ORBITAL IMAGING CORP, S-1/A, 1999-02-25

ORBITAL IMAGING CORP
S-1/A, 1999-02-25
COMMUNICATIONS SERVICES, NEC

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 24, 1999

REGISTRATION NO. 333-67697

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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ORBITAL IMAGING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 4899 54-1660268
(STATE OR OTHER JURISDICTION OF (PRIMARY INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

<TABLE>
<S> <C>
21700 ATLANTIC BOULEVARD SUSAN HERLICK, ESQ.
DULLES, VIRGINIA 20166 21700 ATLANTIC BOULEVARD
(703) 406-5000 DULLES, VIRGINIA 20166
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (703) 406-5000
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
OFFICES) INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>

WITH A COPY TO:

MICHAEL A. BELL, ESQ.

LATHAM & WATKINS
1001 PENNSYLVANIA AVENUE, N.W., SUITE 1300
WASHINGTON, D.C. 20004-2505
(202) 637-2200

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:

From time to time after this Registration Statement becomes effective.

---------------------------

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]

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 WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.

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<PAGE> 2

SUBJECT TO COMPLETION, DATED FEBRUARY 24, 1999

PROSPECTUS

ORBITAL LOGO

ORBITAL IMAGING CORPORATION

150,000 WARRANTS TO PURCHASE COMMON STOCK

AND

1,312,746 SHARES OF COMMON STOCK

This Prospectus relates to (i) the offering for resale from time to time by
certain selling security holders named herein or in supplements hereto (the
"selling holders") of an aggregate of 150,000 warrants (the "warrants") to
purchase an aggregate of 1,312,746 shares (the "warrant shares") of common
stock, par value $.01 per share (the "common stock"), of Orbital Imaging
Corporation, (ii) the offer for resale from time to time of the warrant shares
and (iii) the offer and sale by the Company of the warrant shares upon exercise
of the warrants.

The warrant shares being offered by the Company and the selling holders are
issuable upon the exercise of the warrants, which were sold in connection with
the offering (the "Unit Offering") of units (the "units"), consisting of
$150,000,000 aggregate principal amount of 11 5/8% Senior Notes due 2005 (the
"Notes") of the Company and 150,000 warrants. The units were issued and sold on
February 25, 1998 in a transaction exempt from registration requirements of the
Securities Act of 1933, as amended to qualified institutional buyers in reliance
on Rule 144A under the Securities Act.

The warrants will become exercisable on February 25, 1999. Unless
exercised, the warrants will automatically expire on March 1, 2005. We will
receive the proceeds of any exercise of the warrants. Each warrant, when
exercised, will entitle the holder to receive 8.75164 shares of common stock at
an exercise price of $.01 per share.

The selling holders will receive all of the proceeds from the sale of the
warrants. The selling holders, directly through agents, dealers or underwriters
to be designated from time to time, may sell the warrants and warrant shares
from time to time in the over the counter market, on a securities exchange on
which the warrants or the common stock are then listed, in negotiated
transactions or otherwise, at prices and on terms to be determined at the time
of sale.

We are filing a registration statement of which this Prospectus forms a
part to fulfill in part our obligations under the warrant agreement, dated
February 25, 1998 (the "Warrant Agreement") between ORBIMAGE and Marine Midland
Bank, as warrant agent (the "Warrant Agent"), and the warrant registration
rights agreement, dated as of February 25, 1998, by and between ORBIMAGE and the
initial purchasers of the units (the "Warrant Registration Rights Agreement").

------------------------

See "Risk Factors" beginning on page 9 for a discussion of certain factors
that should be considered by prospective purchasers of the warrants and warrant
shares.

Neither the Securities and Exchange Commission nor any state securities
commission has approved these warrants or warrant shares or determined that this
Prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.

------------------------

The date of this Prospectus is February , 1999

<PAGE> 3

ABOUT THIS PROSPECTUS

This Prospectus is part of a registration statement that Orbital Imaging
Corporation filed with the Securities and Exchange Commission (the "SEC" or the
"Commission"). After we complete the registration process, we will issue the
warrant shares from time to time as holders of the 150,000 outstanding warrants
exercise those warrants. After registration, holders of warrants and warrant
shares will be able to trade these securities privately or using the
over-the-counter market. We will not receive any proceeds when holders of
warrants or warrant shares sell these securities. But if any warrants are
exercised, we will receive the exercise price for the warrant shares. Each time
we issue common stock offered under this registration statement, we will provide
you with a prospectus supplement that will explain the terms of that particular
offering. Therefore, before exercising warrants, read this Prospectus and the
applicable supplement carefully.

WHERE TO FIND MORE INFORMATION

We file annual, quarterly and special reports with the SEC. The annual
reports contain financial information that has been audited and reported on,
with an opinion expressed by an independent auditor. These filings are available
on the SEC's website: http://www.sec.gov. Hard copies are available at the SEC's
public reference facilities at the following addresses:

- 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549;

- Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois,
60661; and

- 7 World Trade Center, 13th Floor, New York, New York, 10007.

Call the SEC at 1-800-SEC-0330 with questions about its public reference
facilities. To contact us, use the following information:

21700 Atlantic Boulevard
Dulles, Virginia 20166
(703) 406-5000
http://www.orbimage.com

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<PAGE> 4

NOTE REGARDING "FORWARD-LOOKING STATEMENTS"

The statements in this Prospectus that are not historical facts are called
"forward-looking statements." They can be identified by words such as
"estimates," "projects," "anticipates," "expects," "intends," "plans,"
"believes," or their negatives or other comparable words. Also look for
discussions of strategy that involve risks and uncertainties. Management wishes
to caution the reader that these forward-looking statements are only estimates
or predictions, such as statements regarding:

- market opportunity in our target markets;

- development of our businesses;

- estimates of market size and addressable markets for our products;

- cash projected to be used in operations;

- anticipated capital expenditures to design, construct and launch the
OrbView-3 and OrbView-4 satellites; and

- expected launch and satellite operational dates.

We can provide no assurance that we will achieve anticipated results.
Actual events or results may differ materially due to risks facing us or due to
actual facts differing from the assumptions underlying our predictions. Some of
these risks and assumptions include:

- risks associated with schedule delays in constructing and launching, and
the successful placement into service, of the OrbView-3, OrbView-4 and
RadarSat-2 satellites;

- our ability to market successfully our imagery products and services to
current and new customers;

- our ability to generate customer demand for our imagery products and
services in our target markets at reasonable cost and on satisfactory
terms and conditions; and

- regulatory, legislative and judicial developments that could cause actual
results to vary materially from anticipated results.

We admonish the reader that these cautionary remarks expressly qualify in
their entirety all forward-looking statements that are attributable to us or
persons acting on our behalf.

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<PAGE> 5

PROSPECTUS SUMMARY

This summary may not contain all the information that may be important to
you. You should read the entire Prospectus, including the "Risk Factors," and
the financial data and related notes, before making an investment decision. The
terms "ORBIMAGE," "Company," "we, " "our," "ours," and "us" refer to the Orbital
Imaging Division of Orbital Sciences Corporation before May 8, 1997, and to
Orbital Imaging Corporation after that date. The term "Orbital" refers to
Orbital Sciences Corporation (our majority stockholder) and its subsidiaries,
including its wholly owned Canadian subsidiary MacDonald, Dettwiler and
Associates, Ltd. ("MDA").

THE COMPANY

ORBIMAGE is a leading provider of global space-based imagery, and expects
to provide its customers with the most comprehensive offering available of
high-resolution imagery, imagery-derived products and image processing services
at competitive prices. We are developing and currently operate a fleet of
satellites that collect, process and distribute digital imagery of the Earth's
surface (land and oceans), the atmosphere and weather conditions. Our imagery
products and services are designed to provide our customers with direct access
to timely and competitively priced information concerning, among other things,
locations and movements of military assets, urban growth, forestry and crop
health, land and ocean-based natural resources and weather patterns and wind
conditions. In April 1998, we acquired an image processing company that
complements our core imagery business by providing sophisticated image
processing software, engineering analysis and in-house digital imaging
production capabilities.

Our two operating satellites, OrbView-1 and OrbView-2 (the latter of which
we operate under a licensing arrangement with Orbital), provide imagery to
various scientific, government and commercial customers, including NASA, the
U.S. National Imagery and Mapping Agency ("NIMA") and commercial fishing
companies. We expect to place two additional satellites, OrbView-3 and
OrbView-4, into operation during the fourth quarter of 1999 and the third
quarter of 2000, respectively. OrbView-3 and OrbView-4 will provide
high-resolution imagery based on advanced optical technology.

As of December 31, 1998, we acquired the exclusive worldwide rights to
distribute and sell imagery from RadarSat-2, a high-resolution "next-generation"
commercial radar imaging satellite that we expect to be operational in 2002.
Unlike optical imaging technology, radar technology permits imagery to be
collected in all weather conditions and at night. RadarSat-2 will have unique
multipolarization capabilities that enable it to image vertical as well as
horizontal features over land or water. This unique technology can be used to
detect certain features on the Earth's surface, such as ice flows, oil seepage
and metallic objects, more effectively than conventional optical imaging
systems.

In addition, we are purchasing aerial-based imagery products to supplement
and expand our existing digital catalogue of OrbView-2 global-color satellite
imagery.

We believe that:

- OrbView-2 is the only satellite providing daily color images of the
entire Earth's surface;

- OrbView-3 and OrbView-4 will be among the first commercial satellites
with high-resolution optical imaging capability;

- OrbView-4 will be the first commercial satellite with hyperspectral
imaging capability; and

- RadarSat-2 will be the first commercial satellite with high-resolution
radar imaging capability.

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The table below shows the imaging capability and current status of each of
the satellites:

<TABLE>
<CAPTION>
SATELLITE IMAGING CAPABILITY STATUS
--------- ------------------ ------
<S> <C> <C>
OrbView-1 Low-resolution, black and white Launched in April 1995 and
(panchromatic) meteorological data currently operational
OrbView-2 Medium-resolution, color and Launched in August 1997 and
infrared (multispectral) optical currently operational
imagery
OrbView-3 High-resolution, panchromatic and Under construction and scheduled
multispectral optical imagery to be operational in the fourth
quarter of 1999
OrbView-4 High-resolution, panchromatic and Under construction and scheduled
enhanced color and infrared to be operational in the third
(hyperspectral) optical imagery quarter of 2000
RadarSat-2 High-resolution, multipolarized Under design and scheduled to be
radar imagery operational in 2002
</TABLE>

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. The U.S. government has estimated that the worldwide
market for remote imagery products and services addressable by commercial
imagery providers (excluding satellite and ground hardware sales) will be
approximately $2 billion by the year 2000. We believe that this market will grow
as the commercial availability of low-cost, high quality satellite imagery
stimulates the demand for these products and services and encourages the
development of new satellite-imaging technologies and applications.

MARKETING STRATEGY

We have been successful in penetrating the remote imaging market by
entering into pre-launch contracts. We expect to increase our market penetration
by entering into additional pre-launch contracts, directly targeting large
customers, developing a network of international distributors and entering into
strategic relationships with value-added resellers.

Pre-launch contracts. Approximately $214 million of advance payments have
been provided from pre-launch contracts (directly with our customers or between
Orbital and third parties) that will fund capital expenditures. These contracts
provide funding for approximately 40% of the total capital expenditures required
for the deployment of our satellite systems and our acquisition of imagery
distribution licenses. These contracts include the following:

- OrbView-1 was partially paid for under an $8 million pre-launch contract
with NASA, $5 million of which was funded prior to launch;

- OrbView-2 was partially paid for under a $43 million pre-launch contract
between Orbital and NASA, $38 million of which was funded prior to
launch;

- OrbView-4's hyperspectral modifications will be partially paid for under
a $33 million contract between Orbital and the U.S. Air Force, $31
million of which will be funded prior to launch. The contract includes an
option for additional post-launch imagery purchases up to $8 million; and

- RadarSat-2 will be partially paid for under a $140 million contract
between Orbital and the Canadian Space Agency ("CSA"), all of which will
be funded prior to launch.

Direct customer sales. In October 1998, we entered into a contract with
NIMA under which the U.S. government authorized the purchase of up to $100
million of OrbView-2, OrbView-3 and OrbView-4 imagery and systems upgrades.
Under this contract, NIMA has committed to purchase $3 million of imagery,
services and compatibility upgrades to ORBIMAGE's ground systems.

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<PAGE> 7

International distributors. Internationally, we are developing
relationships with a network of commercial distributors while also dealing
directly with potential foreign national security government customers. ORBIMAGE
has entered into a $15 million contract with Samsung Aerospace Industries, Ltd.
for the distribution of OrbView-3 and OrbView-4 imagery in South Korea. We are
negotiating several exclusive commercial regional distributorships for Europe,
the Middle East, Central America and Asia, while pursuing other opportunities
with regional distributors in Australia and South Africa. We are also in
discussions with several foreign governments regarding access to our real-time
high-resolution imagery exclusively for national security applications.

Value-added resellers. We are also focusing on the development of various
value-added applications for imagery products. Using OrbView-2 imagery, we
provide our proprietary fish-finding maps to approximately 110 commercial
fishing vessels. We are purchasing aerial imagery of major metropolitan areas in
the United States to supplement and develop a digital catalogue of up-to-date
mapping products that we expect to offer for sale to individual consumers and
local governments later this year. We have also entered into agreements with
several value-added resellers ("VARs") who already have established expertise in
the production of aerial and satellite imagery-based value-added products in
specific industries such as utility monitoring, oil and gas exploration,
agriculture forecasting and national security. We are working with these
value-added resellers to exploit existing applications and develop new products
that will incorporate OrbView-3, OrbView-4 and RadarSat-2 high-resolution data.

BUSINESS STRATEGY

The key elements of our business strategy include:

Providing the most comprehensive offering of high-resolution satellite
imagery at competitive prices. Building on the wide range of imagery that will
be available from our fleet of OrbView satellites and RadarSat-2, we expect to
offer the most comprehensive selection of commercially available satellite
imagery products and services. The cost we expect to incur in the deployment and
operation of our satellite systems is less than the announced costs of our
competitors' high-resolution systems. We expect that our cost structure will
provide us with flexibility to competitively price our imagery products and
services.

Penetrating existing markets and creating new markets. There is currently a
large existing market for imagery products and services (which include new
construction site selection, oil, gas, and mineral exploration, scientific and
environmental monitoring and U.S. national security applications). We believe we
can gain market share rapidly in this existing market because of the breadth and
expected pricing of our product and service offerings. Additionally, we believe
that these markets will expand and further develop as commercial high-resolution
imagery becomes available. Furthermore, we believe we can develop new commercial
applications for satellite-based imagery, including real estate assessment,
travel planning and entertainment applications.

Achieving global distribution of products and services on a timely basis.
We plan to expand our global market coverage by providing imagery to end users
both directly and through VARs and other third party distribution channels. We
intend to focus our direct distribution efforts on larger customers in the
commercial, consumer, scientific, environmental and U.S. and foreign national
security markets. We expect that value-added resellers will perform
application-specific processing of our imagery for various commercial markets.
Internationally, we intend to market primarily through regional partners who
have existing marketing and distribution infrastructures. We expect these
distributors to purchase or upgrade and operate the ground imagery receiving and
processing stations in their territories which will permit them to receive,
process and distribute imagery on a timely basis.

Expanding the "orbimage.com" digital catalogue. We have developed a digital
catalogue located at our orbimage.com website address to collect, store, and
distribute imagery collected from our satellites as well as from other aerial
sources. The digital catalogue currently includes OrbView-2 imagery products and
will ultimately be a full-service on-line digital catalogue of OrbView
high-resolution imagery products. We are currently expanding our database of
digital imagery with aerial imagery products that we expect to
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have available later this year. We can deliver imagery from our digital
catalogue to customers over the Internet or on CD for a per-image fee.

Leveraging the expertise of Orbital. Orbital, our majority stockholder, is
a space technology and satellite services company with extensive experience
designing and constructing remote imaging satellites and ground systems. We have
used and will continue to use Orbital's integrated space capabilities,
infrastructure and experience to develop our business cost effectively.

TARGET MARKETS

We are focused on three primary market segments where we believe that a
significant demand for our imagery exists or will develop. These market segments
are:

U.S. and foreign national security. Commercial satellite imagery can
supplement existing dedicated U.S. government surveillance 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. We believe that potential budget cutbacks in the U.S. Department of
Defense ("DoD") and the U.S. National Reconnaissance Office ("NRO"), combined
with changes in military strategies (e.g. fewer military assets dispersed over a
wider geographic area), could further increase the government's need for
commercially available high-resolution imagery. In addition, many foreign
countries have a strong national security interest in obtaining real-time
high-resolution imagery. This type of imagery generally has not been available
to governments other than those of the United States and the former Soviet
Union. National security customers use imagery to:

- generate up-to-date, wide area maps;

- gather specific military intelligence;

- identify and target enemy forces and assets; and

- plan missions, deploy resources and assess battle damage.

Commercial/consumer. We believe that the near-term commercial/consumer
market segment will include domestic and foreign companies and local government
entities that currently use aerial photographs and medium-resolution satellite
imagery products. As high-resolution satellite imagery becomes available
commercially, we expect new consumer markets to emerge involving real estate
assessment, travel planning, education, and entertainment applications. Current
applications in this market include:

- standardized map-making;

- maintenance of computer-based geographic information systems;

- agriculture and forestry management;

- commercial fishing;

- natural resource exploration and extraction; and

- utility and telecommunications planning and monitoring.

Scientific/environmental. The scientific/environmental market comprises
government and commercial entities that use satellite imagery to monitor the
environment, climate and weather. Optical and radar imagery products have a
variety of scientific and environmental applications, including:

- natural disaster and severe storm damage assessment;

- monitoring and analyzing global climate changes; and

- environmental impact assessment and pollution detection.

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<PAGE> 9

RISK MITIGATION

ORBIMAGE has adopted a comprehensive strategy designed to mitigate the
financial, business, and technical risks associated with developing new and
existing markets and constructing, launching and operating its satellites.

