1 and 4 thereto). Definitive Notes shall be substantially in
the form of Exhibit A attached hereto (excluding the text and schedule called
for by footnotes 1 and 4 thereto). Global Notes or Definitive Notes issued as
Exchange Notes will not include the legend called for by footnote 2 of Exhibit
A. Global Notes or Definitive Notes issued after the Separation Date will not
include the legend called for by footnote 3 of Exhibit A.
(b) Form of Global Notes. Each Global Note (i) shall represent
such portion of the outstanding Notes as shall be specified therein, (ii) shall
provide that it shall represent the
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aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions, (iii) shall be registered in the name of the Depositary or its
nominee, duly executed by the Company and authenticated by the Trustee as
provided herein, for credit to the respective accounts of the Agent Members (or
such accounts as they may direct) at the Depositary, (iv) shall be delivered by
the Trustee or its agent to the Depositary or a Note Custodian pursuant to the
Depositary's instructions and (v) shall bear a legend substantially to the
following effect:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK,
NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Agent Members shall have no rights under this Indenture with respect to
any Global Note held on their behalf by the Depositary, and the Depositary may
be treated by the Company, the Trustee, and any agent of the Company or the
Trustee as the absolute owner of such Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee, or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished to the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Note.
Any endorsement of a Global Note to reflect the amount of any increase
or decrease in the amount of outstanding Notes represented thereby shall be made
by the Trustee or the Note Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.6 hereof.
(c) Form of Definitive Notes. Definitive Notes may be produced
in any manner determined by the Officers of the Company executing such Notes, as
evidenced by their execution of such Notes. The Trustee must register Definitive
Notes so issued in the name of, and cause the same to be delivered to, such
Person (or its nominee). Except as provided in this Section 2.1 or Section 2.6,
no Person having a beneficial interest in the Global Note may exchange such
beneficial interest for fully certificated Definitive Notes in duly registered
form.
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(d) Provisions Applicable to Forms of Notes. The Notes may
also have such additional provisions, omissions, variations or substitutions as
are not inconsistent with the provisions of this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with this Indenture,
any applicable law or with any rules made pursuant thereto or with the rules of
any securities exchange or governmental agency or as may be determined
consistently herewith by the Officers of the Company executing such Notes, as
conclusively evidenced by their execution of such Notes. All Notes shall be
otherwise substantially identical except as provided herein.
Subject to the provisions of this Article II, the Holder of a Global
Note may grant proxies and otherwise authorize any Person to take any action
that a Holder is entitled to take under this Indenture or the Notes.
SECTION 2.2. EXECUTION AND AUTHENTICATION.
An Officer of the Company shall sign the Notes for the Company by
manual or facsimile signature. The Company's seal may be reproduced on the Notes
and may be in facsimile form. If an Officer of the Company whose signature is on
a Note no longer holds that office at the time a Note is authenticated, the Note
shall nevertheless be valid. A Note shall not be valid or obligatory for any
purpose or entitled to the benefits of this Indenture until authenticated by the
manual signature of the Trustee or its authenticating agent. The signature shall
be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee shall, upon the delivery to the Trustee of a written order
of the Company signed by two Officers, from time to time, authenticate Notes for
original issue up to an aggregate principal amount of $150,000,000. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent to authenticate Notes.
An authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as the
Trustee to deal with the Company or an Affiliate of the Company.
SECTION 2.3. TRUSTEE, REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a note register ("Note Register") of the Notes and of their
transfer and exchange. The Company may also from time to time appoint one or
more co-registrars and one or more additional paying agents. The term
"Registrar" includes any co-registrar and the term "Paying Agent" includes any
additional paying agent. The Company may change any Paying Agent or Registrar
upon notice to the Holders. The Company shall notify the Trustee in writing of
the name and address of any Paying Agent or
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Registrar not a party to this Indenture. If the Company fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act,
subject to the last paragraph of this Section 2.3, as such. The Company or any
of its Subsidiaries may act as Paying Agent or Registrar; provided, however,
that none of the Company, its Subsidiaries or the Affiliates of the foregoing
shall act (i) as Paying Agent in connection with any redemption, offer to
purchase, discharge or defeasance, as otherwise specified in this Indenture, and
(ii) as Paying Agent or Registrar if a Default or Event of Default has occurred
and is continuing.
The Company hereby appoints Marine Midland Bank, at its Corporate Trust
Office, as the Trustee hereunder and Marine Midland Bank, hereby accepts such
appointment. The Trustee shall have the powers and authority granted to and
conferred upon it in the Notes and hereby and such further powers and authority
to act on behalf of the Company as may be mutually agreed upon in writing by the
Company and the Trustee, and the Trustee shall keep a copy of this Indenture
available for inspection during normal business hours at its Corporate Trust
Office.
The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Global Notes. The Company initially appoints the
Trustee to act as the Registrar and Paying Agent and to act as Note Custodian
with respect to the Global Notes.
All of the terms and provisions with respect to such powers and
authority contained in the Notes are subject to and governed by the terms and
provisions hereof.
The Trustee may resign as Registrar or Paying Agent upon 30 days prior
written notice to the Company.
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of the
Holders and the Trustee all money held by the Paying Agent for the payment of
principal of, premium, if any, interest and Liquidated Damages, if any, on, the
Notes, and shall notify the Trustee of any default by the Company in making any
such payment. While any such default or an Event of Default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment of all such money over to the Trustee,
the Paying Agent (if other than the Company or a Subsidiary) shall have no
further liability for the money. If the Company or a Subsidiary acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to the Company, the Trustee shall serve as
Paying Agent for the Notes.
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SECTION 2.5. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable to it the most recent list available to it of the names and
addresses of all Holders and, after the consummation of the Exchange Offer,
shall otherwise strictly comply with TIA Section 312(a). If the Trustee is not
the Registrar, the Company shall furnish to the Trustee at least ten Business
Days before each Interest Payment Date and at such other times as the Trustee
may request in writing, a list in such form and as of such date as the Trustee
may require of the names and addresses of the Holders of Notes and, after the
consummation of the Exchange Offer, the Company shall otherwise strictly comply
with TIA Section 312(a).
SECTION 2.6. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Definitive Notes. If notes in
definitive form ("Definitive Notes") are presented by a Holder to the Registrar
with a request: (x) to register the transfer of the Definitive Notes; or (y) to
exchange such Definitive Notes for an equal principal amount of Definitive Notes
of other authorized denominations, the Registrar shall register the transfer or
make the exchange as requested if its requirements for such transactions are
met; provided, however, that the Definitive Notes presented or surrendered for
registration of transfer or exchange: (i) shall be duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by such Holder's attorney, duly authorized in
writing; and (ii) in the case of a Definitive Note that is a Transfer Restricted
Security, such request shall be accompanied by the following additional
information and documents, as applicable:
(i) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification to that effect from such Holder (in
substantially the form of Exhibit B hereto);
(ii) if such Transfer Restricted Security is being
transferred (1) to a QIB in accordance with Rule 144A under the Securities Act
or (2) pursuant to an effective registration statement under the Securities Act,
a certification to that effect (in substantially the form of Exhibit B hereto);
(iii) if such Transfer Restricted Security is being
transferred to an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act pursuant to a private
placement exemption from the registration requirements of the Securities Act
(and based on an Opinion of Counsel if the Company so requests in the case of a
transfer of Notes with an aggregate principal amount of $100,000 or less), a
certification to that effect (in substantially the form of Exhibit B hereto) and
a certification of the applicable transferee (in substantially the form of
Exhibit C hereto);
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<PAGE> 34
(iv) if such Transfer Restricted Security is being
transferred pursuant to an exemption from registration in accordance with Rule
904 under the Securities Act, a certification to that effect (in substantially
the form of Exhibit B hereto); or
(v) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the registration requirements
of the Securities Act (and based on an Opinion of Counsel if the Company so
requests) a certification to that effect (in substantially the form of Exhibit B
hereto).
(b) Restrictions on Transfer of a Definitive Note for a
Beneficial Interest in a Global Note. A Definitive Note may not be exchanged for
a beneficial interest in a Global Note except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive Note,
duly endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with: (i) if such Definitive Note is a
Transfer Restricted Security, a certification from the Holder thereof (in
substantially the form of Exhibit B hereto) to the effect that such Definitive
Note is being transferred by such Holder either (A) to QIB in accordance with
Rule 144A under the Securities Act, (B) outside the United States to a foreign
person in a transaction meeting the requirements of Rule 904 under the
Securities Act or (C) to an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act pursuant to
a private placement exemption from the registration requirements of the
Securities Act (provided that the applicable transferee furnishes a certificate
substantially in the form of Exhibit C hereto, and based on an Opinion of
Counsel if the Company so requests in the case of a transfer of Notes with an
aggregate principal amount of $100,000 or less) who wishes to take delivery
thereof in the form of a beneficial interest in a Global Note; and (ii) whether
or not such Definitive Note is a Transfer Restricted Security, written
instructions from the Holder thereof directing the Trustee to make, or to direct
the Note Custodian to make, an endorsement on the appropriate Global Note to
reflect an increase in the aggregate principal amount of the Notes represented
by such Global Note, in which case the Trustee or its agent shall cancel such
Definitive Note in accordance with Section 2.11 hereof and cause, or direct the
Note Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Note Custodian, the aggregate
principal amount of Notes represented by the Global Note to be increased
accordingly. If no Global Notes are then outstanding, the Company shall issue
and, upon receipt of an authentication order in accordance with Section 2.2
hereof, the Trustee shall authenticate a new Global Note in the appropriate
principal amount.
(c) Transfer and Exchange of a Beneficial Interest in a Global
Note. The transfer and exchange of beneficial interests in Global Notes shall be
effected through the Depositary, in accordance with this Indenture and the
procedures of the Depositary therefor, which shall include restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act, provided that if such Global Note is a Transfer Restricted
Security, the Holder thereof will furnish to the Trustee a certification (in
substantially the form of Exhibit B hereto) to the effect that such beneficial
interest is being transferred by such Holder either (A) to a QIB in accordance
with Rule 144A under the Securities Act, (B) outside the United States to a
foreign person in a transaction meeting the requirements of Rule 904 under the
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<PAGE> 35
Securities Act or (C) to an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act pursuant to
a private placement exemption from the registration requirements of the
Securities Act (provided that the applicable transferee furnishes a certificate
substantially in the form of Exhibit C hereto, and based on an Opinion of
Counsel if the Company so requests in the case of a transfer of beneficial
interests in Notes with an aggregate principal amount of $100,000 or less) who
wishes to take delivery thereof in the form of a beneficial interest in a Global
Note. Any Notes evidenced by the Regulation S Global Note may only be
transferred in accordance with the provisions of Regulation S under the
Securities Act. Notwithstanding the foregoing, in the case of a Transfer
Restricted Security, a beneficial interest in a Global Note being transferred in
reliance on an exemption from the registration requirements of the Securities
Act (other than in accordance with Rule 144A, Rule 144 or Rule 904 under the
Securities Act) may only be transferred for a Definitive Note and pursuant to
the provisions of Section 2.6(d) below.
(d) Transfer and Exchange of a Beneficial Interest in a Global
Note for a Definitive Note.
(i) Any Person having a beneficial interest in a
Global Note may upon request exchange such beneficial interest for a Definitive
Note. Upon receipt by the Trustee of written instructions or such other form of
instructions as is customary for the Depositary from the Depositary or its
nominee on behalf of any Person having a beneficial interest in a Global Note
and, in the case of any Transfer Restricted Security, the following additional
information and documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being
delivered to the Person designated by the Depositary as being the beneficial
owner, a certification to that effect (in substantially the form of Exhibit B
hereto);
(B) if such beneficial interest is being
transferred (1) to a QIB in accordance with Rule 144A under the Securities Act
or (2) pursuant to an effective registration statement under the Securities Act,
a certification to that effect (in substantially the form of Exhibit B hereto);
(C) if such beneficial interest is being
transferred to any institutional "accredited investor" within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act pursuant to a private
placement exemption from the registration requirements of the Securities Act
(and based on an Opinion of Counsel if the Company so requests in the case of a
transfer of with an aggregate principal amount of $100,000 or less), a
certification to that effect (in substantially the form of Exhibit B hereto) and
a certification from the applicable transferee (in substantially the form of
Exhibit C hereto);
(D) if such beneficial interest is being
transferred pursuant to an exemption from registration in accordance with Rule
904 under the Securities Act, a certification to that effect (in substantially
the form of Exhibit B hereto), provided that no Notes represented
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<PAGE> 36
by the Regulation S Global Note may be exchanged for Definitive Notes until
expiration of the applicable restricted period under Regulation S of the
Securities Act; or
(E) if such beneficial interest is being
transferred in reliance on another exemption from the registration requirements
of the Securities Act (and based on an Opinion of Counsel if the Company so
requests), a certification to that effect (in substantially the form of Exhibit
B hereto);
in which case the Trustee or the Note Custodian, at the direction of the
Trustee, shall, in accordance with the standing instructions and procedures
existing between the Depositary and the Note Custodian, cause the aggregate
principal amount of Global Notes to be reduced accordingly and, following such
reduction, the Company shall execute and, upon receipt of an authentication
order in accordance with Section 2.2 hereof, the Trustee shall authenticate and
deliver to the transferee a Definitive Note in the principal amount.
(ii) Definitive Notes issued in exchange for a
beneficial interest in a Global Note pursuant to this Section 2.6(d) shall be
registered in such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such Definitive Notes to
the Persons in whose names such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.6), a Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(f) Authentication of Definitive Notes in Absence of
Depositary. If at any time: (i) the Depositary for the Notes notifies the
Company that the Depositary is unwilling or unable to continue as Depositary for
the Global Notes or, if at any time such Depositary ceases to be a "clearing
agency" registered under the Exchange Act, and a successor Depositary for the
Global Notes is not appointed by the Company within 90 days after delivery of
such notice; or (ii) the Company, at its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of Definitive Notes under this
Indenture in exchange for all or any part of the Notes represented by a Global
Note or Global Notes, the Depositary or the Note Custodian shall surrender such
Global Note to the Trustee, without charge, and then the Company shall execute,
and the Trustee shall, upon receipt of an authentication order in accordance
with Section 2.2 hereof, authenticate and deliver in exchange for such Global
Notes, Definitive Notes in an aggregate principal amount equal to the principal
amount of such Global Notes. Such Definitive Notes shall be registered in such
names as the Depositary shall direct in writing.
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(g) Legends. (i) Except as permitted by the following
paragraphs (ii), and (iii), each Note evidencing Global Notes and Definitive
Notes (and Notes issued in exchange therefor or substitution thereof) shall bear
legends in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
OFFERED, SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO (A) OFFER, SELL, PLEDGE OR
OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO THE COMPANY, (2) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (4) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES IN A MEETING THE
REQUIREMENTS OF RULE 904 OF REGULATIONS UNDER THE SECURITIES ACT, (5)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1)
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT (AN "IAI")
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING THE TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE) AND, IN THE CASE OF ANY TRANSFER TO ANY IAI OF SECURITIES WITH
AN AGGREGATE PRINCIPAL AMOUNT OF $100,000 OR LESS, AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS OR (PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT
(AND BASED ON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS),
SUBJECT IN EACH OF THE FOREGOING CASES TO APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND
(THAT IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
(ii) Upon any sale or transfer of a Transfer
Restricted Security (including any Transfer Restricted Security represented by a
Global Note) pursuant to an effective registration statement under the
Securities Act or pursuant to Rule 144 under the
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<PAGE> 38
Securities Act (pursuant to an Opinion of Counsel reasonably satisfactory to the
Company that no legend is required):
(A) in the case of any Transfer Restricted
Security that is a Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a Definitive Note that
does not bear the legend set forth in (i) above and rescind any restriction on
the transfer of such Transfer Restricted Security;
(B) in the case of any Transfer Restricted
Security represented by a Global Note, such Transfer Restricted Security shall
not be required to bear the legend set forth in (i) above, but shall continue to
be subject to the provisions of Section 2.6(c) hereof; provided, however, that
with respect to any request for an exchange of a Transfer Restricted Security
that is represented by a Global Note for a Definitive Note that does not bear
the legend set forth in (i) above, which request is made in reliance upon Rule
144 (and based upon an Opinion of Counsel if the Company so requests), the
Holder thereof shall certify in writing to the Registrar that such request is
being made pursuant to Rule 144 (such certification to be substantially in the
form of Exhibit B hereto).
(iii) Notwithstanding the foregoing, upon
consummation of the Exchange Offer, the Company shall issue and, upon receipt of
an authentication order in accordance with Section 2.2 hereof, the Trustee shall
authenticate Exchange Notes in exchange for Original Notes accepted for exchange
in the Exchange Offer, which Exchange Notes shall not bear the legend set forth
in (i) above, and the Registrar shall rescind any restriction on the transfer of
such Notes, in each case unless the Holder of such Original Notes fails to
certify that in connection with the Exchange Offer that it is not (A) a
broker-dealer, (B) a Person participating in the distribution of the Original
Notes or (C) a Person who is an affiliate (as defined in Rule 144A) of the
Company.
(h) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in Global Notes have been exchanged for
Definitive Notes, redeemed, repurchased or canceled, all Global Notes shall be
returned to or retained and canceled by the Trustee or its agent in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for Definitive Notes,
redeemed, repurchased or canceled, the principal amount of Notes represented by
such Global Note shall be reduced accordingly and an endorsement shall be made
on such Global Note, by the Trustee or the Note Custodian, at the direction of
the Trustee, to reflect such reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall authenticate
Definitive Notes and Global Notes at the Registrar's request.
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(ii) No service charge shall be made to the Holder
for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchange or registration of transfer
pursuant to Sections 2.2, 2.10, 3.5, 3.8 and 4.14 hereto).
(iii) All Definitive Notes and Global Notes issued
upon any registration of transfer or exchange of Definitive Notes or Global
Notes shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Definitive Notes
or Global Notes surrendered upon such registration of transfer or exchange.
(iv) Neither the Registrar nor the Company shall be
required:
(A) to issue, to register the transfer of or
to exchange Notes during a period beginning at the opening of business 15 days
before the day of any selection of Notes for redemption under Section 3.1 hereof
and ending at the close of business on the day of selection; or
(B) to register the transfer of or to
exchange any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part; or
(C) to register the transfer of or to
exchange a Note between a Record Date and the next succeeding Interest Payment
Date.
(v) The Trustee shall authenticate Definitive Notes
and Global Notes in accordance with the provisions of Section 2.2 hereof.
(j) Certain Transfers in Connection with and after the
Exchange Offer. Notwithstanding any other provision of this Indenture: (i) no
Exchange Note may be exchanged by the Holder thereof for an Original Note; (ii)
accrued and unpaid interest on the Original Notes being exchanged in the
Exchange Offer shall be due and payable on the next Interest Payment Date for
the Exchange Notes following the Exchange Offer; and (iii) interest on the
Exchange Notes to be issued in the Exchange Offer shall accrue from the date of
the Exchange Offer.
(k) Separability of Notes and Warrants. (i) Except as provided
in this Section 2.6(k), each Definitive Note and each Global Note shall bear the
following legend (the "Unit Legend") on the face thereof:
THE NOTES EVIDENCED HEREBY WERE INITIALLY ISSUED AS PART OF AN ISSUANCE
OF UNITS (THE "UNITS"), EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL
AMOUNT OF 11 5/8% SENIOR NOTES DUE 2005 (THE "NOTES") OF ORBITAL
IMAGING CORPORATION (THE "COMPANY") AND ONE WARRANT TO PURCHASE 8.75164
SHARES OF
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COMMON STOCK, $0.01 PAR VALUE, OF THE COMPANY (THE "WARRANTS"). THE
NOTES EVIDENCED HEREBY ARE NOT TRANSFERABLE SEPARATELY FROM THE
WARRANTS UNTIL THE EARLIEST TO OCCUR OF (i) 90 DAYS FROM THE DATE OF
ISSUANCE, (ii) SUCH DATE AS THE INITIAL PURCHASERS MAY, IN THEIR
DISCRETION, DEEM APPROPRIATE, (iii) IN THE EVENT A CHANGE OF CONTROL
(AS DEFINED IN THE INDENTURE RELATING TO THE NOTES) OCCURS, THE DATE
THE COMPANY MAILS NOTICE THEREOF TO HOLDERS OF THE NOTES, (iv) THE DATE
ON WHICH THE EXCHANGE OFFER (AS DEFINED IN THE REGISTRATION RIGHTS
AGREEMENT RELATING TO THE NOTES) IS CONSUMMATED, AND (v) THE
EFFECTIVENESS OF THE SHELF REGISTRATION STATEMENT RELATING TO THE NOTES
PURSUANT TO THE REGISTRATION RIGHTS AGREEMENT. THE DATE ON WHICH THE
NOTES AND THE WARRANTS ARE SEPARABLE IS THE "SEPARATION DATE."
(ii) By its acceptance of any Note represented by a
certificate bearing the Unit Legend, each Holder of, and each beneficial owner
of an interest in, such Note acknowledges that the Notes have been issued as
part of the issuance of the Units and agrees that prior to the Separation Date,
Notes shall not be transferable except as part of a transfer of Units. The
Registrar shall not register the transfer of any Note prior to the Separation
Date unless the Company receives evidence reasonably satisfactory to it that
such transfer is part of a transfer of a Unit or Units; provided that the
Registrar shall not be required to determine (but may rely on the determination
made by the Company with respect to) the sufficiency of any such evidence.
Notice from the Warrant Agent of a proposed transfer of Warrants (in a number
that together with the principal amounts of Notes proposed to be transferred
will constitute a Unit or Units) by the same Holder requesting transfer of such
Notes to the same proposed transferee to which such Notes are to be transferred,
shall constitute satisfactory evidence for purposes of this subsection.
(iii) The Company shall notify the Trustee and the
Depositary in writing of the occurrence of the Separation Date on such
Separation Date. Any Notes issued after the Separation Date shall not include
the Unit Legend.
SECTION 2.7. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receive evidence to their satisfaction of the destruction, loss or
theft of any Note, the Company shall, upon the written request of the Holder
thereof, issue and the Trustee, upon the written order of the Company signed by
two Officers of the Company, shall authenticate a replacement Note if the
Trustee's requirements are met. If required by the Trustee or the Company, an
indemnity bond must be supplied by such Holder that is sufficient in the
judgment of the Trustee and the Company to protect the Company, the Trustee, any
Paying Agent, the Registrar and any authenticating agent from any loss that any
of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
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Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
The provisions of this Section 2.7 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.8. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it (or its agent), those delivered to
it (or its agent) for cancellation, those reductions in the interest in a Global
Note effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in Section 2.9
hereof, a Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note (other than a mutilated Note surrendered for replacement) is held
by a "protected purchaser" (as such term is defined in Section 8-303 of the
Uniform Commercial Code as in effect in the State of New York).
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.9. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Responsible Officer of the Trustee has actual knowledge are so
owned shall be so disregarded.
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SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.
Until such exchange, Holders of temporary Notes shall be entitled to
all of the benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee or its agent
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee (or its agent) and no one else shall cancel all Notes surrendered
for registration of transfer, exchange, payment, replacement or cancellation and
shall destroy canceled Notes (subject to the record retention requirement of the
Exchange Act) in accordance with its usual procedures. Certification of the
destruction of all canceled Notes shall be delivered to the Company from time to
time. The Company may not issue new Notes to replace Notes that it has paid or
that have been delivered to the Trustee (or its agent) for cancellation. If the
Company acquires any of the Notes, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Notes unless
and until the same are surrendered to the Trustee (or its agent) for
cancellation pursuant to this Section 2.11.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.1 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
defaulted interest to be paid.
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SECTION 2.13. PERSONS DEEMED OWNERS.
Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Paying Agent, the Registrar, the Company and any agent of
the foregoing shall deem and treat the Person in whose name any Note is
registered as the absolute owner of such Note for all purposes (including the
purpose of receiving payment of principal of and interest on such Notes;
provided that defaulted interest shall be paid as set forth in Section 2.12),
and none of the Trustee, Paying Agent, the Registrar, the Company or any agent
of the foregoing shall be affected by notice to the contrary.
SECTION 2.14. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will print CUSIP numbers on the
Notes, and the Trustee may use CUSIP numbers in notices of redemption and
purchase as a convenience to Holders; provided, however, that any such notices
may state that no representation is made as to the correctness of such numbers
as printed on the Notes, and any such redemption or purchase shall not be
affected by any defect or omission in such numbers.
ARTICLE III
REDEMPTION
SECTION 3.1. OPTIONAL REDEMPTION.
(a) The Notes will not be redeemable prior to March 1, 2002.
Thereafter, the Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest and Liquidated Damages (if
any) thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on March 1 of the years indicated below:
<TABLE>
<CAPTION>
Redemption
Year Price
- ---- -----
<S> <C>
2002................................................................................ 105.8125%
2003................................................................................ 102.9063%
2004 and thereafter................................................................. 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, prior to March 1, 2001, the
Company may, on one or more occasions, redeem outstanding Notes with the net
cash proceeds of one or more sales of Capital Stock (other than Disqualified
Stock) of the Company to one or more Persons (but only to the extent the
proceeds of such sales of Capital Stock consist of cash or Cash Equivalents) at
a redemption price equal to 111.625% of the principal amount thereof, plus
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accrued and unpaid interest and Liquidated Damages (if any) thereon to the
redemption date; provided, however, that: (i) not less than 65% of the aggregate
principal amount of the Notes initially issued remains outstanding immediately
after any such redemption; and (ii) such redemption shall occur within 60 days
after the date of closing of such sale of Capital Stock.
SECTION 3.2. MANDATORY REDEMPTION.
The Company will not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
SECTION 3.3. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes pursuant to Section 3.1
shall be evidenced by an Officers' Certificate of the Company. In case of any
redemption at the election of the Company of less than all the Notes, the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee in writing of such Redemption Date and of the principal amount of
Notes to be redeemed. In the case of any redemption of Notes prior to the
expiration of any restriction on such redemption provided in the terms of such
Notes or elsewhere in this Indenture, the Company shall furnish the Trustee with
an Officers' Certificate evidencing compliance with such restriction.
SECTION 3.4. NOTES TO BE REDEEMED PRO RATA.
If less than all of the Notes are to be redeemed or repurchased
pursuant to any purchase offer required under this Indenture at any time,
selection of Notes for redemption or repurchase will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, on a
pro rata basis, selected by lot or by such method as the Trustee shall deem fair
and appropriate; provided that no Note with a principal amount of $1,000 or less
shall be redeemed or repurchased in part.
Notices of redemption or repurchase shall be mailed by first class mail
at least 30 but not more than 60 days before the redemption or repurchase date
to each Holder of Notes to be redeemed or repurchased at its registered address.
If any Note is to be redeemed or repurchased in part only, the notice that
relates to such Note shall state the portion of the principal amount thereof to
be redeemed or repurchased. A new Note in principal amount equal to the
unredeemed or unrepurchased portion will be issued in the name of the Holder
thereof upon cancellation of the original Note. On and after the redemption or
repurchase date (unless the Company shall default in the payment of the
Redemption Price, accrued and unpaid interest or Liquidated Damages, if any),
interest will cease to accrue on the Notes or portions thereof called for
redemption or repurchase.
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SECTION 3.5. NOTICE OF REDEMPTION.
(a) Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Notes to be redeemed, at such Holder's
address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price, and the amount of accrued interest
and Liquidated Damages (if any) to be paid;
(iii) the paragraph of the Notes and/or section of this
Indenture pursuant to which the redemption is being made;
(iv) if less than all the outstanding Notes are to be
redeemed, the identification (and, in the case of partial redemption of any
Notes, the principal amounts) of the particular Notes to be redeemed;
(v) that on the Redemption Date the Redemption Price will
become due and payable upon each such Note to be redeemed and that interest
thereon will cease to accrue on and after said date;
(vi) the place or places where such Notes are to be
surrendered for payment of the Redemption Price;
(vii) that in the case that a Note is only redeemed in part,
upon surrender of such Note, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Note without charge a new Note or
Notes in an aggregate principal amount equal to the unredeemed portion of the
Note;
(viii) the aggregate principal amount of Notes being redeemed;
and
(ix) the CUSIP number or numbers of the Notes being redeemed,
and that no representation is made as to the correctness or accuracy of the
CUSIP number, if any, as listed on such notice or printed on the Notes.
(b) Notice of redemption of Notes to be redeemed at the
election of the Company shall be given by the Company or, if request is made to
the Trustee no less than 45 days prior to the Redemption Date, by the Trustee in
the name and at the expense of the Company.
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SECTION 3.6. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
Redemption Date at the Redemption Price. A notice of redemption may not be
conditional.
SECTION 3.7. DEPOSIT OF REDEMPTION PRICE.
The Company shall, by 11:00 a.m., New York City time, on any Redemption
Date, deposit with the Trustee or with the Paying Agent an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued and unpaid interest and Liquidated
Damages (if any) with respect to all the Notes which are to be redeemed on that
date.
SECTION 3.8. NOTES PAYABLE ON REDEMPTION DATE.
Upon notice of redemption, the Notes or any portion thereof to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price, accrued and unpaid interest or
Liquidated Damages (if any)), such Notes shall cease to bear interest. If a Note
is redeemed on or after a Record Date but on or prior to the related Interest
Payment Date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such Record
Date. Upon surrender of any such Note for redemption in accordance with said
notice, such Note or portion thereof shall be paid by the Company at the
Redemption Price, together with accrued and unpaid interest and Liquidated
Damages (if any) to the Redemption Date. If any Note called for redemption shall
not be so paid upon surrender thereof for redemption, the principal and premium
(if any) shall, until paid, bear interest from the Redemption Date at the rate
provided by the Note.
SECTION 3.9. NOTES REDEEMED IN PART.
Any Note that is to be redeemed only in part shall be surrendered at an
office or agency of the Company designated for that purpose pursuant to Section
4.2 (with, if the Company or the Trustee so require, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or its attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Note without service charge, a new Note or Notes
of like tenor, of any authorized denomination as requested by such Holder, in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Note so surrendered.
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ARTICLE IV
COVENANTS
SECTION 4.1. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal and premium (if
any) of, and interest and Liquidated Damages (if any) on, the Notes on the dates
and in the manner provided in the Notes and in this Indenture. An installment of
principal and premium (if any) of, or interest and Liquidated Damages (if any)
on, the Notes shall be considered paid on the date it is due if the Paying Agent
(other than the Company or an Affiliate of the Company) holds no later than
11:00 a.m., New York City time, on that date U.S. dollars designated for and
sufficient to pay the installment in full and is not prohibited from paying such
money to the Holders pursuant to the terms of this Indenture. The Paying Agent
shall return to the Company no later than five days following the date of
payment, any money that exceeds such installment of principal and premium (if
any) of, and interest and Liquidated Damages (if any) payable on, the Notes.
The Company shall pay, to the extent such payments are lawful, interest
on overdue principal and on overdue installments of interest (without regard to
any applicable grace periods) from time to time on demand at the rate borne by
the Notes plus 1% per annum. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months.
Notwithstanding anything to the contrary contained in this Indenture,
the Company may, to the extent it is required to do so by law, deduct or
withhold income or other similar taxes imposed by the United States of America
from principal or interest payments hereunder.
SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain the office or agency required under Section
2.3. The Company shall give prior written notice to the Trustee of the location,
and any change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee set
forth in Section 11.2.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prior
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee
as such office or agency of the Company in accordance with Section 2.3.
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SECTION 4.3. CORPORATE EXISTENCE.
Except as otherwise permitted by Articles IV and V, the Company shall
do or cause to be done, at its own cost and expense, all things necessary to
preserve and keep in full force and effect its corporate existence and the
corporate existence of each of its Subsidiaries (if any) in accordance with the
respective organizational documents of the Company and each such Subsidiary and
the material rights (charter and statutory) and franchises of the Company and
each such Subsidiary;
SECTION 4.4. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Subsidiaries or
its properties or any of its Subsidiaries' properties and (ii) all lawful claims
for labor, materials and supplies that, if unpaid, would by law become a Lien
upon its properties or any of its Subsidiaries' properties; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith and by appropriate
proceedings properly instituted and diligently conducted and for which adequate
reserves, to the extent required under GAAP, have been taken.
SECTION 4.5. MAINTENANCE OF PROPERTIES AND INSURANCE.
(a) The Company shall maintain its properties in good working
order and condition (subject to ordinary wear and tear) and make all reasonably
necessary repairs, renewals, replacements, additions and improvements required
for it to actively conduct and carry on its business;
(b) The Company shall maintain insurance (including
appropriate self-insurance) against loss or damage of the kinds that, in the
good faith judgment of the Company, are adequate and appropriate for the conduct
of the business of the Company and its Subsidiaries in a prudent manner, with
reputable insurers or with the government of the United States of America or an
agency or instrumentality thereof, in such amounts, with such deductibles, and
by such methods as shall be customary, in the good faith judgment of the
Company, for companies similarly situated in the industry (provided that
insurance with respect to the OrbView Satellites and the Replacement Satellites
shall be governed by clause (c) below).
(c) In addition to the foregoing, the Company shall obtain or
maintain (as applicable) in full force and effect:
(i) launch and in-orbit checkout insurance with
respect to each OrbView Satellite, which insurance shall be procured promptly
prior to the launch of each such
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satellite and shall be in effect on the launch date and remain in effect through
the launch and the initial check-out period of such OrbView Satellite, in an
amount sufficient to provide for the construction, launch and insurance of a
Replacement Satellite to be payable in the event of a launch or satellite
failure during the initial check-out period; provided, however, that at the
time the Company is required to procure launch and in-orbit check-out insurance
with respect to an OrbView Satellite, the Company may reduce the amount to be
insured if another OrbView Satellite is fully operational, is being used in
commercial service and is insured in accordance with clause (ii) below, by (x)
the amount of cash, Cash Equivalents and short-term investments (excluding
proceeds of the Offering and the Series A Offering and amounts allocated or
expected to be allocated for capital expenditures) currently available to the
Company to construct a Replacement Satellite as determined in good faith by the
Board of Directors of the Company (evidenced by a resolution approved by at
least a majority of the Board of Directors of the Company and set forth in an
Officers' Certificate delivered to the Trustee), and (y) the value of any long
lead-time spare parts that the Company has procured to date for any satellite
that is comparable to the technological capability of the OrbView Satellite
being insured, as such value is determined in good faith by the Board of
Directors of the Company (evidenced by a resolution approved by at least a
majority of the Board of Directors of the Company and set forth in an Officers'
Certificate delivered to the Trustee); and
(ii) in-orbit operations insurance with respect to
each OrbView Satellite, at all times following the date an OrbView Satellite is
placed in commercial service, representing the value of such satellite (taking
into account the foregone useful life of such satellite) and the pro rata cost
of a launch vehicle, payable in the event that such satellite ceases to be used
for commercial revenue producing service (provided that such insurance may
contain customary provisions for deductible payments and minimum thresholds for
satellite failure); provided, however, that at the time the Company is required
to procure or renew in-orbit operations insurance with respect to an OrbView
Satellite, the Company may reduce the amount to be insured if another OrbView
Satellite is fully operational, is being used in commercial service, and is
insured in accordance with this clause (ii), by (x) the amount of cash, Cash
Equivalents and short-term investments (excluding proceeds of the Offering and
the Series A Offering and amounts allocated or expected to be allocated for
capital expenditures), currently available to the Company to construct a
Replacement Satellite as determined in good faith by the Board of Directors of
the Company (evidenced by a resolution approved by at least a majority of the
Board of Directors of the Company and set forth in an Officers' Certificate
delivered to the Trustee), and (y) the value of any long lead-time spare parts
that the Company has procured to date for any satellite that is comparable to
the technological capability of the OrbView Satellite being insured, as such
value is determined in good faith by the Board of Directors of the Company
(evidenced by a resolution approved by at least a majority of the Board of
Directors of the Company and set forth in an Officers' Certificate delivered to
the Trustee);
The obligation of the Company to maintain insurance pursuant to this
clause (c) may be satisfied by any combination of (i) insurance commitments
obtained from any recognized insurance provider; (ii) insurance commitments
obtained from any entity other than an entity referred to in clause (i) if the
Board of Directors of the Company determines in good faith
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(evidenced by a majority resolution of the Board of Directors of the Company and
set forth in an Officers' Certificate delivered to the Trustee) that such entity
is creditworthy and otherwise capable of bearing the financial risk of providing
such insurance and making payments in respect of any claims on a timely basis;
and (iii) unrestricted cash segregated and maintained by the Company in a
segregated account established with an Eligible Institution (the "Insurance
Account") solely for disbursement in accordance with the terms of this covenant
("Cash Insurance"), and to be held in trust for the sole and express benefit of
the Holders of the Notes.
Within 30 days following any date on which the Company is required to
obtain insurance pursuant to this clause (c), the Company will deliver to the
Trustee an insurance certificate certifying the amount of insurance then
carried, and in full force and effect, and an Officers' Certificate stating that
such insurance, together with any other insurance or Cash Insurance maintained
by the Company, complies with this Indenture. In addition, the Company will
cause to be delivered to the Trustee no less than once each year an insurance
certificate setting forth the amount of insurance then carried, which insurance
certificate shall entitle the Trustee to (i) notice of any claim under any such
insurance policy; and (ii) at least 30 days' notice from the provider of such
insurance prior to the cancellation of any such insurance and an Officers'
Certificate that complies with the first sentence of this paragraph.
In the event that the Company maintains any Cash Insurance in
satisfaction of any part of its obligation to maintain insurance pursuant to
this Section 4.5(c), the Company shall deliver, in lieu of any insurance
certificate otherwise required by this covenant, an Officers' Certificate to the
Trustee certifying the amount of such Cash Insurance.
In the event that the Company receives any proceeds of any insurance
that it is required to maintain pursuant to this Section 4.5(c), the Company
shall promptly deposit such proceeds into an escrow account established with an
Eligible Institution for such purpose. If the Company maintains any Cash
Insurance in satisfaction of any part of its obligation to maintain insurance
pursuant to this clause (c), the Company shall transfer the cash maintained in
the Insurance Account to such escrow account upon the occurrence of the event
(e.g., a launch failure) that would have entitled the Company to the payment of
insurance had the Company purchased insurance from a recognized insurance
provider. The Company may use monies on deposit in such escrow account for the
design, development, construction, procurement, launch and insurance of any
Replacement Satellite if: (i) the Company delivers to the Trustee a certificate
of the Company's President certifying that such Replacement Satellite is
comparable to the technological capability of the satellite being replaced, (ii)
within 30 days following the receipt of such insurance proceeds, the Company
delivers to the Trustee an Officers' Certificate certifying that (A) the Company
will use its reasonable best efforts to ensure that such Replacement Satellite
is launched within 24 months following delivery from the escrow account of such
insurance proceeds; and (B) the Company will have sufficient funds to service
the Company's projected debt service requirements until the scheduled launch of
such Replacement Satellite and to develop, construct, launch and insure such
Replacement Satellite.
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SECTION 4.6. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Company shall deliver to the Trustee, within 90 days
after the end of each of the Company's fiscal years, an Officers' Certificate
stating that a review of its activities during the preceding fiscal year has
been made under the supervision of the signing officers with a view to
determining whether it has kept, observed, performed and fulfilled its
obligations under this Indenture and further stating, as to each such officer
signing such certificate, that to the best of such officer's knowledge, the
Company during such preceding fiscal year has kept, observed, performed and
fulfilled each and every such covenant and no Default or Event of Default
occurred during such year and that, to each officer's knowledge, at the date of
such certificate there is no Default or Event of Default that has occurred and
is continuing or, if such signers do know of such Default or Event of Default,
the certificate shall describe the Default or Event of Default and its status
with particularity.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
annual financial statements delivered pursuant to Section 4.8 shall be
accompanied by a written report of the Company's independent accountants (who
shall be a firm of established national reputation) that in conducting their
audit of such financial statements nothing has come to their attention that
would lead them to believe that the Company has violated any provisions of
Article IV, V or VI of this Indenture insofar as they relate to accounting
matters or, if any such violation has occurred, specifying the nature and period
of existence thereof, it being understood that such accountants shall not be
liable directly or indirectly to any Person for any failure to obtain knowledge
of any such violation. In the event that such written report of the Company's
independent accountants cannot be obtained, the Company shall deliver an
Officers' Certificate certifying that it has used its best efforts to obtain
such written report but was unable to do so.
(c) If any Default or Event of Default has occurred and is
continuing or if any Holder seeks to exercise any remedy hereunder with respect
to a claimed Default under this Indenture or the Notes, the Company shall
deliver to the Trustee, at its address set forth in Section 11.2 hereof, by
registered or certified mail or by telegram or facsimile transmission followed
by hard copy by registered or certified mail an Officers' Certificate specifying
such event, notice or other action within five Business Days of its becoming
aware of such occurrence.
SECTION 4.7. COMPLIANCE WITH LAWS.
The Company shall, and shall cause each of its Subsidiaries to, comply
with all applicable statutes, rules, regulations and orders of the United States
of America, all states and municipalities thereof, and of any governmental
department, commission, board, regulatory authority, bureau, agency and
instrumentality of the foregoing, in respect of the conduct of its businesses
and the ownership of its properties.
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SECTION 4.8. REPORTS.
Whether or not required by the rules and regulations of the Commission,
so long as any Notes are outstanding, the Company will furnish to the Holders of
Notes:
(i) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and 10-K
if the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of the Company and
its Restricted Subsidiaries and, with respect to the annual information only, a
report thereon by the Company's independent certified public accountants; and
(ii) all information that would be required to be filed with the
Commission on Form 8-K if the Company was required to file such reports.
In addition, following the consummation of the Exchange Offer, whether
or not required by the rules and regulations of the Commission, but only if then
permitted by the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability and make
such information available to securities analysts and prospective investors upon
request. In addition, for so long as any Notes remain outstanding, the Company
will furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
SECTION 4.9. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 4.10. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any distribution on account of the Equity Interests of the
Company (including, without limitation, any payment in connection with any
merger or consolidation involving the Company or any of its Restricted
Subsidiaries), other than dividends or distributions declared and payable (x) in
Equity Interests (other than Disqualified Stock) of the Company or any of its
Restricted Subsidiaries or (y) to the Company or to any Restricted Subsidiary of
the Company; (ii) purchase, redeem, defease, retire
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for value or otherwise acquire or return for value any Equity Interests of the
Company, other than any such Equity Interests owned by the Company or any Wholly
Owned Restricted Subsidiary of the Company; (iii) make any principal payment on
(except at maturity) or purchase, redeem, defease or otherwise acquire or retire
for value any Indebtedness that is subordinated (whether pursuant to its terms,
by operation of law, structurally or otherwise) to the Notes; or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(x) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(y) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the immediately preceding fiscal
quarter, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to Section 4.12(a) hereof; and
(z) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issue Date (excluding Restricted Payments
permitted by clauses (ii), (iii) and (iv) of paragraph (b) below), is
less than the sum, without duplication, of: (1) 50% of the Consolidated
Net Income of the Company for the period (taken as one accounting
period) from the beginning of the first fiscal quarter commencing after
the Issue Date to the end of the Company's most recently ended fiscal
quarter for which financial statements are available at the time of
such Restricted Payment (or, if such Consolidated Net Income for such
period is a deficit, less 100% of such deficit); plus (2) 100% of the
aggregate net cash proceeds received by the Company since the Issue
Date as a contribution to its common equity capital or from the issue
or sale of Equity Interests of the Company (other than Disqualified
Stock) or from the issue of Disqualified Stock or debt securities of
the Company that have been converted into such Equity Interests (other
than (A) Equity Interests (or Disqualified Stock or convertible debt
securities) sold to a Subsidiary of the Company, (B) Disqualified Stock
or debt securities that have been converted into Disqualified Stock,
(C) equity capital contributions described in clause (vi) of the
definition of "Permitted Investment," (D) to the extent that the net
cash proceeds of the issuance of such Equity Interests are used to
redeem the Notes as permitted under Section 3 hereof and (E) Series A
Preferred Stock issued in the Series A Offering); plus (3) to the
extent that any Restricted Investment that was made after the Issue
Date is sold for cash or otherwise liquidated or repaid for cash, the
lesser of (A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and (B)
the initial amount of such Restricted Investment; plus (4) to the
extent that any Unrestricted Subsidiary is designated by the Company as
a Restricted Subsidiary, an amount equal to the lesser of (A) the Fair
Market Value of such Restricted Investment and (B) the Company's
Investment in such Unrestricted Subsidiary at the time of such
designation.
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(b) Notwithstanding the foregoing, the provisions set forth in
paragraph (a) above shall not prohibit:
(i) the payment of any dividend within 60 days after
the date of declaration thereof, if at said date of declaration such payment
would have complied with the provisions of this Indenture;
(ii) so long as no Default has occurred and is
continuing or will arise therefrom, the redemption, repurchase, retirement or
other acquisition of any Equity Interests of the Company in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of other Equity Interests of the Company (other than
any Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (2) of paragraph (z) above;
(iii) so long as no Default has occurred and is
continuing or will arise therefrom, the repayment, defeasance, redemption or
repurchase of Intercompany Indebtedness or Indebtedness with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness or the
substantially concurrent sale (other than to a Subsidiary of the Company) of
Equity Interests of the Company (other than Disqualified Stock); provided that
the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition shall be excluded from
clause (2) of paragraph (z) above;
(iv) the issuance of shares of Series A Preferred
Stock as paid-in-kind dividends in accordance with the terms of the Series A
Preferred Stock as in effect on the Issue Date;
(v) the purchase, redemption or retirement by the
Company of shares of its Common Stock held by an employee or former employee of
the Company or its Subsidiaries issued under the Stock Option Plan; provided
that the amount of any such payments in any fiscal year does not exceed
$1,000,000; and provided, further, that the limitation set forth in the
foregoing proviso does not apply to the purchase, redemption or retirement of
shares of common stock with funds or other property or amounts paid by the
Company for which the Company receives concurrent reimbursement from any other
Person (other than the Company's Subsidiaries); and
(vi) payments made in respect of (x) the cancellation
of fractional shares of Common Stock in connection with the conversion of the
Series A Preferred Stock and the exercise of the Warrants and (y) the repurchase
or redemption of any shares of Series A Preferred Stock in an aggregate amount
in the case of (x) and (y) not to exceed $500,000.
In determining the amount of Restricted Payments permissible under
clause (z) of Section 4.10(a) above, amounts expended pursuant to clauses (i),
(v) and (vi) of this Section 4.10(b) shall be included as Restricted Payments.
Notwithstanding the foregoing, payments made by the
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Company to Orbital pursuant to the Orbital Agreements shall not be deemed
Restricted Payments.
The Company may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default and, at
the time of and after giving effect to such designation, the Company could incur
$1.00 of additional Indebtedness under the applicable provisions of the first
paragraph under Section 4.12(a); provided, however, that in no event shall all
or any portion of the material assets or properties (other than cash) owned by
the Company on the Issue Date be transferred to or held by an Unrestricted
Subsidiary of the Company and provided, further, that such ability to incur
$1.00 of additional Indebtedness shall not be required in the case of any newly
created Unrestricted Subsidiary funded solely with an Investment described in
clause (vi) of the definition of "Permitted Investment." For purposes of making
such determination, all outstanding Investments by the Company and its
Restricted Subsidiaries (except to the extent repaid in cash and except for
Investments described in clause (vi) of the definition of "Permitted
Investment") in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation and will reduce the amount available
for Restricted Payments under Section 4.10. All such outstanding Investments
will be deemed to constitute Investments in an amount equal to the greatest of:
(1) the net book value of such Investments at the time of such designation; (2)
the Fair Market Value of such Investments at the time of such designation; and
(3) the original Fair Market Value of such Investments at the time they were
made. Such designation will only be permitted if such Restricted Payment would
be permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments, if not made in cash, shall be
the Fair Market Value on the date of the Restricted Payment of the asset(s)
proposed to be transferred by the Company or such Restricted Subsidiary, as the
case may be, pursuant to the Restricted Payment. Not later than the date of
making any Restricted Payment, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this covenant
were computed, which calculations may be based upon the latest available
financial statements of the Company.
SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, sell, lease transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make any contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless:
(i) such Affiliate Transaction is on terms that are
no less favorable to the Company or such Restricted Subsidiary than those that
would have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person;
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(ii) the Company delivers to the Trustee: (a) with
respect to any Affiliate Transaction involving aggregate consideration in excess
of $2.5 million, (x) a determination by the disinterested members of the Board
of Directors of the Company made in good faith (evidenced by a resolution
approved by at least a majority of the disinterested members of the Board of
Directors of the Company and set forth in an Officers' Certificate delivered to
the Trustee) or (y) an opinion as to the fairness of such Affiliate Transaction
to the Company or Restricted Subsidiary involved in such Affiliate Transaction
from a financial point of view issued by an Independent Financial Advisor or,
with respect to development, launch and operations of satellites and remote
imaging-related matters, a nationally recognized expert in the respective
applicable industry; and (b) with respect to any Affiliate Transaction involving
aggregate consideration in excess of $10 million, an opinion as to the fairness
of such Affiliate Transaction to the Company or Restricted Subsidiary involved
in such Affiliate Transaction from a financial point of view issued by an
Independent Financial Advisor or, with respect to development, launch and
operations of satellites and remote imaging-related matters, a nationally
recognized expert in the respective applicable industry.
(b) The following shall not be deemed Affiliate Transactions:
(i) any employment agreement, stock option or stock
purchase agreement entered into by the Company or any of its Restricted
Subsidiaries with any of their respective employees in the ordinary course of
business;
(ii) transactions between or among the Company and/or
its Wholly Owned Restricted Subsidiaries;
(iii) Restricted Payments permitted by clauses (i),
(ii), (iv), (v) and (vi) of the Section 4.10(b) and Permitted Investments of a
type referred to in clauses (i), (iii) and (vi) of the definition of Permitted
Investments;
(iv) the sale of common Equity Interests (other than
Disqualified Stock, except as contemplated by the Stock Purchase Agreement) of
the Company for cash to an Affiliate of the Company;
(v) transactions pursuant to agreements entered into
with resellers of the Company's products and services on terms substantially the
same as the Company's standard agreements entered into with such parties in the
ordinary course of business;
(vi) transactions pursuant to the Orbital Agreements,
including transactions pursuant to any amendments to the Procurement Agreement
with respect to the selection of the launch vehicle for the satellite designated
on the Issue Date as the OrbView-4 satellite;
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(vii) amendments, supplements or other modifications
to the Orbital Agreements that do not involve the payment of cash by the Company
or any of its Restricted Subsidiaries;
(viii) payment of reasonable directors fees to
Persons who are not otherwise Affiliates of the Company; and
(ix) the sale of securities (other than common Equity
Interests) of the Company for cash to an Affiliate of the Company; provided
that: (A) an amount of such securities at least equal to the amount sold to such
Affiliate have been or are being sold substantially simultaneously to Persons
that are not Affiliates of the Company; (B) the price per security paid by such
Affiliate is no less than the price paid by such non-Affiliates; and (C) the
Company shall not have entered into any other arrangement with such
non-Affiliates to induce such non-Affiliates to purchase such securities.
SECTION 4.12. LIMITATION ON INCURRENCE OF INDEBTEDNESS OR ISSUANCE OF
DISQUALIFIED STOCK.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guaranty or otherwise become directly or indirectly liable, contingently
or otherwise, with respect to (collectively, "incur") any Indebtedness
(including Acquired Debt) or any Disqualified Stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock and the Restricted Subsidiaries may incur Indebtedness if,
after giving pro forma effect to the incurrence of such Indebtedness or the
issuance of such Disqualified Stock and the use of proceeds thereof, the
aggregate Indebtedness to Cash Flow Ratio of the Company does not exceed 4.0 to
1. Notwithstanding the foregoing, prior to June 30, 2001, the Company or any
Restricted Subsidiary may incur Indebtedness if immediately after giving pro
forma effect to the incurrence of such Indebtedness and the receipt and
application of the proceeds thereof, the Indebtedness to Capital Ratio would be
less than or equal to 65.0%.
(b) The provisions set forth in clause (a) above shall not
apply to:
(i) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness under Credit Facilities; provided that
the aggregate principal amount of all Indebtedness (with letters of credit being
deemed to have a principal amount equal to the maximum potential liability of
the Company and its Subsidiaries thereunder) outstanding under all Credit
Facilities after giving effect to such incurrence does not exceed an amount
equal to the greater of (A) $25 million and (B) 85% of Eligible Receivables;
(ii) the incurrence by the Company of Indebtedness
represented by the Notes and this Indenture or the issuance of shares of Series
A Preferred Stock as paid-in-kind dividends;
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(iii) Existing Indebtedness;
(iv) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness under (A) Hedging Obligations, provided
that (1) the notional principal amount of any interest rate protection agreement
does not significantly exceed the principal amount of the Indebtedness to which
such interest rate protection agreement relates and (2) any agreements related
to fluctuations in currency rates do not increase the outstanding Indebtedness
other than as a result of fluctuations in foreign currency exchange rates, and
(B) performance, surety and workers' compensation bonds or other obligations of
a like nature incurred in the ordinary course of business;
(v) the incurrence by any Unrestricted Subsidiary of
the Company of Non- Recourse Debt; provided that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary such event shall be deemed
to constitute an incurrence of Indebtedness by a Restricted Subsidiary;
(vi) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness owed to and held by the Company or any
of its Wholly Owned Restricted Subsidiaries (the Indebtedness incurred pursuant
to this clause (vi) being hereafter referred to as "Intercompany Indebtedness");
provided that an incurrence of Indebtedness shall be deemed to have occurred
upon (x) any sale or other disposition of Intercompany Indebtedness to a Person
other than the Company or any of its Restricted Subsidiaries, (y) any sale or
other disposition of Equity Interests of the Company's Restricted Subsidiaries
which holds Intercompany Indebtedness such that such Restricted Subsidiary
ceases to be a Restricted Subsidiary after such sale or other disposition or (z)
designation of a Restricted Subsidiary as an Unrestricted Subsidiary;
(vii) the incurrence by the Company or any of its
Restricted Subsidiaries of Non-Recourse Debt to finance purchase money
obligations;
(viii) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness ("Permitted Refinancing Indebtedness")
incurred to refinance, replace or refund Indebtedness ("Refinanced
Indebtedness") incurred pursuant to paragraph (a) of this Section 4.12 or
pursuant to clause (i) or (iii) of this paragraph (b); provided that: (x) the
aggregate principal amount of such Permitted Refinancing Indebtedness does not
exceed the aggregate principal amount of the Refinanced Indebtedness (including
accrued and unpaid interest thereon); (y) such Permitted Refinancing
Indebtedness shall have a final maturity equal to or later than, and a Weighted
Average Life to Maturity equal to or greater than, the final maturity and
Weighted Average Life to Maturity of the Refinanced Indebtedness, respectively;
and (z) such Permitted Refinancing Indebtedness shall rank no higher relative to
the Notes than the Refinanced Indebtedness and in no event may any Indebtedness
of the Company, or any of its Restricted Subsidiaries be refinanced with
Indebtedness of any Restricted Subsidiary under this clause (viii);
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(ix) the incurrence by the Company or any of its
Restricted Subsidiaries of Capital Lease Obligations in an aggregate amount for
all such Persons not to exceed $15 million at any one time outstanding;
(x) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness not to exceed $15 million outstanding at
any time pursuant to a Fixed Asset Financing; and
(xi) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness in addition to that described in clauses
(i) through (x) of this Section 4.12(b), so long as the aggregate principal
amount of all such Indebtedness, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness incurred
pursuant to this clause (xi), shall not exceed $10 million outstanding at any
one time in the aggregate.
SECTION 4.13. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to:
(i) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries on its Capital Stock or with
respect to any other interest or participation in, or measured by, its profits;
(ii) pay any Indebtedness owed to the Company or any
of its Restricted Subsidiaries;
(iii) make loans or advances to the Company or any of
its Restricted Subsidiaries; or
(iv) transfer any of its properties or assets to the
Company or any of its Restricted Subsidiaries.
(b) The restrictions set forth in clause (a) above shall not
apply to encumbrances or restrictions existing under or by reason of:
(i) this Indenture, the Pledge Agreement or the
Notes;
(ii) Existing Indebtedness;
(iii) applicable law;
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(iv) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Company or any of its Restricted Subsidiaries
as in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired;
(v) customary non-assignment provisions in leases or
other agreements entered into in the ordinary course of business;
(vi) purchase money obligations for property acquired
in the ordinary course of business that impose restrictions of the nature
described in clause (iv) above on the property so acquired;
(vii) Permitted Refinancing Indebtedness; provided
that the restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those contained in the
agreements governing the Refinanced Indebtedness;
(viii) restrictions on cash or other deposits or net
worth imposed by customers under contracts entered into in the ordinary course
of business;
(ix) secured Indebtedness otherwise permitted to be
incurred pursuant to Section 4.16 hereof that limits the right of the debtor to
dispose of the assets securing such Indebtedness; or
(x) in the case of clauses (i), (ii), (iv), (v),
(vi), (vii), (viii) and (ix) above, any amendments, modifications, restatements,
renewals, increases, supplements, modifications, restatements or refinancings
thereof, provided that such amendments, modifications, restatements or
refinancings are not materially more restrictive with respect to such dividend
and other payment restrictions than those contained in such instruments as in
effect on the date of their incurrence.
SECTION 4.14. LIMITATION ON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages (if any) thereon to the date of purchase
(the "Change of Control Payment").
(b) Within ten days following the date on which any Change of
Control occurs (the "Change of Control Date"), the Company shall send, by first
class mail, a notice to each Holder, with a copy to the Trustee, which notice
shall govern the terms of the Change of
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Control Offer. The notice to the Holders shall contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the
Change of Control Offer. The notice shall state:
(i) that the Change of Control Offer is being made
pursuant to this Section 4.14 and that all Notes tendered and not withdrawn
shall be accepted for payment;
(ii) the purchase price (including the amount of
accrued interest and Liquidated Damages, if any) and the purchase date (which
shall be no earlier than 30 days nor later than 40 days from the date such
notice is mailed, other than as may be required by law) (the "Change of Control
Payment Date");
(iii) that any Note not tendered will continue to
accrue interest;
(iv) that, unless the Company defaults in making
payment therefor, any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control Payment
Date;
(v) that Holders electing to have a Note purchased
pursuant to a Change of Control Offer will be required to surrender the Note,
with the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Note completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day prior to the Change of
Control Payment Date;
(vi) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than five Business Days prior
to the Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Notes the Holder delivered for purchase and a statement that such Holder is
withdrawing such Holder's election to have such Notes purchased;
(vii) that Holders whose Notes are purchased only in
part will be issued new Notes in a principal amount equal to the unpurchased
portion of the Notes surrendered; provided that each Note purchased and each new
Note issued shall be in an original principal amount of $1,000 or integral
multiples thereof; and
(viii) the circumstances and relevant facts regarding
such Change of Control.
(c) On or before the Change of Control Payment Date, the
Company shall, to the extent lawful: (i) accept for payment all Notes or
portions thereof tendered pursuant to the Change of Control Offer; (ii) deposit
with the Paying Agent in U.S. dollars, an amount equal to the Change of Control
Payment in respect of all Notes or portions thereof so tendered; and (iii)
deliver or cause to be delivered to the Trustee, Notes so accepted together with
an Officers' Certificate stating the aggregate principal amount of Notes or
portions thereof being purchased
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by the Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Note surrendered; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. Any Notes not so accepted
shall be promptly mailed by the Company to the Holder thereof. Any amounts
remaining after the purchase of Notes pursuant to a Change of Control Offer
shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent the
provisions of any securities laws or regulations conflict with the provisions
under this Section 4.14, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under this Section 4.14 by virtue thereof. The Company shall publicly announce
the results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date. Any amounts remaining after the purchase of
Notes pursuant to a Change of Control Offer shall be returned by the Trustee to
the Company.
(d) The Company will not be required to make a Change of
Control Offer upon a Change of Control if a third party makes the Change of
Control Offer in the manner, at the time and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
made by the Company and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
SECTION 4.15. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY INTERESTS.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to consummate an Asset Sale unless:
(i) the Company or such Restricted Subsidiary, as the
case may be, receives consideration at the time of such Asset Sale at least
equal to the Fair Market Value of the assets sold or otherwise disposed of;
(ii) at least 75% of the consideration received in
the Asset Sale by the Company or such Restricted Subsidiary, as the case may be,
consists of (a) cash or Cash Equivalents or (b) the assumption of Indebtedness
(other than Indebtedness that is subordinated) of the Company or such Restricted
Subsidiary and the release of the Company and the Restricted Subsidiaries, as
applicable, from all liability on the Indebtedness assumed; and
(iii) the aggregate Fair Market Value of all non-Cash
Consideration received therefor by the Company or such Restricted Subsidiary, as
the case may be, when aggregated with the Fair Market Value of all other
non-Cash Consideration received by the
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Company and its Restricted Subsidiaries from all other Asset Sales since the
Issue Date that has not yet been converted into cash or Cash Equivalents (in
either case, in U.S. dollars or freely convertible into U.S. dollars), does not
exceed (without duplication) 5% of the aggregate Consolidated Tangible Net
Assets of the Company at the time of such Asset Sale; provided, however, that
any securities, notes or similar obligations received by any of the Company or
such Restricted Subsidiaries from such transferees that are contemporaneously
(subject to ordinary settlement periods) converted by the Company or such
Restricted Subsidiaries into cash, shall be deemed to be cash (to the extent of
the net cash received) for purposes of clauses (ii) and (iii).
Within 270 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds to: (i) make capital expenditures
or acquire Business Assets, (ii) acquire 100% of the Equity Interests of a
Related Satellite Business, (iii) market imagery products and services, (iv)
repay Indebtedness under a Credit Facility, and (v) provide working capital.
Pending the final application of any such Net Proceeds, the Company may
temporarily invest such Net Proceeds in any manner that is not prohibited by
this Indenture. Any Net Proceeds from an Asset Sale that are not applied or
invested as provided in the first sentence of this paragraph will be deemed to
constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds
exceeds $7.5 million (the "Asset Sale Offer Trigger Date"), the Company will be
required to make an offer to all Holders of Notes (an "Asset Sale Offer") to
purchase on a date not less than 30 nor more than 45 days following the Asset
Sale Offer Trigger Date the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds (and not solely the amount in excess of
$7.5 million), at an offer price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages (if any) thereon to the date of purchase, in accordance with the
procedures set forth in clause (b) below. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general business
purposes. If the aggregate amount of Notes surrendered by Holders thereof
exceeds the amount of Excess Proceeds, the Trustee will select the Notes to be
purchased on a pro rata basis in accordance with the procedures set forth in
Section 3.4.
Upon completion of such offer to purchase, the amount of Excess
Proceeds will be reset at zero. The Asset Sale Offer shall remain open for a
period of 20 Business Days or such longer period as may be required by law.
If the Purchase Date is on or after a Record Date and on or before the
related Interest Payment Date, any accrued and unpaid interest shall be paid to
the Person in whose name a Note is registered at the close of business on such
Record Date, and no additional interest shall be payable to Holders who tender
Notes pursuant to the Asset Sale Offer.
(b) Each notice of an Asset Sale Offer pursuant to this
Section 4.15 shall be mailed or caused to be mailed, by first class mail, by the
Company not more than 25 days after the Asset Sale Offer Trigger Date to all
Holders at their last registered addresses determined as of a date within 15
days of the mailing of such notice, with a copy to the Trustee. The notice shall
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contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer and shall state the following
terms:
(i) that the Asset Sale Offer is being made pursuant
to Section 4.15 and that all Notes tendered will be accepted for payment;
provided, however, that if the aggregate principal amount of Notes tendered in
an Asset Sale Offer plus accrued interest and Liquidated Damages (if any) at the
expiration of such offer exceeds the aggregate amount of the Excess Proceeds,
the Trustee shall select the Notes to be purchased on a pro rata basis (with
such adjustments as may be deemed appropriate by the Trustee so that only Notes
in denominations of $1,000 or multiples thereof shall be purchased);
(ii) the purchase price (including the amount of
accrued interest and Liquidate Damages, if any) and the purchase date (which
shall be 20 Business Days from the date of mailing of notice of such Asset Sale
Offer, or such longer period as required by law) (the "Proceeds Purchase Date");
(iii) that any Note not tendered will continue to
accrue interest;
(iv) that, unless the Company defaults in making
payment therefor, any Note accepted for payment pursuant to the Asset Sale Offer
shall cease to accrue interest after the Proceeds Purchase Date;
(v) that Holders electing to have a Note purchased
pursuant to an Asset Sale Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day prior to the Proceeds Purchase
Date;
(vi) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than five Business Days prior
to the Proceeds Purchase Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Notes
the Holder delivered for purchase and a statement that such Holder is
withdrawing such Holder's election to have such Note purchased; and
(vii) that Holders whose Notes are purchased only in
part will be issued new Notes in a principal amount equal to the unpurchased
portion of the Notes surrendered; provided that each Note purchased and each new
Note issued shall be in an original principal amount of $1,000 or integral
multiples thereof.
On or before the Proceeds Purchase Date, the Company shall, to the
extent lawful, (i) accept for payment Notes or portions thereof tendered
pursuant to the Asset Sale Offer which are to be purchased in accordance with
this Section 4.15, (ii) deposit with the Paying Agent in U.S. dollars, an amount
sufficient to pay the purchase price plus accrued interest and Liquidated
Damages (if any) of all Notes to be purchased and (iii) deliver to the Trustee
Notes so accepted
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together with an Officers' Certificate stating the Notes or portions thereof
being purchased by the Company. The Paying Agent shall promptly mail to the
Holders of Notes so accepted payment in an amount equal to the purchase price
plus accrued interest and Liquidated Damages, if any.
Any amounts remaining after the purchase of Notes pursuant to an Asset
Sale Offer shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with this Section
4.15, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under
Section 4.15 by virtue thereof.
(c) The foregoing provisions shall not apply to the sale,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company, which shall be governed by the provisions of Article V.
SECTION 4.16. LIMITATION ON LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on any asset or property now owned or hereafter acquired, or any
income or profits therefrom, or assign or convey any right to receive income
therefrom, unless (i) in the case of Liens securing obligations subordinate to
the Notes, the Notes are secured by a valid, perfected Lien on such asset or
property that is senior in priority to such Liens, (ii) in the case of Liens
securing obligations subordinate to a Subsidiary Guarantee, such Subsidiary
Guarantee is secured by a valid, perfected Lien on such asset or property that
is senior in priority to such Liens, and (iii) in all other cases, the Notes
(and, if such Lien secures obligations of a Restricted Subsidiary, a Subsidiary
Guarantee of such Restricted Subsidiary) are equally and ratably secured;
provided, however, that the foregoing shall not prohibit or restrict Permitted
Liens.
SECTION 4.17. BUSINESS ACTIVITIES AND CONSTRUCTION OF ORBVIEW
SATELLITES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business other than that which is related to the
design, development and operation of remote imaging satellites and the worldwide
marketing and sales of remote imagery-based products and services.
SECTION 4.18. LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any Restricted Subsidiary
of the Company to, directly or indirectly, enter into any Sale and Leaseback
Transaction with respect to any property or assets (whether now owned or
hereafter acquired), except for a Sale and Leaseback
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Transaction not exceeding 365 days, unless (i) the sale or transfer of such
property or assets to be leased is treated as an Asset Sale and complies with
the covenants contained in Section 4.15 hereof and (ii) the Company or such
Restricted Subsidiary would be entitled under Section 4.12 hereof to incur
Indebtedness (with the lease obligations being treated as Indebtedness for
purposes of ascertaining compliance with this covenant) in respect of such Sale
and Leaseback Transaction.
SECTION 4.19. LIMITATION ON SALE OF CAPITAL STOCK OF SUBSIDIARIES.
The Company shall not, and shall not permit any Restricted Subsidiary
to, issue, transfer, convey, lease or otherwise dispose of any shares of Capital
Stock or other ownership interests in a Restricted Subsidiary or securities
convertible or exchangeable into, or options, warrants, rights or other interest
with respect to, Capital Stock of or other ownership interests in a Restricted
Subsidiary to any Person (other than to the Company or a Wholly Owned Restricted
Subsidiary) except in a transaction that consists of a sale of all of the
Capital Stock of or other ownership interests in such Subsidiary owned by the
Company and any Subsidiary of the Company that complies with the provisions
contained in Section 4.15 hereof to the extent such provisions apply.
ARTICLE V
MERGER, CONSOLIDATION OR SALE OF ASSETS
SECTION 5.1. MERGERS, CONSOLIDATIONS AND SALES OF ASSETS.
(a) The Company may not consolidate or merge with or into
(whether or not the Company is the surviving Person), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions to, another Person unless:
(i) the Company is the surviving Person or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized and existing under
the laws of the United States, any state thereof or the District of Columbia;
(ii) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the Notes,
the Indenture and the Pledge Agreement pursuant to a supplemental indenture in
form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction, no Default
or Event of Default exists;
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(iv) the Company, or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction;
(v) the Company, or the Person formed by or surviving
any such consolidation or merger (if other than the Company) or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the immediately
preceding fiscal quarter, will be permitted to incur at least $1.00 of
additional Indebtedness pursuant to Section 4.12(a) hereof; and
(vii) the Company and the surviving entity shall have
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture, comply with all
applicable provisions of this Indenture and that all conditions precedent in
this Indenture relating to such transaction have been satisfied.
(b) For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
SECTION 5.2. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of either of the
Company with or into, any other Person or any conveyance, transfer or lease of
the properties and assets of the Company substantially as an entity in
accordance with Section 5.1, the successor Person formed by such consolidation
or into which the Company is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with the same effect as if
such successor Person had been named as the Company herein.
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ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) default for 30 days in the payment when due of
interest on, or Liquidated Damages (if any) with respect to, the Notes;
(ii) default in payment when due (whether at
maturity, upon redemption or repurchase, or otherwise) of the principal of or
premium (if any) on the Notes;
(iii) default in the payment of principal, interest
or Liquidated Damages (if any) on Notes required to be purchased pursuant to
Section 4.14 or Section 4.15 or failure by the Company to comply with the
provisions of Article V;
(iv) failure by the Company or any of its Restricted
Subsidiaries for 30 days after notice to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% of the outstanding
principal amount of the Notes, to comply with any of their other covenants in
this Indenture or the Notes;
(v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by any the
Company or any of its Restricted Subsidiaries), whether such Indebtedness or
guarantee now exists, or is created after the date of this Indenture, which
default:
(A) is caused by a failure to pay principal
of, or premium, if any, or interest on, such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the date of such
default (a "Payment Default"); or
(B) results in the acceleration (which
acceleration has not been rescinded) of such Indebtedness prior to its express
maturity, and, in each case described in clause (a) and (b) of this paragraph,
the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $5 million
or more;
(vi) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments (other than any judgments as to which a
reputable insurance company has accepted full liability and whose bond, premium
or similar charge therefor is not in excess of $5
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million) aggregating in excess of $5 million, which judgments are not paid,
discharged or stayed within 60 days after their entry;
(vii) (x) breach by the Company of any representation
or warranty set forth in the Pledge Agreement upon notice of such breach to the
Company by the Trustee or to the Company and the Trustee by the Holders of at
least 25% of the outstanding principal amount of the Notes; (y) failure by the
Company or any of its Restricted Subsidiaries for 30 days after notice to the
Company by the Trustee or to the Company and the Trustee by the Holders of at
least 25% of the outstanding principal amount of the Notes, to cure any default
by the Company in the performance of any covenant set forth in the Pledge
Agreement; or (z) repudiation by the Company of any of its obligations under the
Pledge Agreement or the unenforceability of the Pledge Agreement against the
Company for any reason;
(viii) the entry by a court having jurisdiction in
the premises of (A) a decree or order for relief in respect of the Company or
any Restricted Subsidiary in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging the Company or any Restricted
Subsidiary bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company or any Restricted Subsidiary under any applicable federal or
state law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of either of the Company or any
Restricted Subsidiary or of any substantial part of its property, or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order for relief or any such other decree or order unstayed and in
effect for a period of 30 consecutive days; or
(ix) the commencement by the Company or any
Restricted Subsidiary of a voluntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other similar law or
of any other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in respect of the
Company or any Restricted Subsidiary in an involuntary case or proceeding under
any applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable federal or state law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the either of Company or any
Restricted Subsidiary, or of any substantial part of its property, or the making
by it of an assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due, or the
taking of corporate action by the Company or any Restricted Subsidiary in
furtherance of any such action.
SECTION 6.2. ACCELERATION.
(a) If an Event of Default, other than an Event of Default
specified in Section 6.1(viii) or (ix) with respect to the Company, any
Significant Subsidiary or any group of
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Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary, occurs and is continuing and has not been waived pursuant to Section
6.4, then the Trustee or the Holders of at least 25% in principal amount of the
then outstanding Notes may declare the principal of and accrued interest and
Liquidated Damages (if any) on all the outstanding Notes to be due and payable
by notice in writing to the Company and the Trustee specifying the respective
Event of Default, such notice to be deemed a "notice of acceleration" (an
"Acceleration Notice"), and the same shall become immediately due and payable.
(b) If an Event of Default specified in Section 6.1(viii) or
(ix) with respect to the Company, any Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary occurs and is continuing, then all unpaid principal of, and premium
(if any) and accrued and unpaid interest and Liquidated Damages (if any) on all
of the outstanding Notes shall become due and payable without further action or
notice on the part of the Trustee or any Holder.
(c) At any time after a declaration of acceleration with
respect to the Notes in accordance with Section 6.2(a), the Holders of a
majority in principal amount of the Notes may rescind and cancel such
declaration and its consequences, but only: (i) if the rescission would not
conflict with any judgment or decree, (ii) if all existing Events of Default
have been cured or waived except nonpayment of principal or interest or
Liquidated Damages (if any) that has become due solely because of the
acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid,
(iv) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances and all
other amounts due the Trustee pursuant to Section 7.7, and (v) if the Trustee
shall have received an Officers' Certificate that such Event of Default has been
cured or waived. No such rescission shall affect any subsequent Default or
impair any right consequent thereto.
(d) In the case of any Event of Default occurring by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to the optional redemption provisions of this Indenture, an equivalent
premium shall also become and be immediately due and payable upon the
acceleration of the Notes pursuant to Section 6.2(a) or (b). If an Event of
Default occurs prior to March 1, 2002 by reason of any such willful action (or
inaction) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to March 1, 2002, then the premium
specified herein shall also become immediately due and payable to the extent
permitted by law upon the acceleration of the Notes pursuant to Section 6.2(a)
or (b).
SECTION 6.3. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment of
principal or premium (if any)
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of or interest or Liquidated Damages (if any) on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative to the extent permitted by
law.
SECTION 6.4. WAIVER OF PAST DEFAULTS.
Subject to Sections 2.9, 6.7 and 9.2, at any time prior to a
declaration of acceleration with respect to the Notes in accordance with Section
6.2(a), the Holders of a majority in aggregate principal amount of the Notes
then outstanding, by notice to the Trustee may, on behalf of the Holders of all
the Notes, waive an existing Default or Event of Default and its consequences,
except a continuing Default or Event of Default in the payment of principal or
premium (if any) of or interest or Liquidated Damages (if any) on any Note as
specified in clauses (i) and (ii) of Section 6.1.
SECTION 6.5. CONTROL BY MAJORITY.
Subject to Section 2.9, the Holders of a majority in principal amount
of the outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it, including, without limitation, any remedies provided for
in Section 6.3. Subject to Section 7.1, however, the Trustee may refuse to
follow any direction that the Trustee reasonably believes conflicts with any law
or this Indenture or that the Trustee determines may be unduly prejudicial to
the rights of another Holder. Notwithstanding any provision to the contrary
herein, the Trustee shall not be obligated to take any action with respect to
the provisions of Section 6.2(d) unless directed to do so pursuant to this
Section 6.5.
SECTION 6.6. LIMITATION ON SUITS.
A Holder may not pursue any remedy with respect to this Indenture or
the Notes unless:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) Holders of at least 25% in principal amount of the
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holders offer to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense to be
incurred in compliance with such request;
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(d) the Trustee does not comply with the request within 30
days after receipt of the request and the offer of satisfactory indemnity; and
(e) during such 30-day period the Holders of a majority in
principal amount of the outstanding Notes do not give the Trustee a direction
which, in the opinion of the Trustee, is inconsistent with the request.
The foregoing limitations shall not apply to a suit instituted by a
Holder for the enforcement of the payment of principal and premium (if any) or
interest and Liquidated Damages (if any) on such Note on or after the respective
due dates set forth in such Note (including upon acceleration thereof) or the
institution of any proceeding with respect to this Indenture or any remedy
hereunder, including, without limitation, acceleration, by the Holders of a
majority in principal amount of outstanding Notes, provided that upon
institution of any proceeding or exercise of any remedy, such Holders provide
the Trustee with prompt notice thereof.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder, it being
understood and intended that no one or more Holders shall have any right by
virtue of any provision of this Indenture to affect, disturb or prejudice the
rights of any other Holders, or to obtain or to seek to obtain priority or
preference over any other Holders, or to enforce any right under this Indenture
except in the manner herein provided and for the equal and ratable benefit of
all the Holders.
SECTION 6.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of, and interest and Liquidated Damages
(if any) on a Note, on or after the respective due dates expressed in such Note,
or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
SECTION 6.8. COLLECTION SUIT BY TRUSTEE.
If an Event of Default in payment of principal or interest or
Liquidated Damages (if any) specified in clause (i) or (ii) of Section 6.1
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company or any other
obligor on the Notes for the whole amount of principal and accrued interest
remaining unpaid and Liquidated Damages, if any, together with interest on
overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, and such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and all other amounts due to the Trustee pursuant to
Section 7.7.
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SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel and all other
amounts due to the Trustee pursuant to Section 7.7) and the Holders allowed in
any judicial proceedings relating to the Company or any other obligor upon the
Notes, any of their respective creditors or any of their respective property and
shall be entitled and empowered to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same,
and any custodian, receiver, assignee, trustee, liquidator or other similar
official in any such judicial proceedings is hereby authorized by each Holder to
make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.7. The Company's payment obligations to
the Trustee under this Section 6.9 shall be secured in accordance with the
provisions of Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money or property pursuant to this Article
VI, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.7;
Second: if the Holders are forced to proceed against the
Company directly without the Trustee, to the Holders for their collection costs;
Third: to Holders for amounts due and unpaid on the Notes for
principal and premium (if any) and interest and Liquidated Damages (if any),
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal and premium, and interest and
Liquidated Damages, respectively; and
Fourth: to the Company or any other obligor on the Notes, as
their interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Holders pursuant to this Section 6.10.
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SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.7, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Notes.
ARTICLE VII
TRUSTEE
SECTION 7.1. DUTIES OF TRUSTEE.
(a) The duties and responsibilities of the Trustee shall be as
provided by the TIA and this Indenture. No provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(b) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise thereof as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(c) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties as are
required by the TIA or specifically set forth in this Indenture and no other
covenants or obligations shall be implied in this Indenture against the Trustee.
(ii) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(d) Notwithstanding anything to the contrary herein contained,
the Trustee may not be relieved from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct.
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(e) Every provision of this Indenture that relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.1.
(f) The Trustee shall not be liable for interest on any money
or assets received by it except as the Trustee may agree in writing. Assets held
in trust by the Trustee need not be segregated from other assets except to the
extent required by law.
SECTION 7.2. RIGHTS OF TRUSTEE.
Subject to Section 7.1:
(a) The Trustee may rely and shall be fully protected in
acting or refraining from acting upon any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or an Opinion of
Counsel, or both. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Officers' Certificate or Opinion
of Counsel.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action that it
takes or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, upon reasonable notice to the Company, to
examine the books, records, and premises of the Company, personally or by agent
or attorney and to consult with the officers and representatives of the Company,
including the Company's accountants and attorneys.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
including, without limitation, the provisions of Section 6.5 hereof, unless such
Holders shall have offered to the Trustee security or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and liabilities which
may be incurred by it in compliance with such request, order or direction.
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(g) The Trustee shall not be required to give any bond or
surety in respect of the performance of its powers and duties hereunder.
(h) the Trustee shall not be charged with knowledge of any
Default or Event of Default unless either (1) a Responsible Officer of the
Trustee shall have actual knowledge of such Default or Event of Default or (2)
written notice of such Default or Event of Default shall have been given to the
Trustee by the Company or any Holder.
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE AND AGENTS.
Each of the Trustee, any Paying Agent and any Registrar, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Company or any of its Subsidiaries or Affiliates
with the same rights it would have if it were not Trustee or such agent.
SECTION 7.4. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of
this Indenture, the Pledge Agreement, the Pledged Securities or the Notes, and
it shall not be accountable for the Company's use of the proceeds from the
Notes, and it shall not be responsible for any statement of the Company in this
Indenture or the Notes, other than the Trustee's certificate of authentication.
SECTION 7.5. NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Holder notice of the
uncured Default or Event of Default within 30 days after such Default or Event
of Default becomes known to the Trustee. Except in the case of a Default or an
Event of Default in payment of principal of, premium, if any, interest or
Liquidated Damages (if any) on any Note, including an accelerated payment and
the failure to make payment on the Change of Control Payment Date pursuant to a
Change of Control Offer or on to the Proceeds Purchase Date pursuant to an Asset
Sale Offer, and, except in the case of a failure to comply with Article V
hereof, the Trustee may withhold the notice if and so long as it in good faith
determines that withholding such notice is in the interest of the Holders.
SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15, the Trustee shall, to the extent that
any of the events described in TIA Section 313(a) occurred within the previous
twelve months, but not otherwise, mail to each Holder a report dated as of such
date that complies with TIA Section 313(a). The Trustee also shall comply with
TIA Sections 313(b) and (c).
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A copy of each report at the time of its mailing to Holders shall be
mailed to the Company and filed with the Commission and each securities
exchange, if any, on which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes become
listed on any securities exchange and the Trustee shall comply with TIA Section
313(d).
SECTION 7.7. COMPENSATION AND INDEMNITY.
(a) The Company agrees:
(i) to pay to the Trustee from time to time
reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(ii) except as otherwise expressly provided herein,
to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(iii) to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense (including the reasonable
compensation, expenses and disbursements of its agents, accountants, experts and
counsel) incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of this trust, including the
costs and expenses of enforcing this Indenture against the Company (including,
without limitation, this Section 7.7) and of defending itself against any claim
(whether asserted by any Holder or the Company) or liability in connection with
the exercise or performance of any of its powers or duties hereunder.
(b) The Trustee shall notify the Company promptly of any claim
asserted against the Trustee for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder.
(c) The Company need not reimburse any expense or indemnify
the Trustee against any loss or liability to the extent incurred by the Trustee
through its negligence, bad faith or willful misconduct.
(d) To secure the Company's payment obligations in this
Section 7.7, the Trustee shall have a lien prior to the Notes on all assets or
money held or collected by the Trustee, in its capacity as Trustee, except
assets or money held in trust to pay principal of, or interest or Liquidated
Damages (if any) on, particular Notes. The Trustee's right to receive payment of
any amounts due under this Section 7.7 shall not be subordinate to any other
liability or indebtedness of the Company.
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(e) When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.1(viii) or (ix) occurs, such expenses
and the compensation for such services are intended to constitute expenses of
administration under Title 11, U.S. Code, or any similar federal or state law.
(f) The provisions of this Section 7.7 shall survive the
resignation or removal of the Trustee and the satisfaction and discharge of this
Indenture.
(g) The Trustee shall comply with the provisions of TIA
Section 313(b)(2) to the extent possible.
SECTION 7.8. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article VII shall become
effective until the acceptance of appointment by the successor Trustee under
Section 7.9, at which time the retiring Trustee shall be fully discharged from
its obligations hereunder.
(b) The Trustee may resign at any time by giving at least 30
days' advance written notice thereof to the Company. If an instrument of
acceptance by a successor Trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
(c) The Trustee may be removed at any time by notice, in
writing, of the Holders of a majority in principal amount of the outstanding
Notes, delivered to the Trustee and to the Company.
(d) If at any time:
(i) the Trustee shall fail to comply with Section
7.11 hereof; or
(ii) the Trustee shall cease to be eligible under
Section 7.11 and shall fail to resign after written request therefor by the
Company or by any such Holder; or
(iii) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case (1) the Company by an
appropriate board resolution evidenced by an Officers' Certificate may remove
the Trustee, or (2) subject to Section 6.11, any Holder may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
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(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by an appropriate board resolution evidenced by an
Officers' Certificate shall promptly appoint a successor Trustee. If, within one
year after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the outstanding Notes delivered to the Company
and the retiring Trustee, the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Trustee and
supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner herein provided, any Holder may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(f) If the Trustee, after written request by the Company or by
any Holder who has been a Holder for at least six months, fails to comply with
Section 7.11 hereof, such Holder may petition any court of competent
jurisdiction for the removal of the Trustee or the appointment of a successor
Trustee.
(g) The Company shall give or cause to be given notice of each
resignation and each removal of the Trustee and each appointment of a successor
Trustee to all Holders in the manner provided herein. Each notice shall include
the name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 7.9. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee a written instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee. Upon request of the Company
or the successor Trustee, the retiring Trustee shall execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder, in each case subject to the lien of the retiring Trustee granted
pursuant hereto. Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article VII.
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SECTION 7.10. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee, provided that such
corporation shall be otherwise qualified and eligible under this Article VII. In
case any Notes shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Notes.
SECTION 7.11. TRUSTEE REQUIRED; ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the TIA to act as such, and has a combined capital
and surplus of at least $50,000,000 and its Corporate Trust Office in the
Borough of Manhattan, The City of New York, New York. If such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of a federal, state, territorial or District of Columbia supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Person shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect specified in this Article VII. If the Trustee has or shall acquire a
conflicting interest within the meaning of the TIA, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the TIA and this Indenture.
SECTION 7.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Notes), the Trustee shall be subject to the
provisions of the TIA regarding the collection of claims against the Company (or
any such other obligor).
ARTICLE VIII
DEFEASANCE AND SATISFACTION AND DISCHARGE
SECTION 8.1. DEFEASANCE AND COVENANT DEFEASANCE.
(a) Company's Option to Effect Defeasance or Covenant
Defeasance. The Company may at its option, by an appropriate board resolution
evidenced by an Officers' Certificate, at any time (subject to 10-day prior
written notification to the Trustee), elect to have the provisions of either
Section 8.1(b) or (c) applied to the outstanding Notes upon compliance with the
conditions set forth below in this Article VIII.
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(b) Legal Defeasance and Discharge. Upon the Company's
exercise of the option provided in Section 8.1(a) applicable to this Section,
the Company shall be deemed to have been discharged from its obligations with
respect to the outstanding Notes on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by the outstanding Notes and to have
satisfied all its other obligations under such Notes and this Indenture insofar
as such Notes are concerned (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (i) the rights of Holders of outstanding Notes to receive, solely
from the trust fund described in Section 8.1(d) and as more fully set forth in
such Section, payments in respect of the principal and premium (if any) of and
interest and Liquidated Damages (if any) on such Notes when such payments are
due, (ii) the Company's obligations with respect to such Notes under Sections
2.4, 2.6, 2.7, 2.10 and 4.2, (iii) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and (iv) this Article VIII. Subject to
compliance with this Article VIII, the Company may exercise its option under
this Section 8.1(b) notwithstanding the prior exercise of its option under
Section 8.1(c).
(c) Covenant Defeasance. Upon the Company's exercise of the
option provided in Section 8.1(a) applicable to this Section, (i) the Company
shall be released from its obligations under Sections 4.5 through 4.19,
inclusive, and (ii) the occurrence of an event specified in Section 6.1(iv)
shall not be deemed to be an Event of Default, on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance").
For this purpose, such Covenant Defeasance means that the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document, but the remainder of this Indenture and such Notes shall be unaffected
thereby.
(d) Conditions to Legal Defeasance or Covenant Defeasance. The
following shall be the conditions to application of either Section 8.1(b) or
8.1(c) to the outstanding Notes:
(i) The Company shall irrevocably have deposited or
caused to be deposited with the Trustee as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Notes: (A) cash in U.S.
dollars, or (B) non-callable Government Securities which through the scheduled
payment of principal and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due date of any payment,
money in an amount, or (C) a combination thereof, sufficient, in the opinion of
a nationally recognized firm of independent certified public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge, and which shall be applied by the Trustee to pay and discharge,
the principal and premium (if any) of, and interest and Liquidated Damages (if
any) on the Notes at the Stated Maturity of such principal or installment of
interest on the day on
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which such payments are due and payable in accordance with the terms of this
Indenture and of such Notes;
(ii) No Default or Event of Default shall have
occurred and be continuing on the date of such deposit;
(iii) Such Legal Defeasance or Covenant Defeasance
shall not cause the Trustee to have a conflicting interest as described in
Section 7.11 and for purposes of the TIA with respect to any securities of the
Company;
(iv) Such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default under,
this Indenture or any other agreement or instrument to which any Issuer or
Guarantor is a party or by which it is bound;
(v) The Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the Legal Defeasance under
Section 8.1(b) or the Covenant Defeasance under Section 8.1(c), as the case may
be, have been complied with;
(vi) In the case of an election under Section 8.1(b),
the Company shall have delivered to the Trustee an Opinion of Counsel stating
that (x) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (y) since the date of this Indenture there
has been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion shall confirm that, the Holders
of the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit, defeasance and discharge and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such deposit, defeasance
and discharge had not occurred;
(vii) In the case of an election under Section
8.1(c), the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such deposit and
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred; and
(viii) The Company shall have delivered to the
Trustee an Opinion of Counsel to the effect that such deposit and Legal
Defeasance or Covenant Defeasance shall not result in the trust arising from
such deposit constituting an investment company as defined in the Investment
Company Act of 1940, as amended, or such trust shall be qualified under such act
or exempt from regulation thereunder.
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SECTION 8.2. SATISFACTION AND DISCHARGE.
In addition to the Company's rights under Section 8.1, the Company may
terminate all of its obligations under this Indenture when:
(a) all Notes theretofore authenticated and delivered (other
than Notes which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.7 and Notes for whose payment money
has theretofore been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such trust) have
been delivered to the Trustee for cancellation or all such Notes not theretofore
delivered to the Trustee for cancellation have become due and payable and the
Company has irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust solely for that purpose an amount of money sufficient to
pay and discharge the entire principal and premium (if any) of and interest and
Liquidated Damages (if any) on the Notes not theretofore delivered to the
Trustee for cancellation;
(b) the Company has paid or caused to be paid all other sums
payable hereunder;
(c) the Company has delivered irrevocable instructions to the
Trustee to apply the deposited money toward the payment of the Notes at maturity
or redemption, as the case may be; and
(d) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, stating that all conditions precedent
specified herein relating to the satisfaction and discharge of this Indenture
have been complied with.
SECTION 8.3. SURVIVAL OF CERTAIN OBLIGATIONS.
Notwithstanding the satisfaction and discharge of this Indenture and of
the Notes referred to in Section 8.1 or 8.2, the respective obligations of the
Company and the Trustee under Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.10, 2.12,
2.13, 4.1, 4.2, 6.7, Article VII, and Sections 8.5, 8.6 and 8.7 shall survive
until no Notes are outstanding, and thereafter the obligations of the Company
and the Trustee under Sections 7.7, 8.5, 8.6 and 8.7 shall survive. Nothing
contained in this Article VIII shall abrogate any of the obligations or duties
of the Trustee under this Indenture.
SECTION 8.4. ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE.
After (i) the conditions of Section 8.1 or 8.2 have been satisfied,
(ii) the Company has paid or caused to be paid all other sums payable hereunder
and (iii) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent referred to in
clause (i) above relating to the satisfaction and discharge of this Indenture
have been complied with, the Trustee, upon written request, shall acknowledge in
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writing the discharge of the Company's obligations under this Indenture, except
for those surviving obligations specified in Section 8.3.
SECTION 8.5. APPLICATION OF TRUST MONEYS AND GOVERNMENT SECURITIES.
Subject to the provisions of Section 2.4, all money and Government
Securities (including the proceeds thereof) deposited with the Trustee pursuant
to Section 8.1(d)(i) in respect of the Notes shall be held in trust and applied
by the Trustee, in accordance with the provisions of such Notes and this
Indenture, to the payment, either directly or through any Paying Agent as the
Trustee may determine, to the Holders of such Notes, of all sums due and to
become due thereon in respect of principal and premium (if any) of and interest
and Liquidated Damages (if any) on the Notes, but such money and Government
Securities need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Government Securities deposited
pursuant to Section 8.1(d)(i) or the principal and interest received in respect
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of the outstanding Notes.
Anything in this Article VIII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon request by an
Officers' Certificate any money or Government Securities held by it as provided
in Section 8.1(d)(i) which, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent defeasance or
covenant defeasance.
SECTION 8.6. REPAYMENT TO THE COMPANY; UNCLAIMED MONEY.
Any money or Government Securities deposited with the Trustee or the
Paying Agent in trust for the payment of the principal and premium (if any) of
and interest and Liquidated Damages (if any) on the Notes and remaining
unclaimed for two years after it has become due and payable shall be paid to the
Company upon written request in the form of an Officers' Certificate, and the
Holder of such Notes shall thereafter, as a creditor, look only to the Company
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
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SECTION 8.7. REINSTATEMENT.
If the Trustee or the Paying Agent is unable to apply any money or
Government Securities in accordance with Section 8.1(b) or 8.1(c) by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to this Article VIII until such time
as the Trustee or Paying Agent is permitted to apply all such money or
Government Securities in accordance with Section 8.1(b) or 8.1(c); provided,
however, that if the Company makes any payment of principal and premium (if any)
on any Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or the Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. WITHOUT CONSENT OF HOLDERS.
Notwithstanding Section 9.2 of this Indenture, without notice to or the
consent of any Holder, the Company, when authorized by an appropriate board
resolution evidenced by an Officers' Certificate, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, and may amend this Indenture, the Notes or the
Pledge Agreement, for any of the following purposes:
(a) to cure any ambiguity, defect or inconsistency; provided
that such amendment or supplement does not, as evidenced by an Opinion of
Counsel delivered to the Trustee, adversely affect the legal rights of any
Holder;
(b) to comply with Article V;
(c) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(d) to comply with any requirements of the Commission in order
to effect or maintain the qualification of this Indenture under the TIA;
(e) to make any change that would provide any additional
benefit or rights to the Holders or that does not, as evidenced by an Opinion of
Counsel delivered to the Trustee, adversely affect the legal rights of any
Holder;
(f) to provide for issuance of the Exchange Notes (which will
have terms substantially identical in all material respects to the Original
Notes, except that the transfer restrictions contained in the Original Notes
will be modified or eliminated as appropriate, and
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which will be treated together with any outstanding Original Notes as a single
issue of securities); or
(g) to make any other change that does not, as evidenced by an
Opinion of Counsel delivered to the Trustee, adversely affect the legal rights
of any Holder;
provided that the Company deliver to the Trustee an Opinion of Counsel and an
Officers' Certificate stating that such amendment or supplement complies with
the provisions of this Section.
SECTION 9.2. WITH CONSENT OF HOLDERS.
Subject to Section 6.7, the Company, when authorized by an appropriate
board resolution evidenced by an Officers' Certificate, and the Trustee, the
Indenture, the Notes and the Pledge Agreement may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the Notes then outstanding (including consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes), and any existing
default or compliance with any provision of the Indenture, the Notes or the
Pledge Agreement may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including consents obtained in
connection with a purchase of, or tender offer or exchange offer for Notes).