Financial. Approximately $214 million of advance payments have been
provided from pre-launch contracts (directly with our customers or between
Orbital and third parties) that will fund capital expenditures. These contracts
provide funding for approximately 40% of the total capital expenditures required
for the deployment of our satellite systems and our acquisition of imagery
distribution licenses. By negotiating pre-launch contracts with customers we
have reduced, and seek to continue to reduce, the financial risks associated
with constructing and operating our satellites and ground systems. We have
further limited the financial risks associated with our satellites by entering
into fixed-price contracts with Orbital to build and launch the satellites, to
acquire exclusive worldwide distribution rights for radar imagery from
RadarSat-2 and to construct the related ground systems. In addition, we have
insured the OrbView-2 satellite against on-orbit failures and we intend to
procure insurance to cover certain losses in the event of an OrbView-3,
OrbView-4 or RadarSat-2 launch or satellite failure.

Market development. In addition to the pre-launch contracts described
above, we are actively marketing our image processing capabilities while seeking
to finalize pre-launch distribution agreements for OrbView-3 and OrbView-4
high-resolution imagery. We have a $15 million contract with Samsung for the
distribution of OrbView-3 and OrbView-4 imagery in South Korea. The U.S.
government has also demonstrated its commitment to procure imagery from
commercial sources by authorizing NIMA to enter into a contract with us for the
purchase of up to $100 million of OrbView-2, OrbView-3 and OrbView-4 imagery and
systems upgrades. Under this contract, NIMA has committed to purchase $3 million
of imagery, services and compatibility upgrades to ORBIMAGE's ground systems. To
further facilitate market penetration, we have developed our own value-added
products using OrbView-2 imagery and are working with a number of VARs in
various industries that use satellite or aerial imagery for commercial
applications.

Technical. U.S. government surveillance and various other space programs
have already successfully deployed many of the imaging technology and the
sub-system components that Orbital will use in OrbView-3, OrbView-4 and
RadarSat-2. These satellites incorporate system redundancies for certain
critical components. As a result of OrbView-3 and OrbView-4 having similar
performance parameters they can provide back-up for each other.

RELATIONSHIP WITH ORBITAL

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 with a
heritage of designing and building satellites and providing launch services for
various satellites operating today, including OrbView-1 and OrbView-2. Orbital's
revenues for 1998 were approximately $734 million. To date, Orbital has
contributed approximately $91.5 million in capital to ORBIMAGE, and owns
approximately 55% of the outstanding voting stock of ORBIMAGE on a fully diluted
basis. We have entered into various agreements with Orbital that require us to
pay Orbital a fixed price of approximately $340 million, net of $140 million and
$31 million which will be funded by CSA and the U.S. Air Force, respectively,
through contracts with Orbital. We have paid approximately $224 million to
Orbital through December 31, 1998. Under these agreements, Orbital has:

- designed, developed, and launched OrbView-1;

- provided the exclusive worldwide license to promote, market, sell and use
OrbView-2 imagery (the "OrbView-2 License") from the OrbView-2 satellite
that was built and launched by Orbital;

- provided the U.S. ground system for OrbView-1 and OrbView-2; and

- designed and begun construction of OrbView-3 and OrbView-4.

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<PAGE> 10

In addition, under these agreements Orbital is:

- finishing constructing and will test and launch OrbView-3 and OrbView-4;

- providing the U.S. ground system for OrbView-3 and OrbView-4; and

- providing the exclusive worldwide license to promote, market, sell and
use RadarSat-2 imagery (the "RadarSat-2 License") from the RadarSat-2
satellite that will be built by Orbital.

RECENT DEVELOPMENTS

As of December 31, 1998, ORBIMAGE acquired from Orbital the RadarSat-2
License, which, for a period of ten years, provides ORBIMAGE with the exclusive
worldwide rights to promote, market, sell and use RadarSat-2 imagery. ORBIMAGE's
acquisition of the RadarSat-2 License will cost approximately $60 million, net
of approximately $140 million which will be funded by CSA through a contract
with Orbital. Under an agreement with Orbital and MDA, ORBIMAGE has appointed
MDA as its exclusive worldwide distributor of RadarSat-2 imagery. Under a
contract between CSA and MDA, (1) CSA will purchase from MDA approximately $140
million of RadarSat-2 imagery for various Canadian government uses, (2) Orbital,
through MDA, will construct the RadarSat-2 satellite and related ground system,
and (3) MDA will own and operate the RadarSat-2 system. See "Certain
Relationships and Related Transactions -- RadarSat-2 License Agreement."

RadarSat-2 is a follow-on to RadarSat-1, CSA's medium-resolution radar
imaging satellite that was launched in 1995 and is expected to be operational
through 2002, based on its seven year design life. RadarSat-2 is expected to be
operational in 2002 at which time it is expected to be the world's first
satellite with commercially available high-resolution radar imagery. We believe
that the commercial introduction of high-resolution radar imagery will help to
expand the market for imagery products and services.

Our executive offices are located at 21700 Atlantic Boulevard, Dulles,
Virginia 20166 and our telephone number is 703-406-5000. You can also reach us
at our website address which is http://www.orbimage.com. Be advised, however,
that this Prospectus does not incorporate by reference any information contained
in our website.

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THE OFFERING

ISSUER..................... Orbital Imaging Corporation.

SECURITIES OFFERED......... 1,312,746 shares of common stock issuable upon the
exercise of 150,000 outstanding warrants.

TOTAL NUMBER OF WARRANTS... 150,000 warrants originally issued in a units
offering where each unit consisted of one warrant
and $1,000 principal amount of notes.

EXERCISE................... The exercise price is $0.01 per share. Each warrant
entitles the holder to buy 8.75164 shares of common
stock. The warrants are exercisable at any time on
or after February 25, 1999.

EXPIRATION DATE............ The warrants expire on March 1, 2005.

NO RIGHTS AS A
STOCKHOLDER................ Warrant holders are not entitled to any rights as
shareholders of the Company, including voting
rights.

NO FRACTIONAL SHARES....... We will not issue fractional shares on exercise of
the warrants. Instead, we will pay to the eligible
holder cash equal to the current market price per
warrant share multiplied by the applicable
fraction.

REGISTRATION OF WARRANTS
AND WARRANT SHARES......... The registration statement, of which this
Prospectus is a part, satisfies the rights of the
warrant holders under a registration rights
agreement which rights terminate when this process
is completed.

USE OF PROCEEDS............ We will not receive any proceeds from either the
sale of the warrants or the sale of the warrant
shares by selling holders. Proceeds, if any,
received by us from the exercise of the warrants
will be used for working capital and for general
corporate purposes.

WARRANT AGENT.............. Marine Midland Bank.

WARRANTS OUTSTANDING....... As of the date of this Prospectus, 150,000 warrants
are outstanding.

COMMON STOCK OUTSTANDING... As of the date of this Prospectus, 25,214,000
shares of common stock are outstanding. This does
not include (i) 1,312,746 shares issuable on
exercise of the warrants, (ii) 4,800,000 shares
issuable under the Company's stock option plan, of
which 2,636,500 are subject to options granted to
executive officers, directors and employees of the
Company and its affiliates and (iii) 16,488,633
shares issuable on exercise of the Series A
preferred stock conversion rights.

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SUMMARY FINANCIAL DATA

<TABLE>
<CAPTION>
DECEMBER 31, 1998
-----------------
(IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and available-for-sale securities.... $ 59,483
Pledged securities.......................................... 24,537
Total assets................................................ 307,969
Long-term obligations (3)................................... 141,728
Total stockholders' equity.................................. 113,372
</TABLE>

- ---------------
(1) All potentially dilutive securities, such as convertible preferred stock,
warrants and stock options are antidilutive for each year presented. Prior
to May 8, 1997, we were an operating division of Orbital, and the loss per
common share for the years ended December 31, 1994, 1995 and 1996 were not
considered meaningful.

(2) EBITDA consists of earnings (losses) before interest, income taxes,
depreciation, amortization and other non-cash charges. EBITDA data is
presented because such data is used by certain investors to determine our
ability to incur debt and to meet our debt service requirements. We consider
EBITDA to be a useful measure of our operating performance, because EBITDA
can be used to measure our ability to service debt, fund capital
expenditures and expand our business. However, such information should not
be considered as an alternative to net income, operating profit, cash flows
from operations or any other operating or liquidity performance measure
prescribed by generally accepted accounting principles. EBITDA does not
represent funds available for management's discretionary use. EBITDA is not
a measure supported by generally accepted accounting principles and may be
calculated differently by other companies. EBITDA as defined in this
Prospectus may not conform to the definition of Consolidated Cash Flow as
defined in the indenture governing the Notes (the "Indenture").

(3) Net of unamortized debt discount, estimated to be $8.4 million.

8
<PAGE> 13

RISK FACTORS

ORBIMAGE, like other companies in the remote imaging industry, faces risks
from several different sources. These risk factors may negatively impact the
price of the common stock. Therefore, in addition to the other information
contained in this Prospectus, investors should carefully consider the following
matters when making investments in the warrants and warrant shares.

SUBSTANTIAL LEVERAGE -- THE SIGNIFICANT AMOUNT OF OUR INDEBTEDNESS COULD
ADVERSELY AFFECT OUR FINANCIAL HEALTH.

We currently have a significant amount of indebtedness and, therefore, are
highly leveraged. Our substantial leverage could have important consequences to
you. For example, it could:

- increase our vulnerability to general adverse economic and industry
conditions;

- limit our ability to fund future working capital, capital expenditures,
acquisitions and other general corporate requirements; or

- require us to dedicate a substantial portion of our cash flow from
operations to repaying indebtedness, thereby reducing the availability of
our cash flow to fund working capital, capital expenditures, acquisitions
and other general corporate purposes;

- limit our flexibility in planning for, or reacting to, changes in our
business and the remote imaging industry; and

- limit our ability to borrow additional funds.

We may incur additional indebtedness in the future in one or more fixed
asset financings or under other facilities, to the extent that the Indenture
permits us to do so. Any additional borrowings would further increase the amount
of our leverage and the associated risks.

RESTRICTIVE COVENANTS

The Indenture contains restrictive covenants. These covenants limit our
ability to:

- borrow money

- pay dividends on stock or purchase stock

- make investments

- transact business with our affiliates

- create liens on our assets

- issue or sell capital stock of our subsidiaries

- make certain restricted payments

- merge, consolidate or transfer all or substantially all of our assets

Our failure to comply with these covenants could result in an event of
default under the Indenture which, if not cured or waived, would have a material
adverse effect on our business.

ABILITY TO SERVICE INDEBTEDNESS -- WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH
TO SERVICE OUR INDEBTEDNESS. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY
FACTORS BEYOND OUR CONTROL.

Our ability to make payments on our indebtedness and to fund planned
capital expenditures, development and initial operating costs will depend on our
ability to generate cash in the future through sales of our imagery products and
services. Our ability to generate cash is dependent on the successful deployment
of our high-resolution satellites and implementation of our marketing and
distribution strategy

9
<PAGE> 14

and, to a certain extent, general economic, financial, competitive, legislative,
regulatory and other factors beyond our control.

We may need to refinance all or a portion of our indebtedness on or before
maturity, but we may not be able to do so on commercially reasonable terms, or
at all. Without sufficient funds to service our indebtedness, we would have
serious liquidity constraints and would need to seek additional financing from
other sources, but we may not be able to do so on commercially reasonable terms,
if at all.

LIMITED HISTORY OF OPERATIONS AND NET LOSSES -- GIVEN OUR LIMITED OPERATING
HISTORY AND NET LOSSES, THE WARRANTS ARE A HIGHLY SPECULATIVE INVESTMENT.

Limited operating and financial data. We did not begin commercial service
until 1995, when we launched OrbView-1. We have a history of net losses from
operations and have generated only limited revenues from the operations of
OrbView-1 and OrbView-2 and our image processing business. Accordingly, you have
limited operating and financial data on which to evaluate our performance when
deciding whether to invest in the warrants.

Our business plan depends upon:

- the timely construction and deployment of OrbView-3, OrbView-4 and
RadarSat-2 and development of the related ground infrastructure network;
and

- our ability to develop a customer base and distribution channels for our
products and services.

Given ORBIMAGE's limited operating history, and in light of the risks, expenses,
difficulties and delays encountered in a high technology, highly regulated
industry, we cannot assure you that OrbView-3, OrbView-4 or RadarSat-2 will be
constructed and deployed in accordance with our schedule or that we will be able
to develop a sufficiently large revenue-generating customer base to compete
successfully in the remote imaging industry.

Expectation of continued losses. Our business strategy requires
significant capital expenditures. We will incur a substantial portion of these
expenditures before we generate significant revenues. Combined with our
operating expenses, these capital expenditures will result in a negative cash
flow until we establish an adequate revenue-generating customer base. We had an
accumulated deficit of approximately $39 million through December 31, 1998. We
expect losses to continue through 2000, and we do not expect to generate net
positive cash flow from operations sufficient to fund both operations and
capital expenditures until both OrbView-3 and OrbView-4 are operational,
currently expected to be in the third quarter of 2000. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business." We cannot assure you that the OrbView satellites will become
operational on this timetable, or at all, or that we will achieve or sustain any
positive cash flow or profitability thereafter.

POTENTIAL ADDITIONAL CAPITAL REQUIREMENTS -- OUR INABILITY TO FUND POTENTIAL
ADDITIONAL CAPITAL REQUIREMENTS COULD DELAY SATELLITE CONSTRUCTION AND
DEPLOYMENT.

We currently expect that we will need approximately $79 million (net of
$140 million and $31 million which will be funded by CSA and the U.S. Air Force,
respectively, through contracts with Orbital) for capital expenditures,
development and initial operating costs through the third quarter of 2000. As of
December 31, 1998, we had cash and cash equivalents and unrestricted securities
in the aggregate amount of $59.5 million. We believe that cash on hand, expected
cash flows from operations and advance payments from customers will be
sufficient to fund our operations through the third quarter of 2000. We cannot
assure you that we will generate sufficient cash from operations to pay for our
anticipated capital expenditures, or that these expenditures will fall within
our estimates. If we do not generate sufficient cash flow by the third quarter
of 2000, or if our capital expenditures exceed our estimates, we would need
additional capital.

A significant portion of our capital requirements are related to
developing, constructing and launching the OrbView satellites, constructing and
activating the related U.S. ground systems and acquiring the

10
<PAGE> 15

RadarSat-2 License. While most of these costs are currently fixed under
agreements with Orbital, we cannot assure you that these costs will not increase
over time. For example, in December 1998 Orbital and ORBIMAGE agreed to amend
the procurement agreement to add performance incentives and to require a Taurus
launch vehicle for OrbView-4, increasing the value of the agreement by
approximately $17 million. In addition to these fixed cost agreements, we will
be furnished with certain items and services on a cost-plus or cost-reimbursable
basis, such as launch and in-orbit insurance and technological assistance for
OrbView-3, OrbView-4 and RadarSat-2. Many factors outside our control influence
the costs of these and other items and services, and we may need to raise more
capital if any of these costs increase materially.

We may also need to raise additional capital if, for example:

- significant delays occur in deploying OrbView-3, OrbView-4 or RadarSat-2
because of technical difficulties, launch or satellite failure or other
reasons;

- we do not enter into agreements with customers, value-added resellers or
distributors for high-resolution imagery in the time frames or on the
terms that we anticipate;

- our estimated net operating deficit increases because we incur
significant unanticipated expenses, such as costs for resolving satellite
operational difficulties;

- we incur additional costs from modifying all or part of OrbView-3 and
OrbView-4 or ground system designs to meet changed or unanticipated
market, regulatory or technical requirements;

- we decide to further expand our fleet of satellites or acquire additional
commercial distribution rights through licensing arrangements or
otherwise.

If these or other events occur, we cannot assure you that we could raise
additional capital on favorable terms, on a timely basis or at all. A
substantial shortfall in funding would delay or prevent deployment of one or
both of the high-resolution OrbView satellites and the RadarSat-2 satellite.

SCHEDULE DELAYS -- DELAYS IN THE COMMERCIAL OPERATION OF OUR SATELLITES COULD
ADVERSELY AFFECT OUR BUSINESS.

We could experience delays in the commercial operation of OrbView-3,
OrbView-4 and RadarSat-2 from a variety of causes, including:

- delays in designing, constructing, integrating or testing the satellites,
satellite components and related ground systems;

- delayed or unsuccessful launches;

- subcontractor or manufacturer delays;

- delays in receiving the licenses necessary to operate the satellite
systems;

- delays under our procurement agreement with Orbital, or delays under the
CSA Contract, including delays by CSA in procuring a launch vehicle on a
timely basis for RadarSat-2; or

- other events beyond our control.

The perceived and actual timing of satellite launches may affect
competition in the remote imaging industry. We 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 deployment
of OrbView-3, OrbView-4 or RadarSat-2 could increase pre-launch operating costs,
delay revenues and negatively affect our marketing efforts. Even the perception
of potential delays could affect our marketing efforts. We cannot assure you
that any of these satellites will be launched or deployed on a timely basis.

11
<PAGE> 16

LAUNCH FAILURES -- A LAUNCH VEHICLE FAILURE WOULD ADVERSELY AFFECT OUR ABILITY
TO DELIVER IMAGERY PRODUCTS AND SERVICES.

Satellite launches are subject to significant risks, including partial or
complete launch vehicle failure. Launch vehicle failure may cause disabling
damage to or loss of a satellite or may result in a failure to deliver the
satellite to its proper orbit. We have contracted with Orbital to launch
OrbView-3 on a Pegasus launch vehicle, which has flown 25 missions and has a
greater than 90% success rate. However, there are several additional Pegasus
launches planned before OrbView-3's scheduled launch, and the failure of any one
of those launch vehicles could result in delayed deployment of OrbView-3. The
Pegasus is launched from beneath Orbital's modified Lockheed L-1011 aircraft. If
Orbital's L-1011 aircraft is unavailable, we could experience significant
delays. Orbital would have to acquire and modify a new carrier aircraft or we
would have to arrange to deploy OrbView-3 using an alternative launch vehicle.
We cannot assure you that Orbital could obtain another aircraft and properly
modify the aircraft or that we could obtain alternate launch services on a
timely basis, if at all. We have contracted with Orbital to launch OrbView-4 on
its Taurus launch vehicle, which has flown three missions to date, all of which
were successful. Under the CSA Contract, CSA is responsible for financing a
launch vehicle for RadarSat-2, which has not yet been identified. We cannot
assure you that Orbital will successfully launch either OrbView-3, OrbView-4 or
RadarSat-2. A launch failure of OrbView-3, OrbView-4 or RadarSat-2 could
negatively affect our business, financial condition and results of operations,
our ability to deliver our products and services.

MARKET ACCEPTANCE -- WE CANNOT ASSURE YOU THAT THE MARKET WILL ACCEPT OUR
PRODUCTS AND SERVICES.

Our success depends on existing markets accepting our imagery products and
services and our ability to develop new markets. Our business plan is based on
the assumption that we will generate significant future revenues from sales of
high-resolution imagery produced by OrbView-3, OrbView-4 and RadarSat-2 to
existing markets and new markets. High-resolution satellite imagery is not yet
commercially available. Consequently, it is difficult to predict accurately the
ultimate size of the market and the market acceptance of products and services
based on this type of imagery.

Our strategy to target certain markets for our satellite imagery relies on
a number of assumptions, some or all of which may be incorrect. Our description
of potential markets for our products and services and estimates of the
addressable markets that we discuss in this Prospectus represent our view as of
the date of this Prospectus, and actual markets could vary materially from these
markets.

We cannot accurately predict whether our products and services will achieve
market acceptance or whether the market will demand our products and services on
terms we find acceptable. Market acceptance depends on a number of factors,
including the spatial and spectral quality, scope, timeliness, sophistication
and price of our imagery products and services and the availability of
substitute products and services. Lack of significant market acceptance of our
products and services, particularly our high-resolution imagery products and
services, delays in such acceptance, or failure of certain markets to develop
could negatively affect our business, financial condition and results of
operations.

TECHNOLOGICAL AND IMPLEMENTATION RISKS -- WE CANNOT ASSURE YOU THAT OUR
SATELLITES WILL OPERATE AS DESIGNED.

The designs for OrbView-3 and OrbView-4 are complete, and the design for
RadarSat-2 is in progress. These satellites' designs may require modifications
to achieve the desired performance criteria, which could result in delays in
satellite deployment. Each of these satellites will employ advanced technologies
and sensors that will be subject to severe environmental stresses during launch
or in space that could affect the satellites' performance. Employing advanced
technologies is further complicated by the fact that the satellites will be in
space. Hardware component problems in space could require premature satellite
replacement, with attendant costs and revenue losses. In addition, sometimes
human operators may execute improper implementation commands that negatively
impact a satellite's performance.

12
<PAGE> 17

We cannot assure you that OrbView-3, OrbView-4 or RadarSat-2 will not
experience design-related delays during the construction process and operate
successfully in space, or that each of these satellites will perform or continue
operating throughout their expected design lives. Even if these satellites are
launched and operated properly, minor technical flaws in the satellites' sensors
could significantly degrade their performance, which could materially affect our
ability to market our products successfully.

LIMITED LIFE OF SATELLITES -- SATELLITES HAVE LIMITED DESIGN LIVES AND ARE
EXPENSIVE TO REPLACE.

Satellites have limited useful lives. We determine a satellite's useful
life, or its design life, using a complex calculation involving the
probabilities of failure of the satellite's components from design or
manufacturing defects, environmental stresses or other causes. The design lives
of our satellites are as follows:

<TABLE>
<CAPTION>
SATELLITE EXPECTED DESIGN LIFE
--------- --------------------
<S> <C>
OrbView-1 3 years (launched in April 1995), although it continues to
operate
OrbView-2 7 1/2 years (launched in August 1997)
OrbView-3 5 years
OrbView-4 5 years
RadarSat-2 7 years
</TABLE>

The expected design lives of these satellites are affected by a number of
factors, including the quality of construction, the expected gradual
environmental degradation of solar panels, the durability of various satellite
components and the orbits in which the satellites are placed. Random failure of
satellite components could cause damage to or loss of a satellite before the end
of its design life. In rare cases, electrostatic storms or collisions with other
objects could damage our satellites. We cannot assure you that each satellite
will remain in operation for its expected design life. We expect the performance
of each satellite to decline gradually near the end of its design life, although
this has not yet happened with OrbView-1.

We have not procured a spare high-resolution OrbView satellite, nor do we
maintain an inventory of long lead-time parts for these satellites. If one of
our high-resolution OrbView satellites were to fail prematurely, we could
experience significant delays while procuring the necessary spares or
replacement parts to replace or repair the satellite. Procurement delays would
negatively affect our business, results of operations and financial condition.
In addition, we would be required to allocate, earlier than expected, additional
capital expenditures to replace a satellite. We cannot assure you that we would
have on hand, or be able to obtain in a timely manner, the necessary funds to
cover accelerated replacement and repair costs of the satellites if they fail
prematurely.

We do not presently have plans to construct and launch a replacement
satellite for OrbView-2 if it fails prematurely. Similarly, there is no
provision under the CSA Contract for a replacement RadarSat-2 satellite in the
event of a premature failure. Permanent loss of OrbView-2 or RadarSat-2 could
adversely affect our operations and financial condition.

We anticipate using funds generated from operations to develop follow-on
high-resolution satellites. If we do not generate sufficient funds from
operations, and if we are unable to obtain financing from outside sources, we
will not be able to deploy follow-on satellites to replace OrbView-3 or
OrbView-4 at the end of their expected design lives. We cannot assure you that
we will be able to raise additional capital, on favorable terms or on a timely
basis, if at all, to develop follow-on high-resolution satellites.

13
<PAGE> 18

INSURANCE -- LIMITED INSURANCE MAY NOT COVER ALL RISKS OF LOSS.

We maintain or expect to maintain the following insurance policies:

- OrbView-1. OrbView-1 is not insured.

- OrbView-2. We have a renewable in-orbit insurance policy for OrbView-2
to cover losses up to $12 million for its current operational year. We
have not yet determined the amounts and types of coverage, if any, we
will purchase for OrbView-2 in the future.

- OrbView-3 and OrbView-4. The Indenture requires us to maintain launch,
in-orbit checkout and in-orbit operations insurance for OrbView-3 and
OrbView-4. This insurance may not be sufficient to cover the cost of a
replacement high-resolution satellite.

- RadarSat-2. We intend to purchase up to $60 million of insurance for the
RadarSat-2 License against launch or in-orbit failure of the RadarSat-2
satellite. This insurance would allow us to recover our initial capital
investment in the RadarSat-2 License, but would not be sufficient to
cover additional business losses or the cost of a replacement radar
satellite.

We may find it difficult to insure certain risks, such as partial
degradation of functionality of a satellite. Insurance market conditions or
factors outside our control at the time we buy the required 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. These
factors could cause other terms to be significantly less favorable than those
currently available, may result in limits on amounts of coverage that we can
obtain or may prevent us from obtaining insurance at all. Furthermore, we cannot
assure you that proceeds from insurance we are able to purchase will be
sufficient to replace a satellite due to cost increases and other factors beyond
our control.

COMPETITION -- WE MAY BE UNABLE TO COMPETE SUCCESSFULLY IN THE REMOTE IMAGING
INDUSTRY.

Our products and services will compete with satellite and aircraft-based
imagery and related products and services offered by a range of private and
government providers. Certain of these entities may have greater financial,
personnel and other resources than we have. Our major potential competitors for
high-resolution satellite imagery include:

- Space Imaging, which has announced plans to launch its first
high-resolution (one-meter) satellite in mid-1999; and

- EarthWatch, which has announced plans to launch its high-resolution
(one-meter) satellite in late 1999.

The U.S. government and foreign governments also may develop, construct,
launch and operate remote imaging satellites that generate imagery competitive
with our 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.

We believe we will have a competitive advantage because we expect to have
sufficient pricing flexibility to be a low-price commercial provider within our
targeted markets and applications due to the relatively lower cost of our
satellite systems as compared to those of our competitors. But the low marginal
cost of producing satellite imagery once a satellite is operating could cause
adverse pricing pressure, decreased profits or even losses. Our competitors or
potential competitors with greater resources than ours could in the future offer
satellite-based imagery or other products having more attractive features than
our products. New technologies, even if not ultimately successful, could
negatively affect our marketing efforts. More importantly, if competitors
develop and launch satellites with more advanced capabilities and technologies
than ours, this competition could harm our business. See
"Business -- Competition."

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<PAGE> 19

DEPENDENCE ON SUPPLIER -- DEPENDENCE ON A SINGLE SUPPLIER COULD RESULT IN DELAYS
IF THE SUPPLIER FAILS TO PERFORM, AND OUR RECOURSE AGAINST THE SUPPLIER IS
LIMITED.

We depend on one supplier, Orbital:

- to design, develop and launch OrbView-3 and OrbView-4 and to construct
the U.S. ground system for these satellites;

- to design, develop and, through its wholly owned subsidiary MDA, operate
RadarSat-2, and to receive, process, and archive RadarSat-2 imagery.

We also rely on the OrbView-2 License from Orbital to market the OrbView-2
imagery, and will rely on the RadarSat-2 License from Orbital's wholly-owned
subsidiary MDA to market the RadarSat-2 imagery. The terms and conditions of the
RadarSat-2 License and related contractual arrangements between ORBIMAGE and MDA
are subject to CSA review and approval. There can be no assurances that CSA will
approve these arrangements on terms that are favorable to ORBIMAGE. ORBIMAGE,
Orbital and MDA are currently negotiating an amendment to the OrbView-2 License
that, among other things, will require MDA and/or Orbital to indemnify ORBIMAGE
if CSA's actions materially impact the commercial viability of the RadarSat-2
program. There can be no assurance that this amendment will be finalized.

We expect to continue to rely on third parties (including Orbital and MDA)
to design, construct or launch satellites for us and to modify the existing
ground systems to accommodate these satellites. Orbital's obligations to provide
design, construction, and launch services for the OrbView satellites are
governed by a procurement agreement between us and Orbital. If Orbital fails to
perform its obligations adequately under the procurement agreement, we would be
forced to delay deployment of OrbView-3 and/or OrbView-4 until we located an
alternative provider. Orbital's liability to us for claims under the procurement
agreement, such as breach of contract or patent indemnification, is limited to
$10 million. Orbital is designing and constructing the RadarSat-2 satellite. If
Orbital fails to perform its obligations in the RadarSat-2 program, the
deployment of RadarSat-2 could be delayed. Orbital is not liable to us for any
costs or other damages arising from schedule delays in the operation of the
high-resolution OrbView satellites or RadarSat-2.

Under a services agreement we have with Orbital, Orbital has agreed to
provide us with 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 OrbView-2, OrbView-3 and OrbView-4. If
Orbital fails to perform its obligations under the services agreement, we may
not be able to operate these satellites properly. The services agreement
terminates for each OrbView satellite three years after the launch of each
satellite. We cannot assure you that we will be able to renew the services
agreement on favorable terms, if at all. In addition, a material adverse change
in Orbital or its financial condition or the condition of one of its
subcontractors could adversely affect Orbital's ability to perform under the
procurement agreement or the services agreement. We have not identified any
alternate providers. In any case, we can provide no assurance that an alternate
provider would be available or, if available, would be available on terms
favorable to us or to Orbital.

DEPENDENCE ON DISTRIBUTOR -- DEPENDENCE ON A SINGLE DISTRIBUTOR FOR RADARSAT
IMAGERY COULD RESULT IN MARKETING AND DISTRIBUTION DELAYS IF THE DISTRIBUTOR
FAILS TO PERFORM.

As of December 31, 1998, we acquired the RadarSat-2 License from Orbital.
Under an agreement with Orbital and MDA, ORBIMAGE appointed MDA as an exclusive
worldwide distribution of RadarSat-2 imagery. In connection with such
appointment we have granted to MDA an exclusive, unrestricted worldwide license
(including the right to sublicense) to promote, market and sell worldwide
RadarSat-2 data. The entire RadarSat-2 marketing operations will be performed by
MDA. All marketing and sales policies, strategies, targets and resources and
budgets shall be approved by us. If MDA fails to perform its obligations under
its agreement with us or fails to successfully implement marketing plan we may
not be able to successfully market the RadarSat-2 imagery. We cannot assure you
that MDA will

15
<PAGE> 20

perform its obligations under its agreements with us or develop a successful
marketing strategy. If MDA fails to perform these obligations, ORBIMAGE's
RadarSat-2 program and our ability to distribute radar imagery would be
negatively affected, which could materially adversely affect our business.

POTENTIAL CONFLICTS OF INTEREST WITH ORBITAL -- WE RELY ON ORBITAL FOR CERTAIN
OPERATIONS AND SERVICES THAT ARE CRITICAL TO OUR BUSINESS. ORBITAL'S INTERESTS
MAY CONFLICT WITH OURS.

Orbital owns approximately 55% of our outstanding voting stock on a fully
diluted basis. Certain of our executive officers and directors are also
employees and/or directors of Orbital. These relationships may produce conflicts
on matters involving both ORBIMAGE and Orbital. Although we have adopted
policies we believe will prevent a conflict from arising, these policies cannot
ensure that a conflict will not arise. See "Relationship with
Orbital -- Policies and Procedures for Addressing Conflicts."

We have several agreements with Orbital, including a procurement agreement
relating to OrbView-1, OrbView-3, OrbView-4 and the ground system, the OrbView-2
License, the RadarSat-2 License, a services agreement and a non-compete
agreement, each of which is material to our business. Orbital's interests as an
equity holder in our business may at times conflict with our interests under
these agreements, and may conflict with your interests as a holder of the Notes.
Our recourse against Orbital is limited in the event of breaches by Orbital
under the procurement agreement or the RadarSat-2 License.

Orbital provides certain products and services to our direct competitors.
Under our non-compete agreement with Orbital, which terminates on the earlier of
June 30, 2003 or the occurrence of certain events, Orbital cannot sell turn-key
satellite optical imaging systems (i.e., satellite, sensors, launch vehicles and
ground system) to anyone other than to ORBIMAGE. Orbital can, however, sell
radar systems and components of optical systems to our current or future
customers or competitors. For example, MDA has a contract to provide certain
ground system work to EarthWatch relating to its planned one-meter satellite
system. As a result of an acquisition, Orbital holds approximately a 4% equity
interest in EarthWatch. We expect to compete directly with EarthWatch. Orbital
also holds an approximate 56% equity interest in Radarsat International Inc.
("RSI"), a low-spatial resolution satellite radar imagery provider that markets
imagery from the RadarSat-1 satellite and has an offer outstanding to acquire
the remaining shares of RSI. Although RadarSat-2 uses more advanced imaging
technology than the technology employed by RadarSat-1, these two satellites have
certain overlapping capabilities, making RSI a potential competitor.

GOVERNMENT REGULATION -- FAILURE TO OBTAIN REGULATORY APPROVALS COULD RESULT IN
SERVICE INTERRUPTIONS.

Domestic. Our business generally requires licenses from the U.S.
Department of Commerce ("DoC") and the U.S. Federal Communications Commission
("FCC").

<TABLE>
<CAPTION>
SATELLITE STATUS OF DOC LICENSE STATUS OF FCC LICENSE
--------- --------------------- ---------------------
<S> <C> <C>
OrbView-2 DoC license obtained; expires in 2004 Operating under Orbital's experimental
FCC license; renewal application
submitted in November 1998
OrbView-3 DoC license obtained; expires 2004 FCC license obtained; will expire ten
years from certification of launch
OrbView-4 DoC license obtained, expires 2004. We FCC license obtained; will expire ten
have applied for an amendment to this years from certification of launch
license to distribute hyperspectral
imagery commercially.
RadarSat-2 No DoC license required No FCC license required. CSA will
secure the required International
Telecommunications Union ("ITU")
authorizations to operate RadarSat-2
in Canada.
</TABLE>

16
<PAGE> 21

We cannot assure you that the DoC will renew the licenses to operate
OrbView-2, OrbView-3 and OrbView-4 when they expire in 2004. Nor can we assure
you that the DoC will amend the OrbView-4 license to allow us to distribute
hyperspectral imagery commercially. The DoC has indicated that its approval may
be subject to certain limitations, such as delaying release of imagery or
degrading spatial resolution of imagery for commercial uses. If the DoC does not
approve the license amendment on acceptable terms, our financial condition and
results of operations could be materially adversely affected.

While we do not believe we require a DoC license to distribute RadarSat-2
imagery and Orbital has informed us that it does not believe a DoC license will
be required in connection with MDA's operation of RadarSat-2, we cannot assure
you that the DoC will not impose a licensing requirement for RadarSat-2. If such
a requirement were imposed and a license were not obtained on acceptable terms,
our financial condition and results of operations could be materially adversely
affected.

Under the DoC licenses, the U.S. government can interrupt service during
certain periods of national emergency. The prospect of actual or threatened
interruptions could adversely affect our ability to market our products to
certain foreign distributors or end-users. In addition, the DoC has the right to
review and approve the terms of agreements with our international customers for
high-resolution optical imagery. These reviews might delay or prohibit us from
executing these agreements. Canada does not have licensing requirements
analogous to the DoC regulatory requirements in the United States. However, the
Canadian government can interrupt RadarSat-2 service during certain periods of
national emergency.

We currently operate OrbView-2 under Orbital's renewal application for an
experimental FCC license. We cannot assure you that the FCC will grant any
future renewals. If the FCC does not renew this license, we would not be able to
operate the OrbView-2 satellite in the United States. We have applied to the FCC
for a license to launch and operate the high-resolution OrbView satellites, but
we cannot assure you that the FCC will approve our applications.