Without the consent of each Holder of each Note affected thereby, an
amendment, supplement or waiver may not (with respect to any Note held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of
any Note, or alter the provisions with respect to the redemption of the Notes
(other than provisions set forth in Sections 4.14 and 4.15 of this Indenture);
(c) reduce the rate of or change the time for payment of
interest on any Note;
(d) waive a Default or Event of Default in the payment of
principal and premium (if any) of, and interest or Liquidated Damages (if any)
on, the Notes (except a rescission of acceleration of the Notes by the Holders
of at least a majority in aggregate principal amount of the Notes and a waiver
of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in
the Notes;
(f) make any change in provisions of this Indenture relating
to waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal and premium (if any) of, and interest or Liquidated
Damages (if any) on, the Notes;
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(g) waive a redemption payment with respect to any Note (other
than a payment required by Section 4.14 and 4.15); or
(h) make any change in the amendment and waiver provisions of
this Section 9.2.
Upon the request of the Company accompanied by an Officers' Certificate
in form satisfactory to the Trustee certifying corporate resolutions,
authorizing the execution of any amended or supplemental indenture, and upon the
filing with the Trustee of evidence satisfactory of the consent of the Holders
as aforesaid, and upon receipt by the Trustee of the documents described in
Section 11.5 hereof, the Trustee shall join with the Company in the execution of
such amended or supplemental indenture unless such amended or supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture. It
shall not be necessary for the consent of the Holders under this Section to
approve the particular form of any proposed amendment, supplement or waiver, but
it shall be sufficient if such consent approves the substance thereof. After an
amendment, supplement or waiver under this Section 9.2 becomes effective, the
Company shall mail to the Holders affected thereby a notice briefly describing
the amendment, supplement or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.3. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article IX or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 7.1) shall be fully protected in relying upon,
in addition to the documents required by Section 11.5, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
SECTION 9.4. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article IX,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
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SECTION 9.5. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect.
SECTION 9.6. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
outstanding Notes.
SECTION 9.7. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Company received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the last
sentence of the immediately preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies), and only those Persons,
shall be entitled to revoke any consent previously given, whether or not such
Persons continue to be Holders after such record date. No such consent shall be
valid or effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (a)
through (h) of Section 9.2, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note; provided that any such waiver shall not impair or
affect the right of any Holder to receive payment of principal of, and interest
and Liquidated Damages (if any) on, a Note, on or after the respective due dates
expressed in such Note, or to bring suit for the enforcement of any such payment
on or after such respective dates without the consent of such Holder.
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ARTICLE X
SUBSIDIARY GUARANTEES
SECTION 10.1. UNCONDITIONAL GUARANTEE.
Each Subsidiary Guarantor, upon execution and delivery of a
supplemental indenture pursuant to Section 10.10, hereby fully and
unconditionally guarantees, jointly and severally with each other Subsidiary
Guarantor, if any, to each Holder of a Note authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, irrespective of the
validity and enforceability of this Indenture or the Notes or the obligations of
the Subsidiary Guarantors under this Indenture or the Notes that: (i) the
principal of and premium (if any) and interest and Liquidated Damages (if any)
on the Notes will be paid in full when due, subject to any applicable grace
period, whether at maturity, by acceleration or otherwise and interest on the
overdue principal, if any, and interest on any interest (if any) to the extent
lawful, on the Notes and all other obligations of the Company to the Holders or
the Trustee hereunder or thereunder will be promptly paid in full or performed,
all in accordance with the terms hereof and thereof; and (ii) in case of any
extension of time of payment or renewal of any Notes or of any such other
obligations, the same will be paid in full when due or performed in accordance
with the terms of the extension or renewal, subject to any applicable grace
period, whether at stated maturity, by acceleration or otherwise, subject,
however, in the case of clauses (i) and (ii) above, to the limitations set forth
in Section 10.4. Each Subsidiary Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity or enforceability
of the Notes or this Indenture. Each Subsidiary Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that its Subsidiary Guarantee will not be discharged (except to
the extent released pursuant to Section 10.9) except by complete performance of
the obligations contained in the Notes, this Indenture and in its Subsidiary
Guarantee. If any Holder or the Trustee is required by any court or otherwise to
return to the Company, any Subsidiary Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to the Company or any
Subsidiary Guarantor, any amount paid by the Company or any Subsidiary Guarantor
to the Trustee or such Holder, each Subsidiary Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect (except to
the extent released pursuant to Section 10.9). Each Subsidiary Guarantor further
agrees that, as between each Subsidiary Guarantor, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article VI for the purposes
of its Subsidiary Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article VI, such obligations (whether or not due and payable)
shall forthwith become due and payable by each Subsidiary Guarantor for the
purpose of its Subsidiary Guarantee.
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SECTION 10.2. PRIORITY OF GUARANTEE.
The obligations of each Subsidiary Guarantor to the Holders of Notes
and to the Trustee pursuant to its Subsidiary Guarantee and this Indenture will
rank senior in right and priority of payment to all other indebtedness of such
Subsidiary Guarantor that is expressly subordinated to its Subsidiary Guarantee
and will rank pari passu in right and priority of payment with all other
indebtedness of such Subsidiary Guarantor that is not expressly so subordinated
to such Subsidiary Guarantee, except to the extent of any collateral securing
such other indebtedness.
SECTION 10.3. SEVERABILITY.
In case any provision of this Subsidiary Guarantee shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.4. LIMITATION OF SUBSIDIARY GUARANTOR'S LIABILITY.
Any term or provision of this Indenture to the contrary
notwithstanding, the maximum aggregate amount of the obligations guaranteed
hereunder by any Subsidiary Guarantor shall not exceed the maximum amount that
can be hereby guaranteed without rendering this Indenture, as it relates to such
Subsidiary Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally. To effectuate the foregoing intention, the obligations of
each Subsidiary Guarantor shall be limited to the maximum amount as will, after
giving effect to all other contingent and fixed liabilities of such Subsidiary
Guarantor and after giving effect to any collections from, rights to receive
contributions from, or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to its contribution obligations hereunder,
result in the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
any applicable law. Each Subsidiary Guarantor that makes a payment or
distribution under a Subsidiary Guarantee shall be entitled to a contribution
from each other Subsidiary Guarantor so long as the exercise of such right does
not impair the rights of the Holders under the Subsidiary Guarantees.
SECTION 10.5. WAIVER OF SUBROGATION.
Until all Obligations are paid, in full each Subsidiary Guarantor
hereby irrevocably waives any claim or other rights which it may now or
hereafter acquire against the Company that arise from the existence, payment,
performance or enforcement of such Subsidiary Guarantor's obligations under its
Subsidiary Guarantee and this Indenture, including, without limitation, any
right of subrogation, reimbursement, exoneration, indemnification, and any right
to participate in any claim or remedy of any Holder of Notes against the
Company, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Company, directly or indirectly, in cash or other
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property or by set-off or in any other manner, payment or security on account of
such claim or other rights. If any amount shall be paid to any Subsidiary
Guarantor in violation of the preceding sentence and the Notes shall not have
been paid in full, such amount shall have been deemed to have been paid to such
Subsidiary Guarantor for the benefit of, and held in trust for the benefit of,
the Holders of the Notes, and shall forthwith be paid to the Trustee for the
benefit of such Holders to be credited and applied upon the Notes, whether
matured or unmatured, in accordance with the terms of this Indenture.
SECTION 10.6. SUCCESSORS AND ASSIGNS.
This Article X shall be binding upon each Subsidiary Guarantor and its
successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
conferred upon that party in this Indenture and in the Notes shall automatically
extend to and be vested in such transferee or assignee, all subject to the terms
and conditions of this Indenture.
SECTION 10.7. NO WAIVER.
Neither a failure nor a delay on the part of either the Subsidiary
Guarantors, the Trustee or the Holders in exercising any right, power or
privilege under this Article X shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Subsidiary
Guarantors, the Trustee and the Holders herein expressly specified are
cumulative and not exclusive of any other rights, remedies or benefits which
either may have under this Article X at law, in equity, by statute or otherwise.
SECTION 10.8. MODIFICATION.
No modification, amendment or waiver of any provision of this Article
X, nor the consent to any departure by any Subsidiary Guarantor therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Trustee, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on any
Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor to any
other or further notice or demand in the same, similar or other circumstances.
SECTION 10.9. RELEASE OF SUBSIDIARY GUARANTOR.
Upon the sale or disposition of all the capital stock of a Subsidiary
Guarantor (or substantially all of its assets) by way of merger, consolidation
or otherwise or the designation of a Subsidiary Guarantor as an Unrestricted
Subsidiary pursuant to and in compliance with the terms of this Indenture, such
Subsidiary shall be released from and relieved of its obligations under its
Subsidiary Guarantee. The Trustee shall deliver an appropriate instrument
evidencing such release upon receipt of a request by the Company accompanied by
an Officers' Certificate
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and Opinion of Counsel certifying as to the compliance with this Section. Any
Subsidiary Guarantor not so released shall remain liable for the full amount of
principal of and interest and Liquidated Damages (if any) on the Notes as
provided in this Article X.
SECTION 10.10. EXECUTION OF SUPPLEMENTAL INDENTURE BY FUTURE RESTRICTED
SUBSIDIARIES.
The Company shall cause each Person that becomes a Restricted
Subsidiary, upon becoming a Restricted Subsidiary, to become a Subsidiary
Guarantor with respect to the Notes. The Company shall cause any such Restricted
Subsidiary to execute and deliver to the Trustee (i) a supplemental indenture,
in form and substance satisfactory to the Trustee, pursuant to which such
Subsidiary shall unconditionally guarantee all of the Company's obligations
under the Notes and this Indenture on the terms set forth in this Indenture and
(ii) deliver to the Trustee an Opinion of Counsel to the effect that such
supplemental indenture has been duly authorized, executed and delivered by such
Subsidiary Guarantor and, subject to the application of bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws relating to
creditors' rights generally and to the principles of equity, whether considered
in a proceeding at law or in equity, the Subsidiary Guarantee of such Subsidiary
Guarantor is a legal, valid and binding obligation of such Subsidiary Guarantor,
enforceable against such Subsidiary Guarantor in accordance with its terms.
Thereafter, such Subsidiary shall be a Subsidiary Guarantor for all purposes of
this Indenture.
SECTION 10.11. WAIVER OF STAY, EXTENSION OR USURY LAWS.
Each Subsidiary Guarantor covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture, and (to the
extent that it may lawfully do so) each such Subsidiary Guarantor hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
a provision of the TIA that is required under the TIA to be a part of and govern
this Indenture, such required provision shall control. If any provision of this
Indenture modifies or excludes any provision of the TIA that may be so modified
or excluded, the provision of the TIA shall be deemed to apply to this Indenture
as so modified or excluded, as the case may be.
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SECTION 11.2. NOTICES TO COMPANY AND TRUSTEE.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by facsimile, or by registered or certified mail, postage prepaid, return
receipt requested, and addressed as follows:
If to the Company:
Orbital Imaging Corporation
21700 Atlantic Boulevard
Dulles, Virginia 20166
Attn: General Counsel
Facsimile: 703-406-5572
If to the Trustee:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005-1180
Attn: Corporate Trust Department
Facsimile: 212-658-6425
Each of the Company and the Trustee by written notice as specified herein to
each other Person may designate additional or different addresses for notices to
such Person. Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made: as of the date delivered, if personally
delivered; when receipt is confirmed, if sent by facsimile; and five calendar
days after mailing, if sent by registered or certified mail, postage prepaid;
provided that a notice of change of address shall not be deemed to have been
given until actually received by the addressee.
SECTION 11.3. NOTICES TO HOLDERS.
Where this Indenture provides for notice to Holders, such notice shall
be sufficiently given (unless otherwise herein expressly provided) if in writing
and: (i) in the case of a Global Note, by facsimile or by overnight mail to the
Depository; and (ii) in the case of Notes other than a Global Note, by
first-class mail, postage prepaid, in each case to each Holder affected at his
address as it appears in the Note Register, and shall be sufficiently given if
sent not later than the latest date (if any) and not earlier than the earliest
date (if any) prescribed for the giving of such notice. Neither the failure to
mail any such notice nor any defect in any notice so mailed to any particular
Holder shall affect the sufficiency of such notice with respect to other
Holders. Notice may be waived in writing by any Person entitled to receive such
notice, either before or after the event requiring notice. Waivers of notice by
Holders shall be filed with the Trustee, but such
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filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
SECTION 11.4. TRUSTEE, PAYING AGENT AND REGISTRAR PROCEDURES.
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at meetings of Holders, and the Paying
Agent and the Registrar may make reasonable rules for their functions.
SECTION 11.5. COMPLIANCE CERTIFICATES AND OPINIONS.
(a) Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture, the Company
shall furnish to the Trustee such certificates and opinions as may be required
under the TIA and under this Indenture. Each such certificate or opinion
required to be made under this Indenture shall be given in the form of an
Officers' Certificate, if to be given by the Company, or an Opinion of Counsel,
if to be given by counsel, and shall comply with the requirements of the TIA and
any other requirement set forth in this Indenture.
(b) Every certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture shall include:
(i) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) a statement as to whether, in the opinion of
each such individual, such condition or covenant has been complied with.
SECTION 11.6. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
(a) In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or several
documents.
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(b) Any Officers' Certificate may be based, insofar as it
relates to legal matters, upon an Opinion of Counsel submitted therewith, unless
such officer knows, or in the exercise of reasonable care should know, that the
opinion with respect to the matters upon which his certificate is based is
erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate of officers of the Company submitted therewith
stating the information on which such counsel is relying, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
with respect to such matters is erroneous.
SECTION 11.7. ACTS OF HOLDERS; REGISTERED HOLDERS; RECORD DATES.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more written instruments
of substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 7.1) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing pursuant to this Section may be proved by the
affidavit of a witness of such execution or by a certificate of a notary public
or other officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority. The fact and date of the execution
of any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Note shall bind every future
Holder of the same Note and the Holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Note.
(e) The Company may set any day as a record date for the
purpose of determining the Holders of outstanding Notes entitled to give, make
or take any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this
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Indenture to be given, made or taken by Holders of Notes; provided that the
Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in paragraph (f) below. If not set
by the Company prior to the first solicitation of a Holder made by any Person in
respect of any such matter referred to in the foregoing sentence, the record
date for any such matter shall be the 30th day (or, if later, the date of the
most recent list of Holders required pursuant to Section 2.5) prior to such
first solicitation. If any record date is set pursuant to this paragraph, the
Holders of outstanding Notes on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders
after such record date. Nothing in this paragraph shall be construed to prevent
the Company from setting a new record date for any action for which a record
date has previously been set pursuant to this paragraph (whereupon the record
date previously set shall automatically and with no action by any Person be
cancelled and of no effect), and nothing in this paragraph shall be construed to
render ineffective any action taken by Holders of the requisite principal amount
of outstanding Notes on the date such action is taken. Promptly after any record
date is set pursuant to this paragraph, the Company, at its own expense, shall
cause notice of such record date, the proposed action by Holders to be given to
the Trustee in writing and to each Holder of Notes in the manner set forth in
Section 11.2.
(f) The Trustee may set any day as a record date for the
purpose of determining the Holders of outstanding Notes entitled to join in the
giving or making of (i) any notice hereunder, (ii) any declaration of
acceleration referred to in Section 6.2, (iii) any request to institute
proceedings referred to in Section 6.6 or (iv) any direction referred to in
Section 6.5. If any record date is set pursuant to this paragraph, the Holders
of outstanding Notes on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date. Nothing in this
paragraph shall be construed to prevent the Trustee from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of outstanding Notes on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Trustee, at the Company's expense, shall cause notice of such record date, the
proposed action by Holders to be given to the Company in writing and to each
Holder of Notes in the manner set forth in Section 11.2.
(g) Without limiting the foregoing, a Holder entitled
hereunder to take any action hereunder with regard to any particular Note may do
so with regard to all or any part of the principal amount of such Note or by one
or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.
SECTION 11.8. SUCCESSORS AND ASSIGNS.
All covenants and agreements of the Company in this Indenture and the
Notes shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successors.
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SECTION 11.9. SEVERABILITY.
In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable in any jurisdiction, in
any respect for any reason, the validity, legality and enforceability of any
such provision in every other jurisdiction and in every other respect, and of
the remaining provisions, shall not in any way be affected or impaired thereby,
it being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.
SECTION 11.10. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders of Notes, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 11.11. GOVERNING LAW; JURISDICTION.
This Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of New York, as applied to contracts made
and performed entirely within the State of New York, without regard to
principles of conflict of laws. Each of the parties hereto agrees to submit to
the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Indenture.
SECTION 11.12. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date, Proceeds
Purchase Date or Change of Control Payment Date of any Note shall not be a
Business Day, then, notwithstanding any other provision of this Indenture or of
the Notes or the Subsidiary Guarantees, payment of interest or Liquidated
Damages (if any) on or principal and premium (if any) of the Notes need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on such Interest Payment Date, Redemption Date,
Proceeds Purchase Date or Change of Control Payment Date, as the case may be.
SECTION 11.13. NO RECOURSE AGAINST OTHERS; LIMITATION ON LIABILITY.
Notwithstanding anything contained in this Indenture or the Notes to
the contrary, (i) except for the Company to the extent provided in clause (ii)
below, no Person shall have any liability whatsoever with respect to or arising
out of this Indenture, the Notes, or the Company's obligations thereunder or any
agreements or documents executed by the Company in connection therewith and (ii)
claims with respect to this Indenture, the Notes and any obligations thereunder
or under any agreements or documents executed in connection therewith shall be
satisfied solely
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from the assets of the Company. Each Holder, by accepting a Note, waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
SECTION 11.14. COUNTERPARTS.
This Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
ORBITAL IMAGING CORPORATION
By:_____________________________________
Name:
Title:
MARINE MIDLAND BANK,
as Trustee
By:_____________________________________
Name:
Title:
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(FORM OF FACE OF NOTE)
Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), New York, New
York, to the Company or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
such other name as may be requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or such other entity as may be requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.[1]
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF ORBITAL IMAGING CORPORATION AND ITS
SUCCESSORS (THE "COMPANY") THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c)
OUTSIDE THE UNITED STATES TO A PERSON THAT IS NOT A U.S. PERSON (AS DEFINED IN
RULE 902 UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE NOTES
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) OR (e) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY OR TRUSTEE, REGISTRAR OR
TRANSFER AGENT FOR THE SECURITIES SO REQUESTS), (2) TO THE COMPANY OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
<PAGE> 101
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.[2]
THIS NOTE WAS INITIALLY ISSUED AS PART OF AN ISSUANCE OF UNITS (THE "UNITS"),
EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT OF 11 5/8% SENIOR NOTES DUE
2005 (THE "NOTES") OF THE COMPANY AND ONE WARRANT TO PURCHASE 8.75164 SHARES OF
COMMON STOCK, $0.01 PAR VALUE, OF THE COMPANY (THE "WARRANTS"). THIS NOTE IS NOT
TRANSFERABLE SEPARATELY FROM THE WARRANTS COMPRISING THE UNIT OF WHICH THIS NOTE
IS A PART UNTIL THE EARLIEST TO OCCUR OF (i) 90 DAYS FROM THE DATE OF ISSUANCE,
(ii) SUCH DATE AS THE INITIAL PURCHASERS MAY, IN THEIR DISCRETION, DEEM
APPROPRIATE, (iii) IN THE EVENT A CHANGE OF CONTROL (AS DEFINED IN THE INDENTURE
RELATING TO THE NOTES) OCCURS, THE DATE THE COMPANY MAILS NOTICE THEREOF TO
HOLDERS OF THE NOTES, (iv) THE DATE OF WHICH THE EXCHANGE OFFER (AS DEFINED IN
THE REGISTRATION RIGHTS AGREEMENT RELATING TO THE NOTES) IS CONSUMMATED, AND (v)
THE EFFECTIVENESS OF THE SHELF REGISTRATION STATEMENT RELATING TO THE NOTES
PURSUANT TO THE REGISTRATION RIGHTS AGREEMENT. THE DATE ON WHICH THE NOTES AND
THE WARRANTS ARE SEPARABLE IS THE "SEPARATION DATE."[3]
[1] This paragraph should be included only if the Note is issued in global.
[2] This legend not required in the case of (1) a Note issued pursuant to
Section 2.6(g)(ii) of the Indenture of (2) a Exchange Note issued pursuant to
Section 2.6(g)(iii) of the Indenture.
[3] This legend is not required in the case of certain Notes as more
particularly described in Section 2.6(k) of the Indenture.
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<PAGE> 102
ORBITAL IMAGING CORPORATION
11 5/8% SENIOR NOTES DUE 2005, [SERIES A] [SERIES B]
NO. ___
CUSIP #__________
ORBITAL IMAGING CORPORATION, a Delaware corporation (the "Company"),
promises to pay to _______ or registered assigns, the principal sum indicated on
Schedule A on March 1, 2005.
Interest Payment Dates: March 1 and September 1, commencing on
September 1, 1998.
Record Dates: February 15 and August 15.
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.
ORBITAL IMAGING CORPORATION
By:_____________________________________
Name: Armand Mancini
Title: Vice President, Finance
Dated: February 25, 1998
<PAGE> 103
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 11 5/8% Senior Notes due 2005 referred to in the
within-mentioned Indenture.
MARINE MIDLAND BANK,
as Trustee
By:_____________________________________
Authorized Signatory
<PAGE> 104
(FORM OF REVERSE SIDE OF NOTE)
11 5/8% Senior Notes due 2005, [Series A] [Series B]
Capitalized terms used herein shall have the meanings ascribed to them
in the Indenture (as defined below) unless otherwise indicated.
1. Interest. ORBITAL IMAGING CORPORATION, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from February 25, 1998. The Company will pay interest semi-annually in arrears
on each Interest Payment Date, commencing September 1, 1998.
The Company shall pay, to the extent such payments are lawful, interest
on overdue principal, from time to time on demand at the rate equal to 1% per
annum in excess of the rate then in effect; it shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent such payments are lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Notwithstanding any other provision of the Indenture or this Note: (i)
accrued and unpaid interest on the Original Notes being exchanged in the
Exchange Offer shall be due and payable on the next Interest Payment Date for
the Exchange Notes following the Exchange Offer; (ii) interest on the Exchange
Notes to be issued in the Exchange Offer shall accrue from the date the Exchange
Offer is consummated; and (iii) the Exchange Notes shall have no provisions for
Liquidated Damages.
2. Method of Payment. The Company shall pay the principal of, and
premium, interest and Liquidated Damages (if any) on, the Notes on the dates and
in the manner provided herein, in the Indenture and in the Registration Rights
Agreement. Principal of, and premium, interest and Liquidated Damages on,
Definitive Notes will be payable, and Definitive Notes may be presented for
registration of transfer or exchange, at the office or agency of the Company
maintained for such purpose. Principal of, and premium, interest and Liquidated
Damages on, Global Notes will be payable by the Company through the Trustee to
the Depositary by wire transfer of immediately available funds. Holders of
Definitive Notes will be entitled to receive interest payments by wire transfer
in immediately available funds if appropriate wire transfer instructions have
been received in writing by the Trustee not less than 15 days prior to the
applicable Interest Payment Date. Such wire instructions, upon receipt by the
Trustee, shall remain in effect until revoked by such Holder. If wire
instructions have not been received by the Trustee with respect to any Holder of
a Definitive Note, payment of interest and Liquidated Damages, if any, may be
made by check in immediately available funds mailed to such Holder at the
address set forth upon the Register maintained by the Registrar.
3. Paying Agent and Registrar. Initially, Marine Midland Bank, a New
York banking corporation and trust company (the "Trustee"), which term includes
any successor
<PAGE> 105
trustee under the Indenture referred to below), will act as Paying Agent and
Registrar. The Company may change the Paying Agent or Registrar without notice
to or consent of the Holders.
4. Indenture. The Company issued the Note under an Indenture, dated as
of February 25, 1998 (the "Indenture"), between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Section 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture,
except as otherwise provided in the Indenture. Notwithstanding anything to the
contrary herein, the Notes are subject to all such terms, and Holders of Notes
are referred to the Indenture and the TIA for a statement of such terms. The
Notes are general obligations of the Company limited in aggregate principal
amount to $150,000,000. Each Holder, by accepting a Note, agrees to be bound by
all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and its Restricted Subsidiaries to incur
additional Indebtedness, pay dividends or make other distributions, repurchase
any capital stock or subordinated Indebtedness, make certain investments, create
certain liens, enter into certain transactions with Affiliates, sell assets,
enter into certain mergers and consolidations, allow Restricted Subsidiaries to
create certain dividend and other payment restrictions, enter into Sale and
Leaseback Transactions, and issue or sell capital stock of Restricted
Subsidiaries. Such limitations are subject to important qualifications and
exceptions. The Company must annually report to the Trustee on compliance with
such limitations. The Indenture requires the Company to cause any Person that
becomes a Restricted Subsidiary after the Closing Date to execute and deliver to
the Trustee a supplemental indenture pursuant to which such Restricted
Subsidiary will Guarantee the Notes.
5. Redemption.
(a) The Notes will not be redeemable prior to March 1, 2002.
Thereafter, the Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest and Liquidated Damages (if
any) thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on March 1 of the years indicated below:
-2-
<PAGE> 106
<TABLE>
<CAPTION>
Redemption
Year Price
- ---- -----
<S> <C>
2002................................................................................ 105.8125%
2003................................................................................ 102.9063%
2004 and thereafter................................................................. 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, prior to March 1, 2001, the
Company may, on one or more occasions, redeem outstanding Notes with the net
cash proceeds of one or more sales of Capital Stock (other than Disqualified
Stock) of the Company to one or more Persons (but only to the extent the
proceeds of such sales of Capital Stock consist of cash or Cash Equivalents) at
a redemption price equal to 111.625% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages (if any) thereon to the
redemption date; provided, however, that: (i) not less than 65% of the aggregate
principal amount of the Notes initially issued remains outstanding immediately
after any such redemption; and (ii) such redemption shall occur within 60 days
after the date of closing of such sale of Capital Stock.
6. Mandatory Redemption; Offer to Purchase. The Company shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
Sections 4.14 and 4.15 of the Indenture provide that, after certain
Asset Sales and upon the occurrence of a Change of Control, and subject to the
conditions and limitations contained therein, the Company will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture at a purchase price equal to 101% in the case of a Change
of Control and 100% in the case of Asset Sales, of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages (if any) to the date of
purchase.
7. Notice of Redemption. Notice of redemption will be given by
first-class mail, postage prepaid, mailed not less than 30 days nor more than 60
days prior to the Redemption Date to each Holder of Notes to be redeemed at such
Holder's registered address as it appears in the Note Register.
Notes to be redeemed shall cease to bear interest from and after the
Redemption Date and the only right of the Holders of such Notes will be to
receive payment of the Redemption Price plus accrued and unpaid interest and
Liquidated Damages (if any).
8. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any
-3-
<PAGE> 107
Note being redeemed in part. Also, it need not exchange or register the transfer
of any Notes for a period of 15 days before a selection of Notes to be redeemed
or during the period between a Record Date and the corresponding Interest
Payment Date.
9. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
10. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company, after which all liability of the Trustee and Paying
Agent with respect to such money shall cease.
11. Discharge Prior to Redemption or Maturity. If the Company at any
time deposits with the Trustee U.S. dollars or Government Securities sufficient
to pay the principal of and interest on the Notes to redemption or maturity, and
complies with the other provisions of the Indenture relating thereto, the
Company will be discharged from certain provisions of the Indenture and the
Notes (including certain covenants, but excluding its obligation to pay the
principal of, and interest and Liquidated Damages (if any) payable on, the
Notes).
12. Amendment; Supplement; Waiver. Subject to certain exceptions, the
Indenture, the Notes and the Pledge Agreement may be amended or supplemented
with the written consent of the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding, and certain existing Defaults or
Events of Default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in aggregate principal amount of
the Notes then outstanding. Without notice to or consent of any Holder, the
parties thereto may make such amendments or supplements to, among other things,
cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in
addition to or in place of certificated Notes, comply with Article V of the
Indenture (dealing with certain mergers and consolidations) or make any other
change that does not adversely affect the legal rights of any Holder of a Note.
13. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received security or indemnity reasonably satisfactory to
the Trustee. The Indenture permits, subject to certain limitations therein
provided, Holders of a majority in aggregate principal amount of the Notes then
outstanding to direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Notes notice of any continuing Default or
Event of Default (except a Default in payment of principal of, or interest or
Liquidated Damages, if any, payable on the Notes) if it determines that
withholding notice is in the Holders' interest.
14. Pledge Agreement. In order to secure the due and punctual payment
of the principal of, premium, interest and Liquidated Damages, if any, on the
Notes and the payment
-4-
<PAGE> 108
and performance of all other obligations of the Company to the Holders of the
Notes or the Trustee under the Indenture, the Company has granted a first
priority Lien on certain Pledged Securities to the Trustee for the benefit of
the Holders, as more particularly described in the Pledge Agreement. If the
Pledged Securities exceed the amount sufficient, in the opinion of a nationally
recognized firm of independent public accountants selected by the Company, to
provide for payment in full of the first four scheduled interest payments due on
the Notes (or, in the event an interest payment or interest payments have been
made, an amount sufficient to provide for payment in full of any interest
payments remaining, up to and including the fourth scheduled interest payment),
and no Default or Event of Default is then continuing, upon the satisfaction of
certain conditions specified in the Pledge Agreement, any such excess amount of
Pledged Securities shall be returned to the Company. Upon such release and
delivery to the Company, the Lien of the Trustee thereon for the benefit of the
Holders shall be released.
15. Trustee's Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee, subject to the
provisions of TIA Section 310.
16. No Recourse Against Others; Limitation on Liability.
Notwithstanding anything contained in the Indenture or the Notes to the
contrary, (i) except for the Company to the extent provided in clause (ii)
below, no person or entity (including, without limitation, the past, present or
future directors, officers, shareholders and employees of the Company) shall
have any liability whatsoever with respect to or arising out of the Indenture,
the Notes or any of the Company's obligations thereunder or any agreements or
documents executed by the Company in connection therewith and (ii) claims with
respect to the Indenture, the Notes and any obligations thereunder or under any
agreements or documents executed in connection therewith shall be satisfied
solely from the assets of the Company. Each Holder, by accepting a Note, waives
and releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
17. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
18. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
19. Additional Rights of Holders of Transfer Restricted Securities. In
addition to the rights provided to Holders under the Indenture, Holders of
Transfer Restricted Securities shall have all the rights set forth in the
Registration Rights Agreement.
20. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a
-5-
<PAGE> 109
convenience to Holders. No representation is made as to the accuracy of such
numbers either as printed on the Notes or as contained in any notice of
redemption.
21. Governing Law. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF
NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
22. Indenture. Each Holder, by accepting a Note, agrees to be bound by
all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
The Company will furnish without charge to any Holder of a Note upon
written request a copy of the Indenture, which has the text of this Note printed
therein. Requests may be made c/o Orbital Imaging Corporation, 21700 Atlantic
Boulevard, Dulles, Virginia 20166, Attn: Secretary.
-6-
<PAGE> 110
ASSIGNMENT FORM
To assign this Note, fill in the form below and have your signature
guaranteed:(1)
I or we assign and transfer this Note to:
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
(Print or type name, address and zip code and social security or tax ID number
of assignee)
and irrevocably appoint -------------------------------------------------, agent
to transfer this Note on the books of the Company. The agent may substitute
another to act for it.
Date: ---------------------
Signed: -------------------
(Signed exactly as your name appears on the other side of this Note)
Signature Guarantee:
- -----------------------------------------
- --------
(1) Your Signature must be guaranteed by an Institution which is a member
of one of the following recognized signature Guarantee Programs: (i)
The Securities Transfer Agent Medallion Program; (ii) The New York
Stock Exchange Medallion Program; (iii) The Stock Exchange Medallion
Program; or (iv) any other guarantee program acceptable to the Trustee.
<PAGE> 111
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the Securities
and Exchange Commission of the effectiveness of a registration statement under
the Securities Act of 1933, as amended (the "Securities Act") covering resales
of this Note (which effectiveness shall not have been suspended or terminated at
the date of the transfer) and (ii) February 25, 2000, the undersigned confirms
that it has not utilized any general solicitation or general advertising in
connection with the transfer and that this Note is being transferred:
- ---------------------------
(Check One)
<TABLE>
<CAPTION>
<S> <C>
(1) __ to an Issuer or a subsidiary thereof; or
(2) __ pursuant to and in compliance with Rule 144A under the Securities Act; or
(3) __ to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act) that has furnished to the Trustee a signed letter containing
certain representations and agreements (the form of which letter is set forth in Annex A to
the Offering Memorandum and which can be obtained from the Trustee); or
(4) __ outside the United States to a "foreign person" in compliance with Regulation S under the
Securities Act; or
(5) __ pursuant to the exemption from registration provided by Rule 144 under the Securities Act;
or
(6) __ pursuant to an effective registration statement under the Securities Act; or
(7) __ pursuant to another available exemption from the registration requirements of the Securities
Act.
</TABLE>
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Notes evidenced by this certificate in the name of any Person other
than the Holder thereof; provided that if box (3), (4), (5) or (7) is checked,
the Company or the Trustee may require, prior to registering any such transfer
of the Notes, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3) or (4)) and other
information as the Trustee or the Company may reasonably request to confirm that
such transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act.
-2-
<PAGE> 112
If none of the foregoing boxes is checked, the Trustee or Registrar
shall not be obligated to register this Note in the name of any Person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.6 of the Indenture shall have
been satisfied.
Date: ____________________
Signed: __________________
(Signed exactly as your name appears on the other side of this Note)
Signature Guarantee:
____________________
NOTICE: Your signature must be guaranteed by an Institution which is a member of
one of the following recognized signature Guarantee Programs: (i) The Securities
Transfer Agent Medallion Program; (ii) The New York Stock Exchange Medallion
Program; (iii) The Stock Exchange Medallion Program; or (iv) any other guarantee
program acceptable to the Trustee.
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: ______________________
NOTICE: To be executed by an executive officer
-3-
<PAGE> 113
OPTION OF HOLDER TO ELECT PURCHASE
If you elect to have this Note purchased by the Company pursuant to
Section 4.14 or Section 4.15 of the Indenture, check the appropriate box:
Section 4.14 [ ]
Section 4.15 [ ]
If you elect to have only part of this Note purchased by the Company
pursuant to Section 4.14 or Section 4.15 of the Indenture, state the amount you
elect to have purchased:
$----------------
Dated: -------------------------
NOTICE: The signature on this assignment must correspond with the name as it
appears upon the face of the within Note in every particular without alteration
or any change whatsoever and be guaranteed by the endorser's bank or broker.
Signature Guarantee:
- ---------------------------------
NOTICE: Your signature must be guaranteed by an Institution which is a member of
one of the following recognized signature Guarantee Programs: (i) The Securities
Transfer Agent Medallion Program; (ii) The New York Stock Exchange Medallion
Program; (iii) The Stock Exchange Medallion Program; or (iv) any other guarantee
program acceptable to the Trustee.
<PAGE> 114
SCHEDULE A
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The initial principal amount at maturity of this Global Note shall be
$_____. The following increases or decreases in this Global Note have been made:
Principal Amount _________________
Amount of :
________ decrease in
________ increase in
of this Global Note (or Exchange Note)
Principal Amount of the Global Note (or Exchange Note) following such increase
or decrease $_______________
MARINE MIDLAND BANK
By:_____________________________________
Authorized Officer
Date: _________________
<PAGE> 115
EXHIBIT C
FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
Orbital Imaging Corporation
21700 Atlantic Boulevard
Dulles, VA 20166
Attention: General Counsel
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Department
Re: 11 5/8% Senior Notes Due 2005
Reference is hereby made to the Indenture, dated as of February 25,
1998 (the "Indenture"), between Orbital Imaging Corporation., as issuer (the
"Company") and Marine Midland Bank, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture. In
connection with our proposed purchase of $____________ aggregate principal
amount of Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the Securities Act of
1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A)(1) to a person who we reasonably believe is a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of Rule 144A, (2) in a transaction meeting
the requirements of Rule 144 under the Securities Act, (3) outside the United
States to a person that is not a U.S. person (as defined in Rule 902 under the
Securities Act) in a transaction meeting the requirements of Rule 904 under the
Securities Act, (4) to an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) that,
prior to such transfer, furnishes to you a signed letter containing certain
representations and agreements relating to the Notes, or (5) in accordance with
another exemption from the registration requirements of the Securities Act (in
the case of 2, 3, 4 or 5, based upon an opinion of counsel if the Company or the
Trustee so requests), (B) to the Company or (C) pursuant to an effective
registration statement and, in each case, in accordance with any applicable
securities laws of any state of the United States or any other applicable
jurisdiction, and we further agree to provide to any person purchasing the
Certificated Securities or interests therein from us in a transaction meeting
the
C-1
<PAGE> 116
requirements of clauses (A) through (C) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or any
interests therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect. We further understand that any subsequent
transfer by us of the Notes or interests therein acquired by us must be effected
through one of the Initial Purchasers.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or interests therein for our own account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion. You and
the Company are entitled to rely upon this letter and are irrevocably authorized
to produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
[Insert Name of Accredited Investor]
By:_____________________________________
Name:
Title:
Dated: _________________
<PAGE> 1
Exhibit 4.4
----------------------------------------------
WARRANT AGREEMENT
DATED AS OF FEBRUARY 25, 1998
BY AND BETWEEN
ORBITAL IMAGING CORPORATION
AND
MARINE MIDLAND BANK
----------------------------------------------
<PAGE> 2
WARRANT AGREEMENT dated as of February 25, 1998 (the "Agreement") between
Orbital Imaging Corporation, a Delaware corporation (the "Company"), and Marine
Midland Bank, as warrant agent (the "Warrant Agent").
WHEREAS, the Company proposes to issue Common Stock Purchase Warrants, as
hereinafter described (the "Warrants"), to purchase up to an aggregate of
1,312,746 shares of Common Stock (as defined below), in connection with the
offering of an aggregate of $150,000,000 principal amount at maturity of the
Company's 11 5/8% Senior Notes due 2005 (the "Notes") and 150,000 Warrants, each
Warrant entitling the holder thereof to purchase 8.75164 shares of Common Stock.
The Notes and Warrants will be sold in Units (the "Units"), each Unit consisting
of $1,000 principal amount at maturity of Notes and one Warrant.
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates (as defined below) and other matters as
provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, and for the purpose of defining the respective rights and
obligations of the Company, the Warrant Agent and the Holders (as defined
below), the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"Affiliate" of any Person means any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any Person means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Commission" means the Securities and Exchange Commission.
"Common Equity Securities" means Common Stock and securities convertible
into, or exercisable or exchangeable for, Common Stock or rights or options to
acquire Common Stock or such other securities, excluding the Warrants.
"Common Stock" means the common stock, par value $.01 per share, of the
Company, and any other capital stock of the Company into which such common stock
may be converted or reclassified or that may be issued in respect of, in
exchange for, or in substitution for, such common stock by reason of any stock
splits, stock dividends, distributions, mergers, consolidations or other like
events.
<PAGE> 3
"Company" means Orbital Imaging Corporation, a Delaware corporation, and
its successors and assigns.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercisability Date" means the date of the earliest to occur of (i) the
first anniversary of the Closing Date and (ii) in the event a Change of Control
occurs, the date the Company mails notice thereof to holders of Notes and
Warrants.
"Exercise Price" means the purchase price per share of Common Stock to be
paid upon the exercise of each Warrant in accordance with the terms hereof,
which price shall initially be $.01 per share, subject to adjustment from time
to time pursuant to Section 13 hereof.
"Expiration Date" means March 1, 2005.
"Holder" means a registered holder of a Warrant.
"Indenture" means the indenture, dated the date hereof, between the
Company and Marine Midland Bank, as trustee.
"Initial Purchasers" means Bear, Stearns & Co. Inc., Merrill, Lynch,
Pierce, Fenner & Smith Incorporated and NationsBanc Montgomery Securities LLC.
"Notes" means the 11 5/8% Notes due 2005 of the Company, being sold and
issued pursuant to the Purchase Agreement and the Indenture, or any notes
exchanged therefor as contemplated by the Indenture and the Registration Rights
Agreement.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Registrable Securities" means the Warrants bearing the legend set forth
in Section 7(g)(i).
"Registration Rights Agreement" means the registration rights agreement,
dated as of February 25, 1998, by and among the Company and the Initial
Purchasers relating to the Notes.
"Securities Act" means the Securities Act of 1933, as amended.
"Separation Date" means the earliest to occur of (i) 90 days from the date
of issuance, (ii) such date as the Initial Purchasers may, in their discretion,
deem appropriate, (iii) in the event a Change of Control occurs, the date the
Company mails notice thereof to the holders of the Notes, (iv) the date on which
the Exchange Offer is consummated, and (v) the date on which the Shelf
Registration Statement is declared effective.
-2-
<PAGE> 4
"Trustee" means the trustee under the Indenture.
"Warrant Agent" means Marine Midland Bank or the successor or successors
of such Warrant Agent appointed in accordance with the terms hereof.
"Warrant Registration Rights Agreement" means the registration rights
agreement, dated as of February 25, 1998, by and among the Company and the
Initial Purchasers relating to the Warrants and the Warrant Shares.
"Warrant Shares" means the shares of Common Stock issued or issuable upon
the exercise of the Warrants.
Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Indenture.
2. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the Warrant
Agent to act as agent for the Company in accordance with the instructions set
forth hereinafter in this Agreement, and the Warrant Agent hereby accepts such
appointment.
3. ISSUANCE OF WARRANTS; WARRANT CERTIFICATES. The Warrants will be issued
in global form (the "Global Warrants"), substantially in the form of Exhibit A
and in definitive form (the "Definitive Warrants"), substantially in the form of
Exhibit A. Each Global Warrant shall represent such of the outstanding Warrants
as shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Warrants from time to time endorsed thereon and
that the aggregate amount of outstanding Warrants represented thereby may from
time to time be reduced or increased, as appropriate. Any endorsement of a
Global Warrant to reflect the amount of any increase or decrease in the amount
of outstanding Warrants represented thereby shall be made by the Warrant Agent
and the depositary with respect to the Global Warrants (the "Depositary") in
accordance with instructions given by the Holder thereof. The Depository Trust
Company shall act as the Depositary until a successor shall be appointed by the
Company and the Warrant Agent. Upon request, a Holder may receive from the
Depositary and the Warrant Agent separate Definitive Warrants as set forth in
Section 7 below. Any certificates (the "Warrant Certificates") evidencing the
Global Warrants or the Definitive Warrants to be delivered pursuant to this
Agreement shall be substantially in the form set forth in Exhibit A attached
hereto.
4. EXECUTION OF WARRANT CERTIFICATES. Warrant Certificates shall be signed
on behalf of the Company by its Chairman of the Board, its President or a Vice
President and by its Secretary or Assistant Secretary. Each such signature upon
the Warrant Certificates may be in the form of a facsimile signature of the
present or any future Chairman of the Board, President, Vice President,
Secretary or Assistant Secretary and may be imprinted or otherwise reproduced on
the Warrant Certificates and for that purpose the Company may adopt and use the
facsimile signature of any Person who shall have been Chairman of the Board,
President, Vice President, Secretary or Assistant Secretary notwithstanding the
fact that at the time the Warrant Certificates
-3-
<PAGE> 5
shall be countersigned and delivered or disposed of such Person shall have
ceased to hold such office.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such Person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any Person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such Person was not such officer.
Warrant Certificates shall be dated the date of countersignature.
5. SEPARATION OF WARRANTS. The Notes and Warrants shall not be separately
transferable prior to the Separation Date.
6. REGISTRATION AND COUNTERSIGNATURE. The Warrant Agent, on behalf of the
Company, shall number and register the Warrant Certificates in a register as
they are issued by the Company. Warrant Certificates shall be manually
countersigned by the Warrant Agent and shall not be valid for any purpose unless
so countersigned. The Warrant Agent shall, upon written instructions of the
Chairman of the Board, the President or the Treasurer of the Company, initially
countersign and deliver Warrants entitling the Holders thereof to purchase not
more than the number of Warrant Shares referred to above in the first recital
hereof and shall countersign and deliver Warrants as otherwise provided in this
Agreement.
The Company and the Warrant Agent may deem and treat the Holder(s) of the
Warrant Certificates as the absolute owner(s) thereof (notwithstanding any
notation of ownership or other writing thereon made by anyone), for all
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary. Prior to the Separation Date, the registered holder of
the Unit shall be deemed the registered Holder of such Warrants for all purposes
hereunder.
7. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) Transfer and Exchange of Definitive Warrants. When Definitive
Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number
of Definitive Warrants of other authorized denominations, the Warrant Agent
shall register the transfer or make the exchange as requested if its
requirements for such transactions are met; provided that the Definitive
Warrants presented or surrendered for registration of transfer or exchange:
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(x) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Warrant Agent, duly executed
by the Holder thereof or by his attorney, duly authorized in writing; and
(y) in the case of Registrable Securities, such request
shall be accompanied by the following additional information and documents, as
applicable:
(A) if such Registrable Security is being
delivered to the Warrant Agent by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to that effect (in
substantially the form of Exhibit B hereto);
(B) if such Registrable Security is being
transferred (1) to a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A under the Securities Act,
or (2) pursuant to an exemption from registration in accordance with Rule 144
under the Securities Act (and based on an opinion of counsel if the Company so
requests), or (3) pursuant to an effective registration statement under the
Securities Act, a certification to that effect (in substantially the form of
Exhibit B hereto);
(C) if such Registrable Security is being
transferred to an institutional "accredited investor," within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act pursuant to a private
placement exemption from the registration requirements of the Securities Act
(and based on an opinion of counsel if the Company so requests), a certification
to that effect (in substantially the form of Exhibit B hereto) and a
certification from the applicable transferee in form and substance reasonably
satisfactory to the Company;
(D) if such beneficial interest is being
transferred pursuant to an exemption from registration in accordance with Rule
904 under the Securities Act (and based on an opinion of counsel if the Company
so requests), a certification to that effect (in substantially the form of
Exhibit B), provided that no Warrants represented by the Reg S Global Warrant
may be exchanged for Definitive Warrants until expiration of the applicable
restricted period under Reg S of the Securities Act; or
(E) if such Registrable Security is being
transferred in reliance on another exemption from the registration requirements
of the Securities Act (and based on an opinion of counsel if the Company so
requests), a certification to that effect (in substantially the form of Exhibit
B hereto).
(b) Restrictions on Exchange or Transfer of a Definitive Warrant for
a Beneficial Interest in a Global Warrant. A Definitive Warrant may not be
exchanged for a beneficial interest in a Global Warrant, except upon
satisfaction of the requirements set forth below. Upon receipt by the Warrant
Agent of a Definitive Warrant, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Warrant Agent, together
with:
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<PAGE> 7
(i) if such Definitive Warrant is a Registrable Security,
certification from the Holder thereof (in substantially the form of Exhibit B
hereto) to the effect that such Definitive Warrant is being transferred by such
Holder either (i) to a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A under the Securities Act
who wishes to take delivery thereof in the form of a beneficial interest in a
Global Warrant, (ii) outside the United States to a foreign Person in a
transaction meeting the requirements of Rule 904 under the Securities Act (and
based on an opinion of counsel if the Company so requests) or (ii) to an
"accredited investor," within the meaning of Rule 501(a)(1), (2), (3) or (7) in
accordance with Rule 144A under the Securities Act (and based on an opinion of
counsel if the Company so requests) who wishes to take delivery thereof in the
form of a beneficial interest in a Global Warrant; and
(ii) whether or not such Definitive Warrant is a Registrable
Security, written instructions directing the Warrant Agent to make, or to direct
the Depositary to make, an endorsement on the Global Warrant to reflect an
increase in the number of Warrants represented by the Global Warrant, then the
Warrant Agent shall cancel such Definitive Warrant and cause, or direct the
Depositary to cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Warrant Agent, the number of Warrants
represented by the Global Warrant to be increased accordingly. If no Global
Warrants are then outstanding, the Company shall issue and the Warrant Agent
shall countersign a new Global Warrant representing the appropriate number of
Warrants.