Our application with the FCC for a license to launch and operate the
OrbView-3 and OrbView-4 satellites was granted in February 1999. Because the
license has been granted, the FCC will now process our applications for licenses
to operate the associated Earth stations. We cannot assure you that we will
receive the necessary FCC authorization to operate the ground system as planned.
Failure to receive the necessary authorization could have a material adverse
effect on our business.

International. All satellite systems operating internationally must follow
general international regulations and the specific laws of the countries in
which satellite imagery is downlinked. Applicable regulations include:

- ITU regulations, which define for each service the technical operating
parameters within which users must operate;

- the Intelsat and Inmarsat agreements, which require that the operators of
international satellite systems demonstrate that they will not cause
economic or technical harm to Intelsat and Inmarsat; and

- regulations of foreign countries, which require that satellite operators
secure appropriate licenses and operational authority to use the required
spectrum in each country.

The CSA has agreed to coordinate with the ITU to secure the necessary
authorizations to operate the RadarSat satellite in Canada. The CSA's failure to
obtain the necessary authorizations in a timely manner could have a material
adverse effect on our business, financial condition and results of operations.

Our customers or distributors are responsible for obtaining local
regulatory approval from the governments in the countries in which they do
business to receive imagery directly from the OrbView-2 satellite, the
high-resolution OrbView satellites and RadarSat-2. If these regional
distributors are not successful in obtaining the necessary approvals, we will
not be able to distribute real time remote imagery service in those regions. Our
inability to offer service in a significant number of foreign countries could
negatively affect our business. In addition, regulatory provisions in countries
where we wish to operate may impose unduly burdensome restrictions on our
operations. Our business may also be adversely affected if

17
<PAGE> 22

the national authorities where we plan to operate adopt treaties, regulations or
legislation unfavorable to foreign companies.

Launch license. Commercial U.S. space launches require licenses from the
U.S. Department of Transportation ("DoT"). Under our procurement agreement with
Orbital, Orbital must ensure that the appropriate DoT commercial launch licenses
are in place for the OrbView-3 and OrbView-4 satellite launches. We cannot
assure you that Orbital will continue to be successful in its efforts to obtain
the necessary licenses or regulatory approvals. Orbital's inability to secure
necessary licenses or approvals could delay launches. Delays could harm our
business, financial condition and results of operations and our ability to
service our debt.

Export License. In connection with certain distributor agreements, we
expect to supply to our international customers with ground stations that enable
these customers to downlink data directly from the high-resolution OrbView
satellites. Exporting these ground stations may require that we obtain an export
license from the DoC or the U.S. Department of State. If we are unsuccessful in
obtaining the necessary export licenses, or if such licenses are significantly
delayed, then we may have to renegotiate existing distributor agreements on less
favorable terms.

RISKS ASSOCIATED WITH DISTRIBUTORS AND RESELLERS -- FOREIGN DISTRIBUTORS AND
VALUE-ADDED RESELLERS MAY NOT EXPAND COMMERCIAL MARKETS.

We will rely on foreign regional distributors to market and distribute
internationally a significant portion of our imagery from OrbView-3, OrbView-4
and RadarSat-2. We expect our existing and future foreign regional distributors
to act on behalf of, or contract directly with, foreign governments to sell
imagery for national security and related purposes. These regional distributors
may not have the skill or experience to develop regional commercial markets for
our products and services. If we fail to enter into regional distribution
agreements on a timely basis or if our foreign regional distributors fail to
market our imagery products and services successfully, these failures would
negatively impact our business, financial condition and results of operations,
and our ability to service our debt.

We intend to rely on value-added resellers to develop and market our
products and services to address certain targeted markets. If our value-added
resellers fail to develop and market OrbView products and services successfully,
this failure would negatively affect our business, financial condition and
results of operations, and our ability to service our debt.

RISK ASSOCIATED WITH INTERNATIONAL OPERATIONS -- OUR INTERNATIONAL BUSINESS
EXPOSES US TO RISKS RELATING TO INCREASED REGULATION AND POLITICAL OR ECONOMIC
INSTABILITY IN FOREIGN MARKETS.

We expect to derive substantial revenues from international sales of
products and services. International operations are subject to certain risks,
such as:

- changes in domestic and foreign governmental regulations and licensing
requirements;

- deterioration of once-friendly relations between the United States and
the foreign entity;

- increases in tariffs and taxes and other trade barriers; and

- changes in 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.

These risks are beyond our control and could have a large negative impact
on our business.

CONTRACT REVENUE -- CUSTOMERS, INCLUDING THE U.S. GOVERNMENT, MAY TERMINATE
CONTRACTS FOR A VARIETY OF REASONS. TERMINATION OF CONTRACTS WOULD RESULT IN A
LOSS OF CONTRACT REVENUES.

At December 31, 1998, contracts with U.S. government agencies constituted
approximately 72% of our total contracts for imagery backlog. Government
agencies may terminate or suspend their contracts at any time, with or without
cause, or may change their policies, priorities or funding levels by reducing

18
<PAGE> 23

agency or program budgets or by imposing budgetary constraints. If a government
agency terminates or suspends any of its contracts with us or Orbital, or
changes its policies, priorities, or funding levels, these actions would
negatively impact our business. Specifically, if the Air Force terminates or
suspends its contract with Orbital and we wish to proceed with our hyperspectral
program, we would incur the remaining cost of upgrading OrbView-4 with
hyperspectral capability. Similarly, if the CSA terminates the CSA Contract and
we wish to proceed with our own radar program, we would have to incur the cost
of constructing, deploying and operating our own radar satellite system.

We have an agreement with Samsung that grants Samsung an exclusive license
to receive, process and sell high resolution OrbView-3 imagery of the Korean
peninsula. This agreement also grants Samsung a non-exclusive license to
receive, process and sell high-resolution OrbView-4 imagery of South Korea.
Samsung may terminate the agreement if OrbView-3 has not been launched by
December 31, 1999 (with liquidated damages payable under certain circumstances).
If Samsung terminates the agreement, we would lose revenues, which could
negatively affect our business, financial condition and results of operations,
and our ability to service our debt.

CHANGE OF CONTROL -- THE HOLDERS OF SERIES A PREFERRED STOCK COULD TAKE CONTROL
OF OUR BOARD OF DIRECTORS UPON CERTAIN EVENTS.

We are a party to a stockholders' agreement with the holders of our Series
A preferred stock. This stockholders' agreement and our charter contain
provisions relating to the election of directors. The stockholders' agreement
provides that our Board of Directors shall consist of up to five directors,
including:

- two directors designated by Orbital;

- two directors designated by the Series A holders (the "Series A
Directors"); and

- one "independent" director designated by both Orbital and the Series A
holders.

Our charter permits the Series A holders to designate two additional
members to the Board of Directors (and thus gain control of the Board of
Directors) if:

- we fail to pay timely dividends or to repurchase the Series A preferred
stock in certain circumstances; or

- Orbital does not start the integration and testing of the OrbView-3
spacecraft by March 15, 1999, or the integration and testing of the
OrbView-4 spacecraft by November 15, 1999. We may extend these dates by
30 days under certain circumstances.

If the Series A holders designated these additional directors, then the
Series A Directors would control our management and policies, and could make
decisions affecting the control of ORBIMAGE. These additional directors would
serve until the event giving rise to their appointment has been resolved. Even
without the appointment of these additional directors, the Series A holders have
de facto control over certain corporate actions enumerated in the stockholders'
agreement, because these actions require the approval of at least one of the
Series A Directors. Such actions include the merger, consolidation, liquidation
or sale of substantially all of our assets, the issuance of equity securities in
certain circumstances, and the incurrence of indebtedness for borrowed money in
excess of $500,000.

FINANCING CHANGE OF CONTROL OFFER -- WE MAY NOT HAVE THE ABILITY TO RAISE THE
FUNDS NECESSARY TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY THE
INDENTURE.

Upon the occurrence of certain specific kinds of change of control events,
we will be required to offer to repurchase all outstanding Notes at a price
equal to 101% of the principal amount and offer to repurchase all of the
outstanding Series A preferred stock (subject to the senior rights of the Note
holders). It is possible that we will not have sufficient funds at the time of
the change of control to make the required repurchases. If we are not able to
make the required repurchases, we would be in default under the Indenture. See
"Certain Relationships and Related Transactions -- Stock Purchase Agreement."

19
<PAGE> 24

RISKS ASSOCIATED WITH GROWTH -- FAILURE TO MANAGE GROWTH COULD ADVERSELY AFFECT
OUR FINANCIAL CONDITION.

ORBIMAGE may experience periods of rapid growth. This growth could place a
significant strain on our management, operating, financial and other resources.
Our future performance will depend in part on our ability to manage growth
effectively. We must develop our management information systems, including our
operating, financial and accounting systems and expand, train and manage our
employee base to keep pace with growth. Our inability to manage growth
effectively could negatively affect our results of operations and our ability to
meet our obligations as they come due.

YEAR 2000 COMPLIANCE -- YEAR 2000 PROBLEMS COULD HAVE AN ADVERSE IMPACT ON OUR
BUSINESS.

The year 2000 presents potential concerns for our computer hardware and
software applications. If our computer-related systems cannot distinguish
between the year 2000 and the year 1900, we may experience systems failures and
business process interruption. The problem may exist for many kinds of our
software and hardware, including mainframes, mini computers, PCs and embedded
systems. We have completed an assessment of Year 2000 issues with respect to our
computer-related systems. By June 1999, we intend to have our systems Year 2000
compliant or to have "work-around" procedures in place to address any
noncompliance that remains as of that date.

Our largest customers are U.S. government agencies. If these agencies'
systems are not Year 2000 compliant, payments they owe to us could be delayed. A
significant delay in payments could have a material adverse impact on our
financial results.

We cannot assure you that costs associated with addressing Year 2000 issues
will not exceed our current estimates, that we will identify all Year 2000
problems on a timely basis or that our corrective actions or those undertaken by
Orbital (our primary vendor) will be completed before any Year 2000 problems
occur. Thus, our operations and financial condition could be adversely affected
by problems associated with the Year 2000 issue. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Year 2000
Compliance."

LACK OF PUBLIC MARKET FOR THE WARRANT SHARES COULD AFFECT THEIR SHARE PRICE

There has not been a public market for our common stock. The warrant shares
issued on exercise of the warrants will constitute a new issue of securities
with no established trading market. We do not intend to list the warrants or
warrant shares on any securities exchange or to seek approval for quotation
through any automated quotation system. We cannot guarantee that an active
market for the warrant shares will develop or that any market that does develop
will be highly liquid.

If a trading market does not develop or is not maintained, holders of the
warrants and warrant shares may find it difficult to resell their securities and
thus may be required to bear the financial risk of such an investment for an
indefinite period of time. If a market for the warrants and warrant shares does
develop, future trading prices of these securities will depend on many factors,
including our results of operations, the market for similar securities, overall
market conditions and general economic conditions.

20
<PAGE> 25

USE OF PROCEEDS

The maximum gross proceeds to the Company from the exercise of the warrants
and the issuance of the warrant shares offered hereby (assuming all warrants are
exercised at the current exercise price of $0.01 per share) would be
approximately $13,000. We intend to use such proceeds for working capital and
general corporate purposes. We will not receive proceeds from either the sale of
warrants or the sale of warrant shares by selling holders.

MARKET PRICE OF AND DIVIDENDS ON THE COMMON STOCK
AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

There is no established public trading market for our common stock. There
are 25,214,000 shares of common stock issued and outstanding, and 20,437,879
shares of common stock are subject to outstanding options or warrants to
purchase, or securities convertible into, shares of common stock.

HOLDERS

As of December 31, 1998, there were two holders of shares of our common
stock.

DIVIDENDS

The Company has never declared or paid any cash dividends on its common
stock or Series A preferred stock. Moreover, the indenture governing our notes
restricts the payment of dividends. We anticipate that we will retain all future
earnings, if any, generated from operations to develop and expand our business.
Thus, we do not expect to pay cash dividends on the common stock or Series A
preferred stock at any time in the foreseeable future.

21
<PAGE> 26

CAPITALIZATION

The following table sets forth the capitalization of ORBIMAGE as of
December 31, 1998. 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, 1998
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Cash, cash equivalents and available-for-sale securities.... $ 59,483
Pledged securities.......................................... 24,537
--------
Total cash, cash equivalents, available-for-sale
securities and pledged securities..................... $ 84,020
========
Long-term obligations:
Notes(1)............................................... $141,620
Capitalized lease obligation........................... 108
--------
Total long-term obligations....................... 141,728
Stockholders' equity:
Preferred Stock, par value $0.01 per share, 2,000,000
shares authorized, and 687,576 shares
outstanding(2)........................................ 7
Common Stock, par value $0.01 per share, 75,000,000
shares authorized, and 25,214,000 shares
outstanding(3)........................................ 252
Additional paid-in capital............................. 152,488
Accumulated deficit.................................... (39,375)
--------
Total stockholders' equity............................. 113,372
--------
Total capitalization.............................. $255,100
========
</TABLE>

- ---------------
(1) Includes the carrying value of the debt discount, estimated to be $8.4
million.

(2) Dividends are payable semi-annually on May 1 and November 1 in cash or
in-kind, subject to restrictions contained in the Indenture.

(3) Excludes 4,800,000 shares of common stock reserved for issuance under
ORBIMAGE's 1996 Stock Option Plan (the "Stock Option Plan"). Options to
purchase 2,636,500 shares of common stock were outstanding under the Stock
Option Plan at December 31, 1998 and options to purchase 1,181,451 shares of
common stock were exercisable at December 31, 1998. See "Management -- Stock
Option Plan."

22
<PAGE> 27

SELECTED HISTORICAL FINANCIAL DATA

The following selected historical financial data of ORBIMAGE as of and for
the years ended December 31, 1994, 1995, 1996, 1997 and 1998 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 and notes thereto, included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1994 1995 1996 1997 1998
------- ------- ------- -------- --------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................................... $ -- $ 4,567 $ 1,055 $ 2,062 $ 11,663
Direct expenses.............................. 800 7,998 4,320 6,312 15,215
------- ------- ------- -------- --------
Gross loss................................... (800) (3,431) (3,265) (4,250) (3,552)
Selling, general and administrative
expenses................................... 3,156 2,371 1,630 2,845 7,124
------- ------- ------- -------- --------
Loss from operations......................... (3,956) (5,802) (4,895) (7,095) (10,676)
Interest income.............................. -- -- -- 1,261 1,845
------- ------- ------- -------- --------
Loss before benefit for income taxes......... (3,956) (5,802) (4,895) (5,834) (8,831)
Benefit for income taxes..................... -- -- -- (1,752) (3,312)
------- ------- ------- -------- --------
Net loss..................................... $(3,956) $(5,802) $(4,895) $ (4,082) $ (5,519)
======= ======= ======= ======== ========
Loss per common share -- basic and diluted
(1)........................................ -- -- -- $ (0.42) $ (0.51)
OTHER DATA:
Capital expenditures......................... $13,832 $18,989 $12,617 $ 49,029 $108,541
EBITDA (2)................................... (3,157) 1,975 (914) (1,558) 2,448
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------
1994 1995 1996 1997 1998
------- ------- ------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and available-for-sale
securities................................. $ -- $ -- $ -- $ 22,220 $ 59,483
Total assets................................. 51,944 63,423 72,328 137,749 307,969
Long-term obligations (3).................... -- -- -- -- 141,728
Stockholders' equity......................... 11,526 19,956 26,279 85,360 113,372
</TABLE>

- ---------------

(1) All potentially dilutive securities, such as convertible preferred stock,
warrants and stock options are antidilutive for each year presented. Prior
to May 8, 1997, ORBIMAGE was an operating division of Orbital, and the loss
per common share for the years ended December 31, 1994, 1995 and 1996 were
not considered meaningful.

(2) EBITDA consists of earnings (losses) before interest, income taxes,
depreciation, amortization and other non-cash charges. EBITDA data is
presented because such data is used by certain investors to determine our
ability to incur debt and to meet its debt service requirements. We consider
EBITDA to be a useful measure of our operating performance, because EBITDA
can be used to measure our ability to service debt, fund capital
expenditures and expand our business. However, such information should not
be considered as an alternative to net income, operating profit, cash flows
from operations or any other operating or liquidity performance measure
prescribed by generally accepted accounting principles. EBITDA does not
represent funds available for management's discretionary use. EBITDA is not
a measure supported by generally accepted accounting principles and may be
calculated differently by other companies. EBITDA as defined herein may not
conform to the definition of Consolidated Cash Flow as defined in the
Indenture.

(3) Net of unamortized debt discount, estimated to be $8.4 million.

23
<PAGE> 28

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

In 1991, ORBIMAGE was established as an operating division of Orbital 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, ORBIMAGE incorporated in Delaware as a wholly owned subsidiary of Orbital.
In 1997, ORBIMAGE consummated a private placement of Series A preferred stock
with financial investors to fund a significant portion of the remaining costs of
existing projects. Contemporaneously with this financing, ORBIMAGE acquired at
historical cost all the assets and liabilities of the operating division. Prior
to May 8, 1997, ORBIMAGE was an operating division of Orbital. Orbital now owns
approximately 60.4% of ORBIMAGE (55.2% on a fully diluted basis) and has the
ability to exercise significant influence, but not control, over ORBIMAGE's
operating and financial policies. Pursuant to the terms of ORBIMAGE's charter
and the stockholders' agreement, Orbital does not have unilateral control over
ORBIMAGE's assets.

ORBIMAGE operates and is further developing a fleet of satellites that
collect, process and distribute digital imagery of the Earth's surface, the
atmosphere and weather conditions. ORBIMAGE has entered into a procurement
agreement with Orbital to purchase the OrbView-1, OrbView-3 and OrbView-4
satellites (including launch services) and the U.S. ground system necessary to
operate the satellites and to collect, process and distribute imagery. Under the
procurement agreement, ORBIMAGE also acquired the OrbView-2 License. The terms
of the OrbView-2 License require ORBIMAGE to operate and control the OrbView-2
satellite. ORBIMAGE has also entered into an agreement with Orbital and MDA
under which ORBIMAGE has acquired the RadarSat-2 License. Under the RadarSat-2
License, MDA will own and operate the RadarSat-2 satellite, and MDA will provide
operations, data reception, processing, archiving and distribution services to
ORBIMAGE. Orbital also provides certain administrative services to ORBIMAGE such
as accounting, tax, human resources and benefit-related services. See "Certain
Relationships and Related Transactions -- Services Agreement" and "-- RadarSat-2
License Agreement."

Currently, ORBIMAGE expects OrbView-3 to be operational in the fourth
quarter of 1999, OrbView-4 to be operational in the third quarter of 2000 and
RadarSat-2 to be operational in early 2002. ORBIMAGE cannot assure the
successful deployment of these satellites. A delay or launch failure could
negatively affect ORBIMAGE's business, financial condition and results of
operations, its ability to deliver its products and services and its ability to
service its debt.

Revenues. ORBIMAGE is performing under several long-term sales contracts
to provide imagery products and receives contractual payments in advance of
product delivery. In such circumstances, ORBIMAGE initially records deferred
revenue for the total amount of the payment and recognizes revenue over the
contractual delivery period. At December 31, 1998, ORBIMAGE had approximately
$32.1 million of deferred revenue related to advance payments for OrbView-2
imagery. See "Certain Relationships and Related Transactions -- OrbView-2
License."

System Depreciation. ORBIMAGE depreciates its satellites over the design
life of each satellite. ORBIMAGE is amortizing the cost of the OrbView-2 License
over the design life of the OrbView-2 satellite. ORBIMAGE intends to amortize
the cost of OrbView-3, OrbView-4 and the RadarSat-2 License over the design life
of the satellites, estimated to be five, five and seven years, respectively.
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
systems are placed in service.

Interest Expense. A portion of the proceeds of the Units Offering
representing the estimated debt discount has been accounted for as a discount to
the par value of the Notes. Amortization of this discount, together with the
stated interest on the Notes, is capitalized as the historical costs of assets
under construction, when appropriate. ORBIMAGE expects to capitalize a
significant portion of its interest expense throughout 1999 and 2000 as it
completes construction of the high-resolution OrbView satellites.
24
<PAGE> 29

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

Business Acquisition. In 1998, ORBIMAGE acquired substantially all of the
assets of St. Louis-based TRIFID Corporation ("TRIFID") for $5 million. TRIFID
provides sophisticated image processing software, geographic information
database and production systems, imaging sensor design and related engineering
services to both governmental and commercial customers. The acquisition provides
ORBIMAGE with the technical personnel and production capability required to
generate high-resolution imagery and derived products. The acquisition resulted
in excess of purchase price over net assets acquired of approximately $3
million, which is being amortized over ten years.

Revenues. Revenues for the years ended December 31, 1996, 1997 and 1998
were approximately $1.1 million, $2.1 million and $11.7 million, respectively.
The increase in 1998 revenues was primarily due to the commencement of the
OrbView-2 satellite's commercial operations in November 1997. Revenues during
the year ended December 31, 1998 also included $1.6 million in sales generated
from the image processing business acquired from TRIFID in April 1998.

Revenues for the year ended December 31, 1997 consisted of approximately
$0.8 million and $1.3 million of OrbView-1 and OrbView-2 sales, respectively.
Revenues in 1996 were attributable solely to the sale of OrbView-1 imagery
products to NASA and the University Corporation for Atmospheric Research.

Direct Expenses. Direct expenses include the costs of operating and
depreciating (i) the OrbView-1 satellite, (ii) the OrbView-2 License, and (iii)
the related ground system. Satellite operating costs primarily consist of labor
expenses. Direct expenses for the years ended December 31, 1996, 1997 and 1998
were approximately $4.3 million, $6.3 million and $15.2 million, respectively.
Direct expenses increased from 1997 to 1998 primarily as a result of the
OrbView-2 License amortization, additional ground system depreciation and
increased operating expenses primarily related to OrbView-2, all of which began
when OrbView-2 commenced commercial operations in November 1997.

Direct expenses increased from the year ended December 31, 1996 to the year
ended December 31, 1997 as a result of the launch and placement in operation of
OrbView-2 in 1997. ORBIMAGE expects direct expenses to increase when OrbView-3,
OrbView-4 and RadarSat-2 are placed in operation.

Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses include the costs of marketing, advertising,
promotion and other selling expenses, as well as the costs of the finance,
administrative and general management functions of ORBIMAGE. SG&A expenses were
approximately $1.6 million, $2.8 million and $7.1 million for the years ended
December 31, 1996, 1997 and 1998, respectively. The increase in SG&A expenses in
1998 was primarily attributable to the increase in salaries and related benefits
as ORBIMAGE expanded its operations and workforce.

The increase in SG&A expenses from the year ended December 31, 1996 to the
year ended December 31, 1997 was primarily attributable to an increase in
ORBIMAGE's staffing levels as ORBIMAGE expanded its operations. SG&A expenses in
1997 included costs of approximately $0.6 million incurred to support the launch
and initial checkout of the OrbView-2 satellite. ORBIMAGE expects that launch
and initial checkout costs for OrbView-3 and OrbView-4 will be incurred at
levels generally consistent with those incurred in 1997 for OrbView-2.

Interest Income and Interest Expense. Interest income reflects interest
earnings on investments made primarily with proceeds from ORBIMAGE's financing
activities. Interest expense reflects interest incurred on the Notes, net of
applicable capitalized interest. Net interest income for the year ended December
31, 1998 was approximately $1.8 million, which is net of interest expense of
approximately $4.9 million. For the year ended December 31, 1998, capitalized
interest in connection with the construction of the OrbView-3 and OrbView-4
satellites and related ground system totaled $10.9 million. The capitalized
interest is recorded as part of the historical cost of the assets to which it
relates and will be amortized over the assets' useful lives when placed in
service. Net interest income was approximately $1.3 million for the year ended
December 31, 1997 and none in 1996.

25
<PAGE> 30

Benefit for Income Taxes. ORBIMAGE recorded an income tax benefit of
approximately $3.3 million for the year ended December 31, 1998. ORBIMAGE
recorded an income tax benefit of approximately $1.8 million for the period May
8, 1997 through December 31, 1997. The tax benefits result from net operating
losses generated during the period in addition to decreases in deferred tax
liabilities for depreciation of satellite assets, which were previously deducted
for tax purposes. Prior to May 8, 1997, ORBIMAGE was an operating division of
Orbital and was included in Orbital's consolidated tax return.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1998, ORBIMAGE had approximately $59.5 million of cash
and cash equivalents and available-for-sale securities. On February 25, 1998,
ORBIMAGE issued units consisting of the Notes and common stock warrants raising
gross proceeds of $150 million. Out of net proceeds of approximately $144.6
million, ORBIMAGE purchased approximately $32.9 million of U.S. Treasury
securities to fund the interest on the Notes for the first four interest payment
dates, of which $24.5 million remained as of December 31, 1998. These securities
were placed in a restricted account and pledged as security for repayment of
interest on the Notes. The total effective interest rate on the Notes, including
the discount attributable to the value of the warrants and issuance expenses, is
approximately 14%. Concurrent with the Units Offering, ORBIMAGE completed a
private placement of 227,295 shares of Series A preferred stock, generating
approximately $21.3 million of net proceeds. During 1997, ORBIMAGE completed two
private equity placements, in which it sold 372,705 shares of Series A preferred
stock, generating gross proceeds of approximately $37.3 million. Orbital also
increased its common equity investment in ORBIMAGE, bringing its total equity
invested to approximately $91.5 million.

Investing activities used cash of approximately $12.6 million, $60.4
million and $161.2 million for the years ended December 31, 1996, 1997 and 1998,
respectively. The increase in the use of cash from 1996 to 1997 and continuing
into 1998 is attributable primarily to the net purchases (net of sales and
maturities) of short- and long-term investments and increased capital
expenditures in those periods. After completion of its private equity and debt
financings in 1997 and 1998, ORBIMAGE invested the proceeds from the financings
in various short- and long-term investments, consisting primarily of commercial
paper and U.S. Treasury securities. ORBIMAGE intends to use the investments to
fund costs under the procurement agreement between ORBIMAGE and Orbital, the
RadarSat-2 License and other operating costs.

Capital expenditures for the years ended December 31, 1996, 1997 and 1998
were approximately $12.6 million, $49 million and $97.6 million (excluding
capitalized interest) and consisted primarily of costs relating to the
acquisition of the OrbView-3 and OrbView-4 satellites and the related U.S.
ground system. Capital expenditures in 1996 consisted primarily of costs under
the procurement agreement relating to the acquisition of the U.S. ground system,
the OrbView-1 satellite and the OrbView-2 License. Beginning in 1997, capital
expenditures were also related to OrbView-3 and OrbView-4. The total cost of the
OrbView-1, OrbView-3 and OrbView-4 satellites, the OrbView-2 License and the
related U.S. ground system, is estimated to be approximately $285 million, net
of approximately $31 million which will be funded by the U.S. Air Force through
a contract with Orbital. Of this amount, as of December 31, 1998, ORBIMAGE had
spent approximately $225 million and expects to spend approximately $60 million
through mid-2000, the projected deployment date of OrbView-4.

ORBIMAGE's acquisition of the RadarSat-2 License will cost approximately
$60 million, net of approximately $140 million which will be funded by the CSA
through a contract with Orbital. ORBIMAGE expects to use cash on hand and cash
from operations to fund RadarSat-2 License payments.

Operating activities provided cash of approximately $6.3 million and $9.8
million during the years ended December 31, 1997 and 1998, respectively.
Operating activities used cash during the year ended December 31, 1996 of
approximately $1 million. The increase in operating cash flow from 1997 to 1998
is primarily attributable to an increase in accounts payable and accrued
expenses of $12.4 million. The

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increase in operating cash flows from 1996 to 1997 was primarily attributable to
the receipt of advance customer payments for imagery purchases.

ORBIMAGE expects to fund its other future capital expenditures and negative
cash flows from operating activities using cash and cash equivalents and
securities together with cash from advance customer payments. ORBIMAGE's ability
to generate positive cash flow is dependent on the sale of its products and
services, adequate customer acceptance of ORBIMAGE's products and services and
numerous other factors. ORBIMAGE does not expect to generate net positive cash
flow from operations sufficient to fund both operations and capital expenditures
before the third quarter of 2000, when both OrbView-3 and OrbView-4 are
operational. While ORBIMAGE believes it has sufficient resources to meet its
requirements through that time, additional funding may be necessary in the event
of an OrbView-3 or OrbView-4 launch delay, cost increases or unanticipated
expenses. We cannot assure you that additional capital will be available on
favorable terms or on a timely basis, if at all. ORBIMAGE has incurred losses
since its inception, and management believes that it will continue to do so for
the foreseeable future. ORBIMAGE's ability to become profitable and generate
positive cash flow is dependent on the continued expansion of commercial
services, adequate customer acceptance of ORBIMAGE's products and services and
numerous other factors. See "Risk Factors -- Limited History of Operations and
Net Losses," "-- Potential Additional Capital Requirements," and "-- Market
Acceptance."

"YEAR 2000" COMPLIANCE

The year 2000 presents potential concerns for computer hardware and
software applications. The consequences of this may include systems failures and
business process interruption. The problem may exist for many kinds of software
and hardware, including mainframes, mini computers, PCs and embedded systems.

ORBIMAGE has completed an assessment of the potential Year 2000 issues with
respect to various financial, technical and operational computer-related
systems. This assessment consisted of reviewing software code and hardware
system components to determine whether a system failure or miscalculations
causing disruption of operations could occur as a result of the system's
inability to distinguish between the year 2000 and the year 1900. ORBIMAGE
intends to correct any Year 2000 issues, or develop alternative "work-around"
procedures that address the problem by June 1999. ORBIMAGE has also inquired of
its primary vendor, Orbital, as to whether products and services provided by
Orbital may be adversely affected by the Year 2000 issue. Orbital has informed
ORBIMAGE that with respect to its provision of administrative services, no
material Year 2000 issues have been identified. Orbital is still conducting an
internal review of Year 2000 issues with respect to the satellite systems,
ground systems and launch services provided or to be provided to ORBIMAGE, and
completed its initial assessment of any pertinent issues in December 1998.

ORBIMAGE's largest customer is NIMA. If NIMA's systems are not Year 2000
compliant on a timely basis, payments owed to ORBIMAGE could be delayed. There
can be no assurance that a significant delay in payments would not have a
material impact on ORBIMAGE's financial results.

ORBIMAGE does not currently anticipate that addressing Year 2000 problems
for its internal systems will have a material impact on its operations or
financial results. There can be, however, no assurance that costs associated
with addressing Year 2000 issues will not be greater than anticipated, or that
Year 2000 problems will be identified on a timely basis and that corrective
actions undertaken by ORBIMAGE or its primary vendor will be completed before
any Year 2000 problems occur. All costs, including the cost of internal
personnel, outside consultants, systems replacements and other equipment, will
be expensed as incurred, except for long-lived assets, which will be capitalized
in accordance with ORBIMAGE's capitalization policies. Contingency plans will be
developed if it appears ORBIMAGE or its key supplier will not be Year 2000
compliant and such noncompliance is expected to have a material adverse impact
on ORBIMAGE's operations.

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BUSINESS

OVERVIEW

ORBIMAGE is a leading provider of global space-based imagery, and expects
to provide its customers with the most comprehensive offering available of
high-resolution imagery, imagery-derived products and image processing services
at competitive prices. We are developing and currently operate a fleet of
satellites that collect, process and distribute digital imagery of the Earth's
surface (land and oceans), the atmosphere and weather conditions. Our imagery
products and services are designed to provide our customers with direct access
to timely and competitively priced information concerning, among other things,
locations and movements of military assets, urban growth, forestry and crop
health, land and ocean-based natural resources and weather patterns and wind
conditions. In April 1998, we acquired a satellite image processing company that
will complement our core imagery business by providing sophisticated image
processing software, engineering analysis capability and in-house digital
imaging production capability.

In April 1995, we launched our first satellite, OrbView-1, which provides
dedicated weather-related imagery and meteorological products to NASA. We
launched our second satellite, OrbView-2, in August 1997. OrbView-2 provides
images of land and ocean surfaces to commercial customers, as well as to NASA
and other scientific users. We believe that OrbView-2 is the only satellite of
its kind providing daily color images of the entire Earth's surface. We expect
to place two additional satellites, OrbView-3 and OrbView-4, into operation
during the fourth quarter of 1999 and the third quarter of 2000, respectively.
OrbView-3 and OrbView-4 will provide high-resolution imagery based on optical
technology. We believe that OrbView-3 and OrbView-4 will be among the first
commercial satellites with high-resolution optical imagery capability and that
OrbView-4 will be the first satellite with commercially available hyperspectral
capability.

MARKETING STRATEGY

- OrbView-1 was partially paid for under an $8 million pre-launch contract
with NASA, $5 million of which was funded prior to launch;

- OrbView-2 was partially paid for under a $43 million pre-launch contract
between Orbital and NASA, $38 million of which was funded prior to
launch;

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- RadarSat-2 will be partially paid for under a $140 million contract
between Orbital and the CSA, all of which will be funded prior to launch.

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 and
aircraft. This market includes satellite development, construction and
operations by both domestic and international commercial and government users
who decide to build and operate their own satellite systems, as well as
purchased imagery and related services currently addressable by existing imagery
suppliers. 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 (excluding satellite
and ground hardware sales) will be approximately $2 billion by the year 2000. We
believe that this market will grow as the availability of low-cost, high quality
satellite imagery stimulates the demand for these products and services and
encourages the development of new satellite-imaging technologies and
applications.

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,
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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 timeliness requirements.

As the remote imaging market develops, we expect that primary competitive
factors will include:

- spatial and/or spectral resolution;
- breadth of product offering;
- frequency of revisit times;
- pricing;
- timeliness of imagery distribution; and
- extent of geographic coverage.

OrbView-2, OrbView-3, OrbView-4 and RadarSat-2 have been or are being
designed to offer a number of strategic advantages over currently available
commercial remote imaging systems. These advantages include increased spatial
resolution and increased spectral capability. Certain markets, such as the
national security, mapping and surveying markets, require spatial resolution of
three meters or less. 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 are easier to identify on an
infrared or radar image than in a conventional black and white aerial
photograph. 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, we expect that OrbView-3 will be able to map over 20,000 square
kilometers at one meter resolution 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. We expect that
OrbView-3, OrbView-4 and RadarSat-2 will be able to image areas that are not
accessible by airplanes because the air space is restricted or because the areas
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. We believe the real-time
global satellite imagery 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. This imagery will also
permit users to frequently monitor agricultural, forestry and fishing areas to
provide timely information to enhance business and government effectiveness.

In addition, we expect RadarSat-2 to extend ORBIMAGE's competitive
advantage over other high-resolution commercial satellite operators.
RadarSat-2's high-resolution radar imaging capability will enable ORBIMAGE to
provide imagery "on-demand" twenty-four hours a day regardless of light and
weather conditions. RadarSat-2 will also be able to detect certain materials on
the Earth's surface, such as oil seepages, ice flows and metallic objects more
effectively than optical imaging satellites.

BUSINESS STRATEGY

The key elements of our business strategy include:

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that our cost structure will provide us with flexibility to competitively price
our imagery products and services.

Penetrating existing markets and creating new markets. There is currently
a large existing market for imagery products and services (which include new
construction site selection, oil, gas, and mineral exploration, scientific and
environmental monitoring and U.S. national security applications). We believe we
can gain market share rapidly in this existing market because of the breadth and
expected pricing of our product and service offerings. Additionally, we believe
that these markets will expand and further develop as commercial high-resolution
imagery becomes available. Furthermore, we believe we can develop new commercial
applications for satellite-based imagery, including real estate assessment,
travel planning and entertainment applications.