(c) Transfer and Exchange of Global Warrants. The transfer and
exchange of beneficial interests in Global Warrants shall be effected through
the Depositary, in accordance with this Warrant Agreement and the procedures of
the Depositary therefor.
(d) Exchange of a Beneficial Interest in a Global Warrant for a
Definitive Warrant.
(i) Any Person having a beneficial interest in a Global
Warrant may upon request exchange such beneficial interest for a Definitive
Warrant. Upon receipt by the Warrant Agent of written instructions or such other
form of instructions as is customary for the Depositary from the Depositary or
its nominee on behalf of any Person having a beneficial interest in a Global
Warrant and, in the case of a Registrable Security, the following additional
information and documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being delivered to
the Person designated by the Depositary as being the beneficial owner, a
certification to that effect (in substantially the form of Exhibit B hereto);
(B) if such beneficial interest is being transferred (1)
to a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act; or (2)
pursuant to an exemption from registration in accordance with Rule 144 under the
Securities Act (and based on an opinion of counsel if the
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<PAGE> 8
Company so requests); or (3) pursuant to an effective registration statement
under the Securities Act, a certification to that effect (in substantially the
form of Exhibit B hereto);
(C) if such beneficial interest is being transferred to
any institutional "accredited investor," within the meaning of Rule 501(a)(1),
(2), (3) and (7) under the Securities Act pursuant to a private placement
exemption from the registration requirements of the Securities Act (and based on
an opinion of counsel if the Company so requests), a certification to that
effect (in substantially the form of Exhibit B hereto) and a certification from
the applicable transferee;
(D) if such beneficial interest is being transferred
pursuant to an exemption from registration in accordance with Rule 904 under the
Securities Act (and based on an opinion of counsel if the Company so requests),
a certification to that effect (in substantially the form of Exhibit B); or
(E) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act (and based on an opinion of counsel if the Company so requests),
a certification to that effect (in substantially the form of Exhibit B hereto);
then the Warrant Agent shall cause, in accordance with the standing instructions
and procedures existing between the Depositary and Warrant Agent, the number of
Warrants represented by the Global Warrant to be reduced and, following such
reduction, the Company shall execute and the Warrant Agent shall countersign and
deliver to the transferee, as the case may be, a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial
interest in a Global Warrant pursuant to this Section 7(d) shall be registered
in such names as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Warrant Agent. The
Warrant Agent shall deliver such Definitive Warrants to the Persons in whose
names such Warrants are so registered.
(e) Restrictions on Transfer and Exchange of Global Warrants.
Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 7), a Global Warrant may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Countersigning of Definitive Warrants in Absence of Depositary.
If at any time: (i) the Depositary for the Global Warrants notifies the Company
that the Depositary is unwilling or unable to continue as Depositary for the
Global Warrants and a successor Depositary for the Global Warrants is not
appointed by the Company within 90 days after delivery of such notice, or (ii)
the Company, in its sole discretion, notifies the Warrant Agent in writing that
it elects to cause the issuance of Definitive Warrants under this Warrant
Agreement,
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<PAGE> 9
then the Company shall execute, and the Warrant Agent, upon written instructions
signed by two officers of the Company, shall countersign and deliver Definitive
Warrants, in an aggregate number equal to the number of Warrants represented by
Global Warrants, in exchange for such Global Warrants.
(g) Legends.
(i) Except for any Warrant sold or transferred (including any
Warrant represented by a Global Warrant) as discussed in clause (ii) below, each
Warrant Certificate evidencing the Global Warrants and the Definitive Warrants
(and all Warrants issued in exchange therefor or substitution thereof), and each
certificate representing the Warrant Shares, shall bear a legend in
substantially the following form:
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF ORBITAL IMAGING CORPORATION AND ITS SUCCESSORS ("THE COMPANY")
THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A PERSON THAT IS NOT A U.S. PERSON (AS DEFINED IN
RULE 902 UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE WARRANT AGENT A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE UNITS, NOTES AND WARRANTS
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE WARRANT AGENT) OR (e)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE
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<PAGE> 10
COMPANY OR WARRANT AGENT FOR THE SECURITIES SO REQUESTS), (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY
OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
(ii) Upon any sale or transfer of a Registrable Security
(including any Registrable Security represented by a Global Warrant) pursuant to
an effective registration statement under the Securities Act, pursuant to Rule
144 under the Securities Act or pursuant to an opinion of counsel reasonably
satisfactory to the Company that no legend is required:
(A) in the case of any Registrable Security that is a
Definitive Warrant, the Warrant Agent shall permit the Holder thereof to
exchange such Registrable Security for a Definitive Warrant that does not bear
the legend set forth in clause (i) above and rescind any restriction on the
transfer of such Registrable Security; and
(B) in the case of any Registrable Security represented
by a Global Warrant, such Registrable Security shall not be required to bear the
legend set forth in clause (i) above but shall continue to be subject to the
provisions of Section 7(c) hereof; provided that with respect to any request for
an exchange of a Registrable Security that is represented by a Global Warrant
for a Definitive Warrant that does not bear the legend set forth in clause (i)
above, which request is made in reliance upon Rule 144 (and based on an opinion
of counsel if the Company so requests), the Holder thereof shall certify in
writing to the Warrant Agent that such request is being made pursuant to Rule
144 (such certification to be substantially in the form of Exhibit B hereto).
(h) Cancellation of Global Warrant. At such time as all beneficial
interests in Global Warrants have either been exchanged for Definitive Warrants,
redeemed, repurchased or canceled, all Global Warrants shall be returned to or
retained and canceled by the Warrant Agent.
(i) Obligations with respect to Transfers and Exchanges of Warrants.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Warrant Agent is hereby authorized to countersign,
in accordance with the provisions of Section 6 and this Section 7, Definitive
Warrants and Global Warrants as required pursuant to the provisions of this
Section 7.
(ii) All Definitive Warrants and Global Warrants issued upon
any registration of transfer or exchange of Definitive Warrants or Global
Warrants shall be the valid obligations of the Company, entitled to the same
benefits under this Warrant Agreement, as the
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<PAGE> 11
Definitive Warrants or Global Warrants surrendered upon such registration of
transfer or exchange.
(iii) Prior to due presentment for registration of transfer of
any Warrant, the Warrant Agent and the Company may deem and treat the Person in
whose name any Warrant is registered as the absolute owner of such Warrant and
neither the Warrant Agent, nor the Company shall be affected by notice to the
contrary.
(iv) No service charge shall be made to a Holder for any
registration, transfer or exchange.
8. TERMS OF WARRANTS; EXERCISE OF WARRANTS. Subject to the terms of this
Agreement, each Warrant Holder shall have the right, which may be exercised
commencing at the opening of business on the Exercisability Date and until 5:00
p.m., New York City time on the Expiration Date to exercise each Warrant and
receive from the Company the number of fully paid and nonassessable Warrant
Shares which the Holder may at the time be entitled to receive on exercise of
such Warrants and payment of the Exercise Price then in effect for such Warrant
Shares; provided that no Warrant Holder shall be entitled to exercise such
Holder's Warrants at any time, unless, at the time of exercise, (i) a
registration statement under the Securities Act relating to the Warrant Shares
has been filed with, and declared effective by, the Commission, and no stop
order suspending the effectiveness of such registration statement has been
issued by the Commission; or (ii) the issuance of the Warrant Shares is
permitted pursuant to an exemption from the registration requirements of the
Securities Act. Each Warrant not exercised prior to 5:00 p.m., New York City
time, on the Expiration Date shall become void and all rights thereunder and all
rights in respect thereof under this Agreement shall cease as of such time. No
adjustments as to dividends will be made upon exercise of the Warrants. The
Company shall give notice not less than 90, and not more than 120, days prior to
the Expiration Date to the Holders of all then outstanding Warrants to the
effect that the Warrants will terminate and become void as of 5:00 p.m., New
York City time, on the Expiration Date. If the Company fails to give such
notice, the Warrants will not expire until 90 days after the Company gives such
notice, provided in no event will Holders be entitled to any damages or other
remedy for the Company's failure to give such notice other than any such
extension.
A Warrant may be exercised upon surrender to the Company at the principal
office of the Warrant Agent of the certificate or certificates evidencing the
Warrant to be exercised with the form of election to purchase on the reverse
thereof duly filled in and signed, which signature shall be guaranteed by a bank
or trust company having an office or correspondent in the United States or a
broker or dealer which is a member of a registered securities exchange or the
National Association of Securities Dealers, Inc., and upon payment to the
Warrant Agent for the account of the Company of the Exercise Price as adjusted
as herein provided, for each of the Warrant Shares in respect of which such
Warrant is then exercised. Payment of the aggregate Exercise Price shall be made
in cash or by certified or official bank check, payable to the order of the
Company. In the alternative, each Holder may exercise its right to receive
Warrant Shares on a net basis, such that without the exchange of any funds, the
Holder receives that number of Warrant Shares otherwise issuable upon exercise
of its Warrants less that number of Warrant
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<PAGE> 12
Shares having a fair market value equal to the aggregate Exercise Price that
would otherwise have been paid by the Holder of the Warrant Shares. For purposes
of the foregoing sentence, "fair market value" of the Warrant Shares shall be
the current market price of the Warrant Shares on the date immediately preceding
the date of payment of the Exercise Price as determined by the procedures set
forth in Section 13(e). The exercise of Warrants by Holders of beneficial
interest in Global Warrants shall be effected in accordance with this Agreement
and the procedures of the Depositary therefor.
Subject to the provisions of Section 9 hereof, upon surrender of Warrants
and payment of the Exercise Price as provided above, the Warrant Agent shall
thereupon promptly notify the Company, and the Company shall promptly transfer
to the Holder of such Warrant Certificate a certificate or certificates for the
appropriate number of Warrant Shares or other securities or property (including
any money) to which the Holder is entitled, registered or otherwise placed in,
or payable to the order of, such name or names as may be directed in writing by
the Holder, and shall deliver such certificate or certificates representing the
Warrant Shares and any other securities or property (including any money) to the
Person or Persons entitled to receive the same, together with an amount in cash
in lieu of any fraction of a share as provided in Section 15. Any such
certificate or certificates representing the Warrant Shares shall be deemed to
have been issued and any Person so designated to be named therein shall be
deemed to have become a Holder of record of such Warrant Shares as of the date
of the surrender of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable commencing on the Exercisability Date,
at the election of the Holders thereof, either in full or from time to time in
part and, in the event that a certificate evidencing Warrants is exercised in
respect of fewer than all of the Warrant Shares issuable on such exercise at any
time prior to the date of expiration of the Warrants, a new certificate
evidencing the remaining Warrant or Warrants will be issued, and the Warrant
Agent is hereby irrevocably authorized to countersign and to deliver the
required new Warrant Certificate or Certificates pursuant to the provisions of
this Section and of Section 4 hereof, and the Company, whenever required by the
Warrant Agent, will supply the Warrant Agent with Warrant Certificates duly
executed on behalf of the Company for such purpose.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled by the Warrant Agent. Such canceled Warrant Certificates shall then be
disposed of by the Warrant Agent in accordance with its customary procedures.
The Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all monies received by the Warrant
Agent for the purchase of the Warrant Shares through the exercise of such
Warrants.
The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder by or from the Company available for inspection by
the Holders during normal business hours at its office. The Company shall supply
the Warrant Agent from time to time with such numbers of copies of this
Agreement as the Warrant Agent may request.
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9. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the initial issuance of Warrant Shares upon the exercise of
Warrants or to any Separation; provided that the Company shall not be required
to pay any tax or taxes which may be payable in respect of any transfer involved
in the issue of any Warrant Certificates or any certificates for Warrant Shares
in a name other than that of the Holder of a Warrant Certificate surrendered
upon the exercise of a Warrant, and the Company shall not be required to issue
or deliver such Warrant Certificates unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
10. MUTILATED OR MISSING WARRANT CERTIFICATES. In case any of the Warrant
Certificates shall be mutilated, lost, stolen or destroyed, the Company may in
its discretion issue and the Warrant Agent may countersign, in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate, or
in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence reasonably
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrant Certificate and indemnity, if requested, also
reasonably satisfactory to them. Applicants for such substitute Warrant
Certificates shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company or the Warrant Agent may prescribe.
11. RESERVATION OF WARRANT SHARES. The Company will at all times reserve
and keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock or its authorized and issued Common Stock
held in its treasury, for the purpose of enabling it to satisfy any obligation
to issue Warrant Shares upon exercise of Warrants, the maximum number of shares
of Common Stock which may then be deliverable upon the exercise of all
outstanding Warrants.
The transfer agent for the Common Stock (the "Transfer Agent") and every
subsequent transfer agent for any shares of the Company's capital stock issuable
upon the exercise of any of the rights of purchase aforesaid will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
as shall be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent and with every subsequent transfer
agent for any shares of the Company's capital stock issuable upon the exercise
of the rights of purchase represented by the Warrants. The Warrant Agent is
hereby irrevocably authorized to requisition from time to time from such
Transfer Agent the stock certificates required to honor outstanding Warrants
upon exercise thereof in accordance with the terms of this Agreement. The
Company will supply such Transfer Agent with duly executed certificates for such
purposes and will provide or otherwise make available any cash which may be
payable as provided in Section 15. The Company will furnish such Transfer Agent
a copy of all notices of adjustments and certificates related thereto,
transmitted to each Holder of the Warrants pursuant to Section 16 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 13 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the
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Company will take any corporate action which may, in the opinion of its counsel
(which may be counsel employed by the Company), be necessary in order that the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares at the Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants in accordance with the terms of this Agreement (including
the terms of the Exercise Price) will, upon issue, be duly and validly issued,
fully paid, nonassessable, free of preemptive rights and free from all taxes,
liens, charges and security interests with respect to the issue thereof.
12. OBTAINING STOCK EXCHANGE LISTINGS. The Company will from time to time
take all action which may be reasonably necessary so that the Warrant Shares,
promptly upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets (including, without limitation,
the Nasdaq National Market) within the United States of America, if any, on
which other shares of Common Stock are then listed. Upon the listing of such
Warrant Shares, the Company shall notify the Warrant Agent in writing. The
Company will obtain and keep all required permits and records in connection with
such listing.
13. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES ISSUABLE.
The number and kind of shares purchasable upon the exercise of Warrants and the
Exercise Price shall be subject to adjustment from time to time as follows:
(a) Stock Splits, Combinations, etc. In case the Company shall
hereafter (A) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock (whether shares of Common Stock or of capital stock
of any other class), (B) subdivide its outstanding shares of Common Stock, (C)
combine its outstanding shares of Common Stock into a smaller number of shares,
or (D) issue by reclassification of its shares of Common Stock any shares of
capital stock of the Company, the Exercise Price in effect immediately prior to
such action shall be adjusted so that the Holder of any Warrant thereafter
exercised shall be entitled to receive the number of shares of capital stock of
the Company which such Holder would have owned immediately following such action
had such Warrant been exercised immediately prior thereto. An adjustment made
pursuant to this paragraph shall become effective immediately after the record
date in the case of a dividend and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, as a result of an adjustment made pursuant to this paragraph, the Holder of
any Warrant thereafter exercised shall become entitled to receive shares of two
or more classes of capital stock of the Company, the Board of Directors of the
Company (whose determination shall be conclusive) shall determine the allocation
of the adjusted Exercise Price between or among shares of such classes of
capital stock.
(b) Reclassification, Combinations, Mergers, etc. In case of any
reclassification or change of outstanding shares of Common Stock issuable upon
exercise of the Warrants (other than as set forth in paragraph (a) above and
other than a change in par value, or from par value to no par value, or from no
par value to par value or as a result of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into another
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<PAGE> 15
corporation (other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification or change of the
then outstanding shares of Common Stock or other capital stock issuable upon
exercise of the Warrants) or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, then, as a condition of such reclassification, change, consolidation,
merger, sale or conveyance, the Company or such a successor or purchasing
corporation, as the case may be, shall forthwith make lawful and adequate
provision whereby the Holder of such Warrant then outstanding shall have the
right thereafter to receive on exercise of such Warrant the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock issuable upon exercise of such Warrant
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance and enter into a supplemental warrant agreement so providing. Such
provisions shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
13. If the issuer of securities deliverable upon exercise of Warrants under the
supplemental warrant agreement is an affiliate of the formed, surviving or
transferee corporation, that issuer shall join in the supplemental warrant
agreement. The above provisions of this paragraph (b) shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(c) Issuance of Options or Convertible Securities. In the event the
Company shall, at any time or from time to time after the date hereof, issue,
sell, distribute or otherwise grant in any manner (including by assumption) to
all holders of the Common Stock any rights to subscribe for or to purchase, or
any warrants or options for the purchase of, Common Stock or any stock or
securities convertible into or exchangeable for Common Stock (any such rights,
warrants or options being herein called "Options" and any such convertible or
exchangeable stock or securities being herein called "Convertible Securities")
or any Convertible Securities (other than upon exercise of any Option), whether
or not such Options or the rights to convert or exchange such Convertible
Securities are immediately exercisable, and the price per share at which Common
Stock is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the
aggregate amount, if any, received or receivable by the Company as consideration
for the issuance, sale, distribution or granting of such Options or any such
Convertible Security, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of all such
Options or upon conversion or exchange of all such Convertible Securities, plus,
in the case of Options to acquire Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the conversion or
exchange of all such Convertible Securities, by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of all such Options or upon
the conversion or exchange of all such Convertible Securities or upon the
conversion or exchange of all Convertible Securities issuable upon the exercise
of all such Options) shall be less than the current market price per share of
Common Stock on the record date for the issuance, sale, distribution or granting
of such Options or Convertible Securities (any such event being herein called a
"Distribution"), then, effective upon such Distribution, (I) the Exercise Price
shall be reduced to the price (calculated to the nearest 1/1,000 of one cent)
determined by multiplying the Exercise Price in effect immediately prior to
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<PAGE> 16
such Distribution by a fraction, the numerator of which shall be the sum of (1)
the number of shares of Common Stock outstanding (exclusive of any treasury
shares) immediately prior to such Distribution multiplied by the current market
price per share of Common Stock on the date of such Distribution plus (2) the
consideration, if any, received by the Company upon such Distribution, and the
denominator of which shall be the product obtained by multiplying (A) the total
number of shares of Common Stock outstanding (exclusive of any treasury shares)
immediately after such Distribution multiplied by (B) the current market price
per share of Common Stock on the record date for such Distribution; and (II) the
number of shares of Common Stock purchasable upon the exercise of each Warrant
shall be increased to a number determined by multiplying the number of shares of
Common Stock so purchasable immediately prior to the record date for such
Distribution by a fraction, the numerator of which shall be the Exercise Price
in effect immediately prior to the adjustment required by clause (I) of this
sentence and the denominator of which shall be the Exercise Price in effect
immediately after such adjustment (for the purposes of this clause (ii) without
giving effect to the provisions of Section 13(h)). For purposes of the
foregoing, the total maximum number of shares of Common Stock issuable upon
exercise of all such Options or upon conversion or exchange of all such
Convertible Securities or upon the conversion or exchange of the total maximum
amount of the Convertible Securities issuable upon the exercise of all such
Options shall be deemed to have been issued as of the date of such Distribution
and thereafter shall be deemed to be outstanding and the Company shall be deemed
to have received as consideration therefor such price per share, determined as
provided above. Except as provided in paragraphs (j) and (k) below, no
additional adjustment of the Exercise Price shall be made upon the actual
exercise of such Options or upon conversion or exchange of the Convertible
Securities or upon the conversion or exchange of the Convertible Securities
issuable upon the exercise of such Options.
(d) Dividends and Distributions. In the event the Company shall, at
any time or from time to time after the date thereof, distribute to all the
holders of Common Stock any dividend or other distribution of cash, evidences of
its indebtedness, other securities or other properties or assets (in each case
other than (i) dividends payable in Common Stock, Options or Convertible
Securities and (ii) any cash dividend that, when added to all other cash
dividends paid in the one year prior to the declaration date of such dividend
(excluding any such other dividend included in a previous adjustment of the
Exercise Price pursuant to this paragraph (d)), does not exceed 5% of the
current market price per share of Common Stock on such declaration date), or any
options, warrants or other rights to subscribe for or purchase any of the
foregoing, then (A) the Exercise Price shall be decreased to a price determined
by multiplying the Exercise Price then in effect by a fraction, the numerator of
which shall be the current market price per share of Common Stock on the record
date for such distribution less the sum of (X) the cash portion, if any, of such
distribution per share of Common Stock outstanding (exclusive of any treasury
shares) on the record date for such distribution plus (Y) the then fair market
value (as determined in good faith by the Board of Directors of the Company) per
share of Common Stock outstanding (exclusive of any treasury shares) on the
record date for such distribution of that portion, if any, of such distribution
consisting of evidences of indebtedness, other securities, properties, assets,
options, warrants or subscription or purchase rights, and the denominator of
which shall be such current market price per share of Common Stock; and (B) the
number of shares of Common Stock purchasable upon the exercise of each Warrant
shall be increased to a
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<PAGE> 17
number determined by multiplying the number of shares of Common Stock so
purchasable immediately prior to the record date for such distribution by a
fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to the adjustment required by clause (A) of this sentence and
the denominator of which shall be the Exercise Price in effect immediately after
such adjustment (for the purposes of this clause (B) without giving effect to
the provisions of Section 13(h)). The adjustments required by this paragraph (d)
shall be made whenever any such distribution occurs retroactive to the record
date for the determination of stockholders entitled to receive such
distribution.
(e) Current Market Price. For the purpose of any computation of
current market price under this Section 13 and Section 15, the current market
price per share of Common Stock at any date shall be (x) for purposes of Section
15, the closing price on the business day immediately prior to the exercise of
the applicable Warrant pursuant to Section 8 and (y) in all other cases, the
average of the daily closing prices for the shorter of (i) the 20 consecutive
trading days ending on the last full trading day on the exchange or market
specified in the second succeeding sentence prior to the Time of Determination
(as defined below); and (ii) the period commencing on the date next succeeding
the first public announcement of the issuance, sale, distribution or granting in
question through such last full trading day prior to the Time of Determination.
The term "Time of Determination" as used herein shall be the time and date of
the earlier to occur of (A) the date as of which the current market price is to
be computed; and (B) the last full trading day on such exchange or market before
the commencement of "ex-dividend" trading in the Common Stock relating to the
event giving rise to the adjustment required by paragraph (a), (b), (c) or (d).
The closing price for any day shall be the last reported sale price regular way
or, in case no such reported sale takes place on such day, the average of the
closing bid and asked prices regular way for such day, in each case (1) on the
principal national securities exchange on which the shares of Common Stock are
listed or to which such shares are admitted to trading; or (2) if the Common
Stock is not listed or admitted to trading on a national securities exchange, in
the over-the-counter market as reported by Nasdaq National Market or any
comparable system; or (3) if the Common Stock is not listed on Nasdaq National
Market or a comparable system, as furnished by two members of the NASD selected
from time to time in good faith by the Board of Directors of the Company for
that purpose. In the absence of all of the foregoing, or if for any other reason
the current market price per share cannot be determined pursuant to the
foregoing provisions of this paragraph (e), the current market price per share
shall be the fair market value thereof as determined in good faith by the Board
of Directors of the Company.
(f) Certain Distributions. If the Company shall pay a dividend or
make any other distribution payable in Options or Convertible Securities, then,
for purposes of paragraph (c) above, such Options or Convertible Securities
shall be deemed to have been issued or sold without consideration.
(g) Consideration Received. If any shares of Common Stock, Options
or Convertible Securities shall be issued, sold or distributed for a
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then fair
market value of such consideration (as determined in good faith by the
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<PAGE> 18
Board of Directors of the Company). If any Options shall be issued in connection
with the issuance and sale of other securities of the Company, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be deemed
to have been issued without consideration; provided, that if such Options have
an exercise price equal to or greater than the current market price of the
Common Stock on the date of issuance of such Options, then such Options shall be
deemed to have been issued for consideration equal to such exercise price.
(h) Deferral of Certain Adjustments. No adjustment to the Exercise
Price (including the related adjustment to the number of shares of Common Stock
purchasable upon the exercise of each Warrant) shall be required hereunder
unless such adjustment, together with other adjustments carried forward as
provided below, would result in an increase or decrease of at least one percent
of the Exercise Price; provided that any adjustments which by reason of this
paragraph (h) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. No adjustment need be made for a
change in the par value of the Common Stock. All calculations under this Section
shall be made to the nearest 1/1,000 of one cent or to the nearest 1/1000 of a
share, as the case may be.
(i) Changes in Options and Convertible Securities. If the exercise
price provided for in any Options referred to in paragraph (c) above, the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in paragraph (c) above, or the rate at which
any Convertible Securities referred to in paragraph (c) above are convertible
into or exchangeable for Common Stock shall change at any time (other than under
or by reason of provisions designed to protect against dilution upon an event
which results in a related adjustment pursuant to this Section 13), the Exercise
Price then in effect and the number of shares of Common Stock purchasable upon
the exercise of each Warrant shall forthwith be readjusted (effective only with
respect to any exercise of any Warrant after such readjustment) to the Exercise
Price and number of shares of Common Stock so purchasable that would then be in
effect had the adjustment made upon the issuance, sale, distribution or granting
of such Options or Convertible Securities been made based upon such changed
purchase price, additional consideration or conversion rate, as the case may be,
but only with respect to such Options and Convertible Securities as then remain
outstanding.
(j) Expiration of Options and Convertible Securities. If, at any
time after any adjustment to the number of shares of Common Stock purchasable
upon the exercise of each Warrant shall have been made pursuant to paragraph (c)
or (i) above or this paragraph (j), any Options or Convertible Securities shall
have expired unexercised, the number of such shares so purchasable shall, upon
such expiration, be readjusted and shall thereafter be such as they would have
been had they been originally adjusted (or had the original adjustment not been
required, as the case may be) as if (i) the only shares of Common Stock deemed
to have been issued in connection with such Options or Convertible Securities
were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such Options or Convertible Securities; and (ii) such shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate consideration, if
any, actually received by the Company for the issuance, sale, distribution or
granting of all such Options or Convertible
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<PAGE> 19
Securities, whether or not exercised; provided that no such readjustment shall
have the effect of decreasing the number of such shares so purchasable by an
amount (calculated by adjusting such decrease to account for all other
adjustments made pursuant to this Section 13 following the date of the original
adjustment referred to above) in excess of the amount of the adjustment
initially made in respect of the issuance, sale, distribution or granting of
such Options or Convertible Securities.
(k) Other Adjustments. In the event that at any time, as a result of
an adjustment made pursuant to this Section 13, the Holders shall become
entitled to receive any securities of the Company other than shares of Common
Stock, thereafter the number of such other securities so receivable upon
exercise of the Warrants and the Exercise Price applicable to such exercise
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the shares of
Common Stock contained in this Section 13.
(l) Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to this Section 13 or upon the occurrence of any event
or action which would require an adjustment of the Exercise Price pursuant to
this Section 13 but for Section 13(h), each Warrant outstanding prior to the
making of the adjustment in the Exercise Price shall thereafter evidence the
right to receive upon payment of the adjusted Exercise Price that number of
shares of Common Stock obtained by dividing (i) the product of the adjusted
number of Warrant Shares issuable upon exercise of a Warrant by payment of the
adjusted Exercise Price plus the Exercise Price prior to adjustment by (ii) the
adjusted Exercise Price (without giving effect to the provisions of Section
13(h)).
Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
14. STATEMENT ON WARRANTS. Irrespective of any adjustment in the number or
kind of shares issuable upon the exercise of the Warrants or the Exercise Price,
Warrants theretofore or thereafter issued may continue to express the same
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
15. FRACTIONAL INTEREST. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Holder, the number of full shares of Common Stock which shall be issuable upon
such exercise shall be computed on the basis of the aggregate number of shares
of Common Stock acquirable on exercise of the Warrants so presented. If any
fraction of a share of Common Stock would, except for the provisions of this
Section, be issuable on the exercise of any Warrant (or specified portion
thereof), the Company shall direct the Transfer Agent to pay an amount in cash
calculated by it to equal the then current market price per share multiplied by
such fraction computed to the nearest whole cent. The Holders, by their
acceptance of the Warrant Certificates, expressly waive any and all rights to
receive any fraction
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<PAGE> 20
of a share of Common Stock or a stock certificate representing a fraction of a
share of Common Stock.
16. NOTICES TO WARRANT HOLDERS. Upon any adjustment of the Exercise Price
pursuant to Section 13, the Company shall promptly thereafter (i) cause to be
filed with the Warrant Agent a certificate of a firm of independent public
accountants of recognized standing selected by the Board of Directors of the
Company (who may be the regular auditors of the Company) setting forth the
Exercise Price after such adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such calculations are based and
setting forth the number of Warrant Shares (or portion thereof) issuable after
such adjustment in the Exercise Price, upon exercise of a Warrant and payment of
the adjusted Exercise Price, which certificate shall be conclusive evidence of
the correctness of the matters set forth therein; and (ii) cause to be given to
each of the registered Holders of the Warrant Certificates at his address
appearing on the Warrant register written notice of such adjustments by
first-class mail, postage prepaid. The Warrant Agent shall be entitled to rely
on the above-referenced accountants certificate and shall be under no duty or
responsibility with respect to any such certificate, except to exhibit the same
from time to time to any Holder desiring an inspection thereof during reasonable
business hours. The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist that may
require any adjustment of the number of shares of Common Stock or other stock or
property issuable on exercise of the Warrants or the Exercise Price, or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed in making such adjustment or the validity or
value (or the kind or amount) of any shares of Common Stock or other stock or
property which may be issuable on exercise of the Warrants. The Warrant Agent
shall not be responsible for any failure of the Company to make any cash payment
or to issue, transfer or deliver any shares of Common Stock or stock
certificates or other common stock or property upon the exercise of any Warrant.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or warrants;
or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in shares of Common Stock or distributions
referred to in Section 13 hereof); or
(c) of any consolidation or merger to which the Company is a party
and for which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange offer for shares of
Common Stock; or
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<PAGE> 21
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) a Change of Control (as defined in the Indenture) occurs; or
(f) the Company proposes to take any other action that would require
an adjustment of the Exercise Price or the number of Warrant Shares pursuant to
Section 13; then the Company shall cause to be filed with the Warrant Agent and
shall cause to be given to each of the registered Holders of the Warrant
Certificates at such Holder's address appearing on the Warrant register, at
least 20 days (or 10 days in any case specified in clauses (a) or (b) above)
prior to the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, by first class mail, postage
prepaid, a written notice stating (i) the date as of which the holders of record
of shares of Common Stock to be entitled to receive any such rights, options,
warrants or distribution are to be determined; or (ii) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common Stock;
or (iii) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up or Change of Control is expected to
become effective or consummated, and the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange such
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up or Change of Control. The failure to give the notice
required by this Section 16 or any defect therein shall not affect the legality
or validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or Change of
Control or the vote upon any action, provided that the Holders shall retain any
right to damages from the Company with respect to such failure. Nothing
contained in this Agreement or in any of the Warrant Certificates shall be
construed as conferring upon the Holders thereof the right to vote or to consent
or to receive notice as shareholders in respect of the meetings of shareholders
or the election of Directors of the Company or any other matter, or any rights
whatsoever as shareholders of the Company.
17. MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT. Any
corporation into which the Warrant Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Warrant Agent shall be a party, or any corporation succeeding to all
or substantially all of the corporate trust business of the Warrant Agent, shall
be the successor to the Warrant Agent hereunder without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
warrant agent under the provisions of Section 19. Any such successor Warrant
Agent shall promptly cause notice of its succession as Warrant Agent to be
mailed (by first class mail, postage prepaid) to each Holder at such Holder's
last address as shown on the register maintained by the Warrant Agent pursuant
this Agreement. In case at the time such successor to the Warrant Agent shall
succeed to the agency created by this Agreement, and in case at that time any of
the Warrant Certificates shall have been countersigned but not delivered, any
such successor to the Warrant Agent may adopt the countersignature of the
original Warrant Agent; and in case at that time any
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<PAGE> 22
of the Warrant Certificates shall not have been countersigned, any successor to
the Warrant Agent may countersign such Warrant Certificates either in the name
of the predecessor Warrant Agent or in the name of the successor to the Warrant
Agent; and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
18. WARRANT AGENT. The Warrant Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and conditions, by all of
which the Company and the Holders of Warrants, by their acceptance thereof,
shall be bound:
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrant
Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of
the Company to comply with any of the covenants contained in this Agreement or
in the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any Holder of
any Warrant Certificate in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the opinion or the advice of
such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any Holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the performance
of this Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature reasonably
incurred by the Warrant Agent in the performance of this Agreement and to
indemnify and defend the Warrant Agent and save it
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<PAGE> 23
harmless against any and all liabilities, including judgments, reasonable costs
and counsel fees, for anything done or omitted by the Warrant Agent in the
performance of this Agreement except as a result of its negligence or bad faith.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more Holders of Warrant Certificates shall
furnish the Warrant Agent with reasonable security and indemnity for any costs
and expenses which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as it may consider proper,
whether with or without any such security or indemnity. All rights of action
under this Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrant Certificates or the
production thereof at any trial or other proceeding relative thereto, and any
such action, suit or proceeding instituted by the Warrant Agent shall be brought
in its name as Warrant Agent and any recovery of judgment shall be for the
ratable benefit of the Holders of the Warrants, as their respective rights or
interests may appear.
(g) The Warrant Agent, and any stockholder, director, officer or
employee of it, may buy, sell or deal in any of the Warrants or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not be liable for anything which it may do or refrain from
doing in connection with this Agreement except for its own negligence or bad
faith.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same. The Warrant Agent shall not
be accountable with respect to the validity or value or the kind or amount of
any Warrant Shares or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant or with respect to whether
any such Warrant Shares or other securities will when issued be validly issued
and fully paid and nonassessable, and makes no representation with respect
thereto.
19. RESIGNATION AND REMOVAL OF WARRANT AGENT; APPOINTMENT OF SUCCESSOR. No
resignation or removal of the Warrant Agent and no appointment of a successor
warrant agent shall become effective until the acceptance of appointment by the
successor warrant agent as provided herein. The Warrant Agent may resign its
duties and be discharged from all further
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<PAGE> 24
duties and liability hereunder (except liability arising as a result of the
Warrant Agent's own negligence of willful misconduct) after giving written
notice to the Company. The Company may remove the Warrant Agent upon written
notice, and the Warrant Agent shall thereupon in like manner be discharged from
all further duties and liabilities hereunder, except as aforesaid. The Warrant
Agent shall, at the Company's expense, cause to be mailed (by first class mail,
postage prepaid) to each Holder of a Warrant at his last address as shown on the
register of the Company maintained by the Warrant Agent a copy of said notice of
resignation or notice of removal, as the case may be. Upon such resignation or
removal, the Company shall appoint in writing a new warrant agent. If the
Company shall fail to make such appointment within a period of 30 days after it
has been notified in writing of such resignation by the resigning Warrant Agent
or after such removal, then the resigning Warrant Agent or the Holder of any
Warrant may apply to any court of competent jurisdiction for the appointment of
a new warrant agent. Any new warrant agent, whether appointed by the Company or
by such a court, shall be a corporation doing business under the laws of the
United States or any state thereof, in good standing and having a combined
capital and surplus of not less than $50,000,000. The combined capital and
surplus of any such new warrant agent shall be deemed to be the combined capital
and surplus as set forth in the most recent annual report of its condition
published by such warrant agent prior to its appointment, provided that such
reports are published at least annually pursuant to law or to the requirements
of a federal or state supervising or examining authority. After acceptance in
writing of such appointment by the new warrant agent, it shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named herein as the Warrant Agent, without any further assurance,
conveyance, act or deed; but if for any reason it shall be necessary or
expedient to execute and deliver any further assurance, conveyance, act or deed,
the same shall be done at the expense of the Company and shall be legally and
validly executed and delivered by the resigning or removed Warrant Agent. Not
later than the effective date of any such appointment, the Company shall give
notice thereof to the resigning or removed Warrant Agent. Failure to give any
notice provided for in this Section, however, or any defect therein, shall not
affect the legality or validity of the resignation of the Warrant Agent or the
appointment of a new warrant agent, as the case may be.
20. REGISTRATION. The Company acknowledges that Holders shall have the
registration rights set forth in the Warrant Registration Rights Agreement.
21. REPORTS. (a) So long as any of the Warrants remain outstanding, the
Company shall cause copies of all quarterly and annual reports and of the
information, documents, and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) which
the Company is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act ("SEC Reports") to be filed with the Warrant Agent and
mailed by the Warrant Agent to the Holders at their addresses appearing in the
register of the Holders maintained by the Warrant Agent, in each case, within 15
days of filing with the Commission. If the Company is not subject to the
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
nevertheless continue to cause SEC Reports, comparable to those which it would
be required to file pursuant to Section 13 or 15(d) of the Exchange Act if it
were subject to the requirements of either such Section, to be so filed with the
Commission (but only if the Commission permits such filings) and with the
Warrant Agent and mailed by the
-23-
<PAGE> 25
Warrant Agent to the Holders, in each case, within the same time periods as
would have applied (including under the preceding sentence) had the Company been
subject to the requirements of Section 13 or 15(d) of the Exchange Act.
(b) The Company shall provide the Warrant Agent with a sufficient
number of copies of all SEC Reports that the Warrant Agent may be required to
deliver to the Holders of the Warrants under this Section 21.
22. RULE 144A. The Company hereby agrees with each Holder, for so long as
any Registrable Securities remain outstanding, to make available, upon request
of any Holder of Registrable Securities, to any Holder or beneficial owner of
Registrable Securities in connection with any sale thereof and any prospective
purchaser of such Registrable Securities designated by such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Securities Act in
order to permit resales of such Registrable Securities pursuant to Rule 144A.
23. NOTICES TO COMPANY AND WARRANT AGENT. All notices and other
communications provided for or hereunder shall be made in writing by
hand-delivery, first-class mail (registered or certified, return receipt
requested), telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to Warrant Agent:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Department
(ii) if to the Company:
Orbital Imaging Corporation
21700 Atlantic Boulevard
Dulles, Virginia 20166
(iii) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
All such notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next business day,
if timely delivered to an air courier guaranteeing overnight delivery. Copies of
all such notices, demands or other communications shall be concurrently
delivered by the Person giving the same to the Trustee at the address specified
in the Indenture.
-24-
<PAGE> 26
24. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant Agent may from
time to time supplement or amend this Agreement without the approval of any
Holders of Warrant Certificates in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company and the Warrant Agent
may deem necessary or desirable and which shall not in any way adversely affect
the interests of the Holders of Warrant Certificates. Any amendment or
supplement to this Agreement that has a material adverse effect on the interests
of Holders shall require the written consent of Holders representing a majority
of the then outstanding Warrants. The consent of each Holder of a Warrant
affected shall be required for any amendment pursuant to which the Exercise
Price would be increased or the number of Warrant Shares purchasable upon
exercise of Warrants would be decreased (other than pursuant to adjustments
provided for in Section 13 hereof). The Warrant Agent shall be entitled to
receive and, subject to Section 18, shall be fully protected in relying upon, an
Officers' Certificate and Opinion of Counsel as conclusive evidence that any
such amendment or supplement is authorized or permitted hereunder, that it is
not inconsistent herewith, and that it will be valid and binding upon the
Company in accordance with its terms.
25. SUCCESSORS. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
26. TERMINATION. This Agreement (other than the Company's obligations with
respect to Warrants previously exercised and with respect to Section 18(e))
shall terminate at 5:00 p.m., New York City time on the Expiration Date.
27. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED
HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF
NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF SAID STATE.
28. BENEFITS OF THIS AGREEMENT. (a) Nothing in this Agreement shall be
construed to give to any Person or corporation other than the Company, the
Warrant Agent and the Holders of the Warrant Certificates any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Warrant Agent and the Holders of
the Warrant Certificates.
(b) Prior to the exercise of the Warrants, no Holder of a Warrant
Certificate, as such, shall be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to receive dividends or
subscription rights, the right to vote, to consent, to exercise any preemptive
right, to receive any notice of meetings of stockholders for the election of
directors of the Company or any other matter or to receive any notice of any
proceedings of the Company, except as may be specifically provided for herein.
Until exercise of their Warrants, the Holders are not entitled to share in the
assets of the Company in the event of the liquidation, dissolution or winding up
of the Company's affairs.
-25-
<PAGE> 27
(c) All rights of action in respect of this Agreement are vested in
the Holders of the Warrants, and any Holder of any Warrant, without the consent
of the Warrant Agent or the Holder of any other Warrant, may, on such Holder's
own behalf and for such Holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company suitable to enforce,
or otherwise in respect of, such Holder's rights hereunder, including the right
to exercise, exchange or surrender for purchase such Holder's Warrants in the
manner provided in this Agreement.
29. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
-26-
<PAGE> 28
IN WITNESS WHEREOF, the parties have executed this Warrant Agreement as of
the date first written above.
ORBITAL IMAGING CORPORATION
By: ____________________________
Name:
Title:
MARINE MIDLAND BANK,
AS WARRANT AGENT
By: ____________________________
Name:
Title:
-27-
<PAGE> 29
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE OF WARRANT]
Unless and until it is exchanged in whole or in part for Warrants in
definitive form, this Warrant may not be transferred except as a whole by the
depositary to a nominee of the depositary or by a nominee of the depositary to
the depositary or another nominee of the depositary or by the depositary or any
such nominee to a successor depositary or a nominee of such successor
depositary. The Depository Trust Company ("DTC"), (55 Water Street, New York,
New York) shall act as the depositary until a successor shall be appointed by
the Company and the Warrant Agent. Unless this certificate is presented by an
authorized representative of DTC to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF ORBITAL IMAGING CORPORATION AND ITS SUCCESSORS (THE "COMPANY")
THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A PERSON THAT IS NOT A U.S. PERSON (AS DEFINED IN
RULE 902 UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE WARRANT
<PAGE> 30
AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE WARRANTS (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE WARRANT AGENT) OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE COMPANY OR TRUSTEE, REGISTRAR OR TRANSFER AGENT FOR THE
SECURITIES SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM
IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
IN (A) ABOVE. THE WARRANTS EVIDENCED HEREBY WERE INITIALLY ISSUED AS PART
OF AN ISSUANCE OF UNITS (THE "UNITS"), EACH OF WHICH CONSISTS OF $1,000
PRINCIPAL AMOUNT OF 11 5/8% SENIOR NOTES DUE 2005 (THE "NOTES") OF THE
COMPANY AND ONE WARRANT TO PURCHASE 8.75164 SHARES OF COMMON STOCK, $0.01
PAR VALUE, OF THE COMPANY (THE "WARRANTS").
EXERCISABLE ON OR AFTER THE EXERCISABILITY DATE (AS DEFINED IN THE
INDENTURE). THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE NOT
TRANSFERABLE SEPARATELY FROM THE NOTES ORIGINALLY SOLD AS A UNIT WITH SUCH
WARRANTS UNTIL THE EARLIEST OF (I) 90 DAYS FROM THE DATE OF ISSUANCE; (II)
SUCH DATE AS THE INITIAL PURCHASERS (AS DEFINED IN THE INDENTURE) MAY, IN
THEIR DISCRETION, DEEM APPROPRIATE; (III) IN THE EVENT A CHANGE OF CONTROL
(AS DEFINED IN THE INDENTURE) OCCURS, THE DATE THE COMPANY MAILS NOTICE
THEREOF TO HOLDERS OF NOTES; (IV) THE DATE ON WHICH THE EXCHANGE OFFER (AS
DEFINED IN THE INDENTURE) IS CONSUMMATED AND (V) THE DATE ON WHICH THE
SHELF REGISTRATION STATEMENT (AS DEFINED IN THE INDENTURE) IS DECLARED
EFFECTIVE.
-2-
<PAGE> 31
NO. CUSIP NO. 68556F127 0 WARRANTS.
ORBITAL IMAGING CORPORATION.
Warrant Certificate
This Warrant Certificate certifies that Cede & Co. or its registered
assigns, is the registered holder of 0 Warrants expiring March 1, 2005 (the
"Warrants") to purchase Common Stock, par value $.01 (the "Common Stock"), of
Orbital Imaging Corporation, a Delaware corporation (the "Company"). The Holder
of this Warrant Certificate shall have the right, which may be exercised
commencing at the opening of business on the Exercisability Date and until 5:00
p.m., New York City time, on the Expiration Date to receive from the Company
8.75164 fully paid and nonassessable shares of Common Stock per Warrant (the
"Warrant Shares") at the initial exercise price (the "Exercise Price") of $.01
per share payable in lawful money of the United States of America upon surrender
of this Warrant Certificate and payment of the Exercise Price at the office or
agency of the Warrant Agent, but only subject to the conditions set forth herein
and in the Warrant Agreement referred to on the reverse hereof. The Exercise
Price and number of Warrant Shares issuable upon exercise of the Warrants are
subject to adjustment upon the occurrence of certain events set forth in the
Warrant Agreement.
No Warrant Holder shall be entitled to exercise such Holder's Warrants at
any time, unless, at the time of exercise, (i) a registration statement under
the Securities Act relating to the Warrant Shares has been filed with, and
declared effective by, the Commission, and no stop order suspending the
effectiveness of such registration statement has been issued by the Commission;
or (ii) the issuance of the Warrant Shares is permitted pursuant to an exemption
from the registration requirements of the Securities Act.
No Warrant may be exercised before the Exercisability Date. No Warrant may
be exercised after 5:00 p.m., New York City Time on March 1, 2005, and to the
extent not exercised by such time such Warrants shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in accordance
with the internal laws of the State of New York.
<PAGE> 32
IN WITNESS WHEREOF, Orbital Imaging Corporation has caused this Warrant
Certificate to be signed by its Vice-President, Finance and by its Secretary,
each by a signature or a facsimile thereof.
ORBITAL IMAGING CORPORATION
By: ____________________________________
Name: Armand Mancini
Title: Vice President, Finance
By: ____________________________________
Name: Susan Herlick
Title: Secretary
COUNTERSIGNED:
MARINE MIDLAND BANK,
AS WARRANT AGENT
By: ____________________________________
Authorized Signature
-2-
<PAGE> 33
[REVERSE OF WARRANT]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring March 1, 2005 entitling the Holders on
exercise to receive shares of Common Stock, par value $.0l, of the Company (the
"Common Stock"), and are issued or to be issued pursuant to a Warrant Agreement
dated as of February 25, 1998 (the "Warrant Agreement"), duly executed and
delivered by the Company to Marine Midland Bank, as warrant agent (the "Warrant
Agent"), which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Warrant Agent, the Company and the Holders of the Warrants. A copy of the
Warrant Agreement may be obtained by the Holder hereof upon written request to
the Company. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Warrant Agreement.
Warrants may be exercised at any time from 9:00 a.m. on or after the
Exercisability Date and until 5:00 p.m., New York City Time on March 1, 2005.
The Holder of Warrants evidenced by this Warrant Certificate may exercise them
by surrendering this Warrant Certificate, with the form of election to purchase
set forth hereon properly completed and executed, together with payment of the
Exercise Price in lawful money of the United States of America or certified or
bank check at the office of the Warrant Agent. In the event that upon any
exercise of Warrants evidenced hereby the number of Warrants exercised shall be
less than the total number of Warrants evidenced hereby, there shall be issued
to the Holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised. No adjustment shall be made for any dividends
on any Common Stock issuable upon exercise of this Warrant.
In the alternative, each Holder may exercise its right to receive Warrant
Shares on a net basis, such that without the exchange of any funds, the Holder
receives that number of Warrant Shares otherwise issuable upon exercise of its
Warrants less that number of Warrant Shares having a fair market value equal to
the aggregate Exercise Price that would otherwise have been paid by the Holder
for the Warrant Shares being issued.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price set forth on the face hereof and/or the number of shares of
Common Stock issuable upon the exercise of each Warrant shall, subject to
certain conditions, be adjusted. No fractions of a share of Common Stock will be
issued upon the exercise of any Warrant, but the Company will pay the cash value
thereof determined as provided in the Warrant Agreement.
The Warrant Agreement provides that the Company shall be bound by certain
registration obligations with respect to the Common Stock issuable upon exercise
of the Warrants.
Warrant Certificates, when surrendered at the office of the Warrant Agent
by the registered holder thereof in Person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
<PAGE> 34
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
Holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any Holder hereof to any rights
of a stockholder of the Company.
-2-
<PAGE> 35
[FORM OF ELECTION TO PURCHASE]
(TO BE EXECUTED UPON EXERCISE OF WARRANT)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive ________ shares of Common
Stock and herewith tenders payment for such shares to the order of ORBITAL
IMAGING CORPORATION, in the amount of $_________ in accordance with the terms
hereof. The undersigned requests that a certificate for such shares be
reregistered in the name of _______________________, whose address is
______________________, and that such shares be delivered to _________________,
whose address is ____________________________. If said number of shares is less
than all of the shares of Common Stock purchasable hereunder, the undersigned
requests that a new Warrant Certificate representing the remaining balance of
such shares be registered in the name of _____________________________, whose
address is ________________________, and that such Warrant Certificate be
delivered to _____________________________, whose address is
____________________________.
Signature: __________________________
Date: _____________________
Signature Guaranteed:
______________________________________
<PAGE> 36
SCHEDULE OF EXCHANGES OF DEFINITIVE WARRANTS
The following exchanges of a part of this Global Warrant for definitive
Warrants have been made:
<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Date of Exchange Amount of Amount of Number of Signature of
decrease in increase in Warrants in authorized
Number of Number of this Global officer of
Warrants in Warrants in Warrant Warrant Agent
this Global this Global following such
Warrant Warrant decrease or
increase
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 37
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF WARRANTS
Re: _____ Warrants to Purchase Common Stock (the "Warrants") of Orbital
Imaging Corporation. This Certificate relates to _____ Warrants held in *
_______ book-entry or * _______ definitive form by __________ (the
"Transferor").
The Transferor*:
[_] has requested the Warrant Agent by written order to deliver in exchange for
its beneficial interest in the Global Warrants held by the depositary a Warrant
or Warrants in definitive, registered form equal to its beneficial interest in
such Global Warrant (or the portion thereof indicated above); or
[_] has requested the Warrant Agent by written order to exchange or register the
transfer of a Warrant or Warrants.
In connection with such request and in respect of each such Warrant, the
Transferor does hereby certify that the Transferor is familiar with the Warrant
Agreement relating to the above captioned Warrants and that the transfer of this
Warrant does not require registration under the Securities Act of 1933, as
amended (the "Securities Act") because:
[_] Such Warrant is being acquired for the Transferor's own account without
transfer (in satisfaction of Section 7 of the Warrant Agreement).
[_] Such Warrant is being transferred to a qualified institutional buyer (as
defined in Rule 144A under the Securities Act), in reliance on Rule 144A or (ii)
pursuant to an exemption from registration in accordance with Rule 904 under the
Securities Act (and, in the case of clause (ii), based on an opinion of counsel
if the Company so requests)..
[_] Such Warrant is being transferred (i) in accordance with Rule 144 under the
Securities Act (and based on an opinion of counsel if the Company so requests)
or (ii) pursuant to an effective registration statement under the Securities
Act.
[_] Such Warrant is being transferred to an institutional accredited investor
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act
pursuant to a private placement exemption from the registration requirements of
the Securities Act (together with a certification).
[_] Such Warrant is being transferred in reliance on and in compliance with
another exemption from the registration requirements of the Securities Act (and
based on an opinion of counsel if the Company so requests).
*Check applicable box.
<PAGE> 38
[INSERT NAME OF TRANSFEROR]
By: ___________________________________
Name:
Title:
Date: ________________________
2
<PAGE> 1
Exhibit 4.5
REGISTRATION RIGHTS AGREEMENT
DATED AS OF FEBRUARY 25, 1998
BY AND AMONG
ORBITAL IMAGING CORPORATION
AND
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED.
NATIONSBANC MONTGOMERY SECURITIES LLC
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and
entered into as of February 25 1998, by and among Orbital Imaging Corporation, a
Delaware corporation (the "Company"), Bear, Stearns & Co. Inc., Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and NationsBanc
Montgomery Securities LLC (each, an "Initial Purchaser" and, collectively, the
"Initial Purchasers"), each of whom has agreed to purchase an aggregate of
150,000 Units consisting of $150,000,000 in aggregate principal amount at
maturity of the Company's 11 5/8% Series A Senior Notes due 2005 and warrants
(the "Warrants") to purchase an aggregate of 1,312,746 shares of the Company's
Common Stock, $.01 par value, pursuant to the Purchase Agreement (as defined
below).
This Agreement is made pursuant to the Purchase Agreement, dated as of
February 20, 1998 (the "Purchase Agreement"), by and between the Company and the
Initial Purchasers. In order to induce the Initial Purchasers to purchase the
Notes, the Company has agreed to provide the registration rights set forth in
this Agreement. The execution and delivery of this Agreement is a condition to
the obligations of the Initial Purchasers set forth in Section 8 of the Purchase
Agreement. Capitalized terms not defined herein shall have the meanings ascribed
to them in the Indenture.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following
capitalized terms shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Business Day: Any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the corporate trust office of the Trustee,
on which banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Broker-Dealer Transfer Restricted Securities: Series B Notes that are
acquired by a Broker-Dealer in the Exchange Offer in exchange for Series A Notes
that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Notes acquired
directly from the Company or any of its affiliates).
Certificated Securities: As defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (b) the
maintenance of such Exchange Offer Registration Statement continuously effective
and
<PAGE> 3
the keeping of the Exchange Offer open for a period not less than the minimum
period required pursuant to Section 3(b) hereof and (c) the delivery by the
Company to the Registrar under the Indenture of Series B Notes in the same
aggregate principal amount as the aggregate principal amount of Series A Notes
that were validly tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Notes, each Interest
Payment Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The offer to exchange and issuance by the Company of a
principal amount of Series B Notes (which shall be registered pursuant to the
Exchange Offer Registration Statement) equal to the outstanding principal amount
of Series A Notes that are validly tendered by such Holders in connection with
such exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Series A Notes to certain "qualified institutional buyers,"
as such term is defined in Rule 144A under the Act and outside the United States
to Persons that are not "U.S. Persons" in a transaction meeting the requirements
of Rule 904 under the Securities Act.
Global Note Holder: As defined in the Indenture.
Holders: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated the Closing Date, by and between the
Company and Marine Midland Bank, as trustee (the "Trustee"), pursuant to which
the Notes are to be issued, as such Indenture is amended or supplemented from
time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series A Notes and the Series B Notes, as the context
requires.
Person: An individual, partnership, corporation, limited liability
company, joint venture, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus
-2-
<PAGE> 4
supplement and by all other amendments thereto, including post-effective
amendments, and all material incorporated by reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date, each Person
who is a Holder of Notes on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company
relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) which is filed pursuant to
the provisions of this Agreement and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
Series A Notes: The Company's 11 5/8% Series A Senior Notes due 2005 to
be issued to the Initial Purchasers pursuant to the Indenture.
Series B Notes: The Company's 11 5/8% Series B Senior Notes due 2005 to
be issued pursuant to the Indenture in the Exchange Offer.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur
of (a) the date on which such Series A Note is exchanged in the Exchange Offer
and entitled to be resold to the public by the Holder thereof without complying
with the prospectus delivery requirements of the Act, (b) the date on which such
Series A Note has been sold pursuant to a Shelf Registration Statement, (c) the
date on which such Series B Note is disposed of by a Broker-Dealer pursuant to
the "Plan of Distribution" contemplated by the Exchange Offer Registration
Statement (including delivery of the Prospectus contained therein) or (d) the
date on which such Note is distributed to the public pursuant to Rule 144 under
the Act.
Trustee: Marine Midland Bank or such other Person who may be the
trustee under the Indenture.
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
-3-
<PAGE> 5
SECTION 2. HOLDERS. A Person is deemed to be a holder of Transfer
Restricted Securities (each, a "Holder") whenever such Person owns Transfer
Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER.
(a) General. Unless the Exchange Offer shall not be permitted
by applicable federal law (after the procedures set forth in Section 6(a)(i)
below have been complied with), the Company shall (i) use its best efforts to
file with the Commission as soon as practicable after the Closing Date, but in
no event later than 45 days after the Closing Date, the Exchange Offer
Registration Statement, (ii) use its best efforts to cause such Exchange Offer
Registration Statement to become effective at the earliest possible time, but in
no event later than 150 days after the Closing Date, (iii) in connection with
the foregoing, (A) file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause such Exchange Offer
Registration Statement to become effective, (B) file, if applicable, a
post-effective amendment to such Exchange Offer Registration Statement pursuant
to the Act, and (C) cause all necessary filings, if any, in connection with the
registration and qualification of the Series B Notes to be made under the blue
sky laws of such jurisdictions as are necessary to permit Consummation of the
Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, commence and Consummate the Exchange Offer. The Exchange
Offer shall be on the appropriate form permitting registration of the Series B
Notes to be offered in exchange for the Notes that are Transfer Restricted
Securities and to permit sales of Broker- Dealer Transfer Restricted Securities
by Restricted Broker-Dealers as contemplated by Section 3(c) below.
(b) Duration. The Company shall use its best efforts to cause
the Exchange Offer Registration Statement to be effective continuously, and
shall keep the Exchange Offer open for a period of not less than the minimum
period required under applicable federal and state securities laws to Consummate
the Exchange Offer; provided, however, that in no event shall such period be
less than 30 Business Days. The Company shall cause the Exchange Offer to comply
with all applicable federal and state securities laws. No securities other than
the Notes shall be included in the Exchange Offer Registration Statement. The
Company shall use its best efforts to cause the Exchange Offer to be Consummated
on the earliest practicable date after the Exchange Offer Registration Statement
has become effective, but in no event later than 30 Business Days thereafter.
(c) Broker-Dealer. The Company shall include a "Plan of
Distribution" section in the Prospectus contained in the Exchange Offer
Registration Statement and indicate therein that any Restricted Broker-Dealer
who holds Transfer Restricted Securities that were acquired for the account of
such Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Transfer Restricted Securities (other than
Transfer Restricted Securities acquired directly from the Company or one of its
affiliates) pursuant to the Exchange Offer; however, such Broker-Dealer may be
deemed to be an "underwriter" within the meaning of the Act and must, therefore,
deliver a prospectus meeting the requirements of the Act in connection with any
resale of the Series B Notes received by such Broker-Dealer in the Exchange
Offer, which prospectus delivery requirement may be satisfied by the delivery by
such
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Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers that the Commission may require in order
to permit such resales pursuant thereto, but such "Plan of Distribution" shall
not name any such Broker-Dealer or disclose the amount of Notes held by any such
Broker-Dealer, except to the extent required by the Commission as a result of a
change in policy after the date of this Agreement.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for resales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers, and to ensure that the Exchange Offer
Registration Statement conforms with the requirements of this Agreement, the Act
and the policies, rules and regulations of the Commission as announced from time
to time, for a period of 180 days from the date on which the Exchange Offer is
Consummated.
The Company shall provide sufficient copies of the latest version of
such Prospectus to such Restricted Broker-Dealers promptly upon request, at any
time during such 180-day period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION.
(a) Shelf Registration. If (i) the Company is not required to
file an Exchange Offer Registration Statement with respect to the Series B Notes
because the Exchange Offer is not permitted by applicable federal law (after the
procedures set forth in Section 6(a)(i) below have been complied with), (ii) any
Holder of Transfer Restricted Securities shall notify the Company within 20
Business Days following the Consummation of the Exchange Offer (the "Holder
Resale Notice") that (A) such Holder was prohibited by applicable law or
Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the Series B Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds Series A
Notes acquired directly from the Company or one of its affiliates, or (iii) the
Exchange Offer is for any other reason not consummated within 180 days of the
Closing Date then the Company shall: (x) cause to be filed on or prior to 45
days after the date on which the Company determines that it is not required to
file the Exchange Offer Registration Statement pursuant to clause (i) above or
45 days after the date on which the Company receives the notice specified in
clause (ii) above a shelf registration statement pursuant to Rule 415 under the
Act (which may be an amendment to the Exchange Offer Registration Statement (in
either event, the "Shelf Registration Statement")), relating to all Transfer
Restricted Securities the Holders of which shall have provided the information
required pursuant to Section 4(b) hereof; and (y) use its best efforts to cause
such Shelf Registration Statement to become effective on or prior to 150 days
after the date on which the Company becomes obligated to file such Shelf
Registration Statement.
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If, after the Company has filed an Exchange Offer Registration
Statement which satisfies the requirements of Section 3(a) above, the Company is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer shall not be permitted under clause (i), (ii) or
(iii) in Section 4(a), then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above. Such
an event shall have no effect on the requirements of clause (y) above. The
Company shall use its best efforts to keep the Shelf Registration Statement
discussed in this Section 4(a) continuously effective, supplemented and amended
as required by and subject to the provisions of Sections 6(b) and (c) hereof to
the extent necessary to ensure that it is available for resales of Transfer
Restricted Securities by the Holders thereof entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, until the earlier of (A) the date that is two years
after the effective date thereof (plus any extension of such two-year period
pursuant to Sections 4(c) or 6(c)(i) below), provided that in the event such
applicable policies, rules and regulations of the Commission are amended to
provide for a period of less than two years, then such period shall be deemed to
be in effect for purposes of this Section 4(a), or (B) the consummation of the
Exchange Offer with respect to all Transfer Restricted Securities and the
expiration of 20 Business Days after the Consummation thereof if during such 20
Business Days no Holder Resale Notice shall have been received by the Company or
(C) the date when all securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement.
(b) Provision by Holders of Certain Information in Connection
with the Shelf Registration Statement. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 20 days after receipt of a request
therefor, such information specified in Item 507 and Item 508 of Regulation S-K
under the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to Liquidated Damages pursuant to
Section 5 hereof unless and until such Holder shall have used its best efforts
to provide all such information. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
(c) Black-out Periods. During any consecutive 365 day period,
the Company may suspend the effectiveness of the Shelf Registration Statement on
two occasions for a period of not more than 45 consecutive days if there is a
possible acquisition or business combination or other transaction, business
development or event involving the Company that may require disclosure in the
Shelf Registration Statement and the Board of Directors of the Company
determines in the exercise of its reasonable judgment that such disclosure is
not in the best interests of the Company and its stockholders or obtaining any
financial statements relating to a possible acquisition or business combination
required to be included in the Shelf Registration Statement would be
impracticable. In such a case, the Company shall promptly notify the Holders of
the suspension of the Shelf Registration Statement's effectiveness, provided
that such
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notice shall not require the Company to disclose the possible acquisition or
business combination or other transaction, business development or event if the
Board of Directors of the Company determines in good faith that such acquisition
or business combination or other transaction, business development or event
should remain confidential. Upon the abandonment, consummation, or termination
of the possible acquisition or business combination, or the availability of the
required financial statements with respect to a possible acquisition or business
combination , the suspension of the use of the Shelf Registration Statement
pursuant to this Section 4(c) shall cease and the Company shall promptly comply
with Section 6(c) hereof and notify the Holders that disposition of Transfer
Restricted Securities may be resumed. The length of any periods during which the
Company prohibits offers and sales of Transfer Restricted Securities pursuant to
the Shelf Registration Statement under this Section 4(c) shall not be considered
periods of a Registration Default under Section 5 hereof. In addition, the
length of any periods during which the Company prohibits offers and sales of
Transfer Restricted Securities pursuant to the Shelf Registration Statement
under this Section 4(c) shall be added to the two year period described in
Section 4(a) above.
SECTION 5. LIQUIDATED DAMAGES. If (i) any Registration Statement
required by this Agreement is not filed with the Commission on or prior to the
date specified for such filing in this Agreement, (ii) any such Registration
Statement has not been declared effective by the Commission on or prior to the
date specified for such effectiveness in this Agreement (the "Effectiveness
Target Date"), (iii) the Exchange Offer has not been Consummated within 30
Business Days of the Effectiveness Target Date with respect to the Exchange
Offer Registration Statement, or (iv) any Registration Statement required by
this Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being succeeded
immediately by a post-effective amendment to such Registration Statement that
cures such failure and that is itself declared effective immediately (each such
event referred to in clauses (i) through (iv), a "Registration Default"), the
Company shall pay as liquidated damages ("Liquidated Damages") to each Holder an
amount (the "Damage Amount") equal to 0.25% per annum of the face amount of the
Notes during the first 90-day period or any portion thereof immediately
following the occurrence of such Registration Default. The Damage Amount will be
increased by an additional 0.25% per annum of the face amount of the Notes for
each subsequent 90-day period that any such Damage Amount continues to accrue,
and the Damage Amount will accrue at the rate specified above until such
Registration Default is cured; provided that in no event shall the Damage Amount
be increased by more than 1% of the face amount of the Notes. Notwithstanding
anything to the contrary set forth herein, (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (ii) above, (3) upon Consummation of the Exchange
Offer, in the case of (iii) above, or (4) upon the filing of a post-effective
amendment to the Registration Statement or an additional Registration Statement
that causes the Exchange Offer Registration Statement (and/or, if applicable,
the Shelf Registration Statement) to again be declared effective or made usable
in the case of (iv) above, the accrual of liquidated damages payable with
respect to the Transfer Restricted Securities as a result of such clause (i),
(ii), (iii) or (iv), as applicable, shall cease.
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All accrued liquidated damages will be paid by the Company on each
Damages Payment Date to the Global Note Holder by wire transfer of immediately
available funds or by federal funds check and to Holders of Certificated
Securities by mailing checks to their registered addresses, as on each Interest
Payment Date. All obligations of the Company set forth in the preceding
paragraph that are outstanding with respect to any Transfer Restricted Security
at the time such security ceases to be a Transfer Restricted Security shall
survive until such time as all such obligations with respect to such security
shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES.
(a) Exchange Offer Registration Statement. In connection with
the Exchange Offer, the Company shall comply with all applicable provisions of
Section 6(c) below, shall use its best efforts to effect such exchange and to
permit the sale of Broker-Dealer Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
(i) If, following the date hereof there has been
published a change in Commission policy with respect to exchange offers such as
the Exchange Offer, such that in the reasonable opinion of counsel to the
Company there is a substantial question as to whether the Exchange Offer is
permitted by applicable federal law, the Company hereby agrees to seek a
no-action letter or other favorable decision from the Commission allowing the
Company to Consummate an Exchange Offer for such Series A Notes. The Company
hereby agrees to pursue the issuance of such a decision to the Commission staff
level, but is not required to take a commercially unreasonable action to effect
a change of Commission policy. In connection with the foregoing, the Company
hereby agrees to take all such other actions as are requested by the Commission
or otherwise required in connection with the issuance of such decision,
including without limitation (A) participating in telephonic conferences with
the Commission, (B) delivering to the Commission staff an analysis prepared by
counsel to the Company setting forth the legal bases, if any, upon which such
counsel has concluded that such an Exchange Offer should be permitted and (C)
diligently pursuing a resolution (which need not be favorable) by the Commission
staff of such submission.
(ii) As a condition to its participation in the
Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company, prior to
the Consummation of the Exchange Offer, a written representation to the Company
(which may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it is not an
affiliate of the Company, (B) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any Person to
participate in, a distribution of the Series B Notes to be issued in the
Exchange Offer and (C) it is acquiring the Series B Notes in its ordinary course
of business. Each Holder hereby acknowledges and agrees that any Broker-Dealer
and any such Holder using the Exchange Offer to participate in a distribution of
the securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc. (available
June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988),
as
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interpreted in the Commission's letter to Shearman & Sterling dated July 2,
1993, and similar no-action letters (including, if applicable, any no-action
letter obtained pursuant to clause (i) above), and (2) must comply with the
registration and prospectus delivery requirements of the Act in connection with
a secondary resale transaction and that such a secondary resale transaction must
be covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of Series B Notes obtained by such Holder in
exchange for Series A Notes acquired by such Holder directly from the Company or
an affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the Company is registering the Exchange Offer in
reliance on the position of the Commission enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available
June 5, 1991) and, if applicable, any no-action letter obtained pursuant to
clause (i) above, (B) including a representation that the Company has not
entered into any arrangement or understanding with any Person to distribute the
Series B Notes to be received in the Exchange Offer and that, to the best of the
Company's information and belief, each Holder participating in the Exchange
Offer is acquiring the Series B Notes in its ordinary course of business and has
no arrangement or understanding with any Person to participate in the
distribution of the Series B Notes received in the Exchange Offer and (C)
including any other undertaking or representation required by the Commission as
set forth in any no-action letter obtained pursuant to clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the resale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in accordance with
the provisions hereof.
(c) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement, the Company
shall:
(i) use its best efforts to keep such Registration
Statement continuously effective and provide all requisite financial statements
for the period specified in Section 3 or 4 of this Agreement, as applicable.
Upon the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for resale of
Transfer Restricted Securities during the period required by this Agreement, the
Company shall file promptly an appropriate amendment to such Registration
Statement or file appropriate documents that will be so incorporated by
reference, (1) in the case of clause (A), correcting any
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such misstatement or omission, and (2) in the case of either clause (A) or (B),
use its best efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for their
intended purpose(s) as soon as reasonably practicable thereafter;
(ii) prepare and file with the Commission such
amendments and post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the applicable period
set forth in Section 3 or 4 hereof, as applicable, or such shorter period as
will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold or exchanged; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424,
430A and 462, as applicable, under the Act in a timely manner; and comply with
the provisions of the Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement to the
Prospectus;
(iii) advise the underwriter(s), if any, and selling
Holders promptly and, if requested by such Persons, confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to any Registration Statement or any
post-effective amendment thereto, when the same has become effective, (B) of any
request by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Act or of
the suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, or (D) of the
existence of any fact or the happening of any event that makes any statement of
a material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in the
Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
blue sky laws, the Company shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(iv) furnish to the Initial Purchaser(s), each
selling Holder named in any Registration Statement or Prospectus and each of the
underwriter(s), if any, in connection with such sale before filing with the
Commission, copies of any Registration Statement or any Prospectus included
therein or any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the initial
filing of such Registration Statement), which documents will be subject to the
review of such Holders
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and underwriter(s), if any, in connection with such sale for a period of at
least five Business Days, and the Company will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents incorporated by reference)
to which the selling Holders of the Transfer Restricted Securities covered by
such Registration Statement or the underwriter(s), if any, in connection with
such sale shall reasonably object within five Business Days after the receipt
thereof. A selling Holder or underwriter, if any, shall be deemed to have
reasonably objected to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed, contains a
material misstatement or omission or fails to comply with the applicable
requirements of the Act;
(v) promptly prior to the filing of any document that
is to be incorporated by reference into a Registration Statement or Prospectus,
provide notice identifying such document, and, upon request, furnish copies of,
such document to one counsel for such selling Holders designated by a majority
of such selling Holders and to the managing underwriter(s), if any, in
connection with such sale, make the Company's representatives available for
discussion of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof as such
selling Holders or underwriter(s), if any, reasonably may request;
(vi) subject to the entry of appropriate
confidentiality agreements, make available at reasonable times for inspection by
the selling Holders, any managing underwriter participating in any disposition
pursuant to such Registration Statement and any attorney or accountant retained
by such selling Holders or any of such underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Company and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such Holder, underwriter, attorney or accountant in
connection with such Registration Statement or any post-effective amendment
thereto subsequent to the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the
underwriter(s), if any, in connection with such sale, promptly include in any
Registration Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities, information with respect to
the principal amount of Transfer Restricted Securities being sold to such
underwriter(s), the purchase price being paid therefor and any other terms of
the offering of the Transfer Restricted Securities to be sold in such offering;
and make all required filings of such Prospectus supplement or post-effective
amendment available to such selling Holders as soon as practicable after the
Company is notified of the matters to be included in such Prospectus supplement
or post-effective amendment;
(viii) furnish to each selling Holder and each of the
underwriter(s), if any, in connection with such sale without charge, at least
one copy of the Registration Statement, as first filed with the Commission, and
of each amendment thereto, and make available all
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documents incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(ix) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons reasonably may request; the Company hereby consents to the use
(in accordance with law) of the Prospectus and any amendment or supplement
thereto by each of the selling Holders and each of the underwriter(s), if any,
in connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement thereto;
(x) enter into such agreements (including an
underwriting agreement) and make such representations and warranties and take
all such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant to any
Registration Statement contemplated by this Agreement as may be reasonably
requested by any Holder of Transfer Restricted Securities or underwriter, and in
such connection, (A) make such representations and warranties to the
underwriters, with respect to the business of the Company and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed incorporated
by reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings, and confirm the same if and when
requested; (B) obtain an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration Statement, as the
case may be, of counsel for the Company covering matters customarily covered in
opinions requested in underwritten offerings and such other matters as may be
reasonably requested by the underwriters, including a statement to the effect
that such counsel has participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants for the Company at which the contents of such Shelf Registration
Statement and related Prospectus were discussed, although such counsel has not
independently verified, and does not assume any responsibility for, the
accuracy, completeness or fairness of such statements; and that such counsel
advises that, on the basis of the foregoing (relying as to materiality to a
large extent upon facts provided to such counsel by officers and other
representatives of the Company and without independent check or verification),
no facts came to such counsel's attention that caused such counsel to believe
that the applicable Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became effective and, in the
case of the Exchange Offer Registration Statement, as of the date of
Consummation of the Exchange Offer, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the Prospectus
contained in such Registration Statement as of its date and, in the case of the
opinion dated the date of Consummation of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. Without
limiting the foregoing, such counsel may state further that such counsel assumes
no responsibility for, and has not independently verified, the accuracy,
completeness or fairness of the financial statements, notes and schedules and
other financial and statistical data included in any Registration Statement
contemplated by this Agreement or the related Prospectus; and (C)
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obtain a customary comfort letter, dated as of the date of effectiveness of the
Shelf Registration Statement or the date of Consummation of the Exchange Offer,
as the case may be, from the Company's independent accountants, in the customary
form and covering matters of the type customarily covered in comfort letters to
underwriters; and (D) if an underwriting agreement is entered into, the same
shall contain indemnification and contribution provisions and procedures no less
favorable than those set forth in Section 8 hereof with respect to all parties
to be indemnified pursuant to Section 8. The above shall be done at each closing
under such underwriting or similar agreement, as and to the extent required
thereunder, and if at any time the representations and warranties of the Company
contemplated in (A) above cease to be true and correct, the Company shall so
advise the underwriter(s), if any, the selling Holders and each Restricted
Broker-Dealer promptly and if requested by such Persons, shall confirm such
advice in writing;
(xi) prior to any public offering of Transfer
Restricted Securities, cooperate with the selling Holders, the underwriter(s),
if any, and their counsel in connection with the registration and qualification
of the Transfer Restricted Securities under the securities or blue sky laws of
such jurisdictions as the selling Holders or underwriter(s), if any, may request
and do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities covered
by the applicable Registration Statement; provided, however, that the Company
shall not be required to register or qualify as a foreign corporation where it
is not now so qualified or would not otherwise be required to be so qualified
but for this Section 6(c)(xi) or to take any action that would subject it to the
service of process in suits or to taxation, in any jurisdiction where it is not
now so subject; (xii) issue, upon the request of any Holder of Series A Notes
covered by any Shelf Registration Statement contemplated by this Agreement,
Series B Notes having an aggregate principal amount equal to the aggregate
principal amount of Series A Notes surrendered to the Company by such Holder in
exchange therefor or being sold by such Holder; such Series B Notes to be
registered in the name of such Holder or in the name of the purchaser(s) of such
Series B Notes, as the case may be; in return, the Series A Notes held by such
Holder shall be surrendered to the Company for cancellation; (xiii) in
connection with any sale of Transfer Restricted Securities that will result in
such securities no longer being Transfer Restricted Securities, cooperate with
the selling Holders and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to register
such Transfer Restricted Securities in such denominations and such names as the
Holders or the underwriter(s), if any, may request at least two Business Days
prior to such sale of Transfer Restricted Securities;
(xiv) use its best efforts to cause the disposition
of the Transfer Restricted Securities covered by the Registration Statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xi) above;
(xv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, prepare
a supplement or post-effective
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<PAGE> 15
amendment to the Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(xvi) provide a CUSIP number for all Transfer
Restricted Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide the Trustee
under the Indenture with printed certificates for the Transfer Restricted
Securities which are in a form eligible for deposit with the Depository Trust
Company;
(xvii) cooperate and assist in any filings required
to be made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the rules and
regulations of the NASD, and use its best efforts to cause such Registration
Statement to become effective and approved by such governmental agencies or
authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer Restricted
Securities;
(xviii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make generally
available to the Holders as soon as reasonably practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) covering a twelve-month period beginning after the "effective date of
the registration statement" (as such term is defined in paragraph (c) of Rule
158 under the Act);
(xix) cause the Indenture to be qualified under the
TIA not later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate with the
Trustee and the Holders of Notes to effect such changes to the Indenture as may
be required for such Indenture to be so qualified in accordance with the terms
of the TIA; and execute and use its best efforts to cause the Trustee to
execute, all documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner; and
(xx) provide promptly to each Holder upon request
each document filed with the Commission pursuant to the requirements of Section
13 or Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition
of a Transfer Restricted Security that, upon receipt of the notice referred to
in Section 6(c)(i) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof,
or until it is
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<PAGE> 16
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (the "Advice"). If so directed by
the Company, each Holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Transfer Restricted Securities that was current
at the time of receipt of either such notice. In the event the Company shall
give any such notice, the time period regarding the effectiveness of such
Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall
be extended by the number of days during the period from and including the date
of the giving of such notice pursuant to Section 6(c)(i) or Section 6(c)(iii)(D)
hereof to and including the date when each selling Holder covered by such
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(xv) hereof or shall have
received the Advice.
SECTION 7. REGISTRATION EXPENSES.
(a) All reasonable expenses incident to the Company's
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses (including
filings made by any Initial Purchaser or Holder with the NASD); (ii) all fees
and expenses of compliance with federal securities and state blue sky or
securities laws; (iii) all expenses of printing (including, without limitation,
printing or engraving certificates for the Series B Notes to be issued in the
Exchange Offer and printing of Prospectuses), messenger and delivery services
and telephone; (iv) all fees and disbursements of counsel for the Company and,
subject to Section 7(b) below, the Holders of Transfer Restricted Securities;
(v) all application and filing fees in connection with listing the Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company (including the expenses of any
special audit and comfort letters required by or incident to such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
(b) In connection with any Registration Statement required by
this Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Initial Purchasers and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared; provided, however, that, in that case of an Exchange Offer
Registration Statement, the Company shall not be required to reimburse the
Initial Purchasers
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<PAGE> 17
and the Holders of Transfer Restricted Securities being registered pursuant to
the Exchange Offer Registration Statement for such fees and disbursements of
counsel in excess of $10,000.
SECTION 8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless (i) each
Holder and (ii) each Person, if any, who controls a Holder within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act any Holder (a
"Controlling Person") and (iii) the respective officers, directors, partners,
employees, representatives and agents of any Holder or any Controlling Person
(any of the Persons referred to in this clause (i), (ii) or (iii) may
hereinafter be referred to as an "Indemnified Holder") to the fullest extent
lawful, from and against any and all losses, liabilities, claims, damages and
expenses whatsoever (including but not limited to reasonable attorneys' fees and
any and all reasonable expenses whatsoever incurred in investigating, preparing
for or defending against any investigation or litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or the Prospectus, or
in any supplement thereto or amendment thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that
the Company will not be liable in any such case to the extent that any such
loss, liability, claim, damage or expense arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Holder expressly for
use therein.
(b) Each Holder, severally and not jointly, agrees to
indemnify and hold harmless the Company and any of its respective directors,
officers, and any Controlling Person of the Company, and the officers,
directors, partners, employees, representatives and agents of each such Person,
to the same extent as the foregoing indemnity from the Company to each of the
Indemnified Holders, but only with respect to losses, liabilities, claims,
damages or expenses (including but not limited to reasonable attorneys' fees and
any and all reasonable expenses whatsoever incurred in investigating, preparing
for or defending against any investigation or litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement or Prospectus, or in any amendment thereof or
supplement thereto, or arising out of or based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading in each case to the extent, but only to the
extent, that such loss, liability, claim, damage or expense arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
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<PAGE> 18
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on the behalf of such Holder
expressly for use therein. In no event shall any Holder be liable or responsible
for any amount in excess of the dollar amount of the proceeds received by such
Holder upon its sale of the Transfer Restricted Securities giving rise to such
indemnification obligation.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve such indemnifying
party from any liability which it may have under this Section 8 except to the
extent that it has been prejudiced in any material respect by such failure to
notify by the indemnified party or from any liability which it may otherwise
have). In case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and to the extent it may elect by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying party or parties in connection with the defense of such action,
(ii) the indemnifying party or parties shall not have employed counsel to take
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded, upon the advice of counsel that there may be defenses
available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying party or parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses of counsel shall be borne by the indemnifying
parties. The indemnifying party under subsection (a) or (b) above, shall only be
liable for the legal expenses of one counsel (in addition to any local counsel)
for all indemnified parties in each jurisdiction in which any claim or action is
brought. Anything in this subsection to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or action
effected without its prior written consent; provided that such consent was not
unreasonably withheld.
(d) In order to provide for contribution in circumstances in
which the indemnification provided for in this Section 8 is for any reason held
to be unavailable or is insufficient to hold harmless a party indemnified
hereunder, the Company and each Holder shall contribute to the aggregate losses,
claims, damages, liabilities and expenses of the nature contemplated by such
indemnification provision (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting in the case of
losses, claims, damages, liabilities and expenses suffered by the Company, any
contribution received by the Company from Persons, other than the Holder who may
also be liable for contribution, including
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<PAGE> 19
Controlling Persons of the Company to which the Company and any Holders may be
subject, in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Holders or, if such allocation is not permitted
by applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in this Section 8, in
such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and the Holder in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and any
Holder shall be deemed to be in the same proportion as (x) the total proceeds
from the offering of the Notes (net of discounts but before deducting expenses)
received by the Company and (y) the total proceeds received by such Holder upon
its sale of Notes which would otherwise give rise to the indemnification
obligation, respectively. The relative fault of the Company and of the Holders
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Holders and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Holders agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to above. Notwithstanding the provisions of this Section
8(d), (i) no Holder shall be required to contribute, in the aggregate, any
amount in excess of the dollar amount by which the proceeds received by such
Holder with respect to the sale of its Transfer Restricted Securities pursuant
to a Registration Statement exceeds the sum of (A) the amount paid by such
Holder for such Transfer Restricted Securities plus (B) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission and
indemnification obligation, respectively; and (ii) no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant to
this Section 8(d) are several in proportion to the respective principal amount
of Notes held by each of the Holders hereunder and not joint.
For purposes of this Section 8, (A) each Controlling Person, if any, of
any Holder and (B) the respective officers, directors, partners, employees,
representatives and agents of any Initial Purchaser or any Controlling Person
thereof shall have the same rights to contribution as such Initial Purchaser,
and each Controlling Person, if any, of the Company shall have the same rights
to contribution as the Company, subject in each case to clauses (i) and (ii) of
this Section 8(d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this Section 8(d), notify such party or parties from whom
contribution may be sought, but the failure to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 8(d) or otherwise. No
party shall be liable for contribution with respect to any action or claim
settled without its prior written consent; provided that such written consent
was not unreasonably withheld.
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<PAGE> 20
SECTION 9. RULE 144A.
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company is not subject to Section 13 or 15(d) of the Act, to make available,
upon request of any Holder of Transfer Restricted Securities, to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS.
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements, lockup
letters and other documents required under the terms of such underwriting
arrangements.
SECTION 11. SELECTION OF UNDERWRITERS. For any Underwritten Offering,
the investment banker or investment bankers and manager or managers for any
Underwritten Offering that will administer such offering will be selected by the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Securities included in such offering provided that such investment bankers and
managers must be reasonably satisfactory to the Company. Such investment bankers
and managers are referred to herein as the "underwriters."
SECTION 12. MISCELLANEOUS.
(a) Remedies. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or
after the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. Except as disclosed
in the Offering Memorandum, the Company has not previously entered into any
agreement granting any registration rights with respect to its securities to any
Person. The rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the holders of the
Company's securities under any agreement in effect on the date hereof.
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<PAGE> 21
(c) Adjustments Affecting the Notes. The Company will not take
any action, or voluntarily permit any change to occur, with respect to the Notes
that would materially and adversely affect the ability of the Holders to
Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Company has
obtained the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer or registered pursuant to the Shelf Registration
Statement and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
or registered pursuant to the Shelf Registration Statement may be given by the
Holders of a majority of the outstanding principal amount of Transfer Restricted
Securities subject to such Exchange Offer.
(e) Notice. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), facsimile
transmission, telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the Registrar under
the Indenture; and
(ii) if to the Company:
Orbital Imaging Corporation
21700 Atlantic Boulevard
Dulles, Virginia 20166
Phone: (703) 406-5000
Fax: (703) 406-5572
All such notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; upon receipt of a
confirmation notice, if sent by facsimile transmission; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next Business Day,
if timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
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<PAGE> 22
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities directly from such Holder.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted with respect to the
Transfer Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
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<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
ORBITAL IMAGING CORPORATION
By: ___________________________________
Name:
Title:
BEAR, STEARNS & CO. INC.
By: ___________________________________
Name:
Title:
MERRILL LYNCH, PIERCE FENNER & SMITH
INCORPORATED
By: ___________________________________
Name:
Title:
NATIONSBANC MONTGOMERY SECURITIES LCC
By: ___________________________________
Name:
Title:
22
<PAGE> 1
Exhibit 4.6
WARRANT REGISTRATION RIGHTS AGREEMENT
DATED AS OF FEBRUARY 25, 1998
BY AND AMONG
ORBITAL IMAGING CORPORATION
AND
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
NATIONSBANC MONTGOMERY SECURITIES LLC
<PAGE> 2
This Warrant Registration Rights Agreement (the "Agreement") is made
and entered into as of February 25, 1998, by and among Orbital Imaging
Corporation, a Delaware corporation (the "Company"), and Bear, Stearns & Co.
Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
and NationsBanc Montgomery Securities LLC (each an "Initial Purchaser" and
together, the "Initial Purchasers"), each of whom has agreed to purchase an
aggregate of 100,000 Units consisting of an aggregate of $100,000,000 in
aggregate principal amount at maturity of the Company's 11 5/8% Series A Senior
Notes due 2005 (the "Series A Notes") and warrants (the "Warrants") to purchase
an aggregate of 1,312,746 shares of the Company's Common Stock, $.01 par value,
pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement (the
"Purchase Agreement"), dated as of February 20, 1998, between the Company and
the Initial Purchasers. In order to induce the Initial Purchasers to purchase
the Units, the Company has agreed to provide the registration rights set forth
in this Agreement. The execution and delivery of this Agreement is a condition
to the obligations of the Initial Purchasers set forth in Section 8 of the
Purchase Agreement. All defined terms used but not defined herein shall have the
meanings ascribed to them in the Indenture (as defined below).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following
capitalized terms shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Business Day: Any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the corporate trust office of the Trustee,
on which banks are authorized to close.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Common Stock: The common stock, $.01 par value, of the Company.
Exchange Act: The Securities Exchange Act of 1934, as amended
Exchange Offer: The offer to exchange and issuance by the Company of a
principal amount of Series B Notes (which shall be registered pursuant to the
Exchange Offer Registration Statement) equal to the outstanding principal amount
of Series A Notes that are validly tendered by such Holders in connection with
such exchange and issuance.
Holders: As defined in Section 2 hereof.
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<PAGE> 3
Indenture: The Indenture, dated the Closing Date, by and between the
Company and Marine Midland Bank, as trustee (the "Trustee"), pursuant to which
the Notes are to be issued, as such Indenture is amended or supplemented from
time to time in accordance with the terms thereof.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, limited liability
company, joint venture, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
Prospectus: The prospectus included in a Shelf Registration Statement
at the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Registrable Securities: The Warrants, Warrant Shares and any other
securities issued or issuable with respect to the Warrants or the Warrant Shares
by way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization;
provided that a security ceases to be a Registrable Security when it is no
longer a Transfer Restricted Security.
Registration Expenses: See Section 6 hereof.
Shelf Registration Statement: Any registration statement of the Company
which covers Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such Shelf
Registration Statement, including post-effective amendments, and all exhibits
and all material incorporated by reference in such Registration Statement.
Transfer Restricted Securities: A Warrant or Warrant Share, until such
Warrant or Warrant Share (i) has been effectively registered under the Act and
resold in accordance with the Shelf Registration Statement covering it, (ii) is
distributed to the public pursuant to Rule 144 or (iii) may be sold or
transferred pursuant to Rule 144(k) (or any similar provisions then in force)
under the Act or otherwise.
Trustee: Marine Midland Bank or such other person who may be the
trustee under the Indenture.
Warrants: The warrants to purchase an aggregate of 1,312,726 shares of
Common Stock of the company issued pursuant to the Purchase Agreement and the
Warrant Agreement, together with any warrants issued in substitution or
replacement therefor.
Warrant Agreement: The Warrant Agreement dated the Closing Date by and
between the Company and Marine Midland Bank, as Warrant Agent.
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<PAGE> 4
Warrant Shares: The Common Stock or other securities which any Holder
may acquire upon exercise of a Warrant, together with any other securities which
such Holder may acquire on account of any such securities, including, without
limitation, as the result of any dividend or other distribution on Common Stock
or any split-up of such Common Stock as provided for in the Warrant Agreement.
SECTION 2. HOLDER. A Person is deemed to be a holder of Registrable
Securities (each a "Holder") whenever such Person owns Registrable Securities or
holds a beneficial interest in Registrable Securities.
SECTION 3. SHELF REGISTRATION.
(a) Shelf Registration. The Company shall use its best efforts
to file a Shelf Registration Statement with respect to all Registrable
Securities on any appropriate form pursuant to Rule 415 (or similar rule that
may be adopted by the Commission) under the Act within 270 days after the
Closing Date covering (i) resales by the Holders of the Warrants, and (ii) the
issuance of the Warrant Shares by the Company upon exercise, or if such issuance
is not then permitted to be registered by applicable rule or policy of the
Commission, covering resales of the Warrant Shares and shall use its best
efforts to have such Shelf Registration Statement declared effective by the
Commission on or prior to 95 days after the dates specified for such filings.
Notwithstanding the foregoing, the Company shall not be required to file such
Shelf Registration Statement on or prior to the consummation of the Exchange
Offer; provided that, in the event the Exchange Offer is consummated later than
the filing time required by the preceding sentence for each Shelf Registration
Statement, the Company shall file such Shelf Registration Statement(s) within 30
days after the date of the consummation of the Exchange Offer; and shall use its
best efforts to have the Shelf Registration Statement declared effective within
95 days thereafter provided that no Holder shall be entitled to have its
Registrable Securities covered by the Shelf Registration Statement unless such
Holder is in compliance with Section (b) hereof.
(b) Provision by Holders of Certain Information in Connection
with the Shelf Registration Statement. No Holder may include any of its
Registrable Securities in the Shelf Registration Statement pursuant to this
Agreement unless and until such Holder furnishes to the Company in writing such
information as the Company may reasonably request specified in Item 507 and
Items 508 of Regulation S-K under the Act for use in connection with the Shelf
Registration Statement. Each Holder agrees to furnish promptly to the Company
all information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.
(c) Black-out Periods. During any consecutive 365 day period,
the Company may suspend the effectiveness of the Shelf Registration Statement on
two occasions for a period of not more than 45 consecutive days if there is a
possible acquisition or business combination or other transaction, business
development or event involving the Company that may require disclosure in the
Shelf Registration Statement and the Board of Directors of the Company
determines in the exercise of its reasonable judgment that such disclosure is
not in the best interests of the Company and its stockholders or obtaining any
financial statements relating to a
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<PAGE> 5
possible acquisition or business combination required to be included in the
Shelf Registration Statement would be impracticable. In such a case, the Company
shall promptly notify the Holders of the suspension of the Shelf Registration
Statement's effectiveness, provided that such notice shall not require the
Company to disclose the possible acquisition or business combination or other
transaction, business development or event if the Board of Directors of the
Company determines in good faith that such acquisition or business combination
or other transaction, business development or event should remain confidential.
Upon the abandonment, consummation, or termination of the possible acquisition
or business combination, or the availability of the required financial
statements with respect to a possible acquisition or business combination, the
suspension of the use of the Shelf Registration Statement pursuant to this
Section 3(f) shall cease and the Company shall promptly comply with Section 5
hereof and notify the holders that disposition of Registrable Securities may be
resumed. The length of any periods during which the Company prohibits offers and
sales of Registrable Securities pursuant to the Shelf Registration Statement
under this Section 3(f) shall not be considered periods of a Registration
Default under Section 5 hereof. In addition, the length of any periods during
which the Company prohibits offers and sales of Registrable Securities pursuant
to the Shelf Registration Statement under this Section 3(f) shall be added to
the period described in Section 3(f) above.
(d) If the Holders of a majority of the Registrable Securities
so elect, an offering of Registrable Securities pursuant to the Shelf
Registration Statement may be effected in the form of an underwritten offering.
In such event, and if the managing underwriters advise the Company and the
Holders of such Registrable Securities in writing that in their opinion the
amount of Registrable Securities proposed to be sold in such offering exceeds
the amount of Registrable Securities which can be sold in such offering, there
shall be included in such underwritten offering the amount of such Registrable
Securities which in the opinion of such managing underwriters can be sold, and
such amount shall be allocated pro rata among the Holders of such Registrable
Securities on the basis of the principal amount of Registrable Securities
requested to be included by such Holders. The Holders of the Registrable
Securities to be registered shall pay all underwriting discounts and commissions
of such underwriters.
(e) If any of the Registrable Securities covered by the Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority of such
Registrable Securities included in such offering; provided that such investment
bank or manager shall be reasonably satisfactory to the Company.
(f) The Company shall use its best efforts (i) to keep the
Shelf Registration Statement continuously effective in order to permit the
Prospectus forming a part thereof to be usable from the date that the Shelf
Registration Statement is declared effective until the earlier of (A) the
expiration of the Warrants, and (B) such date as all Registrable Securities have
been sold, and (ii) after the effectiveness of the Shelf Registration Statement,
promptly upon the request of any Holder, to take any action reasonably necessary
to register the sale of any Registrable Securities of such Holder and to
identify such Holder as a selling security holder. The Company further agrees to
use its best efforts to prevent the happening of any event that
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<PAGE> 6
would cause the Shelf Registration Statement pursuant to Section 3 hereof to
contain a material misstatement or omission or to be not effective and usable
for resale of the Registrable Securities during the period that such Shelf
Registration Statement is required to be effective and usable.
(g) Each Holder whose Registrable Securities are covered by a
Shelf Registration Statement filed pursuant to this Section 3 agrees, if
requested by the managing underwriters in an underwritten offering, not to
effect any public sale or distribution of securities of the Company of the same
class as any Securities included in such Shelf Registration Statement, including
a sale pursuant to Rule 144 under the Act (except as part of such underwritten
offering), during the 10-day period prior to, and during the 90-day period
beginning on, the closing date of each underwritten offering made pursuant to
such Shelf Registration Statement, to the extent timely notified in writing by
the Company or the managing underwriters; provided that each Holder shall be
subject to the hold-back restrictions of this Section 3(e) only once during the
term of this Agreement.
The foregoing provisions shall not apply to any Holder if such Holder
is prevented by applicable statute or regulation from entering into any such
agreement; provided that any such Holder shall undertake, in its request to
participate in any such underwritten offering, not to effect any public sale or
distribution of any applicable class of Registrable Securities commencing on the
date of sale of such applicable class of Registrable Securities unless it has
provided 45 days prior written notice of such sale or distribution to the
underwriter or underwriters.