Achieving global distribution of products and services on a timely
basis. We plan to expand our global market coverage by providing imagery to end
users both directly and through VARs and other third party distribution
channels. We intend to focus our direct distribution efforts on larger customers
in the commercial, consumer, scientific, environmental and U.S. and foreign
national security markets. We expect that value-added resellers will perform
application-specific processing of our imagery for various commercial markets.
Internationally, we intend to market primarily through regional partners who
have existing marketing and distribution infrastructures. We expect these
distributors to purchase or upgrade and operate the ground imagery receiving and
processing stations in their territories which will permit them to receive,
process and distribute imagery on a timely basis.

Expanding the "orbimage.com" digital catalogue. We have developed a
digital catalogue located at our orbimage.com website address to collect, store,
and distribute imagery collected from our satellites as well as from other
aerial sources. The digital catalogue currently includes OrbView-2 imagery
products and will ultimately be a full-service on-line digital catalogue of
OrbView high-resolution imagery products. We are currently expanding our
database of digital imagery with aerial imagery products that we expect to have
available later this year. We can deliver imagery from our digital catalogue to
customers over the Internet or on CD for a per-image fee.

PRODUCTS AND SERVICES

We expect to offer the most comprehensive selection of commercially
available satellite imagery with products and services. Such products and
services will include high-resolution optical imagery, high-resolution radar
imagery, hyperspectral imagery and imagery processing services.

Weather, climate and atmospheric monitoring. The OrbView-1 satellite
provides the U.S. government with daily atmospheric and weather condition
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, including atmospheric
temperature, pressure, and water vapor profiles. Because of the radio
frequencies used by the OrbView-1 satellite, OrbView-1 imagery may only be sold
to the U.S. government.

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 downlink directly certain OrbView-2
imagery 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 we generally can
deliver within 24 hours of collection. Such products measure phytoplankton and
sediment concentration in oceans and lakes, as
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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.

We also use OrbView-2 imagery to generate commercial fishing maps. We
currently offer 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 optical and radar imagery. High-resolution optical
imagery enables users to identify objects as small as one-meter in size
(approximately the size of a phone booth) from space. We plan to sell our
high-resolution imagery products in the form of hard copies and electronic
copies that can be stored and processed on a computer. We intend to base our
product pricing, in part, on the level of processing required and the customer's
delivery-time requirements. We will target sales of unprocessed imagery to
sophisticated end-users, such as the U.S. and foreign national security
customers or value-added resellers who have internal capability to perform their
own imagery enhancement and processing. While we intend to sell unprocessed
imagery through the ORBIMAGE digital catalogue, we believe 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.

We may also offer various value-added precision-corrected products. We
believe that these products will have applications in all three of our 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 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, 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.

Radar imagery. High-resolution radar imagery from RadarSat-2 with a
spatial resolution of three meters will complement the high-resolution optical
imagery available from OrbView-3 and OrbView-4. Radar and optical technology
share many of the same capabilities. However, unlike optical imaging technology,
radar technology permits imagery to be collected in all weather conditions and
at night. Additionally, radar imagery can detect certain materials on the
Earth's surface more effectively than optical imagery, such as oil seepages and
ice flows, making such technology useful for offshore and onshore oil and gas
exploration, ship navigation and crop health monitoring. RadarSat-2 will have
unique multipolarization capabilities that enable it to image vertical as well
as horizontal features over land or water.

TARGET MARKETS

We target our imagery product and service offerings toward three distinct
markets: the U.S. and foreign national security market, the commercial/consumer
market and the scientific/environmental market. These markets are currently
serviced by aerial photography or lower-resolution government-operated satellite
imagery systems.

U.S. and foreign 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. We believe that potential
budget cutbacks

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in DoD and NRO budgets, combined with changes in military strategies (e.g.,
fewer military assets dispersed over a wider geographic area), could further
increase the government's need for commercially available high-resolution
imagery. Commercial satellite imagery can augment current classified government
satellite programs that 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. We believe that our radar imagery, which can be acquired in all weather
conditions and at night, may be useful to governmental agencies during times of
international conflicts when "real time" imagery is essential regardless of the
time of day, weather or other conditions, such as smoke or haze. We believe that
we can capture a significant share of the addressable national security market
once OrbView-3 or OrbView-4 is operational.

The U.S. government has turned to commercial providers such as ORBIMAGE for
a portion of its satellite imagery requirements. The U.S. Air Force is funding
the hyperspectral modifications to the OrbView-4 sensor under a $31 million
contract (with up to $10 million in data purchases and contract options) to
acquire real-time hyperspectral imagery from OrbView-4. In October 1998, we
entered into a contract with NIMA under which the U.S. government authorized the
purchase of up to $100 million of OrbView-2, OrbView-3 and OrbView-4 imagery and
systems upgrades. Under this contract, NIMA has committed to purchase $3 million
of imagery, services and compatibility upgrades to ORBIMAGE's ground systems.
The U.S. Navy has made an initial purchase of OrbView-2 imagery and has also
expressed an interest in procuring additional 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. The
Canadian Navy uses RadarSat-1 imagery (i) to detect the presence of other ships
through wave analysis and (ii) to monitor the location and movement of ice bergs
in connections with submarine and ship deployments. We expect navy fleets to
rely on RadarSat-2 imagery for similar purposes.

In addition, many foreign countries have a strong national security
interest in obtaining real-time high-resolution satellite imagery that can be
collected during all weather conditions and at night. This imagery will be used
by national security customers to help generate up-to-date wide area maps,
gather intelligence, identify and target enemy forces and assets, plan missions
and deploy resources and assess battle damage. Many countries have aerial
reconnaissance aircraft, but these aircraft may be 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:

- develop the technology and build and launch their own satellites;

- purchase and operate a turn-key satellite system; or

- purchase "time-share" capacity from a satellite imaging 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.

We are currently in discussions with several foreign national security
customers, and have already entered into an agreement with Samsung for imagery
of the Korean peninsula. The interest expressed by potential regional
distributors during the course of these discussions strengthens our belief that
there exists substantial unmet demand for such imagery. We believe that our
products and services will provide an effective means for foreign governments to
acquire high-resolution imagery for national security purposes.

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Commercial/consumer market. We believe 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
we expect this market will also include individual consumers who will use
satellite imagery from the ORBIMAGE digital catalogue in various consumer
oriented applications such as real estate assessment, travel planning, education
and entertainment. We have already begun targeting the market applications
described below, which we believe represents attractive near-term marketing
opportunities.

- Commercial fishing. We are currently marketing fishing maps designed to
assist the commercial ocean fishing industry. 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. Fishing fleets are
using OrbView-2 imagery to accurately identifying this boundary in a
timely fashion. Based on customer feedback, our fishing maps
significantly reduce search time and related hardware and operating cost,
and are more accurate, and cover a broader area than existing
alternatives.

Our customers for fishing maps include 25 fishing companies comprising
approximately 110 fishing vessels operated by commercial fishing companies
in the United States, Asia, Europe and South America. Fishing captains
view the maps transmitted daily over a satellite link to their vessels
with a personal computer using our proprietary software, or receive the
maps in a hard copy format via facsimile.

- Mapping and surveying. The key mapping and surveying markets that we
have targeted are new construction site selection, utility infrastructure
monitoring and local and regional tax assessment. The availability of
radar technology which can identify metallic objects on the Earth's
surface as well as subtle geological features (such as fault lines and
land elevation) will enable us to more efficiently interpret
high-resolution optical imagery from OrbView-3 and OrbView-4 and generate
a more comprehensive product offering in these markets. 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. We believe 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 versus industrial land use
patterns, locations of competitive businesses and other factors useful in
the site selection process.

We believe that our high-resolution OrbView imagery also 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. We recently entered into a strategic relationship with a
value-added reseller that currently uses aerial imagery to monitor power
lines for utility companies. Under the agreement, we will be the preferred
supplier of high-resolution satellite imagery and we are working with the
VAR to develop a broad product base targeted at the utility market. We are
also finalizing the terms of a strategic value-added reseller arrangement
with one of the leading providers of value-added aerial products to oil
and gas companies for pipeline monitoring and oil field monitoring and
mapping. Finally, we believe our 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. We expect 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

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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. We believe
products based on multispectral, hyperspectral and radar 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, we believe that our broad-area multispectral,
hyperspectral and radar 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, we
believe the multispectral and radar imagery generated by OrbView-2,
OrbView-3, OrbView-4 and RadarSat-2 will be beneficial in monitoring the
overall health of forests. In addition, OrbView-4's hyperspectral imagery
will be useful in distinguishing tree plantations of different species
and ages through pattern recognition techniques and RadarSat-2's imagery
will be useful in monitoring deforestation and land use changes. We
believe this information will be beneficial both to private forest
product companies and to government agencies such as the U.S. Forest
Service.

- Oil, gas and mineral exploration. We believe that OrbView-3, OrbView-4
and RadarSat-2 imagery will 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.
Hyperspectral imagery from OrbView-4 will be useful for identifying
promising locations for new oil, gas and mineral reserves. Spectral
matching techniques can be used to identify specific "pathfinder
minerals" that signify high probability locations for oil, gas and other
mineral reserves. Oil and gas exploration companies are using RadarSat-1
imagery products in their exploration endeavors. These companies should
also benefit from RadarSat-2's multipolarization capabilities which
enable the detection of oil seepages in the oceans as well as on land.

- Ice flow monitoring. We believe that imagery from RadarSat-2 will be
valuable for potential customers engaging in marine navigation and
offshore drilling operations. RadarSat-2's ability to detect the
presence, size and movement of icebergs will be useful to government
agencies and private companies for safely routing cargo ships and fishing
vessels. In addition, RadarSat's ability to measure the edge of and track
the movement of major ice flows will be valuable to oil and gas companies
for managing the operation of offshore oil rigs located in the arctic
regions of the world.

Scientific/environmental market. The scientific/environmental market
comprises government entities that use satellite imagery to monitor
environmental, climate-related and meteorological phenomena, 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. Scientists and government agencies are using satellite radar
imagery to map the Antarctic ice filed in order to analyze the effects of
glaciers and global climate changes in Antarctica. We are currently selling
imagery from OrbView-2 to national government agencies such as NASA, NIMA and
the National Oceanic and Atmospheric Administration ("NOAA"). NOAA recently has
announced its intention to purchase additional OrbView-2 imagery over a three
year period. All of 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. OrbView-2's
ability to monitor phytoplankton levels in the world's oceans on a global basis
is being used by scientists to study global climate change and by coastal
fisheries to track dangerous and costly "red tide" events. We believe the
imagery available from our high-resolution optical satellites and RadarSat-2
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, severe storms and the environmental impact of
industrial activities.

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MARKETING AND DISTRIBUTION

We currently plan to market and distribute imagery from our satellite
network through:

- our direct sales force;

- market- or application-specific value-added resellers;

- foreign regional distributors; and

- the ORBIMAGE digital catalogue.

Direct customer sales. Our initial strategy for direct customer sales is
to market and sell our 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, we have 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. We may also directly market and will distribute our products
and services, such as fishing maps, to commercial and scientific customers
worldwide.

We will continue to market our 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. We anticipate 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 our U.S.
central ground system and then delivered to the applicable end user.

International distributors. We expect to sell high-resolution OrbView
satellite imagery in international markets principally through arrangements with
various regional distributors. We expect that our distribution agreements will
give foreign regional distributors priority in "tasking" the satellite's camera
while the satellite is over its geographic region. We generally expect to retain
the right to market and sell imagery of a distributor's territories, although we
will pay the distributor a royalty for these sales. In certain cases, we may
agree that a distributor's approval is required for certain sales of imagery,
including sales to specified customers or of specific areas. We anticipate 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.

We are negotiating several exclusive commercial regional distributorships
for Europe, the Middle East, Central America and Asia, while pursuing
opportunities with regional distributors in Australia and South Africa. We are
also in discussions with several foreign governments regarding access to our
real-time high-resolution imagery exclusively for national security
applications.

We anticipate that our 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. We 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.

Value-added resellers. While we expect to perform certain value-added
services internally we also intend to distribute our imagery to end users
through value-added resellers who process it into complex maps and other types
of products for specific markets or applications. Using OrbView-2 imagery, we
provide our proprietary fish-finding maps to approximately 110 commercial
fishing vessels. We are purchasing aerial imagery of major metropolitan areas in
the United States to supplement and develop a digital catalogue of up-to-date
mapping products that we expect to offer for sale to individual consumers and
local governments later this year. We have also entered into agreements with
several value-added resellers who already have established expertise in the
production of aerial and satellite imagery-based value-added products in
specific industries such as utility monitoring, agriculture monitoring and
national

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<PAGE> 41

security. We are working with these value-added resellers to exploit existing
applications and develop new products that will incorporate OrbView-3, OrbView-4
and RadarSat-2 high-resolution data.

ORBIMAGE digital catalogue. We also market imagery through our on-line
electronic ORBIMAGE digital catalogue. The ORBIMAGE digital catalogue will be a
comprehensive, digital-imagery catalogue in which we collect, store and
distribute imagery derived from our satellites and other satellite and aerial
sources. We 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 value-added resellers, we intend
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. To date, we have completed distribution
agreements with three aerial imagery firms to assist us in developing an initial
high resolution imagery product line planned for release in April 1999. This
product line will include images of approximately 15 U.S. cities and will be
available through the ORBIMAGE digital catalogue. The ORBIMAGE digital catalogue
commenced operation in the second half of 1998 offering OrbView-2 imagery
products. The ORBIMAGE digital catalogue website is currently under
construction. The completed digital catalogue and website will be available in
the second half of 1999.

RISK MITIGATION

- Financial. Approximately $214 million of advance payments have been
provided from pre-launch contracts (directly with our customers or
between Orbital and third parties) that will fund capital expenditures.
These contracts provide funding for approximately 40% of the total
capital expenditures required for the deployment of our satellite systems
and our acquisition of imagery distribution licenses. By negotiating
pre-launch contracts with customers we have reduced, and seek to continue
to reduce, the financial risks associated with constructing and operating
our satellites and ground systems. We have also limited risks associated
with our satellites by entering into fixed-price contracts with Orbital
to build and launch the satellites, to acquire exclusive worldwide
distribution rights for radar imagery from RadarSat-2 and to construct
the related ground systems. In addition, we have insured the OrbView-2
satellite against on-orbit failures and we intend to procure insurance to
cover certain losses in the event of an OrbView-3, OrbView-4 or
RadarSat-2 launch or satellite failure.

- Market development. In addition to the pre-launch contracts described
above, we are actively marketing our image processing capabilities while
seeking to finalize pre-launch distribution agreements for OrbView-3 and
OrbView-4 high-resolution imagery. We have a $15 million contract with
Samsung for the distribution of OrbView-3 and OrbView-4 imagery in South
Korea. The U.S. government has also demonstrated its commitment to
procure imagery from commercial sources by authorizing NIMA to enter into
a contract with us for the purchase of up to $100 million of OrbView-2,
OrbView-3 and OrbView-4 imagery and systems upgrades. Under this
contract, NIMA has committed to purchase $3 million of imagery, services
and compatibility upgrades to ORBIMAGE's ground systems. To further
facilitate market penetration, we have developed our own value-added
products using OrbView-2 imagery and are working with a number of VARs in
various industries that use satellite or aerial imagery for commercial
applications.

- Technical. U.S. government surveillance and various other space programs
have already successfully deployed many of the imaging technology and the
sub-system components that Orbital will use in OrbView-3, OrbView-4 and
RadarSat-2. These satellites incorporate system redundancies for certain
critical components. As a result of OrbView-3 and OrbView-4 having
similar performance parameters they can provide back-up for each other.

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<PAGE> 42

BACKLOG

ORBIMAGE's contract backlog of firm commitments at December 31, 1997 and
1998 was approximately $56 million and $54 million, respectively. As of December
31, 1997 and 1998, 75% and 72%, respectively, of ORBIMAGE's backlog was with
government agencies. Contract backlog of firm commitments consists of aggregate
contract value for firm product orders, excluding the portion previously
included in operating revenues on the basis of imagery delivered. Contract
backlog of firm commitments excludes unexercised contract options at December
31, 1998 of approximately $106 million.

SATELLITE AND GROUND SYSTEM OPERATIONS

ORBIMAGE's basic system architecture consists of several major components:

- a fleet of low-Earth orbit, advanced-technology small imaging satellites
carrying sophisticated sensors that collect specific types of land,
ocean, and atmospheric imagery;

- 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

- foreign regional receiving and distribution centers with direct
downlinking capabilities.

We believe that our system will provide global economies of scale in image
collection, processing and distribution. In particular, we believe the satellite
system will be able to collect, produce and sell spatial and spectral-resolution
imagery worldwide on a daily basis.

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 and RadarSat-2 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 OrbView-3 and
OrbView-4, 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, Landsat 5 and RadarSat-1 to minimize overall program risk. RadarSat-2
will build on the heritage of RadarSat-1 and will use redundant components and
subsystems that were used in RadarSat-1. RadarSat-1 is expected to be at the end
of its design life at the time RadarSat-2 is expected to be launched. The
OrbView-1 and OrbView-2 satellites are, and OrbView-3 and OrbView-4 will be,
commanded and controlled from ORBIMAGE's main operations center located in
Dulles, Virginia. The RadarSat-2 satellite will be operated and controlled by
MDA and/or CSA under the CSA Contract.

The following table summarizes the primary technical characteristics of the
satellites.