SECTION 4. LIQUIDATED DAMAGES. If the Shelf Registration Statement: (i)
is not filed with the Commission on or prior to the date specified for such
filing in Section 3(a) hereof; (ii) has not been declared effective by the
Commission pursuant to Section 3(a) hereof; or (iii) following the date such
Shelf Registration Statement is declared effective by the Commission, shall
cease to be effective without being restored to effectiveness by amendment or
otherwise within 30 business days, (each such event referred to in clauses (i)
through (iii), a "Shelf Registration Statement Default"), the Company shall pay
as liquidated damages ("Liquidated Damages") to each Holder of Warrants or
Warrant Shares an amount (the "Damage Amount") equal to $.0025 per week per
Warrant for each week that the Shelf Registration Statement Default continues.
The amount of Liquidated Damages will increase by an additional $.0025 per week
per Warrant with respect to subsequent 90-day period until all Shelf
Registration Statement Defaults have been cured, up to a maximum amount of
Liquidated Damages of $.0125 per week per Warrant.
All accrued liquidated damages will be paid to record Holders by the
Company by wire transfer of immediately available funds or a federal funds
check, and to Holders of Certificated Securities by mailing checks to their
registered addresses on each Interest Payment Date (as defined in the
Indenture). All obligations of the Company set forth in the preceding paragraph
that are outstanding with respect to any Registrable Security at the time such
security ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such security have been satisfied
in full.
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<PAGE> 7
SECTION 5. REGISTRATION PROCEDURES. (a) General Provisions. In
connection with the Company's registration obligations pursuant to Section 3
hereof, the Company will use its best efforts to effect such registration to
permit the sale of such Registrable Securities in accordance with the intended
method or methods of disposition thereof, and pursuant thereto the Company will
as expeditiously as possible:
(1) use its best efforts to keep such Shelf
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 of this Agreement.
Upon the occurrence of any event that would cause any such Shelf Registration
Statement or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for resale of
Registrable Securities during the period required by this Agreement, the Company
shall file promptly an appropriate amendment to such Shelf Registration
Statement or file appropriate documents that will be so incorporated by
reference, (1) in the case of clause (A), correcting any such misstatement or
omission, and (2) in the case of either clause (A) or (B), use its best efforts
to cause such amendment to be declared effective and such Shelf Registration
Statement and the related Prospectus to become usable for their intended
purpose(s) as soon as reasonably practicable thereafter;
(2) prepare and file with the Commission such
amendments and post-effective amendments to the Shelf Registration Statement as
may be necessary to keep the Shelf Registration Statement effective for the
period set forth in Section 3(d) hereof; cause the Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Act; and comply with the provisions of the Act
with respect to the disposition of all securities covered by such Shelf
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth in
such Shelf Registration Statement or supplement to the Prospectus;
(3) advise the underwriter(s), if any, and selling
Holders promptly and, if requested by such Persons, confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to any Shelf Registration Statement
or any post-effective amendment thereto, when the same has become effective, (B)
of any request by the Commission for amendments to the Shelf Registration
Statement or amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the Commission of any stop
order suspending the effectiveness of the Shelf Registration Statement under the
Act or of the suspension by any state securities commission of the qualification
of the Registrable Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any statement of
a material fact made in the Shelf Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the Shelf Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in the
Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time the
Commission shall issue any stop order
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<PAGE> 8
suspending the effectiveness of the Shelf Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Registrable
Securities under state securities or blue sky laws, the Company shall use its
best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(4) furnish to each selling Holder named in any Shelf
Registration Statement or Prospectus and each of the underwriter(s) in
connection with such sale, if any, before filing with the Commission, copies of
any Shelf Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Shelf Registration Statement or
Prospectus, which documents will be subject to the review of such Holders and
underwriter(s), if any, in connection with such sale, for a period of at least
five Business Days, and the Company will not file or will correct any such Shelf
Registration Statement or Prospectus (including all documents incorporated by
reference) to which the selling Holders of the Registrable Securities covered by
such Shelf Registration Statement or the underwriter(s) in connection with such
sale, if any, shall reasonably object within five (5) Business Days after the
receipt thereof. A selling Holder or underwriter, if any, shall be deemed to
have reasonably objected to such filing if such Shelf Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be filed,
contains a material misstatement or omission or fails to comply with the
applicable requirements of the Act;
(5) promptly prior to the filing of any document that
is to be incorporated by reference into a Shelf Registration Statement or
Prospectus, provide notice identifying such document, and upon request, furnish
copies of such document to one counsel for such selling Holders designated by a
majority of such Holders and to the underwriter(s), if any, in connection with
such sale, make the Company's representatives available for discussion of such
document and other customary due diligence matters, and include such information
in such document prior to the filing thereof as such selling Holders or
underwriter(s), if any, reasonably may request;
(6) subject to the entry of appropriate
confidentiality agreements, make available at reasonable times for inspection by
the selling Holders, any managing underwriter participating in any disposition
pursuant to such Shelf Registration Statement and any attorney or accountant
retained by such selling Holders or any of such underwriter(s), all financial
and other records, pertinent corporate documents and properties of the Company
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such Holder, underwriter, attorney or
accountant in connection with such Shelf Registration Statement or any post-
effective amendment thereto subsequent to the filing thereof and prior to its
effectiveness;
(7) if requested by any selling Holders or the
underwriter(s), if any, in connection with such sale, promptly include in any
Shelf Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such selling Holders
and underwriter(s), if any, may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Registrable
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<PAGE> 9
Securities, information with respect to the number of Registrable Securities
being sold to such underwriter(s), the purchase price being paid therefor and
any other terms of the offering of the Registrable Securities to be sold in such
offering; and make all required filings of such prospectus supplement or
post-effective amendment available to such selling Holders as soon as
practicable after the Company is notified of the matters to be included in such
prospectus supplement or post-effective amendment;
(8) furnish to each selling Holder and each of the
underwriter(s), if any, in connection with such sale, without charge, at least
one copy of the Shelf Registration Statement, as first filed with the
Commission, and of each amendment thereto, and make available all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(9) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons reasonably may request; the Company hereby consents to the use
(in accordance with law) of the Prospectus and any amendment or supplement
thereto by each of the selling Holders and each of the underwriter(s), if any,
in connection with the offering and the sale of the Registrable Securities
covered by the Prospectus or any amendment or supplement thereto;
(10) enter into such agreements (including an
underwriting agreement) and make such representations and warranties and take
all such other actions in connection therewith in order to expedite or
facilitate the disposition of the Registrable Securities pursuant to any Shelf
Registration Statement contemplated by this Agreement as may be reasonably
requested by any Holder of Registrable Securities or underwriter, and in such
connection, (A) make such representations and warranties to the underwriters,
with respect to the business of the Company and the Shelf Registration
Statement, Prospectus and documents, if any, incorporated or deemed incorporated
by reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings, and confirm the same if and when
requested; (B) obtain an opinion, dated the date of effectiveness of the Shelf
Registration Statement of counsel for the Company covering matters customarily
covered in opinions requested in underwritten offerings and such other matters
as may be reasonably requested by the underwriters, including a statement to the
effect that such counsel has participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants for the Company at which the contents of such Shelf Registration
Statement and related Prospectus were discussed, although such counsel has not
independently verified, and does not assume any responsibility for, the
accuracy, completeness or fairness of such statements; and that such counsel
advises that, on the basis of the foregoing (relying as to materiality to a
large extent upon facts provided to such counsel by officers and other
representatives of the Company and without independent check or verification),
no facts came to such counsel's attention that caused such counsel to believe
that the applicable Shelf Registration Statement, at the time such Shelf
Registration Statement or any post-effective amendment thereto became effective
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus contained in
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<PAGE> 10
such Shelf Registration Statement as of its date contained an untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. Without limiting the foregoing, such counsel may
state further that such counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial and statistical data
included in any Shelf Registration Statement contemplated by this Agreement or
the related Prospectus; and (C) obtain a customary comfort letter, dated as of
the date of effectiveness of the Shelf Registration Statement from the Company's
independent accountants, in the customary form and covering matters of the type
customarily covered in comfort letters to underwriters; and (D) if an
underwriting agreement is entered into, the same shall contain indemnification
and contribution provisions and procedures no less favorable than those set
forth in Section 7 hereof with respect to all parties to be indemnified pursuant
to Section 8. The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any time
the representations and warranties of the Company contemplated in (A)(1) above
cease to be true and correct, the Company shall so advise the underwriter(s), if
any, the selling Holders promptly and if requested by such Persons, shall
confirm such advice in writing;
(11) prior to any public offering of Registrable
Securities, cooperate with the selling Holders, the underwriter(s), if any, and
their counsel in connection with the registration and qualification of the
Registrable Securities under the securities or blue sky laws of such
jurisdictions as the selling Holders or underwriter(s), if any, may request and
do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
applicable Shelf Registration Statement; provided, however, that the Company
shall not be required to register or qualify as a foreign corporation where it
is not now so qualified or would not otherwise be required to be so qualified
but for this Section 5(a)(11) or to take any action that would subject it to the
service of process in suits or to taxation, in any jurisdiction where it is not
now so subject; to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold and not
bearing any restrictive legends; and to register such Transfer Restricted
Securities in such denominations and such names as the Holders or the
underwriter(s), if any, may request at least two Business Days prior to such
sale of Transfer Restricted Securities;
(12) in connection with any sale of Registrable
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends; and to register such Registrable Securities in such
denominations and such names as the Holders or the underwriter(s), if any, may
request at least two Business Days prior to such sale of Registrable Securities;
(13) use its best efforts to cause the Registrable
Securities covered by the Shelf Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the
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<PAGE> 11
underwriter(s), if any, to consummate the disposition of such Registrable
Securities, subject to the proviso contained in clause (11) above;
(14) if any fact or event contemplated by clause (2)
above shall exist or have occurred, prepare a supplement or post-effective
amendment to the Shelf Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Registrable Securities,
the Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(15) provide a CUSIP number for all Registrable
Securities not later than the effective date of a Shelf Registration Statement
covering such Registrable Securities and provide the Trustee under the Indenture
with printed certificates for the Registrable Securities which are in a form
eligible for deposit with the Depository Trust Company;
(16) cooperate and assist in any filings required to
be made with the NASD and in the performance of any due diligence investigation
by any underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its best efforts to cause such Shelf Registration Statement to
become effective and approved by such governmental agencies or authorities as
may be necessary to enable the Holders selling Registrable Securities to
consummate the disposition of such Registrable Securities;
(17) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make generally
available to the Holders as soon as reasonably practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) covering a twelve-month period beginning after the "effective date of
the registration statement" (as such term is defined in paragraph (c) of Rule
158 under the Act);
(18) cause all Registrable Securities covered by the
Shelf Registration Statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed if requested by the
Holders of a majority of Registrable Securities or the managing underwriter(s),
if any; and
(19) provide promptly to each Holder upon written
request each document filed with the Commission pursuant to the requirements of
Section 13 or Section 15(d) of the Exchange Act.
(b) Restrictions on Holders. Each Holder agrees by acquisition
of a Registrable Security that, upon receipt of any notice from the Company of
the existence of any fact of the kind described in Section 5(a)(3)(D) hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to the applicable Shelf Registration Statement until
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<PAGE> 12
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(a)(14) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus. If so directed by the Company, each Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities that was current at the time of receipt of
such notice. In the event the Company shall give any such notice, the time
period regarding the effectiveness of such Shelf Registration Statement set
forth in Section 3 hereof, as applicable, shall be extended by the number of
days during the period from and including the date of the giving of such notice
pursuant to Section 5(a)(3)(D) hereof to and including the date when each
selling Holder covered by such Shelf Registration Statement shall have received
the copies of the supplemented or amended Prospectus contemplated by Section
5(a)(14) hereof or shall have received the Advice.
SECTION 6. REGISTRATION EXPENSES. (a) All expenses incident to the
Company's performance of or compliance with this Agreement will be borne by the
Company, regardless of whether a Shelf Registration Statement becomes effective,
including without limitation: (i) all registration and filing fees and expenses
(including filings made by any Holder with the NASD); (ii) all fees and expenses
of compliance with federal securities and state blue sky or securities laws;
(iii) all expenses of printing (including, without limitation, expenses of
printing or engraving certificates for the Registrable Securities in a form
eligible for deposit with The Depositary Trust Company and printing of
Prospectuses), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Company and the Holders of Transfer Restricted
Securities; (v) all application and filing fees in connection with listing the
Registrable Securities on a national exchange or automated quotation system
pursuant to the requirements hereof; and (vi) all fees and disbursements of
independent certified public accountants of the Company (including the expenses
of any special audit and comfort letters required by or incident to such
performance). The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
(b) In connection with each Shelf Registration Statement
required hereunder, the Company will reimburse the Holders of Registrable
Securities being registered pursuant to such Shelf Registration Statement for
the reasonable fees and disbursements of not more than one counsel chosen by the
Holders of a majority of the Registrable Securities.
SECTION 7. INDEMNIFICATION. (a) The Company agrees to indemnify and
hold harmless (i) each Holder, (ii) each Person, if any, who controls a Holder
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
(a "Controlling Person") and (iii) the respective officers, directors, partners,
employees, representatives and agents of any Holder or any Controlling Person to
the fullest extent lawful, from and against any and all losses, liabilities,
claims, damages and expenses whatsoever (including but not limited to reasonable
attorneys' fees and any and all reasonable expenses whatsoever incurred in
investigating, preparing or defending against any investigation or litigation,
commenced or threatened, or any claim whatsoever, and
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<PAGE> 13
any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Shelf Registration Statement or the Prospectus, or in any supplement thereto or
amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, that the Company will not
be liable in any such case to the extent that any such loss, liability, claim,
damage or expense arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Holder expressly for use therein.
(b) Each Holder, severally and not jointly, agrees to
indemnify and hold harmless the Company and each Controlling Person of the
Company and the respective officers, directors, partners, employees,
representatives and agents of the Company or any Controlling Person against any
losses, liabilities, claims, damages and expenses whatsoever (including but not
limited to reasonable attorneys' fees and any and all reasonable expenses
whatsoever incurred in investigating, preparing or defending against any
investigation or litigation, commenced or threatened, or any claim whatsoever
and any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Shelf Registration Statement or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, in each case to the extent, but only
to the extent, that any such loss, liability, claim, damage or expense arise out
of or is based upon any untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Holder expressly
for use therein. In no event, however, shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the proceeds received
by such Holder upon its sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve such indemnifying
party from any liability which it may have under this Section 7 except to the
extent that it has been prejudiced in any material respect by such failure to
notify by the indemnified party or from any liability which it may otherwise
have). In case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and to the extent it may elect by
written notice delivered to the
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<PAGE> 14
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying party or
parties shall not have employed counsel to take charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded, upon
the advice of counsel, that there may be defenses available to it or them which
are different from or additional to those available to one or all of the
indemnifying party or parties (in which case the indemnifying party or parties
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses of
counsel shall be borne by the indemnifying parties. The indemnifying party under
subsection (a) or (b) above, shall only be liable for the legal expenses of one
counsel (in addition to any local counsel) for all indemnified parties in each
jurisdiction in which any claim or action is brought. Anything in this
subsection to the contrary notwithstanding, an indemnifying party shall not be
liable for any settlement of any claim or action effected without its prior
written consent; provided, that such consent was not unreasonably withheld.
(d) In order to provide for contribution in
circumstances in which the indemnification provided for in this Section 7 is for
any reason held to be unavailable or is insufficient to hold harmless a party
indemnified hereunder, the Company and each Holder shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Company, any contribution received by the Company from Persons,
other than the Holder who may also be liable for contribution, including
Controlling Persons of the Company to which the Company and any Holders may be
subject, in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Holders or, if such allocation is not permitted
by applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in this Section 7, in
such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and the Holder in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and any
Holder shall be deemed to be in the same proportion as (x) the total proceeds
from the Offering of the Registrable Securities (net of discounts but before
deducting expenses) received by the Company and (y) the total proceeds received
by such Holder upon its sale of Registrable Securities which would otherwise
give rise to the indemnification obligation, respectively. The relative fault of
the Company and of the Holders shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Holders and the parties' relative intent,
knowledge, access to information and
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<PAGE> 15
opportunity to correct or prevent such statement or omission. The Company and
the Holders agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to above. Notwithstanding the provisions of this Section
7, (i) no Holder shall be required to contribute, in the aggregate, any amount
in excess of the dollar amount by which the proceeds received by such Holder
with respect to the sale of its Registrable Securities pursuant to a Shelf
Registration Statement exceeds the sum of (A) the amount paid by such Holder for
such Registrable Securities plus (B) the amount of any damages which such Holder
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission and indemnification obligation,
respectively; and (ii) no Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 7(d) are several in
proportion to the respective number of Registrable Securities held by each of
the Holders hereunder and not joint.
For purposes of this Section 7, (A) each Controlling Person of a Holder
and (B) the respective officers, directors, partners, employees, representatives
and agents of any Initial Purchaser or any Controlling Person shall have the
same rights to contribution as such Initial Purchaser, and each Controlling
Person of the Company shall have the same rights to contribution as the Company,
subject in each case to clauses (i) and (ii) of this Section 7(d). Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties under this Section
7(d), notify such party or parties from whom contribution may be sought, but the
failure to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 7(d) or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its prior
written consent; provided that such written consent was not unreasonably
withheld.
SECTION 8. RULE 144A. The Company hereby agrees with each Holder, for
so long as any Registrable Securities remain outstanding and during any period
in which the Company is not subject to Section 13 or 15(d) of the Act, to make
available, upon request of any Holder, to any Holder or beneficial owner of
Registrable Securities in connection with any sale thereof and any prospective
purchaser of such Registrable Securities designated by such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Act in order to
permit resales of such Registrable Securities pursuant to Rule 144A.
SECTION 9. MISCELLANEOUS.
(a) Remedies. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
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<PAGE> 16
(b) No Inconsistent Agreements. The Company will not, on or
after the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. Except as disclosed
in the Offering Memorandum, the Company has not previously entered into any
agreement granting any registration rights with respect to its securities to any
Person. The rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the holders of the
Company's securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Registrable Securities. The
Company will not take any action, or permit any change to occur, with respect to
the Registrable Securities that would (i) adversely affect the ability of the
Holders to include such Registrable Securities in a registration undertaken
pursuant to this Agreement or (ii) materially adversely affect the marketability
of the Registrable Securities in any such registration.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to or departures from the provisions
hereof may not be given unless the Company has obtained the written consent of
Holders of a majority of the Registrable Securities. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are sold pursuant
to a Shelf Registration Statement and that does not affect directly or
indirectly the rights of other Holders may be given by the Holders of a majority
of the Registrable Securities being sold.
(e) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), facsimile
transmission, telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Warrant Agent under the Warrant Agreement, with a copy to the
Warrant Agent under the Warrant Agreement; and
(ii) if to the Company:
Orbital Imaging Corporation
21700 Atlantic Boulevard
Dulles, Virginia 20166
Phone: (703) 406-5000
Fax: (703) 406-5572
All such notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; upon receipt of a
confirmation notice, if sent by facsimile
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<PAGE> 17
transmission; when answered back, if telexed; when receipt acknowledged, if
telecopied; and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Warrant Agent at the
address specified in the Warrant Agreement.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Registrable Securities; provided, however,
that this Agreement shall not inure to the benefit of or be binding upon a
successor or assign of a Holder unless and to the extent such successor or
assign acquired Registrable Securities directly from such Holder.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted with respect to the
Registrable Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Warrant Registration
Rights Agreement as of the date first written above.
ORBITAL IMAGING CORPORATION
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<PAGE> 18
By:
--------------------------------------------
Name:
Title:
BEAR, STEARNS & CO. INC.
By:
--------------------------------------------
Name:
Title:
MERRILL LYNCH, PIERCE FENNER & SMITH INCORPORATED
By:
--------------------------------------------
Name:
Title:
NATIONSBANC MONTGOMERY SECURITIES LCC
By:
--------------------------------------------
Name:
Title:
17
<PAGE> 1
Exhibit 4.7
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of February 25, 1998 between Orbital Imaging
Corporation, a Delaware corporation (the "Pledgor") and Marine Midland Bank, as
collateral agent (the "Collateral Agent"), for the Holders of the Notes (as
defined herein). Capitalized terms used but not otherwise defined herein shall
have the meanings given to such terms in the Indenture (as defined below).
W I T N E S S E T H:
WHEREAS, the Pledgor and Marine Midland Bank, as Trustee (the
"Trustee") have entered into that certain Indenture dated as of February 25,
1998 (as amended, restated, supplemented or otherwise modified from time to
time, the "Indenture"), pursuant to which the Pledgor issued 150,000 Units
consisting of $150,000,000 in aggregate principal amount of 11 5/8% Senior Notes
due 2005 (the "Notes") and warrants to purchase an aggregate of 1,312,746 shares
of common stock, $.01 par value, of the Pledgor (the "Warrants"). Each Unit
consists of $1,000 principal amount of Notes and one Warrant to purchase 8.75164
shares of common stock of the Pledgor;
WHEREAS, the Pledgor has agreed, pursuant to a Purchase Agreement dated
February 25, 1998 by and among the Pledgor, Bear, Stearns & Co. Inc., Merrill
Lynch & Co., Merrill Lynch, Pierce Fenner & Smith Incorporated and NationsBanc
Montgomery Securities LLC, to (i) purchase a portfolio of securities initially
consisting of Government Securities (as defined), which Government Securities
may subsequently be substituted with Marketable Securities (as defined) pursuant
to the terms of this Pledge Agreement (collectively, the "Pledged Securities) in
an amount sufficient, upon receipt of the scheduled interest and principal
payments in respect of the Pledged Securities, in the opinion of a nationally
recognized firm of independent certified public accountants selected by the
Pledgor, to provide for payment of the first four scheduled interest payments
due on the Notes, and (ii) place such Pledged Securities in the Pledge Account
(as defined herein) held by the Collateral Agent for the benefit of the Holders
of the Notes;
WHEREAS, the Pledgor is the sole legal and beneficial owner of the
Pledged Securities; and
WHEREAS, to secure the payment and performance by the Pledgor of its
obligations under the Indenture and the Notes (collectively, the "Obligations"),
the Pledgor has agreed to (i) pledge to the Collateral Agent for its benefit and
the ratable benefit of the Holders of the Notes a security interest in the
Pledged Securities and the Pledge Account, and (ii) execute and deliver this
Pledge Agreement.
NOW, THEREFORE, in order to induce the Holders of Notes to purchase the
Notes, and for good and valuable consideration, the receipt of which is hereby
acknowledged, the Pledgor hereby agrees with the Collateral Agent for its
benefit and for the ratable benefit of the Holders of Notes as follows:
<PAGE> 2
1. DEFINED TERMS. All capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Indenture. In addition to
any other defined terms used herein, the following terms shall constitute
defined terms for purposes of this Pledge Agreement and shall have the meanings
set forth below:
"Collateral" has the meaning given in Section 2 hereof.
"Government Securities" means securities that are direct obligations
of, or obligations fully guaranteed by, the United States of America for the
payment of which guarantee or obligations the full faith and credit of the
United States is pledged.
"Marketable Securities" means: (i) Government Securities or, for
purpose of determining whether such Government Securities may serve as
substitute Pledged Securities, Government Securities having a maturity date on
or before the date on which the payments of interest on the Notes to which such
Government Securities are pledged occur; (ii) any certificate of deposit
maturing not more than 270 days after the date of acquisition issued by, or time
deposit of, an Eligible Institution; (iii) commercial paper maturing not more
than 270 days after the date of acquisition issued by a corporation (other than
an affiliate of the Pledgor) with a rating at the time as of which any
investment therein is made, of "A-1" (or higher) according to S&P or "P-1" (or
higher) according to Moody's; (iv) any banker's acceptances or money market
deposit accounts issued or offered by an Eligible Institution; and (v) any fund
investing exclusively in investments of the types described in clauses (i)
through (iv) above; and in the case of (ii) through (iv) above, which have a
maturity date on or before the date on which the payments of interest on the
Notes to which such securities are pledged occur.
"UCC" means, with respect to the validity and perfection and the effect
of perfection or non-perfection of the security interest, the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
2. PLEDGE AND GRANT OF SECURITY INTEREST. The Pledgor hereby
pledges and grants to the Collateral Agent for the ratable benefit of the
Holders of the Notes, a continuing first priority security interest in and to
(i) all of the Pledgor's right, title and interest in the Pledged Securities and
the Pledge Account, (ii) all certificates or other evidence of ownership
representing the Pledged Securities and the Pledge Account, and (iii) all
products and proceeds of any of the Pledged Securities, including, without
limitation, all dividends, interest, principal payments, cash, options,
warrants, rights, instruments, subscriptions and other property or proceeds from
time to time received, receivable or otherwise distributed or distributable in
respect of or in exchange for any or all of the Pledged Securities
(collectively, the "Collateral").
The Collateral Agent, as securities intermediary, will comply
with entitlement orders originated by the Trustee concerning the Pledge Account,
and the entitlements therein, without further consent of the Pledgor.
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<PAGE> 3
3. SECURITY FOR OBLIGATIONS. This Pledge Agreement and the
Collateral secure the prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of all of the
Obligations.
4. DELIVERY OF COLLATERAL; PLEDGE ACCOUNT; INTEREST; SUBSTITUTION
OF COLLATERAL.
(a) If and to the extent the Pledged Securities comprise
"certificated securities," as defined in Section 8-102 of the UCC, such
securities shall be registered in the name of the Collateral Agent or its
nominee for the benefit of the Holders of the Notes and delivered to the
Collateral Agent or its custodian in the State of New York, and possession
thereof shall be maintained by the Collateral Agent within the State of New
York.
(b) All Government Securities included in the Collateral
shall be registered in the name of the Collateral Agent or its nominee for the
benefit of the Holders of the Notes on the records of the Federal Reserve Bank
of New York and credited in the books and records of the Collateral Agent to the
Pledge Account. All other uncertificated securities, if any, included in the
Collateral shall be registered on the books of the issuer of such uncertificated
securities in the name of the Collateral Agent or its nominee for the benefit of
the Holders of the Notes, and credited in the books and records of the
Collateral Agent to the Pledge Account.
(c) Concurrently with the execution and delivery of this
Pledge Agreement, the Collateral Agent shall establish an account entitled the
"MARINE MIDLAND BANK PLEDGE ACCOUNT FOR THE BENEFIT OF HOLDERS OF 11 5/8% SENIOR
NOTES DUE 2005 OF ORBITAL IMAGING CORPORATION" for the deposit of the Pledged
Securities (the "Pledge Account") at its office at 140 Broadway, New York, New
York, 10005. The Pledge Account is and shall be maintained as a "securities
account" within the meaning of Article 8 of the UCC, and the Collateral Agent
will treat all property held by it in the Pledge Account as "financial assets"
under Article 8-501(a) of the UCC. Subject to the other terms and conditions of
this Pledge Agreement, all funds or other property accepted by the Collateral
Agent pursuant to this Pledge Agreement shall be held in the Pledge Account for
the ratable benefit of the Holders of the Notes. All proceeds of the Pledged
Securities shall remain on deposit in the Pledge Account until withdrawn in
accordance with this Pledge Agreement.
(d) All proceeds of, interest earned on and other
distributions or amounts paid with respect to, any Collateral shall be credited
to and retained in the Pledge Account, and the Collateral Agent shall invest and
reinvest the same as directed from time to time in writing by the Pledgor;
provided, however, that such proceeds and other amounts must be invested in
Government Securities except as otherwise provided in this Section 4(d) or in
Section 4(e). Prior to the Collateral Agent's receipt of written instructions
from the Pledgor, the Collateral Agent shall invest any such proceeds and other
amounts in Federated Investors Treasury Cash Service Fund. In all events, any
monies so invested or reinvested and any securities acquired thereby shall be
(i) held as Collateral in the Pledge Account, (ii) subject in all respects to
the security interest created hereby and shall be and remain under the control
of the Collateral Agent, and (iii) otherwise subject to the terms hereof.
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<PAGE> 4
(e) At any time while this Pledge Agreement is in force,
the Pledgor may substitute Marketable Securities for the Government Securities
originally pledged as Collateral hereunder; provided, however, that the
Marketable Securities so substituted must have a fair market value (measured at
the date of substitution) as certified to the Collateral Agent, in the opinion
of a nationally recognized firm of independent public accountants selected by
the Pledgor, at least equal to 125.0% of the amount of any of the first four
scheduled interest payments on the Notes that are unpaid (or the pro rata
portion of such interest payments equal to the percentage of such interest
payments to be secured by such Marketable Securities) as of the date such
Marketable Securities are proposed to be substituted as Collateral hereunder.
Concurrently with such substitution, the Pledgor shall deliver to the Collateral
Agent a certificate signed by an executive officer of the Pledgor reaffirming
the representations and warranties set forth in Section 6 hereof, and an Opinion
of Counsel stating that the Collateral Agent has a perfected lien in such
Marketable Securities. The Collateral Agent hereby confirms such pledge and
security interest (whether of Collateral now owned or hereafter acquired) to the
Trustee and the Holders of the Notes.
5. DISBURSEMENTS.
(a) Unless notified at least one Business Day in advance
of an Interest Payment Date of the Pledgor's election pursuant to Section 5(b),
on the date when each of the first four scheduled interest payments is due on
the Notes and without notice from the Pledgor, the Collateral Agent shall
transfer from the Pledge Account to the Paying Agent under the Indenture, funds
necessary to provide for payment in full or of any portion of the next scheduled
interest payment on the Notes and the Paying Agent shall apply the proceeds to
such interest payment.
(b) If the Pledgor elects to pay any of the first four
scheduled interest payments (or portion thereof) on the Notes from a source of
funds other than the Pledge Account (the "Pledgor's Funds"), then the Pledgor
may, after payment in full of such interest payment, deliver to the Collateral
Agent written acknowledgment from the Paying Agent of its receipt of such funds,
together with a written request for release of a portion of Collateral not in
excess of the Pledgor's Funds so paid, whereupon the Collateral Agent is hereby
authorized and directed to release to the Pledgor an amount of funds from the
Pledge Account less than or equal to the amount of Pledgor Funds so expended.
Upon receipt of such written direction from the Pledgor, together with the
certificate described in the following sentence, the Collateral Agent shall take
such action as is necessary to provide for the payment to the Pledgor of the
amount requested from the Pledge Account. Prior to any release of funds to the
Pledgor from the Pledge Account pursuant to this Section 5(b), the Pledgor shall
deliver to the Collateral Agent an Officer's Certificate stating that such use
of Pledgor's Funds has been duly authorized by all necessary corporate action
and does not contravene or constitute a default under any provision of
applicable law, regulation or the certificate of incorporation of the Pledgor,
or of any material agreement, judgment, injunction, order, decree or other
instrument binding upon the Pledgor, and does not result in the creation or
imposition of any Lien on any asset of the Pledgor.
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<PAGE> 5
(c) If at any time the amount of Collateral exceeds the
amount sufficient, in the opinion of a nationally recognized firm of independent
certified public accountants selected by the Pledgor, to provide for payment in
full of the first four scheduled interest payments due on the Notes (or, in the
event any interest payments have been made on the Notes, an amount sufficient to
provide for payment in full of all interest payments then remaining up to and
including the fourth scheduled interest payment), the Pledgor may direct the
Collateral Agent in writing to release to the Pledgor or as it directs, an
amount less than or equal to such excess. Upon receipt of such written direction
from the Pledgor, together with the opinion of a nationally recognized firm of
independent certified public accountants with respect to the value of the
Pledged Securities, the Collateral Agent shall take such action as is necessary
to provide for the payment to the Pledgor of the amount requested from the
Pledge Account.
(d) Upon payment in full of the first four scheduled
interest payments on the Notes, the security interest in the Collateral
evidenced by this Pledge Agreement shall terminate and be of no further force
and effect. Furthermore, upon release of any Collateral from the Pledge Account
in accordance with the terms of this Pledge Agreement, whether upon release of
Collateral to the Paying Agent, to the Pledgor or otherwise, the security
interest evidenced by this Pledge Agreement in the Collateral so released shall
terminate and be of no further force and effect.
6. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby represents
and warrants that:
(a) The execution, delivery and performance by the
Pledgor of this Pledge Agreement has been duly authorized by all necessary
corporate action and does not contravene or constitute a default under any
provision of applicable law, regulation or the certificate of incorporation or
the bylaws of the Pledgor, or of any judgment, injunction, order, decree or any
material agreement or instrument binding upon the Pledgor, and does not result
in the creation or imposition of any Lien on any asset of the Pledgor, except
for the security interests granted under this Pledge Agreement.
(b) The Pledgor is the record and beneficial owner of the
Collateral, free and clear of any Lien or claims of any Person (except for the
security interest granted under this Pledge Agreement). No financing statement
covering the Pledged Securities is on file in any public office, other than
financing statements filed pursuant to this Pledge Agreement. This Pledge
Agreement has been duly executed and delivered by the Pledgor and constitutes a
valid and binding obligation of the Pledgor, enforceable against the Pledgor in
accordance with its terms, except as such enforceability may be limited by the
effect of any applicable bankruptcy, insolvency, reorganization, fraudulent
conveyances, moratorium or other similar laws affecting creditors' rights
generally or general principles of equity.
(c) Upon the delivery to the Collateral Agent of the
certificates, if any, representing the Pledged Securities, any filing of
financing statements required by the UCC and notation on the records of the
Collateral Agent that it holds the Pledged Securities as pledgee, the pledge of
the Collateral pursuant to this Pledge Agreement creates a valid and perfected
first
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<PAGE> 6
priority security interest in and to the Collateral, securing the payment and
performance of the Obligations for the ratable benefit of the Holders of the
Notes, enforceable as such against all creditors of the Pledgor and any Persons
purporting to purchase any of the Collateral from the Pledgor.
(d) No consent of any other Person and no consent,
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body, is required either (i) for the
pledge by the Pledgor of the Collateral pursuant to this Pledge Agreement or for
the execution, delivery or performance of this Pledge Agreement by the Pledgor
(except for any filings and notations necessary to perfect the security interest
created hereby in the Collateral) or (ii) for the exercise by the Collateral
Agent of the rights provided for in this Pledge Agreement or the remedies in
respect of the Collateral pursuant to this Pledge Agreement. No litigation,
proceeding or investigation of or before any arbitrator or governmental
authority is pending or, to the knowledge of the Pledgor, threatened by or
against the Pledgor with respect to this Pledge Agreement or any of the
transactions contemplated hereby.
(e) The pledge of the Collateral pursuant to this Pledge
Agreement is not prohibited by any applicable law or government regulation,
release, interpretation or opinion of the Board of Governors of the Federal
Reserve System or other regulatory agency (including, without limitation,
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System).
7. FURTHER ASSURANCES. The Pledgor agrees promptly to take such
actions and to execute and deliver or cause to be executed and delivered, or use
its best efforts to procure, such stock or bond powers, proxies, assignments,
instruments and such other or different writings as the Collateral Agent may
reasonably request, all in form and substance satisfactory to the Collateral
Agent, deliver any instruments to the Collateral Agent and take any other
actions that are necessary or, in the opinion of the Collateral Agent,
desirable, to perfect, continue the perfection of, confirm and assure the first
priority of the Collateral Agent's security interest in the Collateral, to
protect the Collateral against the rights, claims or interests of third persons,
or to otherwise effect the purposes of this Pledge Agreement. The Pledgor also
hereby authorizes the Collateral Agent to file any financing or continuation
statements with respect to the Collateral without the signature of the Pledgor
(to the extent permitted by applicable law). The Pledgor will pay all costs
incurred by the Collateral Agent in connection with any of the foregoing.
8. COVENANTS. The Pledgor covenants and agrees with the
Collateral Agent and the Holders of the Notes from and after the date of this
Pledge Agreement until the earlier of payment in full in cash of (A) each of the
first four scheduled interest payments due on the Notes under the terms of the
Indenture or (B) all Obligations due and owing under the Indenture and the Notes
in the event such Obligations become due and payable prior to the payment of the
first four scheduled interest payments on the Notes, as follows:
(a) The Pledgor agrees that it (i) will not sell or
otherwise dispose of, or grant any option or other interest with respect to, any
of the Collateral, (ii) will not create or permit to
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<PAGE> 7
exist any Lien upon or with respect to any of the Collateral, except for the
Liens created pursuant to this Pledge Agreement, and (iii) will at all times be
the sole beneficial owner of the Collateral.
(b) The Pledgor agrees that it will not (i) enter into
any agreement or understanding that purports to or may restrict or inhibit the
Collateral Agent's rights or remedies hereunder, including, without limitation,
the Collateral Agent's right to sell or otherwise dispose of the Collateral, or
(ii) with regard to the Collateral, fail to pay or discharge any tax, assessment
or levy of any nature due with respect thereto later than five days prior to the
date of any proposed sale under any judgment, writ or warrant of attachment.
9. POWER OF ATTORNEY.
(a) The Pledgor hereby appoints and constitutes the
Collateral Agent as the Pledgor's attorney-in-fact with full power of
substitution to exercise to the fullest extent permitted by law all of the
following powers upon and at any time after the occurrence and during the
continuance of an Event of Default:
(i) collection of proceeds of any Collateral;
(ii) conveyance of any item of Collateral to any
purchaser thereof as specified herein;
(iii) giving of any notices or recording of any
Liens pursuant to Section 7 hereof;
(iv) making any payments or taking any acts
pursuant to Section 10 hereof;
(v) paying or discharging taxes or Liens levied
or placed upon the Collateral, the legality or validity thereof and the amounts
necessary to discharge the same to be determined by the Collateral Agent in its
sole discretion, and any such payments made by the Collateral Agent shall become
Obligations of the Pledgor to the Collateral Agent, due and payable immediately
upon demand; and
(vi) taking any acts pursuant to Section 13
hereof.
(b) The Collateral Agent's authority under this Section 9
shall include, without limitation, the authority to endorse and negotiate any
checks or instruments representing proceeds of Collateral in the name of the
Pledgor, execute and give receipt for any certificate of ownership or any
document constituting Collateral, transfer title to any item of Collateral, to
the extent permitted by applicable law, sign the Pledgor's names on all
financing statements or any other documents deemed necessary or appropriate by
the Collateral Agent to preserve, process or perfect the security interest in
the Collateral, and to file the same, and to prepare, sign the Pledgor's name
and file any notice of Lien, and to take any other actions arising from or
incident
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<PAGE> 8
to the powers granted to the Collateral Agent in this Pledge Agreement. This
power of attorney is coupled with an interest and shall be irrevocable by the
Pledgor.
(c) The Pledgor acknowledges that the rights and
responsibilities of the Collateral Agent under this Pledge Agreement with
respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, right, request, judgment or
other right or remedy provided for herein or resulting or arising out of this
Pledge Agreement shall, as between the Collateral Agent and the Holders of the
Notes, be governed by this Pledge Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Collateral Agent and the Pledgor, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Holders of the Notes with full and valid
authority so to act or refrain from acting, and the Pledgor shall not be
obligated or entitled to make any inquiry respecting such authority.
(d) The Collateral Agent undertakes to perform such
duties and only such duties as are specifically set forth in this Pledge
Agreement and no implied covenants or obligations shall be read in this Pledge
Agreement against the Collateral Agent. The Collateral Agent shall not be deemed
to have knowledge of an Event of Default under the Indenture unless informed in
writing by the Pledgor or the Holder of any Note.
(e) The Collateral Agent shall not be required to
exercise any remedies hereunder unless requested in writing to do so by the
Holders of a majority in principal amount of the outstanding Notes and only if
furnished with indemnity reasonably satisfactory to the Collateral Agent. The
Collateral Agent may consult with counsel and shall not be liable for any action
taken in good faith in reliance upon advice of counsel except for gross
negligence or willful misconduct. The Collateral Agent makes no representation
or warranty and shall have not responsibility concerning the value or validity
of the Collateral or the validity or perfection of the pledge thereof or any
security interest therein.
(f) The Collateral Agent may at any time on 30 days
notice to the Pledgor and the Holders of the Notes resign hereunder. Upon any
such resignation the Pledgor shall promptly appoint another financial
institution reasonably satisfactory to the Holders of a majority in principal
amount or the outstanding Notes to act as Collateral Agent hereunder and such
resignation shall become effective upon the acceptance of the appointment by the
successor.
(g) The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which a prudent financial institution similarly situated would accord its
own property, it being understood that neither the Collateral Agent nor the
Holders of the Notes shall have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not any such Person has or
is deemed to have knowledge of such matters, or (ii) taking any necessary steps
to preserve rights against any parties with respect to any Collateral.
-8-
<PAGE> 9
10. COLLATERAL AGENT MAY PERFORM. If the Pledgor fails to perform
any agreement contained herein, the Collateral Agent may, but shall not be
obligated to, itself perform or cause performance of such agreement, and the
expenses incurred by or on behalf of the Collateral Agent in connection
therewith shall be payable by the Pledgor under Section 14 hereof.
11. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Collateral Agent hereunder are being granted in order to
preserve and protect the security interest of the Collateral Agent and the
Holders of Notes in and to the Collateral granted hereby and shall not be
interpreted to, and shall not, impose any duties on the Collateral Agent in
connection therewith other than those imposed under applicable law.
12. INDEMNITY. The Pledgor shall indemnify, defend and hold
harmless the Collateral Agent and its directors, officers, agents and employees
from and against all claims, actions, obligations, losses, liabilities and
expenses, including costs, fees and disbursements of counsel, the costs of
investigations, and claims for damages, arising from the Collateral Agent's
performance under this Pledge Agreement, except insofar as the same may have
been caused by the bad faith, gross negligence or willful misconduct of such
indemnified Person. The obligations of the Pledgor under this Section 12 shall
survive the resignation or removal of the Collateral Agent or the termination of
this Pledge Agreement.
13. REMEDIES UPON EVENT OF DEFAULT. If an Event of Default shall
have occurred:
(a) Upon the acceleration of the Notes in accordance with the
terms of the Indenture, the Collateral Agent shall have and may exercise with
reference to the Collateral any or all of the rights and remedies of a secured
party under the UCC, and as otherwise granted herein or under any other
applicable law or under any other agreement executed by Pledgor, including,
without limitation, the right and power to sell, at public or private sale or
sales, or otherwise dispose of, or otherwise utilize the Collateral and any part
or parts thereof, in any manner authorized or permitted under the UCC after
default by a debtor, and to apply the proceeds thereof toward payment of any
costs and expenses and attorneys' fees and expenses thereby incurred by the
Collateral Agent and toward payment of the Obligations in such order or manner
as the Collateral Agent may elect. The purchaser of any or all Collateral so
sold shall thereafter hold the same absolutely, free from any claim, encumbrance
or right of any kind whatsoever created by or through the Pledgor. Unless any of
the Collateral threatens, in the reasonable judgment of the Collateral Agent, to
decline speedily in value or is or becomes of a type sold on a recognized
market, the Collateral Agent shall give the Pledgor reasonable notice of the
time and place of any public sale thereof, or of the time after which any
private sale or other intended disposition is to be made. Any sale of the
Collateral conducted in conformity with reasonable commercial practices of
banks, insurance companies, commercial finance companies, or other financial
institutions disposing of property similar to the Collateral shall be deemed to
be commercially reasonable. Any requirements of reasonable notice shall be met
if such notice is mailed to the Pledgor as provided in Section 17 herein, at
least fifteen (15) days before the time of the sale or disposition. The
Collateral Agent or any Holder of Notes may, in its own name or in the name of a
designee or nominee, buy any of the Collateral at any public sale and, if
permitted by applicable law, at any private sale. All expenses (including court
costs
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<PAGE> 10
and reasonable attorneys' fees, expenses and disbursements) of, or incident to,
the enforcement of any of the provisions hereof shall be recoverable from the
proceeds of the sale or other disposition of the Collateral.
(b) The Pledgor further agrees to use its best efforts to
do or cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Collateral pursuant to this Section 13
valid and binding and in compliance with any and all other applicable
requirements of law. The Pledgor further agrees that a breach of any of the
covenants contained in this Section 13 will cause irreparable injury to the
Collateral Agent and the Holders of Notes, that the Collateral Agent and the
Holders of Notes have no adequate remedy at law in respect of such breach and,
as a consequence, that each and every covenant contained in this Section 13
shall be specifically enforceable against the Pledgor, and the Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants, except for a defense that no Event of Default has
occurred.
(c) All rights to marshalling of assets of the Pledgor,
including any such right with respect to the Collateral, are hereby waived by
the Pledgor. The Pledgor shall not contest or support any other Person in
contesting the validity or priority of the security interests created under this
Pledge Agreement.
14. FEES AND EXPENSES. The Pledgor shall, upon demand, pay to the
Collateral Agent the amount of its fees (which shall be in an amount previously
agreed by the Pledgor and the Collateral Agent) and any and all expenses
(including, without limitation, the reasonable fees, expenses and disbursements
of counsel, experts and agents retained by the Collateral Agent) that the
Collateral Agent may incur in connection with (i) the administration of this
Pledge Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Collateral Agent and the
Holders of the Notes hereunder, or (iv) the failure by the Pledgor to perform or
observe any of the provisions hereof.
15. SECURITY INTEREST ABSOLUTE. All rights of the Collateral Agent
and the Holders of the Notes, and the security interests created hereunder, and
all obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the
Indenture or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Indenture;
(c) any exchange, surrender, release or non-perfection of
any Liens on any other Collateral for all or any of the Obligations; or
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<PAGE> 11
(d) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Pledgor in respect of
the Obligations or of this Pledge Agreement.
16. AUTHORITY OF THE COLLATERAL AGENT. (a) The Collateral Agent
shall have and be entitled to exercise all powers hereunder that are
specifically granted to the Collateral Agent by the terms hereof, together with
such powers as are incident thereto. The Collateral Agent may perform any of its
duties hereunder or in connection with the Collateral by or through agents or
employees and shall be entitled to retain counsel and to act in reliance upon
the advice of counsel concerning all such matters. None of the Collateral Agent,
any director, officer, employee, attorney or agent of the Collateral Agent nor
the Holders of the Notes shall be liable to the Pledgor for any action taken or
omitted to be taken by it or them hereunder, except for its own bad faith, gross
negligence or willful misconduct, nor shall the Collateral Agent be responsible
for the validity, effectiveness or sufficiency hereof or of any document or
security furnished pursuant hereto. The Collateral Agent and its directors,
officers, employees, attorneys and agents shall be entitled to rely on any
communication, instrument or document believed by it or them to be genuine and
correct and to have been signed or sent by the proper Person or Persons.
17. NOTICES. Any communication, notice or demand to be given
hereunder shall be duly given hereunder if given in the form and manner, and
delivered to the address set forth in the Indenture, or in such other form and
manner or to such other address as shall be designated by any party hereto to
each other party hereto in a written notice delivered in accordance with the
terms of the Indenture.
18. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of the
Collateral Agent to exercise, and no delay in exercising, any right, remedy or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise by the Collateral Agent of any right, remedy or power hereunder
preclude any other or future exercise of any other right, remedy or power. Each
and every right, remedy and power hereby granted to the Collateral Agent or
allowed it by law or other agreement shall be cumulative and not exclusive the
one of any other, and may be exercised by the Collateral Agent from time to
time.
19. BENEFITS OF PLEDGE AGREEMENT. Nothing in this Pledge
Agreement, whether express or implied, shall give to any Person other than the
parties hereto and their successors hereunder, and the Holders of the Notes, any
benefit or any legal or equitable right, remedy or claim under this Pledge
Agreement.
20. APPLICABLE LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK. TO INDUCE THE COLLATERAL AGENT TO ENTER INTO THIS PLEDGE
AGREEMENT, THE PLEDGOR HEREBY IRREVOCABLY AGREES THAT, SUBJECT TO THE COLLATERAL
AGENT'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS THAT IN ANY
MANNER ARISE OUT OF OR IN CONNECTION WITH OR ARE IN ANY WAY RELATED TO THIS
PLEDGE AGREEMENT SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN
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<PAGE> 12
THE COUNTY OF NEW YORK, STATE OF NEW YORK. THE PLEDGOR HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW
YORK, STATE OF NEW YORK. THE PLEDGOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL TO THE
PLEDGOR'S NOTICE ADDRESS AS SPECIFIED HEREIN. THE PLEDGOR HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BETWEEN THE
PLEDGOR AND THE COLLATERAL AGENT IN ACCORDANCE WITH THIS PARAGRAPH. EACH OF THE
PLEDGOR AND THE COLLATERAL AGENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING THAT IN ANY MANNER
ARISES OUT OF OR IN CONNECTION WITH OR IS IN ANY WAY RELATED TO THIS PLEDGE
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN.
(b) THE PROVISIONS OF THIS SECTION 20 ARE A MATERIAL
INDUCEMENT FOR THE COLLATERAL AGENT ENTERING INTO THIS PLEDGE AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY. THE PLEDGOR HEREBY ACKNOWLEDGES THAT IT HAS
REVIEWED THE PROVISIONS OF THIS SECTION 20 WITH INDEPENDENT COUNSEL.
21. CALCULATION OF INTEREST. For purposes of this Pledge
Agreement, all calculations of the first four scheduled interest payments on the
Notes shall be calculated on the basis that interest will accrue on the Notes at
the rate of 11 5/8% per annum and will be payable semi-annually in arrears on
September 1, 1998, March 1, 1999, September 1, 1999, and March 1, 2000. Interest
on the Notes will be computed on the basis of a 360-day year comprised of twelve
30-day months.
22. EXECUTION IN COUNTERPARTS. This Pledge Agreement may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute one and the same instrument.
23. SETTLEMENT. Amounts, if any, held in the Pledge Account
pending settlement of purchase of the Pledged Securities shall constitute
Collateral hereunder, shall be held by the Collateral Agent for the benefit of
the Holders of the Notes and a portion thereof equal to the aggregate price paid
for such Pledged Securities shall be released by the Collateral Agent (without
further direction or instruction required from any other party hereto) against
delivery of such Pledged Securities, and any excess funds remaining in the
Pledge Account after giving effect to such settlement shall be promptly
forwarded pursuant to written instructions of the Company.
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed as of the day and year first above written.
ORBITAL IMAGING CORPORATION
By:
-----------------------------------
Name:
Title:
MARINE MIDLAND BANK,
as Collateral Agent
By:
-----------------------------------
Name:
Title:
<PAGE> 1
Exhibit 10.1
ORBITAL IMAGING CORPORATION
$150,000,000
11 5/8% SENIOR NOTES DUE 2005
WITH WARRANTS
PURCHASE AGREEMENT
FEBRUARY 20, 1998
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
NATIONSBANC MONTGOMERY SECURITIES LLC
<PAGE> 2
ORBITAL IMAGING CORPORATION
$150,000,000
11 5/8% Senior Notes due 2005
with Warrants
PURCHASE AGREEMENT
February 20, 1998
New York, New York
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
NATIONSBANC MONTGOMERY SECURITIES LLC
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies & Gentlemen:
Orbital Imaging Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to Bear, Stearns & Co. Inc., Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and NationsBanc Montgomery
Securities LLC (together, the "Initial Purchasers") 150,000 units (the "Units")
consisting of $150,000,000 in aggregate principal amount of 11 5/8% Senior Notes
due 2005 (the "Notes") and warrants (the "Warrants") to purchase an aggregate of
1,312,746 shares (the "Warrant Shares") of common stock, $.01 par value, of the
Company (the "Common Stock"), subject to the terms and conditions set forth
herein. Each Unit will consist of $1,000 principal amount of Notes and one
Warrant. The Notes will be issued pursuant to an indenture (the "Indenture"), to
be dated the Closing Date (as defined), between the Company and Marine Midland
Bank, as trustee (the "Trustee"). The Warrants will be issued pursuant to a
warrant agreement (the "Warrant Agreement") to be dated the Closing Date,
between the Company and Marine Midland Bank, as warrant agent (the "Warrant
Agent"). The Notes and the Warrants will not trade separately until the earliest
of (i) 90 days from the date of issuance, (ii) such date as the Initial
Purchasers may, in their discretion, deem appropriate, (iii) in the event a
Change of Control occurs, the date the Company mails notice thereof to the
holders of the Notes, (iv) the date on which the Exchange Offer is consummated
(such date, the "Separation Date") and (v) the effective date of the Shelf
Registration Statement. The Units, the Notes and the Warrants are collectively
referred to herein as the "Securities." Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the
Indenture.
1. Issuance of Securities. The Company proposes, upon the terms and
subject to the conditions set forth herein, to issue and sell to the Initial
Purchasers 150,000 Units consisting of $150,000,000 in aggregate principal
amount of Notes and Warrants to purchase an aggregate of 1,372,746 shares of
Common Stock. The Notes issuable in exchange therefor are collectively referred
to herein as the "Exchange Notes."
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act of 1933,
as amended (the "Act"), the Units, the Notes, the Warrants and the Warrant
Shares (and all securities issued in exchange therefor or in substitution
thereof) shall bear the following legend:
<PAGE> 3
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF ORBITAL IMAGING CORPORATION AND ITS SUCCESSORS ("THE COMPANY")
THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A PERSON THAT IS NOT A U.S. PERSON (AS DEFINED IN
RULE 902 UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE AND WARRANT AGENT A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE UNITS, NOTES AND
WARRANTS (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE OR
WARRANT AGENT) OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE COMPANY OR TRUSTEE, REGISTRAR OR TRANSFER AGENT FOR THE
SECURITIES SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM
IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
IN (A) ABOVE.
2. Offering. The Units will be offered and sold to the Initial Purchasers
pursuant to an exemption from the registration requirements under the Act. The
Company has prepared a preliminary offering memorandum, dated February 5, 1998
(the "Preliminary Offering Memorandum"), and a final offering memorandum, dated
February 23, 1998 (the "Offering Memorandum"), relating to the Company, the
Units, the Notes and the Warrants.
The Initial Purchasers have advised the Company that the Initial
Purchasers will make offers (the "Exempt Resales") of the Units on the terms set
forth in the Offering Memorandum, as amended or supplemented, solely to (i)
persons whom the Initial Purchasers reasonably believe to be "qualified
institutional buyers," as defined in Rule 144A under the Act ("QIBs") and (ii)
non-U.S. persons outside the United States in reliance upon Regulation S
("Regulation S") under the Act (each, a "Regulation S Investor"). The QIBs and
the Regulation S Investors are collectively referred to herein as the "Eligible
Purchasers." The Initial Purchasers will offer the Units to such Eligible
Purchasers initially at the price set forth herein. Such price may be changed at
any time without notice.
Holders (including subsequent transferees) of the Notes will have the
registration rights set forth in the registration rights agreement relating
thereto (the "Registration Rights Agreement") in the form agreed to by the
Company and the Initial Purchasers, and holders (including subsequent
transferees) of the Warrants will have the registration rights set forth in the
registration rights agreement relating thereto (the "Warrant Registration Rights
Agreement"), in each case, to be dated the Closing Date, in the form agreed to
by the Company and the Initial Purchasers, for so long as such Notes, Warrants
or any Warrant Shares constitute "Transfer Restricted Securities" (as defined in
each such agreement, respectively). Pursuant to the Registration Rights
Agreement, the Company
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<PAGE> 4
will agree to file with the Securities and Exchange Commission (the
"Commission"), under the circumstances set forth therein, (i) a registration
statement under the Act (the "Exchange Offer Registration Statement") relating
to the Exchange Notes to be offered in exchange for the Notes (the "Exchange
Offer") and (ii) a shelf registration statement pursuant to Rule 415 under the
Act (the "Shelf Registration Statement") relating to the resale by certain
holders of the Notes, and to use its best efforts to cause such registration
statements to be declared effective and consummate the Exchange Offer. Pursuant
to the Warrant Registration Rights Agreement, the Company will agree to file
with the Commission, under the circumstances set forth therein, shelf
registration statements pursuant to Rule 415 under the Act (the "Warrant Shelf
Registration Statements;" each of the Warrant Shelf Registration Statement, the
Exchange Offer Registration Statement and the Shelf Registration Statement, a
"Registration Statement") relating to the resale by certain holders of the
Warrants and the Warrant Shares, and to use its best efforts to cause such
Warrant Shelf Registration Statement to be declared effective.
The Company will use a portion of the net proceeds from the sale of the
Units to purchase a portfolio of Government Securities pursuant to the Pledge
Agreement (the "Pledged Securities") in an amount sufficient to provide for
payment in full of the first four scheduled interest payments due on the Notes.
The Pledged Securities will be pledged as security for the benefit of the
Initial Purchasers and other holders of the Notes (including subsequent
transferees) pursuant to the Pledge Agreement, in the form agreed to by the
Company and the Initial Purchasers.
This Agreement, the Notes, the Units, the Warrant Agreement, the Warrant
Shares, the Indenture and the Registration Rights Agreements, are hereinafter
sometimes referred to collectively as the "Operative Documents."
3. Purchase, Sale and Delivery. (a) On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to its terms
and conditions, the Company agrees to issue and sell to each Initial Purchaser,
and each Initial Purchaser agrees, severally and not jointly, to purchase from
the Company, that amount of Units set forth opposite its name on Schedule I
hereto. The aggregate purchase price for the Units will be $145,500,000.
(b) Delivery of the Units shall be made, against payment of the
purchase price therefor, at the offices of Fried, Frank, Harris, Shriver &
Jacobson, 1001 Pennsylvania Avenue, N.W., Washington, D.C. or such other
location as may be mutually acceptable. Such delivery and payment shall be made
at 10:00 a.m., New York City time, on February 25, 1998 or at such other time as
shall be agreed upon by the Initial Purchasers and the Company. The time and
date of such delivery and payment are herein called the "Closing Date."
(c) Units sold to Regulation S Investors will initially be
represented by one or more permanent Notes and one or more permanent Warrants,
each in global form without interest coupons (a "Regulation S Global Note" and a
"Regulation S Global Warrant," respectively, and together constituting one or
more "Regulation S Global Units") registered in the name of Cede & Co., as
nominee of the Depository Trust Company ("DTC"), for the accounts of the
Euroclear System ("Euroclear") and Cedel Bank, societe anonyme ("Cedel"), having
an aggregate amount corresponding to the aggregate amount of the Units sold to
Regulation S Investors. Units sold to QIBs will be represented by one or more
permanent Notes and one or more permanent Warrants, each in global form without
interest coupons (a "Restricted Global Note" and a "Restricted Global Warrant,"
respectively, and together constituting one or more "Restricted Global Units")
registered in the name of Cede & Co., as nominee of DTC, having an aggregate
amount corresponding to the aggregate amount of the Units sold to QIBs. The
Global Units shall be delivered by the Company to the Initial Purchasers (or as
the Initial Purchasers direct), against payment by the Initial Purchasers of the
purchase price therefor, by wire transfer of immediately available funds to an
account specified by the Company or as the Company may direct in writing,
provided that the Company shall give at least two business days' prior written
notice to the Initial Purchasers of the information required to effect such wire
transfers. The Global Units, Global Notes and Global Warrants shall be made
available to the Initial Purchasers for inspection not later than 9:30 a.m., New
York City time, on the business day immediately preceding the Closing Date.
4. Agreements of the Company. The Company covenants and agrees with the
Initial Purchasers as follows:
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<PAGE> 5
(a) To advise the Initial Purchasers promptly and, if requested by
the Initial Purchasers, confirm such advice in writing of; (i) the issuance by
any state securities commission of any stop order suspending the qualification
or exemption from qualification of any Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by any state
securities commission or other regulatory authority; and (ii) the happening of
any event that, in the reasonable opinion of either counsel to the Company or
counsel to the Initial Purchasers, makes any statement of a material fact made
in the Preliminary Offering Memorandum or the Offering Memorandum untrue or that
requires the making of any additions to or changes in the Preliminary Offering
Memorandum or the Offering Memorandum in order to make the statements therein,
in the light of the circumstances under which they are made, not misleading. The
Company shall use its best efforts to prevent the issuance of any stop order or
order suspending the qualification or exemption of any Securities under any
state securities or Blue Sky laws and, if at any time any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption of any Securities under any state securities or Blue
Sky laws, the Company shall use its best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons identified
by the Initial Purchasers to the Company, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
or supplements thereto, as the Initial Purchasers may reasonably request. The
Company consents to the use of the Preliminary Offering Memorandum and the
Offering Memorandum, and any amendments and supplements thereto required
pursuant hereto, by the Initial Purchasers in connection with Exempt Resales.
(c) Not to amend or supplement the Preliminary Offering Memorandum
or the Offering Memorandum prior to the Closing Date unless the Initial
Purchasers shall previously have been advised thereof and shall not have
reasonably objected thereto within a reasonable time after being furnished a
copy thereof. The Company shall promptly prepare, upon the Initial Purchasers'
request, any amendment or supplement to the Preliminary Offering Memorandum or
the Offering Memorandum that may be necessary or advisable in connection with
Exempt Resales.
(d) If, after the date hereof and prior to consummation of any
Exempt Resale, any event shall occur as a result of which, in the judgment of
the Company or in the reasonable opinion of either counsel to the Company or
counsel to the Initial Purchasers, it becomes necessary or advisable to amend or
supplement the Preliminary Offering Memorandum or Offering Memorandum in order
to make the statements therein, in the light of the circumstances in which they
were made, not misleading, or if it is necessary or advisable to amend or
supplement the Preliminary Offering Memorandum or Offering Memorandum to comply
with applicable law, (i) notify the Initial Purchasers and (ii) forthwith to
prepare an appropriate amendment or supplement to such Offering Memorandum so
that the statements therein as so amended or supplemented will not, in the light
of the circumstances when it is so delivered, be misleading, or so that such
Offering Memorandum will comply with applicable law.
(e) To cooperate with the Initial Purchasers and counsel to the
Initial Purchasers in connection with the qualification or registration of the
Units, the Notes and the Warrants under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may reasonably request and to continue
such qualification in effect so long as required for the Exempt Resales;
provided, however, that the Company shall not be required in connection
therewith to register or qualify as a foreign corporation where it is not now
qualified or to take any action that would subject it to service of process in
suits or taxation, in each case, other than as to matters and transactions
relating to the Preliminary Offering Memorandum, the Offering Memorandum or
Exempt Resales, in any jurisdiction where it is not now so subject.
(f) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated, to pay all
costs, expenses, fees and taxes incident to the performance of the obligations
of the Company hereunder, including in connection with: (i) the preparation,
printing, filing and distribution of the Preliminary Offering Memorandum and the
Offering Memorandum (including, without
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<PAGE> 6
limitation, financial statements) and all amendments and supplements thereto
required pursuant hereto, (ii) the issuance, transfer and delivery by the
Company of the Securities to the Initial Purchasers, (iii) the qualification or
registration of the Securities for offer and sale under the securities or blue
sky laws of the several states (including, without limitation, the cost of
preparing, printing and mailing a preliminary and final blue sky memorandum and
the reasonable fees and disbursements of counsel to the Initial Purchasers
relating thereto), (iv) furnishing such copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and all amendments and supplements
thereto, as may be requested for use in connection with Exempt Resales, (v) the
preparation of certificates for the Securities (including, without limitation,
printing and engraving thereof), (vi) the fees, disbursements and expenses of
the Company's counsel and accountants, (vii) all expenses and listing fees in
connection with the application for quotation of the Securities in the National
Association of Securities Dealers, Inc. ("NASD") Automated Quotation System -
PORTAL ("PORTAL"), (viii) all fees and expenses (including fees and expenses of
counsel to the Company) of the Company in connection with the approval of the
Securities by DTC for "book-entry" transfer, (ix) the rating of the Securities
by rating agencies, (x) the reasonable fees and expenses of the Trustee and its
counsel in connection with the Indenture and the Notes, (xi) the reasonable fees
and expenses of the Warrant Agent and its counsel in connection with the Warrant
Agreement and the Warrants, (xii) the performance by the Company of its other
obligations under this Agreement and the other Operative Documents and (xiii)
"roadshow" travel and other expenses incurred in connection with the marketing
and sale of the Units, the Notes and the Warrants.
(g) To use the proceeds from the sale of the Units in the manner
described in the Offering Memorandum under the caption "Use of Proceeds."
(h) Not to voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any Securities.
(i) To do and perform all things required to be done and performed
under this Agreement by it prior to or after the Closing Date and to satisfy all
conditions precedent on its part to the delivery of the Units.
(j) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Units in a manner that would require
the registration under the Act of the sale to the Initial Purchasers, or the
Eligible Purchasers, of the Units, the Notes or the Warrants or to take any
other action that would result in the Exempt Resales not being exempt from
registration under the Act.
(k) For so long as any of the Securities remain outstanding and
during any period in which the Company is not subject to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
available to any beneficial owner of Units, Notes or Warrants in connection with
any sale thereof and any prospective purchaser of such Units, Notes or Warrants
from such beneficial owner, the information required by Rule 144A(d)(4) under
the Act.
(l) To cause the Exchange Offer to be made in the appropriate form
to permit registered Exchange Notes to be offered in exchange for the Notes and
to comply with all applicable federal and state securities laws in connection
with the Exchange Offer.
(m) To comply with all of its agreements set forth in the
Registration Rights Agreement, the Warrant Registration Rights Agreement and all
agreements set forth in the representation letters of the Company to DTC
relating to the approval of the Securities by DTC for "book-entry" transfer.
(n) To use its best efforts to obtain approval of the Securities by
DTC for "book-entry" transfer.
(o) During a period of five years following the Closing Date, to
deliver without charge to each of the Initial Purchasers, as they may reasonably
request, promptly upon their becoming available, copies of (i) all reports or
other publicly available information that the Company shall mail or otherwise
make available to its securityholders and (ii) all reports, financial statements
and proxy or information statements filed by the Company
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<PAGE> 7
with the Commission or any national securities exchange and such other publicly
available information concerning the Company or its subsidiaries, if any,
including without limitation, press releases.
(p) Prior to the Closing Date, to furnish to each of the Initial
Purchasers, as soon as they have been prepared in the ordinary course by the
Company, copies of any unaudited interim financial statements for any period
subsequent to the periods covered by the financial statements appearing in the
Offering Memorandum.
(q) Not to take, directly or indirectly, any action designed to, or
that might reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities. Except as permitted by the Act, the Company will
not distribute any (i) preliminary offering memorandum, including, without
limitation, the Preliminary Offering Memorandum, (ii) offering memorandum,
including, without limitation, the Offering Memorandum, or (iii) other offering
material in connection with the offering and sale of the Securities.
(r) To perform all things required or necessary to be done and
performed under this Agreement prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Securities.
(s) To reserve and continue to reserve as long as any Warrants are
outstanding, a sufficient number of shares of Common Stock for issuance upon
exercise of the Warrants.
5. Representations and Warranties. (a) The Company represents and warrants
to the Initial Purchasers that:
(i) The Preliminary Offering Memorandum and the Offering Memorandum
do not, and any supplement or amendment to them will not, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained in
this paragraph shall not apply to statements in or omissions from the
Preliminary Offering Memorandum and the Offering Memorandum (or any
supplement or amendment thereto) made in reliance upon and in conformity
with information relating to the Initial Purchasers furnished to the
Company in writing by or on behalf of the Initial Purchaser expressly for
use therein. No stop order preventing the use of the Preliminary Offering
Memorandum or the Offering Memorandum, or any amendment or supplement
thereto, or any order asserting that any of the transactions contemplated
by this Agreement are subject to the registration requirements of the Act,
has been issued.
(ii) When the Units, the Notes and the Warrants are issued and
delivered pursuant to this Agreement, no Unit, Note or Warrant will be of
the same class (within the meaning of Rule 144A under the Act) as
securities of the Company that are listed on a national securities
exchange registered under Section 6 of the Exchange Act or that are quoted
in a United States automated inter-dealer quotation system.
(iii) The Company (A) has been duly incorporated, is validly
existing as a corporation in good standing under the laws of its
respective jurisdiction of incorporation, (B) has all requisite corporate
power and authority to carry on its business as it is currently being
conducted and as described in the Offering Memorandum and to own, lease
and operate its properties and (C) is duly qualified and in good standing
as a foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of property
requires such qualification except, with respect to this clause (C), where
the failure of the Company to be so qualified or in good standing does not
and could not reasonably be expected to individually or in the aggregate,
result in a material adverse effect on the assets, liabilities, business,
results of operations, condition (financial or otherwise), cash flows,
affairs or prospects of the Company or on the Company's ability to issue
the Securities (a "Material Adverse Effect").
(iv) The Company has no direct or indirect subsidiaries as of the
Closing Date.
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<PAGE> 8
(v) All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive or
similar rights. The Company has an authorized and outstanding consolidated
capitalization as set forth in the Offering Memorandum under the caption
"Capitalization."
(vi) Except as disclosed in the Offering Memorandum, there are not
currently, and will not be as a result of the Offering, any outstanding
subscriptions, rights, warrants, calls, commitments of sale or options to
acquire, or instruments convertible into or exchangeable for, any capital
stock or other equity interest of the Company (collectively, "Equity
Rights"). The issuance of the Units, the Notes and the Warrants, and the
Warrant Shares upon exercise of the Warrants, will not result in an
adjustment to the exercise price or number of shares issuable upon the
exercise of such Equity Rights.
(vii) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under each of this Agreement,
the Indenture, the Warrant Agreement, the Registration Rights Agreement,
the Warrant Registration Rights Agreement and the other Operative
Documents and to consummate the transactions contemplated hereby and
thereby, including, without limitation, the corporate power and authority
to issue, sell and deliver the Securities as provided herein and therein.
(viii) This Agreement has been duly and validly authorized, executed
and delivered by Company and is the legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors generally
and subject to general principles of equity.
(ix) The Indenture has been duly and validly authorized by the
Company and, when duly executed and delivered by the Company, will be the
legal, valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or similar
laws affecting the rights of creditors generally and subject to general
principles of equity. On the Closing Date, the Indenture will conform, in
all material respects, to the requirements of the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder. The Offering Memorandum contains a summary of the
terms of the Indenture, which is accurate in all material respects.
(x) The Units have been duly and validly authorized by the Company.
The Notes have been duly and validly authorized for issuance and sale to
the Initial Purchasers by the Company pursuant to this Agreement and, when
issued and authenticated in accordance with the terms of the Indenture and
delivered against payment therefor in accordance with the terms hereof and
thereof, will be the legal, valid and binding obligations of the Company.
The description of the Notes in the Offering Memorandum is accurate in all
material respects.
(xi) The Exchange Notes have been duly and validly authorized for
issuance by the Company and, when issued and authenticated in accordance
with the terms of the Exchange Offer and the Indenture, will be the legal,
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms and entitled to the benefits of the
Indenture, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity. The
description of the Exchange Notes in the Offering Memorandum is accurate
in all material respects.
(xii) The Registration Rights Agreement has been duly and validly
authorized by the Company and, when duly executed and delivered by the
Company, will be the legal, valid and binding obligation of the Company.
The description of the Registration Rights Agreement in the Offering
Memorandum is accurate in all material respects.
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<PAGE> 9
(xiii) The Warrant Agreement has been duly and validly authorized by
the Company and, when duly executed and delivered by the Company, will be
the legal, valid and binding obligation of the Company. The description of
the Warrant Agreement in the Offering Memorandum is accurate in all
material respects.
(xiv) The Warrants have been duly and validly authorized for
issuance and sale to the Initial Purchasers by the Company pursuant to
this Agreement and, when issued and countersigned in accordance with the
terms of the Warrant Agreement and delivered against payment therefor in
accordance with the terms hereof and thereof, will be the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the Warrant
Agreement, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity. The
description of the Warrants in the Offering Memorandum is accurate in all
material respects.
(xv) The Warrants are exercisable into Warrant Shares in accordance
with the terms of the Warrant Agreement. The Warrant Shares have been duly
authorized for issuance by the Company and, when issued and paid for upon
exercise of the Warrants in accordance with the terms thereof, will be
validly issued, fully paid and nonassessable, free of any preemptive or
similar rights.
(xvi) The Warrant Registration Rights Agreement has been duly and
validly authorized by the Company and, when duly executed and delivered by
the Company, will be the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors generally
and subject to general principles of equity. The description of the
Warrant Registration Rights Agreement in the Offering Memorandum is
accurate in all material respects.
(xvii) The Company is not and, after giving effect to the Offering
will not be (A) in violation of its charter or bylaws, (B) in default in
the performance of any bond, debenture, note, indenture, mortgage, deed of
trust or other agreement or instrument to which it is a party or by which
it is bound or to which any of its properties is subject, which singly or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect, or (C) in violation of any local, state, federal or foreign law,
statute, ordinance, rule, regulation, requirement, judgment or court
decree (including, without limitation, the Communications Act of 1934, as
amended by the Telecommunications Act of 1996 (the "Telecommunications
Act"), and the rules and regulations of the Federal Communications
Commission (the "FCC"), the Department of Commerce (the "DoC"), the
National Telecommunications and Information Administration (the "NTIA")
and the International Telecommunications Union ("ITU") and environmental
laws, statutes, ordinances, rules, regulations, judgments or court
decrees) applicable to the Company or any of its assets or properties
(whether owned or leased), which singly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. To the best
knowledge of the Company, there exists no condition that, with notice, the
passage of time or otherwise, would constitute a default under any such
document or instrument.
(xviii) None of (A) the execution, delivery or performance by the
Company of this Agreement and the other Operative Documents, (B) the
issuance and sale of the Securities and (C) consummation by the Company of
the transactions contemplated by the Operative Documents or the Offering
Memorandum described under the captions "Use of Proceeds" and "Related
Party Transactions," violates, conflicts with or constitutes a breach of
any of the terms or provisions of, or a default under (or an event that
with notice or the lapse of time, or both, would constitute a default), or
require consent under, or result in the imposition of a lien or
encumbrance on any properties of the Company, or an acceleration of any
indebtedness of the Company pursuant to, (i) the charter or bylaws of the
Company, (ii) any bond, debenture, note, indenture, mortgage, deed of
trust or other agreement or instrument to which the Company is a party or
by which it or its property is or may be bound, (iii) any local, state,
federal or foreign law, statute, ordinance, rule, regulation or
requirement (including, without limitation, the Telecommunications Act and
the rules and regulations of the FCC, the DoC, the NTIA and the ITU,
environmental laws,
-8-
<PAGE> 10
statutes, ordinances, rules or regulations) applicable to the Company, or
any of its assets or properties or (iv) any judgment, order or decree of
any court or governmental agency or authority having jurisdiction over the
Company or any of its assets or properties. Other than as described in the
Offering Memorandum, no consent, approval, authorization or order of, or
filing, registration, qualification, license or permit of or with, (A) any
court or governmental agency, body or administrative agency (including,
without limitation, the FCC, the DoC, the NTIA and the ITU) or (B) any
other person is required for (1) the execution, delivery and performance
by the Company of this Agreement and the other Operative Documents or (2)
the issuance and sale of the Securities and the transactions contemplated
hereby and thereby, except such as have been obtained and made on or prior
to the Closing Date (or, in the case of the Registration Rights Agreement
and the Warrant Registration Rights Agreement, will be obtained and made)
under the Act, the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and state securities or Blue Sky laws and regulations or
such as may be required by the NASD.
(xix) There is (A) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or
foreign, now pending or, to the knowledge of the Company, threatened or
contemplated to which the Company is or may be a party or to which the
business, assets or property of the Company is subject, (B) no local,
state, federal or foreign law, statute, ordinance, rule, regulation,
requirement, judgment or court decree (including, without limitation, the
Telecommunications Act and the rules and regulations of the FCC, the DoC,
the NTIA and the ITU) or order that has been enacted, adopted or issued by
any governmental agency or that has been proposed by any governmental body
or (C) no injunction, restraining order or order of any nature by a
federal or state court or foreign court of competent jurisdiction to which
the Company is or may be subject or to which the business, assets, or
property of the Company is or may be subject, that, in the case of clauses
(A), (B) and (C) above, (1) is required to be disclosed in the Preliminary
Offering Memorandum or the Offering Memorandum and that is not so
disclosed, or (2) could reasonably be expected to result in a Material
Adverse Effect.
(xx) No action has been taken and no local, state, federal or
foreign law, statute, ordinance, rule, regulation, order, requirement,
judgment or court decree has been enacted, adopted or issued by any
governmental agency that prevents the issuance of the Securities or
prevents or suspends the use of the Offering Memorandum; no injunction,
restraining order or order of any nature by a federal, state or foreign
court of competent jurisdiction has been issued that prevents the issuance
of the Securities or prevents or suspends the sale of the Securities in
any jurisdiction referred to in Section 4(e) hereof; and the Company has
complied with every request of any securities authority or agency of any
jurisdiction for additional information.
(xxi) There is (i) no unfair labor practice complaint pending or, to
the knowledge of the Company, threatened against the Company, before the
National Labor Relations Board, or any state or local labor relations
board or any foreign labor relations board, and no significant grievance
or significant arbitration proceeding arising out of or under any
collective bargaining agreement is so pending or, to the knowledge of the
Company, threatened against the Company, (ii) no significant strike, labor
dispute, slowdown or stoppage pending or, to the knowledge of the Company,
threatened against the Company, and (iii) no union representation question
existing with respect to the employees of the Company. To the knowledge of
the Company, no collective bargaining organizing activities are taking
place with respect to the Company. The Company has not violated (A) any
federal, state or local law or foreign law relating to discrimination in
hiring, promotion or pay of employees, (B) any applicable wage or hour
laws, or (C) any provision of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or the rules and regulations thereunder.
(xxii) The Company has not violated any foreign, federal, state or
local law or regulation relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), lacks any permit,
license or other approval required of it under applicable Environmental
Laws, or is violating any term or condition of such permit, license or
approval which could reasonably be expected to have a Material Adverse
Effect. There is no
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<PAGE> 11
alleged liability or potential liability (including, without limitation,
alleged or potential liability or investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property damages,
personal injuries or penalties) of the Company arising out of, based on or
resulting from (a) the presence or release into the environment of any
Hazardous Material (as defined) at any location, whether or not owned by
the Company, or (b) any violation or alleged violation of any
Environmental Law, which alleged or potential liability is required to be
disclosed in the Offering Memorandum, other than as disclosed therein, or
could reasonably be expected to have a Material Adverse Effect. The term
"Hazardous Material" means (i) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (ii) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (iii) any petroleum or
petroleum product, (iv) any polychlorinated biphenyl, and (v) any
pollutant or contaminant or hazardous, dangerous or toxic chemical,
material, waste or substance regulated under or within the meaning of any
other law relating to protection of human health or the environment or
imposing liability or standards of conduct concerning any such chemical
material, waste or substance.
(xxiii) The Company has (i) good and marketable title to all of the
properties and assets described in the Offering Memorandum as owned by it,
free and clear of all liens, charges, encumbrances and restrictions
(except for Permitted Liens and taxes not yet payable), (ii) peaceful and
undisturbed possession under all leases to which any of them is a party as
lessee, (iii) except as disclosed in the Offering Memorandum, all
licenses, certificates, permits, authorizations, approvals, franchises and
other rights from, and has made all declarations and filings with, all
federal, foreign, state and local authorities (including, without
limitation, the FCC, the DoC, the NTIA and the ITU), all self-regulatory
authorities and all courts and other tribunals (each an "Authorization")
necessary to engage in the business conducted by any of them in the manner
described in the Offering Memorandum, and (iv) no reason to believe that
any governmental body or agency is considering limiting, suspending or
revoking any such Authorization. All such Authorizations are valid and in
full force and effect and the Company is in compliance with the terms and
conditions of all such Authorizations and with the rules and regulations
of the regulatory authorities having jurisdiction with respect thereto,
except where the failure to so comply would not have a Material Adverse
Effect. All leases to which the Company is a party are valid and binding
and no default by the Company has occurred and is continuing thereunder
and no defaults by the landlord are existing under any such lease, except
such defaults that could not reasonably be expected to have a Material
Adverse Effect. The Company is using its reasonable best efforts to obtain
all Authorizations (including, but not limited to an FCC license and a DoC
License, or amendments thereto) with respect to the high-resolution
satellites described in the Offering Memorandum.
(xxiv) The Company owns, possesses or has the right to employ all
patents, patent rights, intellectual property licenses, including the
OrbView-2 License (as defined in the Offering Memorandum), inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, software, systems or
procedures), trademarks, service marks and trade names, inventions,
computer programs, technical data and information (collectively, the
"Intellectual Property") employed by the Company in connection with its
business, free and clear of and without violating any right, claimed
right, charge, encumbrance, pledge, security interest, restriction or lien
of any kind of any other person, except where the failure to own, possess
or have the right to employ such Intellectual Property would not have a
Material Adverse Effect. The Company has not infringed and is not
infringing with asserted rights of others with respect to any such
Intellectual Property, except infringements that would not have a Material
Adverse Effect, and the Company has not received notice of the
infringement of asserted rights of others with respect to any such
Intellectual Property.
(xxv) None of the Company or any of its officers, directors,
partners, employees, agents or affiliates or any other person acting on
behalf of the Company, has, directly or indirectly, given or agreed to
give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, official
or employee of any governmental agency (domestic or foreign),
instrumentality of any government (domestic or foreign) or any political
party or candidate for office (domestic or foreign) or other person who
was, is
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<PAGE> 12
or may be in a position to help or hinder the business of the Company (or
assist the Company in connection with any actual or proposed transaction)
which (i) might subject the Company, or any other individual or entity to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign), (ii) if not given in the past, could
reasonably be expected to have had a Material Adverse Effect on the
assets, business or operations of the Company or (iii) if not continued in
the future, could reasonably be expected to have a Material Adverse
Effect.
(xxvi) All material tax returns required to be filed by the Company
in all jurisdictions have been so filed. All taxes, including withholding
taxes, penalties and interest, assessments, fees and other charges due or
claimed to be due from such entities or that are due and payable have been
paid, except to the extent such taxes are (A) currently payable without
penalty or interest or (B) being contested in good faith and for which
adequate reserves have been provided. To the knowledge of the Company,
there are no material proposed additional tax assessments against the
Company or the assets or property of the Company.
(xxvii) The Company is not, and after giving effect to the Offering
will not be, an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of
1940, as amended (the "Investment Company Act").
(xxviii) Except as set forth in the Offering Memorandum with respect
to the holders of Series A Preferred Stock, there are no holders of
securities of the Company who, by reason of the execution by the Company
of this Agreement or any other Operative Document to which it is a party
or the consummation by the Company of the transactions contemplated hereby
and thereby, have the right to request or demand that the Company register
any of its securities under the Act or analogous foreign laws and
regulations.
(xxix) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that: (i) transactions
are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect thereto.
(xxx) The Company maintains insurance covering its properties,
operations, personnel and businesses, and will maintain insurance as
required by the Indenture. Such insurance insures against such losses and
risks as are consistent with industry practice to protect the Company and
its business. The Company has not received notice from any insurer or
agent of such insurer that substantial capital improvements or other
expenditures will have to be made in order to continue such insurance. All
such insurance is outstanding and duly in force on the date hereof.
(xxxi) The Company has not (i) taken, directly or indirectly, any
action designed to, or that might reasonably be expected to, cause or
result in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Units, the Notes or
the Warrants or (ii) except as set forth in the Offering Memorandum with
respect to the Series A Offering, since the date of the Preliminary
Offering Memorandum (A) sold, bid for, purchased or paid any person any
compensation for soliciting purchases of, the Units, the Notes or the
Warrants or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(xxxii) No registration under the Act of the Units, the Notes or the
Warrants is required for the sale of the Units to the Initial Purchasers
as contemplated hereby or for the Exempt Resales assuming (i) that the
purchasers who buy the Units in the Exempt Resales are either Eligible
Purchasers and (ii) the accuracy of the Initial Purchasers'
representations regarding the absence of general solicitation in
connection with the sale of Units to the Initial Purchasers and the Exempt
Resales contained herein. No form of general solicitation or general
advertising was used by the Company or any of its representatives (other
than the Initial Purchasers, as to which the Company makes no
representation or warranty) in
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<PAGE> 13
connection with the offer and sale of any of the Securities in connection
with Exempt Resales, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising. No securities of the same class as the Securities have been
issued and sold by the Company within the six-month period immediately
prior to the date hereof.
(xxxiii) Except as set forth on Schedule 5(xxxiii), there are no
employee pension or benefit plan with respect to which the Company or any
corporation considered an affiliate of the Company within the meaning of
Section 407(d)(7) of ERISA (an "ERISA Affiliate") is a party in interest
or disqualified person. The execution and delivery of this Agreement, the
other Operative Documents and the sale of the Units to be purchased by the
Eligible Purchasers will not involve any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue
Code of 1986. The representation made by the Company in the preceding
sentence is made in reliance upon and subject to the accuracy of, and
compliance with, the representations and covenants made or deemed made by
the Eligible Purchasers, as set forth in the Offering Memorandum under the
caption "Notice to Investors."
(xxxiv) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, and each amendment or supplement thereto, as
of its date, contains the information specified in, and meets the
requirements of, Rule 144A(d)(4) under the Act.
(xxxv) Subsequent to the respective dates as of which information is
given in the Offering Memorandum and up to the Closing Date, and except as
set forth in the Offering Memorandum, (A) the Company has not entered into
any amendment to or agreed to any modification of the Orbital Agreements,
the Stock Purchase Agreement or the Stockholders' Agreement, (B) the
Company has not incurred any liabilities or obligations, direct or
contingent, which are or will be material, individually or in the
aggregate, to the Company, nor entered into any transaction not in the
ordinary course of business, (C) there has not been, singly or in the
aggregate, any change or development which could reasonably be expected to
result in a Material Adverse Effect, and (D) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of capital stock.
(xxxvi) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Securities, the application of the
proceeds from the issuance and sale of the Securities and the consummation
of the transactions contemplated thereby as set forth in the Offering
Memorandum, will violate Regulations G, T, U or X promulgated by the Board
of Governors of the Federal Reserve System or analogous foreign laws and
regulations.
(xxxvii) The accountants who have certified or will certify the
financial statements included or to be included as part of the Offering
Memorandum are independent accountants as required by the Act. The
historical financial statements of the Company, together with related
notes thereto, comply as to form with the requirements applicable to
registration statements on Form S-4 under the Act, and the historical
financial statements of the Company present fairly the financial position
and results of operations of the Company at the dates and for the periods
indicated. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods presented except as noted therein. The other
financial and statistical information and data included in the Offering
Memorandum derived from the historical financial statements are accurately
presented and prepared on a basis consistent with the historical financial
statements included in the Offering Memorandum and the books and records
of the Company.
(xxxviii) The Company does not intend to, nor does it believe that
it will, incur debts beyond its ability to pay such debts as they mature.
Upon the issuance of the Units, the present fair saleable value of the
assets of the Company will exceed the amount that will be required to be
paid on or in respect of the existing debts and other liabilities
(including contingent liabilities) of the Company as they become absolute
and matured. Upon the issuance of the Units, the assets of the Company
will not constitute
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<PAGE> 14
unreasonably small capital to carry out its businesses as now conducted,
including the capital needs of the Company, taking into account the
projected capital requirements and capital availability.
(xxxix) Except pursuant to this Agreement, there are no contracts,
agreements or understandings between the Company and any other person that
would give rise to a valid claim against the Company or either of the
Initial Purchasers for a brokerage commission, finder's fee or like
payment in connection with the issuance, purchase and sale of the
Securities.
(xl) The Company has complied with all provisions of Section
517.075, Florida Statutes, relating to doing business with the Government
of Cuba or with any affiliate located in Cuba.
(xli) There exist no conditions that would constitute a default (or
an event which with notice or the lapse of time, or both, would constitute
a default) under any of the Operative Documents or any of the documents
relating to the Series A Preferred Stock.
(xlii) Except as disclosed in the Offering Memorandum, there are no
business relationships or related party transactions required to be
disclosed therein pursuant to Item 404 of Regulation S-K of the Commission
(assuming for purposes of this subparagraph that Regulation S-K is
applicable to the Offering Memorandum).
(xliii) Prior to the effectiveness of any Registration Statement,
the Indenture is not required to be qualified under the Trust Indenture
Act.
(xliv) Each certificate signed by any officer of the Company and
delivered to the Initial Purchasers or counsel for the Initial Purchasers
pursuant to this Agreement shall be deemed to be a representation and
warranty by the Company to the Initial Purchasers as to the matters
covered thereby.
(xlv) The data relating to market size included in the Offering
Memorandum is based on or derived from sources that the Company believes
to be reliable and accurate in all material respects.
The Company acknowledges that each of the Initial Purchasers and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 8 hereof, counsel to the Company and counsel to the Initial Purchasers,
will rely upon the accuracy and truth of the foregoing representations and
hereby consents to such reliance.
(b) Each of the Initial Purchasers, severally and not jointly,
represents, warrants and covenants to the Company and agrees that:
(i) Offers and Sales only to Institutional Accredited Investors or
Qualified Institutional Buyers. Offers and sales of the Securities shall be made
only to Eligible Purchasers. Each Initial Purchaser agrees that it will not
offer, sell or deliver any of the Securities in any jurisdiction outside the
United States except under circumstances that will result in compliance with the
applicable laws thereof, and that it will take at its own expense whatever
action is required to permit its purchase and resale of the Securities in such
jurisdictions.
(ii) No General Solicitation. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the 1933 Act) will be used
in the United States in connection with the offering or sale of the Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
Eligible Purchaser of a Security acting as a fiduciary for one or more third
parties, each third party shall, in the judgment of the applicable Initial
Purchaser, be an Eligible Purchaser.
(iv) Subsequent Purchaser Notification. Each Initial Purchaser will
take reasonable steps to inform, and cause each of its U.S. affiliates to take
reasonable steps to inform, persons acquiring Securities from
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<PAGE> 15
such Initial Purchaser or affiliate, as the case may be, in the United States
that the Securities (A) have not been and will not be registered under the
Securities Act, (B) are being sold to them without registration under the
Securities Act in reliance on Rule 144A or in accordance with another exemption
from registration under the Securities Act, as the case may be, and (C) may not
be offered, sold or otherwise transferred except (1) to the Company, (2) outside
the United States in accordance with Regulation S or (3) inside the United
States in accordance with (x) Rule 144A to a person whom the Seller reasonably
believes is a QIB that is purchasing such Securities for its own account or for
the account of a QIB to whom notice is given that the offer, sale or transfer is
being made in reliance on Rule 144A or (y) pursuant to another available
exemption from registration under the 1933 Act.
(v) Minimum Principal Amount. No sale of the Securities to any one
Eligible Purchaser will be for less than U.S. $100,000 principal amount and no
Security will be issued in a smaller principal amount. If the Eligible Purchaser
is a non-bank fiduciary acting on behalf of others, each of the persons for whom
it is acting must purchase at least U.S. $100,000 principal amount of the
Securities.
(vi) Restrictions on Transfer. The transfer restrictions and the
other provisions set forth in the Offering Memorandum under the heading "Notice
to Investors," including the legend required thereby, shall apply to the
Securities except as otherwise agreed by the Company and the Initial Purchasers.
(vii) Delivery of Offering Memorandum. Each Initial Purchaser will
deliver to each purchaser of the Securities from such Initial Purchaser, in
connection with its original distribution of the Securities, a copy of the
Offering Memorandum, as amended and supplemented at the date of such delivery.
The Initial Purchasers understand that the Company and, for purposes of
the opinions to be delivered to the Initial Purchasers pursuant to Section 8
hereof, counsel for the Company and counsel for the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and hereby consents
to such reliance.
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless (i) each of
the Initial Purchasers, (ii) each person, if any, who controls either of the
Initial Purchasers within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act and (iii) the respective officers, directors, partners,
employees, representatives and agents of each of the Initial Purchasers or any
controlling person to the fullest extent lawful, from and against any and all
losses, liabilities, claims, damages and expenses whatsoever (including but not
limited to reasonable attorneys' fees and any and all reasonable expenses
whatsoever incurred in investigating, preparing or defending against any
investigation or litigation, commenced or threatened, or any claim whatsoever,
and any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
will not be liable in any such case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
information relating to either of the Initial Purchasers furnished to the
Company in writing by or on behalf of such Initial Purchaser expressly for use
therein; provided, further, that such indemnity with respect to the Preliminary
Offering Memorandum shall not inure to the benefit of either Initial Purchaser
(or any persons controlling such Initial Purchaser) from whom the person
asserting such loss, claim, damage or liability purchased the Units which are
the subject thereof if such person did not receive a copy of the Offering
Memorandum (or the Offering Memorandum as amended or supplemented) at or prior
to the confirmation of the sale of such Units to such person (and the Offering
Memorandum or any such amended or supplemented Offering Memorandum, as
applicable, shall have been delivered by the Company to such Initial Purchaser a
reasonable amount of time prior to the mailing or delivery, as applicable, of
such confirmation) and any such untrue statement or omission or alleged untrue
statement or omission of a material fact contained in such Preliminary
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<PAGE> 16
Offering Memorandum was corrected in the Offering Memorandum (or the Offering
Memorandum as amended or supplemented). This indemnity agreement will be in
addition to any liability which the Company may otherwise have, including under
this Agreement.
(b) Each of the Initial Purchasers, severally and not jointly,
agrees to indemnify and hold harmless (i) the Company, (ii) each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, and (iii) the officers, directors, partners,
employees, representatives and agents of the Company against any losses,
liabilities, claims, damages and expenses whatsoever (including but not limited
to reasonable attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any investigation or litigation,
commenced or threatened, or any claim whatsoever and any and all amounts paid in
settlement of any claim or litigation), joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Memorandum or
the Offering Memorandum, or in any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with information
relating to such Initial Purchaser furnished to the Company in writing by or on
behalf of such Initial Purchaser expressly for use therein; provided, however,
that in no case shall either of the Initial Purchasers be liable or responsible
for any amount in excess of the discounts and commissions received by such
Initial Purchaser, as set forth on the cover page of the Offering Memorandum.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have reasonably concluded that there may
be defenses available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which case the
indemnifying party or parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses of counsel shall be borne by the indemnifying
parties; provided, however, that the indemnifying party under subsection (a) or
(b) above shall only be liable for the legal expenses of one counsel (in
addition to any local counsel) for all indemnified parties in each jurisdiction
in which any claim or action is brought. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its prior written consent,
provided that such consent was not unreasonably withheld.
7. Contribution. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 6 is for any reason held to be
unavailable to or is insufficient to hold harmless a party indemnified
thereunder, each indemnifying party shall contribute to the aggregate losses,
claims, damages, liabilities and expenses of the nature contemplated by such
indemnification provision (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement
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<PAGE> 17
of, any action, suit or proceeding or any claims asserted, but after deducting
in the case of losses, claims, damages, liabilities and expenses suffered by the
Company, any contribution received by the Company from persons, other than the
Initial Purchasers, who may also be liable for contribution, including persons
who control the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act) to which the Company and such Initial Purchaser may
be subject, in such proportion as is appropriate to reflect the relative
benefits received by the Company, on one hand, and such Initial Purchaser, on
the other hand, from the offering of the Units or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 6, in
such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company, on one hand, and
such Initial Purchaser, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on one hand, and each Initial Purchaser, on
the other hand, shall be deemed to be in the same proportion as (i) the total
proceeds from the offering of Units (net of discounts but before deducting
expenses) received by the Company and (ii) the discounts and commissions
received by such Initial Purchaser, respectively, in each case as set forth in
the table on the cover page of the Offering Memorandum. The relative fault of
the Company, on one hand, and of each Initial Purchaser, on the other hand,
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or such
Initial Purchaser and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to above. Notwithstanding the provisions
of this Section 7, (i) in no case shall either of the Initial Purchasers be
required to contribute any amount in excess of the amount by which the discounts
and commissions applicable to the Units purchased by such Initial Purchaser
pursuant to this Agreement exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, (A) each person,
if any, who controls either of the Initial Purchasers within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the
respective officers, directors, partners, employees, representatives and agents
of each of the Initial Purchasers or any controlling person shall have the same
rights to contribution as such Initial Purchaser, and (A) each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act and (B) the respective officers, directors, partners,
employees, representatives and agents of the Company shall have the same rights
to contribution as the Company, subject in each case to clauses (i) and (ii) of
this Section 7. Any party entitled to contribution will, promptly after receipt
of notice of commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against another party
or parties under this Section 7, notify such party or parties from whom
contribution may be sought, but the failure to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 7 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its prior written consent, provided that such written consent was not
unreasonably withheld.