<TABLE>
<CAPTION>
ORBVIEW-1 ORBVIEW-2 ORBVIEW-3 ORBVIEW-4
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Principal Applications Weather, Scientific Weather, Fishing, Mapping, Agriculture, Oil Mapping, Agriculture,
Research Agricultural, and Gas, National Oil and Gas,
Scientific Security Forestry, Mining,
Research National Security
Best Ground Resolution 10 km Panchromatic 1 km to 4 km 1 m Panchromatic 1 m Panchromatic
Multispectral 4 m Multispectral 4 m Multispectral
8 m Hyperspectral
Scene-Width 1,300 km 2,800 km 8 km Panchromatic 8 km Panchromatic
and Multispectral and Multispectral
5 km Hyperspectral
Image Area N.A. N.A. 64 km(2) Panchromatic and 64 km(2) Panchromatic
Multispectral and 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

<CAPTION>
RADARSAT-2
----------
<S> <C>
Principal Applications Mapping, Agriculture,
Oil and Gas,
Forestry, Mining,
National Security
Best Ground Resolution 3 m to 100 m
multipolarization
Scene-Width 20 km to 500 km
Image Area 400 km(2) to 250,000 km(2)
On-Board Storage 32 Gigabytes
Revisit Time less than 5 days
Orbital Altitude 800 km
Design Life 7 Years
</TABLE>

- ---------------
(1) The combined revisit time of both of OrbView-3 and OrbView-4 will be less
than two days.

(2) Based on current performance, the satellite has exceeded its design life.

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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
system. 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 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 and
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 ORBIMAGE
operates it under the OrbView-2 License.

ORBVIEW-3 AND ORBVIEW-4 SATELLITES

OrbView-3 and OrbView-4, 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. These two satellites will have
substantially similar performance capabilities, thereby reducing the impact of a
satellite failure, increasing revisit frequency, and improving our overall
capacity to supply timely imagery to our customers. We plan to either downlink
imagery in real-time to regional ground stations or store it on board the
satellite and subsequently downlink it to the U.S. central ground system. We
plan to forward copies of most imagery downlinked to regional ground stations to
the ORBIMAGE digital catalogue.

The partially redundant designs of OrbView-3 and OrbView-4 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. OrbView-3 and OrbView-4 are
designed to provide maximum maneuvering agility together with a stable optical
platform for high quality image collection. Their 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.

OrbView-3 and OrbView-4 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,
their combined 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 OrbView-3 and OrbView-4
is expected to pass over the territory covered by a typical regional ground
station an
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<PAGE> 44

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. Revisit frequency will be reduced to less than
two days with both OrbView-3 and OrbView-4 in operation. This is because the
satellites' high-resolution "seeing" range (approximately 940 kilometers in
diameter) is less than its communications range (approximately 4,800 kilometers
in diameter).

We expect the total annual realizable capacity of each of OrbView-3 and
OrbView-4 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
stations.

RADARSAT-2

The RadarSat-2 satellite will acquire imagery in all weather conditions and
at night across a range of modes that span from 3-meter spatial resolution
imagery with a swath width of 20 km to 100-meter spatial resolution imagery with
a swath width of 500 km. RadarSat-2 will also be capable of acquiring imagery
using multiple polarization technology that will enable better identification
and measurement of materials on the Earth's surface such as oil seepage in the
oceans and wood mass in timber stands. RadarSat-2 imagery can either be stored
on board its spacecraft recorder or downlinked in real-time to the same antennas
that downlink OrbView-3 and OrbView-4 imagery. As with OrbView-3 and OrbView-4
most of the downlinked RadarSat-2 imagery will be available at the ORBIMAGE
digital catalogue for sale to customers around the world.

RadarSat-2 will build on the heritage of the RadarSat-1 satellite. It will
use redundant components and subsystems that were used in RadarSat-1 and will
have a design life of seven years. RadarSat-1 is expected to be at the end of
its design life at the time RadarSat-2 is expected to be launched. RadarSat-2
will be launched into a sun-synchronous orbit at an altitude of approximately
800 km. RadarSat-2 will have the ability to acquire imagery on either side of
its orbital track not by physically turning the imaging instrument, as is the
case with OrbView-3 and OrbView-4, but purely by electronic means using a
sophisticated phased-array antenna. This "electronic" steering of RadarSat-2's
radar signal will enable the satellite to maintain a very stable imaging
platform that will enhance overall product quality. This steering capability
will provide RadarSat-2 with a five day revisit time. Its polar orbit will allow
it to pass over and communicate with Canadian ground stations during the
majority of its orbits. In addition, RadarSat-2 will have the ability to
directly down-link, in real-time, high resolution radar imagery to foreign
distributor stations nationwide. RadarSat-2 will be capable of providing
real-time imagery within a 4,000 kilometer radius of any ground station.
RadarSat-2 will have an annual image capacity in excess of 220,000 images.

GROUND OPERATIONS CENTERS AND IMAGE PROCESSING FACILITIES

ORBIMAGE's central U.S. ground systems monitor the OrbView satellites while
they are in orbit and command 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 OrbView-3 and
OrbView-4, 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. MDA will operate the RadarSat-2
satellite in Canada on similar terms.

The image receiving and processing center for the OrbView satellites is
also located at our 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

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<PAGE> 45

each image for placement in the ORBIMAGE digital catalogue accessible by
customers using the Internet. ORBIMAGE's ground systems and image recovery and
processing center currently downlink and process imagery from the OrbView-1 and
OrbView-2 satellites. We expect our ground network to be compatible with
OrbView-3 and OrbView-4 by the respective time each such satellite is launched.
In April 1998, we acquired an image processing company to complement our core
business by providing engineering analysis, sophisticated imaging processing
software and production of high quality digital imagery products.

We expect that the imagery collected by OrbView-2, OrbView-3, OrbView-4,
and RadarSat-2 will either downlink directly to a distributor or be stored
on-board for later downlink to an ORBIMAGE ground system located in the United
States. OrbView-2, OrbView-3, OrbView-4 and RadarSat-2 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 ground system in Virginia and a planned second system
in Alaska, we expect to down-link high-resolution and hyperspectral OrbView
imagery on an average of 12 out of every 16 daily orbits for subsequent
processing, archiving and distribution by ORBIMAGE. Imagery collected by
RadarSat-2 will be downlinked in Canada for subsequent processing, archiving and
distribution. This procedure ensures timely delivery of imagery even to those
customers without a dedicated ground station. The high-gain directional antennae
on board OrbView-3 and OrbView-4, which continually track our ground system, are
designed to provide a strong signal to the ground with very low transmission
errors. Even with compression and encryption of the signal, we expect coding and
transmission errors to be insignificant.

COMPETITION

ORBIMAGE's satellite and aerial imaging competitors include:

- small regional aerial photography firms;

- a limited number of existing satellite imagery providers; and

- 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 the OrbView satellites. We expect that our
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. SPOT 4 (operated by SPOTImage) provides multispectral imagery that is
competitive with OrbView-2 in certain markets, such as agricultural assessment.
There are five existing satellite-based providers of low-resolution imagery:

- 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;

- Space Imaging'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;

- RadarSat-1, operated by CSA, provides radar imagery with a resolution
that varies between 10 and 100 meters. RadarSat-1 will be phased out
based on its seven year design life when RadarSat-2 is deployed in 2002;

- KVR-1000, a Russian government satellite, provides film-based, two-meter
resolution panchromatic images; and

- IRS-IC, an Indian Space Agency satellite, provides six-meter panchromatic
and 25 meter multispectral imagery.

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We view these providers as indirect competitors to our high-resolution
OrbView satellite imagery in certain markets.

Future Satellite Competitors. The high-resolution OrbView satellites are
expected to face significant 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 and who
have partnered with various industry participants:

- Space Imaging, which is owned by Lockheed Martin Corporation, Raytheon
Company and Mitsubishi Corporation, has announced plans to launch its
first high-resolution (one-meter) satellite in mid-1999; and

- EarthWatch, whose major shareholders include Ball Aerospace and
Technology Corporation, Telespazio and Hitachi, Ltd has announced plans
to launch its high-resolution (one-meter) satellite in late 1999.

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 and RadarSat-2. 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, and the European Space Agency has announced that
it plans to launch Envisat satellite in late 1999 that will include a radar
instrument with 8-meter spatial resolution that may compete with RadarSat-2. The
U.S. Navy has also announced its intention to procure a satellite with low
resolution hyperspectral capability from Space Technology Development
Corporation, which would retain certain commercial marketing rights. There is
also an Israeli government sponsored commercial joint venture that is seeking to
market commercially high-resolution imagery using Israeli remote imaging
satellites.

EMPLOYEES

As of December 31, 1998, ORBIMAGE had 94 employees. None of our employees
is represented by a collective bargaining agreement.

PROPERTIES

ORBIMAGE currently leases approximately 13,000 square feet of office and
operations space in Dulles, Virginia from Orbital at cost. See "Certain
Relationships and Related Transactions -- Services Agreement." We also lease
approximately 16,000 square feet of office and operations space in St. Louis,
Missouri.

LEGAL PROCEEDINGS

We are not a party to any pending legal proceedings material to its
financial condition or results of operations. For a discussion of regulatory
issues affecting ORBIMAGE, see "Regulation."

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REGULATION

The satellite remote imaging industry is a highly regulated industry, both
domestically and internationally. In the U.S., remote imaging satellites
generally require licenses from the DoC and from the FCC. In addition, in order
to operate internationally, remote imaging satellites may require licenses from
the governments of foreign countries in which imagery will be directly
downlinked.

UNITED STATES REGULATION

DoC regulation. The DoC, through the 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
ORBIMAGE'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 our ability to market our 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 our international customers and
distributors for high-resolution optical imagery. The OrbView-1 satellite is not
subject to DoC-NOAA regulation since its imagery can be sold only to the U.S.
government.

ORBIMAGE currently has a DoC license for OrbView-2 and two one-meter
high-resolution satellites. We also filed an amendment application with the DoC
to permit us to make OrbView-4 hyperspectral imagery available commercially. We
cannot assure that DoC will grant the amendment request, or that the agency will
take such action in a manner consistent with our planned schedule for launch and
operation of OrbView-4. While a final decision has not been rendered, the DoC
has indicated that the approval may be subject to certain limitations on our
ability to deliver hyperspectral imagery to commercial customers, such as
delaying release of imagery or degrading spatial resolution of such imagery that
is available for commercial uses. If the DoC does not approve the license
amendment on acceptable terms, our financial condition and results of operations
could be materially adversely affected.

The DoC licenses for OrbView-2, OrbView-3 and OrbView-4 expire in 2004.
While we believe that the DoC would renew our licenses at that time, the DoC's
failure to do so with respect to the OrbView-3 and OrbView-4 satellites could
materially affect our business. While we do not believe that we require a DoC
license to function as a RadarSat-2 distributor and Orbital has informed us that
it does not believe a DoC license will be required in connection with MDA's
operation of RadarSat-2, we cannot assure that the DoC will not in the future
impose some form of licensing requirement. If such a requirement were imposed
and Orbital or we were not able to obtain a license, our inability to obtain
such a license on favorable terms and consistent with our business plan could
have a material adverse effect on our results of operations.

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. A 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.

Both NTIA and the FCC regulate the operation of OrbView-2. NASA has the
NTIA license to downlink 4-kilometer OrbView-2 imagery on a government-only
frequency. NASA provides us with the

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imagery to sell to our commercial customers, and NASA provides this imagery to
government researchers as well. Orbital has an experimental license issued by
the FCC to operate and receive 1-kilometer imagery from OrbView-2. This
experimental license was set to expire in January 1999, but Orbital has timely
filed for renewal. Under the FCC's rules, Orbital's license continues in effect
until the FCC acts on the renewal application. Although the FCC routinely grants
renewal of an experimental license, we cannot assure you that the FCC will in
fact grant the renewal of Orbital's experimental license.

In February 1999, the FCC granted our application for a license to launch
and operate the OrbView-3 and OrbView-4 satellites, and to obtain a frequency
allocation in the FCC's Earth 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
our potential satellite-based competitors, EarthWatch and Space Imaging EOSAT,
hold licenses to use the same frequency band that we intend 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. Because our
OrbView-3 and OrbView-4 license has been granted, the FCC will now process our
applications for licenses to operate the associated Earth stations. We cannot
assure you that we will receive the necessary FCC authorization to operate the
ground system as planned. Failure to receive the necessary authorizations could
have a material adverse effect on our business.

The RadarSat-2 satellite will be operated only in Canada. Therefore, the
RadarSat-2 satellite is not subject to the FCC licensing requirements. While
Canada does not have licensing requirements analogous to the DoC regulatory
scheme in the United States, under the CSA Contract, the Canadian government has
reserved the right to interrupt service during periods of national emergency
that affect Canadian or allied national security interests.

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. We cannot assure that U.S. regulators will not decide to impose
limitations currently applicable only to other countries or other regulatory
limitations that affect satellite remote imaging operations. Any such
limitations could adversely affect our 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:

- 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);

- the Intelsat and Inmarsat agreements, which require that operators of
international satellite systems must demonstrate that they will not cause
technical harm to Intelsat and Inmarsat; and

- regulations of foreign countries that require that satellite operators
secure appropriate licenses and operational authority for utilization of
the required spectrum in each country.

Under the CSA Contract, the CSA is obligated to coordinate with the ITU to
secure the necessary authorizations to operate the RadarSat-2 satellite in
Canada. The CSA's failure to obtain the necessary authorizations in a timely
manner could have a material adverse effect our results of operations.

The U.S. government, on our behalf, 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 satellite systems. In addition, this
coordination 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 we intend to have the U.S. government initiate the
ITU coordination process for the

44
<PAGE> 49

high-resolution OrbView satellites as quickly as possible. We believe that the
ITU registration process will not prevent us from obtaining necessary foreign
licenses in a timely manner.

In addition to compliance with ITU regulations and coordination processes,
we must also demonstrate that our satellites will not cause technical harm to
Intelsat and Inmarsat, pursuant to the Intelsat and Inmarsat Agreements signed
under international treaty. We have completed this process for OrbView-2 and
believe that because of the frequencies we intend to use, the high-resolution
OrbView satellites will not cause any technical harm to the Intelsat or Inmarsat
systems.

Within foreign countries, we expect that our regional distributors or
customers will secure appropriate licenses and operational authority to use the
required spectrum in each country into which we will downlink high-resolution
OrbView satellite imagery. For the most part, we anticipate that our
distributors or customers will perform these activities, with our assistance
when required.

While we believe that we will be able to obtain all U.S. and international
licenses and authorizations necessary to operate effectively, we cannot assure
that we will be successful in doing so. Our failure to obtain some or all
necessary licenses or approvals could adversely affect our business.

45
<PAGE> 50

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES OF ORBIMAGE

The following table sets forth the directors, executive officers and key
employees 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............................ 58 President and Chief Operating Officer
Edward D. Nicastri........................ 51 Vice President, Engineering and Operations
Armand D. Mancini......................... 40 Vice President, Chief Financial Officer
Marshall B. Faintich...................... 51 Vice President, Strategic Development
Steven M. Cox............................. 52 Vice President, International Marketing
Joseph K. Dodd............................ 44 Vice President, Government Marketing
Mark G. Pastrone.......................... 34 Vice President, Commercial Marketing
Raymond J. Helmering...................... 60 Vice President, Image Products and
Services
James A. Abrahamson....................... 65 Director
Bruce W. Ferguson......................... 44 Director
Richard Reiss, Jr. ....................... 54 Director
William W. Sprague........................ 41 Director
</TABLE>

DAVID W. THOMPSON is our Chairman of the Board and Chief Executive Officer,
a position he has held since 1993. He is also 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 our President and Chief Operating Officer, 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 our Vice President of Engineering and
Operations 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 from 1988 to 1993. Prior to 1988 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
ORBIMAGE 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.

DR. MARSHALL B. FAINTICH has been the Vice President for Strategic
Development for ORBIMAGE since 1997. From 1987 to early 1997, Dr. Faintich was
employed by TRIFID Corporation, a leading satellite-based geographic information
services company, where he was a co-founder and Chief Technical Officer. Prior
to that, Dr. Faintich's career in government service spanned more than 16 years,
including

46
<PAGE> 51

positions at the Naval Weapons Laboratory and the Defense Mapping Agency, now
the National Imaging and Mapping Agency. He has received numerous DoD awards and
has served in leading positions on imaging industry working groups and
associations, including as a National Director of the American Cartographic
Association.

STEVEN M. COX has been the Vice President for International Marketing for
ORBIMAGE since 1997. From 1996 to 1997, Mr. Cox was Vice President of Marketing
for ImageLinks, Inc., a satellite imagery processing company. From 1994 to 1996
he was in charge of worldwide marketing for an imaging satellite joint venture
formed by CORE Software Technology and Israel Aircraft Industries. From 1989 to
1994, he served as the Executive Director of Worldwide Sales for Space Imaging
EOSAT, the operator of the U.S. Landsat low-resolution Imagery satellite
services.

JOSEPH K. DODD has been the Vice President of Government Programs for
ORBIMAGE since 1997. Mr. Dodd has over 18 years experience in the satellite
remote sensing and space industry. From 1996 to 1997, Mr. Dodd was employed as
director of systems development at Hughes Electronics' Space and Communications
group. From 1979 to 1996, Mr. Dodd worked on a number of U.S. government imaging
satellite programs at The Aerospace Corporation.

MARK G. PASTRONE has been Vice President of Marketing and Business
Development for ORBIMAGE since 1997 and has been employed by ORBIMAGE since
1995. From 1992 to 1995, Mr. Pastrone was employed by Orbital. From 1987 to
1988, Mr. Pastrone was employed as an aerospace engineer for Integrated Systems
Incorporated, and from 1989 to 1990 as Manager of Air Vehicles, specializing in
guidance, navigation and control of aerospace vehicles.

DR. RAYMOND J. HELMERING was appointed our Vice President of Image Products
and Services in May 1998 He joined ORBIMAGE as a result of the TRIFID
acquisition. Before joining us, Dr. Helmering was President and Chief Operating
Officer of TRIFID Corporation from 1987 to 1998. Dr. Helmering also served for
over twenty years within the U.S. Department of Defense Mapping, Charting and
Geodesy Programs where his duties included managing a $100 million research and
development program. Dr. Helmering has served as an affiliate professor of
geodetic science at Washington University in St. Louis, Missouri.