8. Conditions of Initial Purchasers' Obligations. The obligations of the
Initial Purchasers to purchase and pay for the Units, as provided herein, shall
be subject to the satisfaction of the following conditions:
(a) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on the date hereof and on
the Closing Date with the same force and effect as if made on and as of the date
hereof and the Closing Date, respectively. The Company shall have performed or
complied with all of the agreements herein contained and required to be
performed or complied with by it at or prior to the Closing Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers as promptly as practicable on the day
following the date of this Agreement or at such later date and time as to which
the Initial Purchasers may agree, and no stop order suspending the qualification
or exemption from
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<PAGE> 18
qualification of the Units in any jurisdiction referred to in Section 4(e) shall
have been issued and no proceeding for that purpose shall have been commenced or
shall be pending or threatened.
(c) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental agency
which would, as of the Closing Date, prevent the issuance of the Units; no
action, suit or proceeding shall have been commenced and be pending or
threatened against or affecting the Company before any court or arbitrator or
any governmental body, agency or official that, if adversely determined, would
result in a Material Adverse Effect; and no stop order shall have been issued
preventing the use of the Offering Memorandum, or any amendment or supplement
thereto, or which could reasonably be expected have a Material Adverse Effect on
the Company.
(d) Since the dates as of which information is given in the Offering
Memorandum, (i) there shall not have been any material adverse change, or any
development that is reasonably likely to result in a material adverse change, in
the capital stock or the long-term debt, or increase in the short-term debt, of
the Company from that set forth in the Offering Memorandum, (ii) no dividend or
distribution of any kind shall have been declared, paid or made by the Company
on any class of its capital stock, and (iii) the Company shall not have incurred
any liabilities or obligations, direct or contingent, that are material,
individually or in the aggregate, to the Company, and that are required to be
disclosed on a balance sheet or notes thereto in accordance with generally
accepted accounting principles and are not disclosed on the latest balance sheet
or notes thereto included in the Offering Memorandum. Since the date hereof and
since the dates as of which information is given in the Offering Memorandum,
there shall not have occurred any Material Adverse Effect.
(e) The Initial Purchasers shall have received certificates, dated
the Closing Date, signed on behalf of the Company, in form and substance
satisfactory to the Initial Purchasers, confirming, as of the Closing Date, the
matters set forth in paragraphs (a), (b), (c) and (d) of this Section 8 and
that, as of the Closing Date, the obligations of the Company to be performed
hereunder on or prior thereto have been duly performed.
(f) The Initial Purchasers shall have received on the Closing Date
an opinion, dated the Closing Date, (i) of Latham & Watkins, counsel for the
Company and (ii) of Susan Herlick, Esquire, general counsel for the Company;
each in form and substance satisfactory to the Initial Purchasers and counsel
for the Initial Purchasers, covering such matters as are customarily covered in
such opinions.
(g) The Initial Purchasers shall have received on the Closing Date
an opinion, dated the Closing Date, of Halprin, Temple, Goodman and Sugrue, in
form and substance satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers, covering such matters as are customarily covered in such
opinions.
(h) At the time this Agreement is executed and at the Closing Date,
the Initial Purchasers shall have received from KPMG Peat Marwick, independent
public accountants, dated as of the date of this Agreement and as of the Closing
Date, customary comfort letters addressed to the Initial Purchasers and in form
and substance satisfactory to the Initial Purchasers and counsel for the Initial
Purchasers with respect to the financial statements and certain financial
information of the Company contained in the Offering Memorandum and/or
incorporated therein by reference.
(i) The Initial Purchasers shall have received an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchasers, of Fried, Frank, Harris, Shriver & Jacobson, counsel for the Initial
Purchasers, covering such matters as are customarily covered in such opinions.
(j) Fried, Frank, Harris, Shriver & Jacobson shall have been
furnished with such documents, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass upon the
matters referred to in this Section 8 and in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions herein contained.
(k) Prior to the Closing Date, the Company shall have furnished to
the Initial Purchasers such further information, certificates and documents as
the Initial Purchasers may reasonably request.
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<PAGE> 19
(l) The Company and the Trustee shall have entered into the
Indenture and the Initial Purchasers shall have received counterparts, conformed
as executed, thereof.
(m) The Company shall have entered into the Registration Rights
Agreement and the Initial Purchasers shall have received counterparts, conformed
as executed, thereof.
(n) The Company shall have entered into the Warrant Registration
Rights Agreements and the Initial Purchasers shall have received counterparts,
conformed as executed, thereof.
(o) The Company shall have entered into the Pledge Agreement and the
Initial Purchasers shall have received counterparts, conformed as executed,
thereof.
(p) The Company shall have given irrevocable instructions to
purchase the Pledged Securities and deposit the Pledged Securities into the
Pledge Account, and the Initial Purchasers shall have received the written
opinion of a firm of nationally recognized independent certified accountants, in
form and substance satisfactory to the Initial Purchasers, to the effect that
the Pledged Securities, upon receipt of scheduled interest and principal
payments thereon, are sufficient to provide for the payment in full of the first
four scheduled interest payments due on the Notes.
(q) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
463(g) under the Securities Act, that (i) it is downgrading its rating assigned
to any class of securities of the Company or (ii) it is reviewing its rating
assigned to any class of securities of the Company with a view to possible
downgrading, or with negative implications, or direction not determined.
(r) The Units shall have been approved for trading on PORTAL.
(s) Not later than the Closing Date, the Series A Offering shall
have been completed, upon the terms described in the Offering Memorandum.
All opinions, certificates, letters and other documents required by this
Section 8 to be delivered by the Company will be in compliance with the
provisions hereof only if they are satisfactory in form and substance to the
Initial Purchasers. The Company shall furnish the Initial Purchasers with such
conformed copies of such opinions, certificates, letters and other documents as
they shall reasonably request.
9. Initial Purchasers' Information. The Company acknowledges that the
statements with respect to the offering of the Units set forth in the first
sentence of the last paragraph of text on the cover page, the last paragraph
appearing on page iv of the Offering Memorandum and the sixth paragraph under
the caption "Plan of Distribution" in the Offering Memorandum constitute the
only information relating to any of the Initial Purchasers furnished to the
Company in writing by or on behalf of any of the Initial Purchasers expressly
for use in the Offering Memorandum.
10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Initial Purchasers and the Company
contained in this Agreement, including the agreements contained in Sections 4(f)
and 11(d), the indemnity agreements contained in Section 6 and the contribution
agreements contained in Section 7, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of either of the
Initial Purchasers, any controlling person thereof, or by or on behalf of the
Company or any controlling person thereof, and shall survive delivery of and
payment for the Units to and by the Initial Purchasers. The representations
contained in Section 5 and the agreements contained in Sections 4(f), 6, 7 and
11(d) shall survive the termination of this Agreement, including any termination
pursuant to Section 11.
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<PAGE> 20
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon execution and
delivery of a counterpart hereof by each of the parties hereto.
(b) The Initial Purchasers shall have the right to terminate this
Agreement at any time prior to the Closing Date by notice to the Company from
the Initial Purchasers, without liability (other than with respect to Sections 6
and 7) on the Initial Purchasers' part to the Company if, on or prior to such
date, (i) the Company shall have failed, refused or been unable to perform any
agreement in any material respect on their part to be performed hereunder, (ii)
any other condition to the obligations of the Initial Purchasers hereunder as
provided in Section 8 is not fulfilled when and as required in any material
respect], (iii) in the reasonable judgment of the Initial Purchasers, any
Material Adverse Effect shall have occurred since the respective dates as of
which information is given in the Offering Memorandum, other than as set forth
in the Offering Memorandum, or (iv)(A) any domestic or international event or
act or occurrence has disrupted, or in the opinion of the Initial Purchasers
will in the immediate future materially disrupt, the market for the Company's
securities or for securities in general; (B) trading in securities generally on
the New York or American Stock Exchange, or the Nasdaq National Market, shall
have been suspended or materially limited, or minimum or maximum prices for
trading shall have been established, or maximum ranges for prices for securities
shall have been required, on such exchange, or by such exchange or other
regulatory body or governmental authority having jurisdiction; (C) a banking
moratorium shall have been declared by federal or state authorities, or a
moratorium in foreign exchange trading by major international banks or persons
shall have been declared; (D) there is an outbreak or escalation of armed
hostilities involving the United States on or after the date hereof, or if there
has been a declaration by the United States of a national emergency or war, the
effect of which shall be, in the Initial Purchasers' reasonable judgment, to
make it inadvisable or impracticable to proceed with the offering or delivery of
the Units on the terms and in the manner contemplated in the Offering
Memorandum; or (E) there shall have been such a material adverse change in
general economic, political or financial conditions or if the effect of
international conditions on the financial markets in the United States shall be
such as, in the Initial Purchasers' reasonable judgment, makes it inadvisable or
impracticable to proceed with the delivery of the Units as contemplated hereby.
(c) Any notice of termination pursuant to this Section 11 shall be
by telephone or telephonic facsimile and, in either case, confirmed in writing
by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to clause (iii) or (iv) of Section
11(b), in which case each party will be responsible for its own expenses), the
Company shall reimburse the Initial Purchasers for all out-of-pocket expenses
(including the reasonable fees and expenses of the Initial Purchasers' counsel),
reasonably incurred by the Initial Purchasers in connection herewith.
12. Notice. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the Initial
Purchasers shall be mailed, delivered, telecopied and confirmed in writing or
sent by a nationally recognized overnight courier service guaranteeing delivery
on the next business day to Bear, Stearns & Co. Inc., 245 Park Avenue, New York,
NY 10167, Attention: Corporate Finance Department, telecopy number: (212)
272-3092, with a copy to Fried, Frank, Harris, Shriver & Jacobson, 1001
Pennsylvania Avenue, N.W., Suite 800, Washington, DC 20004, Attention: Stephen
I. Glover, telecopy number: (202) 639-7008; and if sent to the Company, shall be
mailed, delivered, telecopied and confirmed in writing or sent by a nationally
recognized overnight courier service guaranteeing delivery on the next business
day to Orbital Imaging Corporation, 21700 Atlantic Boulevard, Dulles, VA 20166,
Attention: Susan Herlick, General Counsel, telecopy number: (703) 406-5552, with
a copy to Latham & Watkins, 1001 Pennsylvania Ave., NW, Suite 800, Washington,
DC 20004, Attention:
Michael A. Bell, telecopy number: (202) 637-2201.
13. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Initial Purchasers and the Company and the
controlling persons and agents referred to in Sections 6 and 7, and their
respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained. The
-19-
<PAGE> 21
term "successors and assigns" shall not include a purchaser, in its capacity as
such, of Units, Notes or Warrants from the Initial Purchasers.
14. Construction. This Agreement shall be construed in accordance with the
internal laws of the State of New York. TIME IS OF THE ESSENCE IN THIS
AGREEMENT.
15. Captions. The captions included in this Agreement are included solely
for convenience of reference and are not to be considered a part of this
Agreement.
16. Counterparts. This Agreement may be executed in various counterparts
which together shall constitute one and the same instrument.
[Signature Page to Follow]
-20-
<PAGE> 22
If the foregoing correctly sets forth the understanding among the Initial
Purchasers and the Company please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
ORBITAL IMAGING CORPORATION
By: ____________________________
Name:
Title:
Accepted and agreed to as of
the date first above written:
BEAR, STEARNS & CO. INC.
By: _______________________
Name:
Title:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: _______________________
Name:
Title:
NATIONSBANC MONTGOMERY SECURITIES LLC
By: _______________________
Name:
Title:
-21-
<PAGE> 23
SCHEDULE I
<PAGE> 24
SCHEDULE 5(vi)
<PAGE> 25
SCHEDULE 5(xxxiii)
401(k) plan
<PAGE> 1
Exhibit 12
ORBITAL IMAGING CORPORATION
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
($ IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1997
---- ---- ---- ---- ---- ----
(PRO FORMA)
<S> <C> <C> <C> <C> <C> <C>
FIXED CHARGES:
Capitalized Interest.......... -- -- -- -- -- 19,508,929
Portion of rent expense
representative of interest.. 7,770 8,546 9,400 32,000 117,000 117,000
---------- ---------- ---------- ---------- ---------- ----------
Total Fixed Charges............. 7,770 8,546 9,400 32,000 117,000 19,625,929
========== ========== ========== ========== ========== ==========
EARNINGS:
Loss before income taxes...... (1,702,000) (3,956,000) (5,802,000) (4,895,000) (7,094,000) (7,094,000)
Fixed charges, less
capitalized interest........ 7,770 8,546 9,400 32,000 117,000 117,000
---------- ---------- ---------- ---------- ----------- ----------
Earnings adjusted for
fixed charges............... (1,694,230) (3,947,454) (5,792,600) (4,863,000) (6,977,000) (6,977,000)
========== ========== ========== ========== =========== ==========
RATIO OF EARNINGS
TO FIXED CHARGES -- -- -- -- -- --
DEFICIENCY IN EARNINGS TO
COVER FIXED CHARGES (1,702,000) (3,956,000) (5,802,000) (4,895,000) (7,094,000) (26,602,929)
</TABLE>
<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Orbital Imaging Corporation:
We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Washington, DC
April 6, 1998
<PAGE> 1
EXHIBIT 25.1
Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
--------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
--------------
MARINE MIDLAND BANK
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Charles E. Bauer
Vice President
Marine Midland Bank
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-1792
(Name, address and telephone number of agent for service)
ORBITAL IMAGING CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 54-1660268
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
21700 Atlantic Boulevard 20166
Dulles, VA
(703) 406-5000 (Zip Code)
(Address of principal executive offices)
11 5/8% SENIOR NOTES DUE 2005
(Title of Indenture Securities)
<PAGE> 2
General
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to which
it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None
<PAGE> 3
Item 16. List of Exhibits.
<TABLE>
<CAPTION>
Exhibit
<S> <C> <C> <C>
T1A(i) * - Copy of the Organization Certificate of Marine
Midland Bank.
T1A(ii) * - Certificate of the State of New York Banking
Department dated December 31, 1993 as to the
authority of Marine Midland Bank to commence
business.
T1A(iii) - Not applicable.
T1A(iv) * - Copy of the existing By-Laws of Marine Midland
Bank as adopted on January 20, 1994.
T1A(v) - Not applicable.
T1A(vi) * - Consent of Marine Midland Bank required by
Section 321(b) of the Trust Indenture Act
of 1939.
T1A(vii) - Copy of the latest report of condition of the
trustee (December 31, 1997), published pursuant
to law or the requirement of its supervisory or
examining authority.
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
</TABLE>
* Exhibits previously filed with the Securities and Exchange Commission
with Registration No. 33-53693 and incorporated herein by reference
thereto.
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
Marine Midland Bank, a banking corporation and trust company organized under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York on the 6th day of
April, 1998.
MARINE MIDLAND BANK
By: /s/ Frank J. Godino
----------------------
Frank J. Godino
Vice President
<PAGE> 5
EXHIBIT T1A (vii)
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
Expires March 31, 2000
- -------------------------------------------------------------------------------
Please refer to page i, /1/
Table of Contents, for
the required disclosure
of estimated burden.
- -------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES - FFIEC 031
REPORT AT THE CLOSE OF BUSINESS DECEMBER 31, 1997
This report is required by law; 12 U.S.C. Section 324 (state member banks); 12
U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161
(National banks).
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National Banks.
I, Gerald A. Ronning, Executive VP & Controller
---------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and Income
(including the supporting schedules) have been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and are true
to the best of my knowledge and belief.
/s/ Gerald A. Ronning
- ----------------------------------------------
Signature of Officer Authorized to Sign Report
1/26/98
- ----------------------------------------------
Date of Signature
SUBMISSION OF REPORTS
Each Bank must prepare its Reports of Condition and Income either:
(a) in automated form and then file the computer data file directly with the
banking agencies' collection agent, Electronic Data System Corporation
(EDS), by modem or computer diskette; or
(971231)
-----------
(RCRI 9999)
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it
has been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
/s/ Malcolm Burnett
- ------------------------------------------
Director (Trustee)
/s/ Bernard J. Kennedy
- ------------------------------------------
Director (Trustee)
/s/ Sal H. Alfiero
- ------------------------------------------
Director (Trustee)
(b) in hard-copy (paper) form and arrange for another party to convert the paper
report to automated form. That party (if other than EDS) must transmit the
bank's computer data file to EDS
To fulfill the signature and attestation requirement for the Reports of
Condition and Income for this report date, attach this signature page to the
hard-copy of the completed report that the bank places in its files.
- -------------------------------------------------------------------------------
FDIC Certificate Number /0/0/5/8/9/
-----------
(RCRI 9030)
<PAGE> 6
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
Name of Bank City
in the state of New York, at the close of business December 31, 1997
ASSETS
<TABLE>
<CAPTION>
Thousands
of dollars
<S> <C>
Cash and balances due from
depository institutions:
Noninterest-bearing balances
currency and coin.......................... $ 928,754
Interest-bearing balances.................. 2,571,410
Held-to-maturity securities................ 0
Available-for-sale securities.............. 3,968,837
Federal funds sold and securities purchased
under agreements to resell................. 497,992
Loans and lease financing receivables:
Loans and leases net of unearned income.... 21,550,115
LESS: Allowance for loan and lease losses.. 407,355
LESS: Allocated transfer risk reserve...... 0
Loans and lease, net of unearned income,
allowance, and reserve..................... 21,142,760
Trading assets............................. 979,454
Premises and fixed assets (including
capitalized leases)........................ 225,646
Other real estate owned........................ 8,092
Investments in unconsolidated subsidiaries and
associated companies........................... 0
Customers' liability to this bank on
acceptances outstanding........................ 24,795
Intangible assets.............................. 479,713
Other assets................................... 488,168
Total assets................................... 31,315,621
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices ....................... 20,072,724
Noninterest-bearing ....................... 4,090,658
Interest-bearing .......................... 15,981,866
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs .................... 3,834,827
Noninterest-bearing ....................... 0
Interest-bearing .......................... 3,834,827
Federal funds purchased and securities sold
under agreements to repurchase ............ 2,007,482
Demand notes issued to the U.S. Treasury .... 192,186
Trading Liabilities ......................... 215,748
Other borrowed money:
With a remaining maturity of one year
or less ................................. 1,402,449
With a remaining maturity of more than
one year through three years ............ 63,601
With a remaining maturity of more than
three years ............................. 61,707
Bank's liability on acceptances
executed and outstanding .................. 24,795
Subordinated notes and debentures ........... 497,774
Other liabilities ........................... 719,423
Total liabilities ........................... 29,092,716
EQUITY CAPITAL
Perpetual preferred stock and related
surplus ................................... 0
Common Stock ................................ 205,000
Surplus ..................................... 1,984,326
Undivided profits and capital reserves ...... 8,678
Net unrealized holding gains (losses)
on available-for-sale securities .......... 24,901
Cumulative foreign currency translation
adjustments ............................... 0
Total equity capital ........................ 2,222,905
Total liabilities, limited-life
preferred stock, and equity capital ....... 31,315,621
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF EARNINGS AT AND FOR
THE YEAR ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001040570
<NAME> ORBITAL IMAGING CORP/DE/
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 10,883
<SECURITIES> 11,337
<RECEIVABLES> 134
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 22,354
<PP&E> 133,371
<DEPRECIATION> (18,091)
<TOTAL-ASSETS> 137,750
<CURRENT-LIABILITIES> 12,528
<BONDS> 0
4
0
<COMMON> 252
<OTHER-SE> 85,105
<TOTAL-LIABILITY-AND-EQUITY> 137,750
<SALES> 2,062
<TOTAL-REVENUES> 2,062
<CGS> 6,312
<TOTAL-COSTS> 6,312
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,834)
<INCOME-TAX> (1,752)
<INCOME-CONTINUING> (4,082)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,082)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
FORM OF LETTER OF TRANSMITTAL
OFFER TO EXCHANGE
11 5/8% SENIOR NOTES DUE 2005, SERIES B
FOR ANY AND ALL OUTSTANDING
11 5/8% SENIOR NOTES DUE 2005, SERIES A
OF
ORBITAL IMAGING CORPORATION
PURSUANT TO THE PROSPECTUS DATED MAY , 1998
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE , 1998,
UNLESS EXTENDED (THE "EXPIRATION DATE").
To: Marine Midland Bank, THE EXCHANGE AGENT
By Hand/Overnight Courier Facsimile By Registered or Certified Mail
Marine Midland Bank Transmission: Marine Midland Bank
140 Broadway (212) 658-2292 140 Broadway
A Level A Level
New York, New York 10005-1180 Confirm by New York, New York 10005-1180
Corporate Trust Services Telephone: Corporate Trust Services
(212) 658-5931
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
The undersigned acknowledges receipt of the Prospectus dated May , 1998
(the "Prospectus") of Orbital Imaging Corporation, a Delaware corporation (the
"Company"), and this Letter of Transmittal (the "Letter of Transmittal"), which
together constitute (i) the Company's offer (the "Exchange Offer") to exchange
$1,000 principal amount of its 11-5/8% Senior Notes due 2005, series B (the
"Exchange Notes") which have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), pursuant to a Registration Statement of which
the Prospectus is a part, for each $1,000 principal amount of its outstanding
11-5/8% Senior Notes due 2005, series A (the "Original Notes"), of which
$150,000,000 principal amount is outstanding. Capitalized terms used but not
defined herein have the meaning given to them in the Prospectus.
All holders of Original Notes who wish to tender their Original Notes
must, prior to the Expiration Date: (1) complete, sign, date and mail or
otherwise deliver this Letter of Transmittal to the Exchange Agent, in person or
to the address set forth above, or in lieu thereof, comply with the procedures
of the Automated Tender Offer Program ("ATOP") of The Depository Trust Company
("DTC"); and (2) tender his or her Original Notes or, if a tender of Original
Notes is to be made by book-entry transfer to the account maintained by the
Exchange Agent at DTC (the "Book-Entry Transfer Facility"), confirm such
book-entry transfer (a "Book-Entry Confirmation"), in each case in accordance
with the procedures for tendering described in the Instructions to this Letter
of Transmittal. Holders of Original Notes whose certificates are not immediately
available, or who are unable to deliver their certificates or Book-Entry
Confirmation and all other documents required by this Letter of Transmittal to
be delivered to the Exchange Agent on or prior to the Expiration Date, must
tender their Original Notes according to the guaranteed delivery procedures set
forth under the caption "The Exchange Offer --Procedures for Tendering Original
Notes" in the Prospectus. (See Instruction 1).
The term "Holder" with respect to the Exchange Offer means any person
in whose name the Original Notes are registered on the books of the Company or
any other person who has obtained a properly completed bond power from the
registered holder. The undersigned has completed, executed and delivered this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer. The Instructions included with this Letter
of Transmittal must be followed in their entirety. Questions and requests for
assistance or for additional copies of the Prospectus or this Letter may be
directed to the Exchange Agent, at the address listed above, or to the General
Counsel, Orbital Imaging Corporation, Inc., 21700 Atlantic Boulevard, Dulles,
VA 20166 (telephone (703) 406-6000).
<PAGE> 2
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL, INCLUDING
THE INSTRUCTIONS TO THIS LETTER OF TRANSMITTAL, CAREFULLY
BEFORE CHECKING ANY BOX BELOW
List in Box 1 below the Original Notes of which you are the holder. If
the space provided in Box 1 is inadequate, list the certificate numbers and
principal amount of Original Notes on a separate SIGNED schedule and affix that
schedule to this Letter of Transmittal.
DESCRIPTION OF 11-5/8% SENIOR NOTES DUE 2005, SERIES A
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
AGGREGATE TENDERED(2)
PRINCIPAL (MUST BE IN
NAMES AND ADDRESS(ES) OF AMOUNT INTEGRAL
REGISTERED HOLDERS(S) CERTIFICATE REPRESENTED BY MULTIPLE
(PLEASE FILL IN, IF BLANK) NUMBER(S)(1) CERTIFICATE(S)(1) OF $1,000)
<S> <C> <C> <C>
- ------------------------- ------------- ---------------- ------------
- ------------------------- ------------- ---------------- ------------
- ------------------------- ------------- ---------------- ------------
TOTAL
- ------------------------- ------------- ---------------- ------------
</TABLE>
(1) Need not be completed by holders tendering by book-entry transfer (see
below).
(2) Unless otherwise indicated in the column labeled "Principal Amount
Tendered," any tendering Holder of 11-5/8% Senior Notes due 2005,
series A will be deemed to have tendered the entire aggregate principal
amount represented by the column labeled "Aggregate Principal Amount
Represented by Certificate(s)." If the space provided above is
inadequate, list the certificate numbers and principal amounts on a
separate SIGNED schedule and affix the list to this Letter of
Transmittal. The minimum permitted tender is $1,000 in principal amount
of 11-5/8% Senior Notes due 2005, series A. All other tenders must be
in integral multiples of $1,000.
2
<PAGE> 3
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Original Notes
indicated above. Subject to, and effective upon, the acceptance for exchange of
the principal amount of Original Notes tendered in accordance with this Letter
of Transmittal, the undersigned sells, assigns and transfers to, or upon the
order of, the Company all right, title and interest in and to the Original Notes
tendered hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent its agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company) with respect to the
tendered Original Notes, with full power of substitution, to: (i) deliver
certificates for such Original Notes; (ii) deliver Original Notes and all
accompanying evidence of transfer and authenticity to or upon the order of the
Company upon receipt by the Exchange Agent, as the undersigned's agent, of the
Exchange Notes to which the undersigned is entitled upon the acceptance by the
Company of the Original Notes tendered under the Exchange Offer; and (iii)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Original Notes, all in accordance with the terms of the Exchange Offer.
The power of attorney granted in this paragraph shall be deemed to be
irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, sell, assign and transfer the Original Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim, when the same are acquired by the Company. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Company to be necessary or desirable to complete the assignment
and transfer of the Original Notes tendered.
The undersigned also acknowledges that this Exchange Offer is being
made in reliance upon interpretations contained in letters issued to third
parties by the staff of the Securities and Exchange Commission that the Exchange
Notes issued in exchange for the Original Notes pursuant to the Exchange Offer
may be offered for resale, resold and otherwise transferred by Holders thereof
(other than (i) any such Holder that is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act, (ii) a broker-dealer who acquired
the Original Notes directly from the Company or (iii) a broker-dealer who
acquired the Original Notes as a result of market-making or other trading
activities), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Notes are acquired
in the ordinary course of such Holders' business and such Holders have no
arrangement with any person to participate in distribution of such Exchange
Notes. If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Original Notes, it acknowledges that
it will deliver a prospectus in connection with any resale of such Exchange
Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Original Notes when, as and if the Company has given
oral or written notice thereof to the Exchange Agent, at which time the
undersigned's right to withdraw such tender will terminate.
If any tendered Original Notes are not accepted for exchange pursuant
to the Exchange Offer for any reason, certificates for any such unaccepted
Original Notes will be returned, without expense, to the undersigned at the
address shown below or at a different address as may be indicated herein under
"Special Issuance Instructions" as promptly as practicable after the Expiration
Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns. Tenders may be withdrawn only in
accordance with the procedures set forth in the Instructions contained in this
Letter of Transmittal.
The undersigned understands that tenders of Original Notes pursuant to
the procedures described under the caption "The Exchange Offer--Procedures for
Tendering Original Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Exchange Offer.
3
<PAGE> 4
Unless otherwise indicated under "Special Issuance Instructions," the
Exchange Agent will issue the certificates representing the Exchange Notes
issued in exchange for the Original Notes accepted for exchange and will return
any Original Notes not tendered or not exchanged, in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," the Exchange Agent will send the certificates representing the
Exchange Notes issued in exchange for the Original Notes accepted for exchange
and any certificates for Original Notes not tendered or not exchanged (and
accompanying documents, as appropriate) will be returned to the undersigned at
the address shown below the undersigned's signature(s). In the event that both
"Special Issuance Instructions" and "Special Delivery Instructions" are
completed, the Exchange Agent will issue the certificates representing the
Exchange Notes issued in exchange for the Original Notes accepted for exchange
in the name(s) of, and will return any Original Notes not tendered or not
exchanged and will send said certificates to, the person(s) so indicated. The
undersigned recognizes that the Company has no obligation pursuant to the
"Special Issuance Instructions" and "Special Delivery Instructions" to transfer
any Original Notes from the name of the registered holder(s) thereof if the
Company does not accept for exchange any of the Original Notes so tendered.
Holders of Original Notes who wish to tender their Original Notes and
(i) whose Original Notes are not immediately available, or (ii) who cannot
deliver their Original Notes, this Letter of Transmittal or any other documents
required hereby to the Exchange Agent prior to the Expiration Date (or who
cannot comply with the book-entry transfer procedure on a timely basis) may
tender their Original Notes according to the guaranteed delivery procedures set
forth in the Prospectus under the caption "The Exchange Offer -- Guaranteed
Delivery Procedures." See Instruction 1 regarding the completion of this Letter
of Transmittal, printed below.
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC
AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS
HEREINAFTER DEFINED) ONLY):
Name of Tendering Institution
-----------------------------------------
Account Number
--------------------------------------------------------
Transaction Code Number
-----------------------------------------------
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE
FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name(s) of Registered Original Noteholder(s)
---------------------------
Date of Execution of Notice of Guaranteed Delivery
---------------------
Window Ticket Number (if available)
------------------------------------
Name of Institution which Guaranteed Delivery
--------------------------
Account Number (if delivered by book-entry transfer)
-------------------
4
<PAGE> 5
PLEASE SIGN HERE WHETHER OR NOT
ORIGINAL NOTES ARE BEING PHYSICALLY TENDERED HEREBY
X
- ----------------------------------------------------------------- ---------
Date
X
- ----------------------------------------------------------------- ---------
Signature(s) of Registered Holder(s) Date
or Authorized Signatory
Area Code and Telephone Number:
-----------------------------------
The above lines must be signed by the registered holder(s) of Original
Notes as their name(s) appear(s) on the Original Notes or by person(s)
authorized to become registered holder(s) by a properly completed bond power
from the registered holder(s), a copy of which must be transmitted with this
Letter of Transmittal. If Original Notes to which this Letter of Transmittal
relate are held of record by two or more joint holders, then all such holders
must sign this Letter of Transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, then such person must
(i) set forth his or her full title below and (ii) unless waived by the Company,
submit evidence satisfactory to the Company of such person's authority so to
act. See Instruction 4 regarding the completion of this Letter of Transmittal,
printed below.
Name(s):
------------------------------------------------------------------------
(PLEASE PRINT)
Capacity:
-----------------------------------------------------------------------
Address:
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Signature(s) Guaranteed by an Eligible Institution (as hereinafter
defined): (If required by Instruction 4)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(TITLE)
- --------------------------------------------------------------------------------
(NAME OF FIRM)
Dated:
----------------------------------
5
<PAGE> 6
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY (i) if certificates for Original Notes in a principal
amount not exchanged, or Exchange Notes issued in exchange for Original Notes
accepted for exchange, are to be issued in the name of someone other than the
undersigned, or (ii) if Original Notes tendered by book-entry transfer which are
not exchanged are to be returned by credit to an account maintained at DTC.
ISSUE CERTIFICATE(S) TO:
Name
------------------------------------------------------
(Please Print)
Address
-------------------------------------------------------------------------
(Include Zip Code)
------------------------------------------
(Tax Identification or Social Security No.)
Credit Original Notes not exchanged and delivered by book-entry transfer to the
DTC account set forth below:
DTC Account Number
-------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS 6
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Original Notes in a principal amount
not exchanged, or Exchange Notes issued in exchange for Original Notes accepted
for exchange, are to be sent to someone other than the undersigned, or to the
undersigned at an address other than that shown above.
MAIL TO:
Name
----------------------------------------------------
(Please Print)
Address
-------------------------------------------------------------------------
(Include Zip Code)
-------------------------------------------
(Tax Identification or Social Security No.)
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND ORIGINAL NOTES. The
tendered Original Notes or any confirmation of a book-entry transfer (a
"Book-Entry Confirmation"), as well as a properly completed and duly executed
copy of this Letter of Transmittal or facsimile hereof, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. The method of delivery of the tendered Original Notes, this
Letter of Transmittal and all other required documents to the Exchange Agent is
at the election and risk of the Holder and, except as otherwise provided below,
the delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. Instead of delivery by mail, it is recommended that the Holder
use an overnight or hand delivery service. In all cases, sufficient time should
be allowed to assure timely delivery. No Letter of Transmittal or Original Notes
should be sent to the Company.
The Exchange Agent and DTC have confirmed that any financial
institution that is a participant in DTC's system may utilize DTC's ATOP to
tender. Accordingly, participants in DTC's ATOP may, in lieu of physically
completing and signing the Letter of Transmittal and delivering it to the
Exchange Agent, electronically transmit their acceptance of the Exchange Offer
by causing the Depositary to transfer the Original Notes to the Exchange Agent
in accordance with the DTC's ATOP procedures for transfer. The Depositary will
then send an Agent's Message to the Exchange Agent.
The term "Agent's Message" means a message transmitted by DTC received
by the Exchange Agent and forming part of the Book-Entry Confirmation, which
states that the Depositary has received an express acknowledgment from a
participant in DTC's ATOP that is tendering Original Notes which are the subject
of such book entry confirmation, that such participant has received and agrees
to be bound by the terms of the Letter of Transmittal (or, in the case of an
Agent's Message relating to guaranteed delivery, that such participant has
received and agrees to be bound by the applicable Notice of Guaranteed
Delivery), and that the agreement may be enforced against such participant.
Holders who wish to tender their Original Notes and (i) whose Original
Notes are not immediately available, (ii) who cannot deliver their Original
Notes or any other documents required hereby to the Exchange Agent prior to the
Expiration Date or (iii) who are unable to complete the procedure for book-entry
transfer on a timely basis, must tender their Original Notes according to the
guaranteed delivery procedures set forth in the Prospectus. Pursuant to such
procedure: (i) such tender must be made by or through an Eligible Institution
(as hereinafter defined); (ii) prior to the Expiration Date, the Exchange Agent
must have received from the Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery (by facsimile transmission, mail or hand delivery) setting forth the
name and address of the Holder of the Original Note, and the principal amount of
Original Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within three business days after the date of execution of the
Notice of Guaranteed Delivery, the certificate(s) for all physically tendered
Original Notes, or a Book-Entry Confirmation, and any other required documents
by the Letter of Transmittal will be deposited by the Eligible Institution (as
hereinafter defined) with the Exchange Agent, or, alternatively, the Holder
shall have complied with DTC's ATOP procedures; and (iii) the certificate(s) for
all physically tendered Original Notes, in proper form for transfer, or a
Book-Entry Confirmation, and, as the case may be, all other documents required
by the Letter of Transmittal, are received by the Exchange Agent within three
business days after the date of execution of the Notice of Guaranteed Delivery,
all as provided in the Prospectus under the caption "The Exchange
Offer--Guaranteed Delivery Procedures." Any Holder of Original Notes who wishes
to tender his Original Notes pursuant to the guaranteed delivery procedures
described above must ensure that the Exchange Agent receives the Notice of
Guaranteed Delivery prior to 5:00 p.m., New York City time, on the Expiration
Date. Upon request of the Exchange Agent, a Notice of Guaranteed Delivery will
be sent to Holders who wish to tender their Original Notes according to the
guaranteed delivery procedures set forth above.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of the Original Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
tenders of any particular Original Notes not properly tendered or to not accept
any particular Original Notes which acceptance might, in the judgment of the
Company or its counsel, be unlawful. The Company also reserves the absolute
right in its sole discretion to waive any defects or irregularities or
conditions of the Exchange Offer as to any particular Original Note either
7
<PAGE> 8
before or after the Expiration Date (including the right to waive the
ineligibility of any Holder who seeks to tender the Original Notes in the
Exchange Offer). The interpretation of the terms and conditions of the Exchange
Offer as to any particular Original Note either before or after the Expiration
Date (including the Letter of Transmittal and instructions thereto) by the
Company shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Original Notes for exchange must be
cured within such reasonable period of time as the Company shall determine.
Neither the Company, the Exchange Agent nor any other person shall be under any
duty to give notification of any defect or irregularity with respect to any
tender of the Original Notes for exchange, nor shall any of them incur any
liability for failure to give such notification.
2. TENDER BY HOLDER. Only a Registered Holder of Original Notes may
tender such Original Notes in the Exchange Offer. Any beneficial owner whose
Original Notes are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to tender Original Notes should
contact the Registered Holder promptly and instruct such Registered Holder to
tender Original Notes on such beneficial owner's behalf. If such beneficial
owner wishes to tender such Original Notes himself, such beneficial owner must,
prior to completing and executing this Letter of Transmittal and delivering such
Original Notes in such beneficial owner's name, either make appropriate
arrangements to register ownership of the Original Notes in such beneficial
owner's name or obtain a properly completed bond power from the Registered
Holder of the Original Notes. The transfer of registered ownership may take
considerable time and may not be able to be completed prior to the Expiration
Date.
3. PARTIAL TENDERS; WITHDRAWALS. Tenders of Original Notes will be
accepted only in integral multiples of $1,000. If less than the entire principal
amount of any Original Notes is tendered, the tendering Holder should fill in
the principal amount tendered in the third column of the box entitled
"Description of 11-5/8% Senior Notes due 2005, Series A above. The entire
principal amount of Original Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated. If the entire principal
amount of all Original Notes is not tendered, then Original Notes for the
principal amount of Original Notes not tendered and a certificate or
certificates representing Exchange Notes issued in exchange for any Original
Notes accepted will be sent to the Holder at his or her registered address,
unless a different address is provided in the appropriate box on this Letter of
Transmittal, promptly after the Original Notes are accepted for exchange.
If not yet accepted, a tender pursuant to the Exchange Offer may be
withdrawn prior to the Expiration Date. For a withdrawal to be effective, (i) a
written or facsimile notice of withdrawal must be received by the Exchange Agent
at its address set forth herein or (ii) holders must comply with the appropriate
procedures of DTC's ATOP system. Any such notice of withdrawal must (i) specify
the name of the person having tendered the Original Notes to be withdrawn, (ii)
identify the Original Notes to be withdrawn (including the serial number or
numbers and the principal amount of Original Notes to be withdrawn), (iii) be
signed by the Holder in the same manner as the original signature on the Letter
of Transmittal by which such Original Notes were tendered and (iv) specify the
name in which such Original Notes are to be registered, if different from that
of the withdrawing Holder. If Original Notes have been tendered pursuant to the
procedure for book-entry described above, any notice of withdrawal must specify,
in lieu of certificate numbers, the name and number of the account at DTC to be
credited with the withdrawn Original Notes and otherwise comply with the
procedures of such facility. Any questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties. Any
Original Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the Exchange Offer. Any Original Notes which have been
tendered for exchange but which are not exchanged for any reason will be
returned to the Holder thereof without cost to such Holder (or, in the case of
Original Notes tendered by book-entry transfer into the Exchange Agent's account
at DTC pursuant to the book-entry transfer procedures described above, such
Original Notes will be credited to an account maintained with DTC for the
Original Notes) as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Original Notes may be
retendered by following one of the procedures described in "Exchange Offer
- --Procedures for Tendering Original Notes" set forth in the Prospectus.
4. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND
ENDORSEMENTS; GUARANTEE OF Signatures. If this Letter of Transmittal (or
facsimile hereof) is signed by the Registered Holder(s) of the Original Notes
tendered hereby, the signature must correspond with the name(s) as written on
the face of the Original Notes without alteration, enlargement or any change
whatsoever.
If this Letter of Transmittal (or facsimile hereof) is signed by the
Registered Holder or Holders of Original Notes tendered and the certificate or
certificates for Exchange Notes issued in exchange therefor is to be issued (or
8
<PAGE> 9
any untendered principal amount of Original Notes is to be reissued) to the
Registered Holder, the said Holder need not and should not endorse any tendered
Original Notes, nor provide a separate bond power. In any other case, such
Holder must either properly endorse the Original Notes tendered or transmit a
properly completed separate bond power with this Letter of Transmittal, with the
signatures on the endorsement or bond power guaranteed by an Eligible
Institution (as hereinafter defined).
If the Letter of Transmittal is signed by a person or persons other
than the Registered Holder or Holders of Original Notes, such Original Notes
must be endorsed or accompanied by a properly completed bond power, in either
case signed exactly as the names of the Registered Holder or Holders that appear
on the original Notes with the signature thereon guaranteed by an Eligible
Institution.
If the Letter of Transmittal or any Original Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing and, unless waived by the
Company, proper evidence satisfactory to the Company of their authority to so
act must be submitted with the Letter of Transmittal.
Endorsements on Original Notes or signatures on bond powers required by
this Instruction 4 must be guaranteed by an Eligible Institution (as hereinafter
defined).
Except as otherwise provided below, signatures on this Letter of
Transmittal must be guaranteed unless the Original Notes surrendered for
exchange pursuant thereto are tendered (i) by a Registered Holder of the
Original Notes who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution (as defined below). In the event
that signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guarantees must be by a firm
(an "Eligible Institution") that is a member of a recognized signature guarantee
medallion program (an "Eligible Program") within the meaning of Rule 17Ad-15
under the Exchange Act. If the Exchange Notes and/or Original Notes not
exchanged are to be delivered to an address other than that of the Registered
Holder appearing on the note register for the Original Notes, the signature on
the Letter of Transmittal must be guaranteed by an Eligible Institution. If the
Original Notes are registered in the name of a person other than the person
signing the Letter of Transmittal, the Original Notes surrendered for exchange
must be endorsed by, or accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by the Company in its
sole discretion, duly executed by the registered Holder with the signature
thereon guaranteed by an Eligible Institution.
5. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering Holders should
indicate, in the applicable box or boxes, the name and address to which Exchange
Notes or substitute Original Notes for principal amounts not tendered or not
accepted for exchange are to be issued or sent, if different from the name and
address of the person signing this Letter of Transmittal. In the case of
issuance in a different owner, the taxpayer identification or social security
number of the person named must also be indicated.
6. TAX IDENTIFICATION NUMBER. Federal income tax law requires that a
holder whose tendered Original Notes are accepted for exchange must provide the
Exchange Agent (as payer) with his or her correct taxpayer identification number
("TIN"), which, in the case of a holder who is an individual, is his or her
social security number. If the Exchange Agent is not provided with the correct
TIN, the holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, delivery to the holder of the Exchange Notes pursuant to
the Exchange Offer may be subject to back-up withholding (If withholding results
in overpayment of taxes, a refund may be obtained.). Exempt holders (including,
among others, all corporations and certain foreign individuals) are not subject
to these back-up withholding and reporting requirements. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
Under Federal income tax laws, payments that may be made by the Company
on account of Exchange Notes issued pursuant to the Exchange Offer may be
subject to back-up withholding at a rate of 31%. In order to prevent back-up
withholding, each tendering holder must provide his or her correct TIN by
completing the "Substitute Form W- 9" referred to above, certifying that the TIN
provided is correct (or that the holder is awaiting a TIN) and that: (i) the
holder has not been notified by the Internal Revenue Service that he or she is
subject to back-up withholding as a result of failure to report all interest or
dividends; or (ii) the Internal Revenue Service has notified the holder that he
or she is no longer subject to back-up withholding; or (iii) certify in
accordance with the Guidelines that such holder is exempt from back-up
withholding. If the Original Notes are in more than one name or are not in the
name of the actual owner, consult the enclosed Guidelines for information on
which TIN to report.
9
<PAGE> 10
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Original Notes pursuant to the Exchange Offer. If,
however, certificates representing Exchange Notes or Original Notes for
principal amounts not tendered or accepted for exchange are to be delivered to,
or are to be registered or issued in the name of, any person other than the
registered holder of the Original Notes tendered, or if tendered Original Notes
are registered in the name of any person other than the person signing this
Letter of Transmittal, or if a transfer tax is imposed for any reason other than
the exchange of Original Notes pursuant to the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or on any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with this
Letter of Transmittal, or in the Agent's Message in lieu thereof, the amount of
such transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Original Notes listed in this Letter of
Transmittal.
8. WAIVER OF CONDITIONS. The Company reserves the absolute right to
amend, waive or modify specified conditions in the Exchange Offer in the case of
any Original Notes tendered.
9. MUTILATED, LOST, STOLEN OR DESTROYED ORIGINAL NOTES. Any tendering
Holder whose Original Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated herein for further
instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance and requests for additional copies of the Prospectus or
this Letter of Transmittal may be directed to the Exchange Agent at the address
specified in the Prospectus. Holders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Exchange Offer.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF, IF APPLICABLE)
TOGETHER WITH CERTIFICATES FOR ALL PHYSICALLY TENDERED ORIGINAL NOTES, OR A BOOK
ENTRY CONFIRMATION, OR THE NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED
DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION
DATE.
10
<PAGE> 11
IMPORTANT TAX INFORMATION
Under current federal income tax law, a Holder whose tendered Original
Notes are accepted for exchange is required to provide the Company (as payer),
through the Exchange Agent, with such Holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 or otherwise establish a basis for
exemption from backup withholding. If such Holder is an individual, the TIN is
such Holder's social security number. If the Exchange Agent is not provided with
the correct taxpayer identification number, the Holder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, delivery to such
Holder of the Exchange Notes may be subject to backup withholding.
Certain Holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on Substitute
Form W-9. A foreign individual may qualify as an exempt recipient by submitting
to the Exchange Agent a properly completed Internal Revenue Service Form W-8
(which the Exchange Agent will provide upon request) signed under penalty of
perjury, attesting to the Holder's exempt status. See the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Company is required to withhold 31%
of any payment made to the Holder or other payee. Backup withholding is not an
additional Federal income tax. Rather, the Federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a Holder
with respect to Original Notes exchanged in the Exchange Offer, the Holder is
required to provide the Exchange Agent with either: (i) the Holder's correct TIN
by completing the form below, certifying that the TIN provided on Substitute
Form W-9 is correct (or that such Holder is awaiting a TIN) and that (A) the
Holder has not been notified by the Internal Revenue Service that he or she is
subject to backup withholding as a result of failure to report all interest or
dividends or (B) the Internal Revenue Service has notified the Holder that he or
she is no longer subject to backup withholding; or (ii) an adequate basis for
exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the record owner of the
Original Notes. If the Original Notes are held in more than one name or are not
held in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
11
<PAGE> 12
<TABLE>
PAYER'S NAME:
<S> <C>
SUBSTITUTE PART 1 - PLEASE PROVIDE -----------------------------------------------------
YOUR TIN IN THE BOX AT Social Security Number
FORM W-9 RIGHT AND CERTIFY BY OR
SIGNING AND DATING BELOW
-----------------------------------------------------
Employer Identification Number
-----------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 2 - Certification -- Under Penalties of Perjury, PART 3 -
INTERNAL REVENUE SERVICE I certify that:
(1) The number shown on this form is my correct Awaiting TIN [ ]
Taxpayer Identification Number (or I am waiting
for a number to be issued to me) and
PAYOR'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN) (2) I am not subject to backup withholding either
because I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to
report all interest or dividends, or the IRS has
notified me that I am no longer subject to
backup withholding.
--------------------------------------------------------------------------
</TABLE>
Certificate instruction - You must cross out item (2) in Part 2 above if you
have been notified by the IRS that you are subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS stating that you are no longer
subject to backup withholding, do not cross out times (2).
SIGNATURE DATE
----------------------------------- -------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number within (60) days, 31% of all reportable
payments made to me thereafter will be withheld until I provide a number.
Signature Date
---------------------------------------------- ----------------
12