GENERAL (RET.) JAMES A. ABRAHAMSON has been a member of the Board since
April 1998. General Abrahamson currently serves as Chairman and Chief Executive
Officer of StratCom, LLC and Air Safety Consultants. From 1992 to 1995, he
served as Chairman of Oracle Corporation. He served as Executive Vice President
for Corporate Development for Hughes Aircraft Company from October 1989 to April
1992 and President of the Transportation Sector for Hughes Aircraft Company from
April 1992 to September 1992. General Abrahamson directed the Strategic Defense
Initiative from April 1984 until he retired from the Air Force in January 1989
at the rank of Lieutenant General. General Abrahamson is also a director of
Western Digital Corporation and Stratesec Corporation.

BRUCE W. FERGUSON has been a member of the Board 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 Manager/ 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.

RICHARD REISS, JR. has been a member of the Board since 1997. Mr. Reiss
founded Georgica Advisors LLC in 1997, a private investment firm, to make both
public and private investments in the communications, media and entertainment
industries. From 1982 to 1997, Mr. Reiss was the Managing Partner of Cumberland
Associates, a private investment firm that 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

47
<PAGE> 52

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 since 1997. Mr. Sprague
is the founder and President of Crest Communications 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., Wave Transnational LLC, One-On-One Sports,
Inc. and Communications Resources, Inc.

EXECUTIVE COMPENSATION

The following table sets forth all compensation earned for services
rendered to ORBIMAGE in the fiscal years ended December 31, 1997 and 1998, by
ORBIMAGE's Chief Executive Officer and the three most highly compensated
executive officers in all capacities in which they served (the "Named
Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- -----------------------------
SECURITIES
UNDERLYING
OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITIONS SALARY BONUS (#) COMPENSATION(1)
---------------------------- -------- -------- ----------- ---------------
<S> <C> <C> <C> <C>
David W. Thompson
Chairman and Chief Executive Officer(2)
1998...................................... $ -- $ -- 50,000 $ --
1997...................................... -- -- 40,000 --
Gilbert D. Rye
President and Chief Operating Officer
1998...................................... 215,000 97,200 60,000 15,120
1997...................................... 200,000 110,000 50,000 11,658
Edward D. Nicastri
Vice President, Engineering and Operations
1998...................................... 162,500 48,260 20,000 11,271
1997...................................... 116,000 64,500 90,000 8,488
Armand D. Mancini
Vice President, Chief Financial Officer
1998...................................... 132,000 39,200 20,000 8,774
1997...................................... 115,000 39,300 15,000 6,789
</TABLE>

- ---------------
(1) Includes matching and profit-sharing contributions earned under a 401(k)
Plan and the dollar value of premiums paid by ORBIMAGE with respect to life
insurance for their benefit.

(2) Mr. Thompson's salary, bonus and long-term compensation (other than options)
are paid by Orbital. Except as set forth in the above table, Mr. Thompson is
not compensated for services rendered in his capacity as an officer of
ORBIMAGE.

ORBIMAGE pays Gen. Abrahamson a $1,000 director's fee for each meeting of
the Board that he attends. In addition, ORBIMAGE reimburses all directors for
out of pocket expenses incurred for their services rendered as directors.

48
<PAGE> 53

INDEMNIFICATION AGREEMENTS

We have entered into an indemnification agreement with each of our
executive officers and directors. Each agreement provides that if an executive
officer or director is or is threatened to be made a party to an actual or
threatened civil, criminal, administrative or investigative action, suit or
proceeding (other than an action brought by or in the right of ORBIMAGE), we
will indemnify that executive officer or director against expenses (including
attorneys' fees), judgments, fines and amounts actually and reasonably incurred
by him or her in connection with that action, suit or proceeding, if he or she
acted in good faith and in a manner that he or she reasonably believed to be in,
or not opposed to, the best interests of ORBIMAGE. With respect to any criminal
action or proceeding, our obligation to indemnify the executive officer or
director applies so long as he or she had no reasonable cause to believe that
his or her conduct was unlawful. If an executive officer or director is or is
threatened to be made a party to an actual or threatened action or suit that is
brought by or in the right of ORBIMAGE, we are still obligated to indemnify that
officer or director unless he or she is determined to be liable to ORBIMAGE.

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 December 31, 1998, 4,800,000 shares of common stock were authorized
for issuance under the Stock Option Plan, of which 2,636,500 options were
outstanding at exercise prices ranging from $3.60 to $5.10 per share. Of the
total number of options outstanding, 1,181,451 were currently exercisable.

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,
1998, which options are reflected in the Summary Compensation Table.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------- POTENTIAL REALIZED VALUE
PERCENT OF AT ASSUMED ANNUAL
NUMBER OF TOTAL OPTIONS RATES OF STOCK PRICE
SECURITIES GRANTED APPRECIATION FOR
UNDERLYING TO EMPLOYEES EXERCISE OR OPTION TERM
OPTIONS IN FISCAL YEAR BASE PRICE EXPIRATION -------------------------
NAME GRANTED(1) 1998 PER SHARE(2) DATE 5% 10%
---- ---------- --------------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
David W. Thompson.......... 50,000 7% 4.17 1/14/08 $131,125 $332,295
Gilbert D. Rye............. 60,000 8% 4.17 1/14/08 157,349 398,754
Edward D. Nicastri......... 20,000 3% 4.17 1/14/08 52,450 132,918
Armand D. Mancini.......... 20,000 3% 4.17 1/14/08 52,450 132,918
</TABLE>

- ---------------
(1) Options generally vest in one-third increments over a three-year period.

(2) Options are granted at the fair market value on the date of grant, as
determined by the Board. Certain factors considered by the Board in
determining the fair market value of options include, without limitation:
(i) valuations done in connection with recent financings; (ii) the
conversion price of the Company's Series A preferred stock; (iii) results of
operations; (iv) whether ORBIMAGE has entered into any new contracts; and
(v) the lack of a market for ORBIMAGE common stock.

The Board has implemented an incentive bonus plan. Members of senior
management are eligible for bonuses equal to between 10% and 50% of their base
salary, based upon their success in meeting certain team and individual
incentives that are defined by the Board.

49
<PAGE> 54

ORBIMAGE awarded options to purchase 10,000 shares of common stock to one
non-employee director in April 1998, when that director was elected to serve on
the Board.

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, 1998.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED IN-
UNEXERCISED OPTIONS AT THE-MONEY OPTIONS AT
DECEMBER 31, 1998 DECEMBER 31, 1998(1)
--------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
David W. Thompson.............................. 141,111 148,889 $204,066 $179,634
Gilbert D. Rye................................. 204,167 155,833 296,750 180,550
Edward D. Nicastri............................. 30,000 80,000 27,900 74,400
Armand D. Mancini.............................. 80,000 55,000 117,150 65,400
</TABLE>

- ---------------
(1) The value of unexercised in-the-money options at December 31, 1998 assumes a
fair value of $5.10 for ORBIMAGE's common stock.

50
<PAGE> 55

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the common stock and Series A preferred stock as of December 31,
1998: (i) by each person who beneficially owns more than five percent of the
Series A preferred stock (which votes as a class on certain matters); (ii) by
each person who beneficially owns more than five percent of the common stock
(including the Series A preferred stock on an as-converted basis); (iii) by each
director and named officer; and (iv) by all executive officers and directors as
a group.

All persons listed below have an address in care of ORBIMAGE's principal
executive offices unless otherwise noted.

<TABLE>
<CAPTION>
SHARES OF PREFERRED SHARES OF COMMON
STOCK BENEFICIALLY STOCK BENEFICIALLY
OWNED(1) OWNED(1)(2)
-------------------- --------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT
------------------------ -------- -------- ---------- -------
<S> <C> <C> <C> <C>
Orbital Sciences Corporation........................... -- --% 25,200,000 60.4%
21700 Atlantic Boulevard
Dulles, VA 20166
Merrill Lynch KECALP L.P............................... 245,813(3) 35.8 5,894,796 14.1
225 Liberty Street
South Tower, 23rd Floor
New York, NY 10080-6123
Crest Funding Partners, L.P.(4)........................ 195,520(5) 28.4 4,688,729 11.2
320 Park Avenue
New York, NY 10022
Morgan Guaranty Trust Company of New York.............. 145,386(6) 21.1 3,486,475 8.4
522 Fifth Avenue
New York, NY 10036
Georgica Advisors LLC(7)............................... 74,295(8) 10.8 1,781,655 4.3
1114 Avenue of the Americas
New York, NY 10036
David W. Thompson(9)................................... -- -- 157,778 *
Gilbert D. Rye(9)...................................... -- -- 224,167 *
Armand D. Mancini(9)................................... -- -- 86,667 *
Edward D. Nicastri(9).................................. -- -- 36,667 *
James A. Abrahamson.................................... -- -- -- --
Bruce W. Ferguson(9)(10)............................... -- -- 151,667 *
William W. Sprague(4)(9)............................... -- -- 1,667 *
Richard Reiss, Jr.(7)(9)............................... -- -- 1,667 *
All executive officers and directors as a
group(9)(10)......................................... -- -- 660,280 1.6
</TABLE>

- ---------------
* Less than one percent.

(1) The persons named in this table have sole voting power with respect to all
shares 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 December 31, 1998, are
deemed outstanding.

(2) Each of Crest Funding Partners, L.P., Merrill Lynch KECALP L.P., Morgan
Guaranty Trust Co. and Georgica Advisors LLC or their respective affiliates
currently owns shares of Series A preferred stock. Each share of Series A
preferred stock is convertible into approximately 24 shares of common
stock. See "Description of Capital Stock -- Series A Preferred
Stock -- Conversion Rights."

51
<PAGE> 56

(3) Includes 150,775 shares owned by Merrill Lynch KECALP L.P. 1997, 49,685
shares owned by Merrill Lynch KECALP L.P. 1999, 28,790 shares owned by
Merrill Lynch KECALP International L.P. 1997, and 16,563 shares owned by
Merrill Lynch KECALP International L.P. 1999.

(4) William W. Sprague, a director of the Company, is the founder and President
of Crest Management Company, LLC, the manager of Crest Funding Partners,
L.P.

(5) Includes 142,166 shares owned by Crest Funding Partners, L.P., and 53,354
shares owned by Crest Management Company LLC.

(6) Includes 103,085 shares owned by Morgan Guaranty Trust Company of New York,
as Trustee of the Commingled Pension Trust Fund (Multi-Market Special
Investment Fund II) of Morgan Guaranty Trust Company of New York; 20,494
shares 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 21,807 shares owned by Morgan Guaranty Trust
Company of New York, as Investment Manager and Agent for the Alfred P.
Sloan Foundation (Multi-Market Account).

(7) Richard Reiss, Jr., an ORBIMAGE director, is the founder and President of
Georgica Advisors LLC.

(8) Includes 63,256 shares owned by Georgica Partners, 8,662 shares owned by
Georgica International Fund and 2,337 shares owned by Georgica Advisors
LLC.

(9) Consists of shares of common stock issuable upon the exercise of options.

(10) Includes 14,000 shares of common stock issued pursuant to option exercises.

52
<PAGE> 57

SELLING HOLDERS

The following table sets forth as of February 12, 1999, certain information
with respect to the warrants owned by the selling holders listed below. As of
the date hereof, none of the selling holders owns any of the warrant shares
offered hereby. Such information has been obtained from the warrant agent. None
of such holders has, or within the past three years has had, any position,
office or other material relationship with the Company.

<TABLE>
<CAPTION>
WARRANTS
BENEFICIALLY
OWNED PRIOR TO
NAME THE OFFERING
---- --------------
<S> <C>
Bank of New York............................................ 59,825
Bankers Trust Company....................................... 12,415
Bear, Stearns Securities Corporation........................ 800
Boston Safe Deposit and Trust Company....................... 14,680
Brown Brothers Harriman & Co................................ 1,145
Chase Manhattan Bank........................................ 2,270
Chase Manhattan Bank Trust Company of California............ 14,750
Firstar Trust Corporation................................... 6,500
First Union National Bank................................... 575
FUNB-Main................................................... 950
Goldman, Sachs & Co......................................... 4,780
Investors Bank and Trust/M.F. Custody....................... 600
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... 1,750
Merrill Lynch, Pierce Fenner & Smith Safekeeping............ 800
NationsBank Montgomery Securities LLC....................... 500
Northern Trust Company...................................... 4,780
PNC Bank, National Association.............................. 130
SG Cowen Securities Corp.................................... 11,570
State Street Bank and Trust Company......................... 8,680
Yasuda Bank and Trust Company (U.S.A.)...................... 2,500
-------
150,000
=======
</TABLE>

Because the selling holders may, pursuant to this Prospectus, offer all or
some portion of the warrants they presently hold, no estimate can be given as to
the number of warrants that will be held by the selling holders upon termination
of any such sales. In addition, the selling holders identified above may have
sold, transferred or otherwise disposed of all or a portion of their warrants
since the date on which they provided the information regarding their warrants,
in transactions exempt from the registration requirements of the Securities Act.
This information may change from time to time, and, if required, such changes
will be set forth in a supplement or supplements to this Prospectus. See "Plan
of Distribution."

Only selling holders identified above who own the warrants set forth
opposite each such selling holder's name in the foregoing table on the effective
date of the registration statement, or in supplements to this Prospectus, may
sell such warrants pursuant to the registration statement. We may from time to
time, in accordance with the Warrant Registration Rights Agreement, include
additional selling holders in supplements to this Prospectus.

53
<PAGE> 58

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

STOCK PURCHASE AGREEMENT

During 1997, we sold 372,705 shares of our Series A Cumulative Convertible
Preferred Stock for $100 per share pursuant to a stock purchase agreement,
generating net proceeds of approximately $33.5 million. We used these proceeds
to fund 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. During 1998, the Series A holders exercised their rights
under the stock purchase agreement to purchase an additional $22.7 million of
Series A preferred stock. This Series A offering generated net proceeds of
approximately $21.3 million.

Capital Contributions. As part of the initial sale of Series A preferred
stock in 1997, Orbital contributed approximately $91.5 to our capital and paid
us $40.9 to purchase OrbView-1 and OrbView-2 imagery, for total payments to us
of $132.4 million. These payments were offset by approximately $95 million that
we owed to Orbital under the procurement agreement and the services agreement,
resulting in net payments to us of $37.4 million. See "-- Procurement
Agreement," and "-- Services Agreement."

Change of Control. We have certain obligations to our Series A holders
upon a "change of control." If a change of control occurs before the latest of:

- the successful in-orbit checkout of OrbView-3,

- the closing of an initial public offering that meets certain criteria, or

- the end of a 180-day period in which the average price of the common
stock exceeds a certain level relative to the conversion price of the
Series A preferred stock,

then we must offer to purchase, subject to the rights of the holders of the
Notes, all outstanding shares of Series A preferred stock for a purchase price
of 101% of the liquidation amount of the stock. If the change of control occurs
before the fourth anniversary of the initial 1997 sale of the Series A preferred
stock, then we must also pay each Series A holder an amount equal to the
dividends that would have accrued on such holder's shares of Series A preferred
stock from the date of the change of control through the fourth anniversary of
the initial 1997 sale of the Series A preferred stock.

For these purposes, a "change of control" means:

- the failure by Orbital to hold at least 50% of the shares of common stock
of ORBIMAGE;

- the failure by Orbital to hold at least 30% of the common stock of
ORBIMAGE on a fully diluted basis, without giving effect to the
conversion of capital stock of ORBIMAGE issued (i) as a paid-in-kind
dividends on the Series A preferred stock or (ii) upon the exercise of
options granted under the stock option plans for our employees or
directors;

- the acquisition of beneficial ownership by any person or group of persons
of an amount of voting equity securities of ORBIMAGE that equals or
exceeds the amount of voting equity interests held by Orbital, except (i)
purchases by our current Series A holders and their affiliates from other
Series A holders or their affiliates and (ii) purchases by the Series A
holders from us resulting from the exercise of their subscription rights
under the stockholders' agreement;

- the acquisition of ORBIMAGE, or the sale, lease, transfer, conveyance or
other disposition (including through a liquidation or dissolution) of all
or substantially all of our assets, or the combination of ORBIMAGE with
another entity, unless immediately after such transaction, our
stockholders hold more than 50% of voting equity interests in the
acquiring or surviving entity;

- the adoption of a plan relating to the liquidation or dissolution of
ORBIMAGE (other than a liquidation or dissolution to or for the benefit
of any of our wholly owned subsidiaries);

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- our failure to obtain any applicable license or license amendment so that
it is in full force and effect within 30 days before the scheduled launch
of either of OrbView-3 or OrbView-4;

- the revocation of any license necessary to operate OrbView-2, OrbView-3
or OrbView-4 consistent with our current and planned commercial
operations if it is not cured within 30 days, unless we are appealing the
revocation and have received regulatory approval to continue operations
under the revoked license pending the outcome of the appeal; or

- unless consented to by a majority of the Series A holders, the
acquisition of beneficial ownership by any person or group of persons of
35% or more of the voting equity securities of Orbital, and at any time
thereafter if (i) less than a majority of Orbital's board of directors
are "continuing directors" (i.e., directors as of February 25, 1998 or
their nominees) or (ii) Orbital or an acquiror announces, or Orbital's
board approves a business plan, in either case that indicates an
intention to de-emphasize or curtail our relationship with Orbital.

STOCKHOLDERS' AGREEMENT

In connection with the 1997 sale of our Series A preferred stock, we
entered into a stockholders' agreement with Orbital and the Series A holders.
The stockholders' agreement governs certain voting rights of, and restrictions
upon transfer on, the Series A preferred stock.

Board of Directors. The stockholders' agreement provides that the Board
shall consist of up to five members. The majority of the Series A holders have
the right to elect two directors, and may be entitled to elect two additional
directors upon the occurrence of certain events described in "Description of
Capital Stock -- Series A Preferred Stock -- Voting." The majority of the
holders of the common stock also have the right to elect two directors. The
fifth member of the Board must be an independent director, elected by a majority
vote of all stockholders, 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. However, as long as Orbital holds 50% of the voting
stock of ORBIMAGE, it has the right to appoint the independent member of the
Board with the consent of one of the Series A directors, and as long as Orbital
holds 20% of the voting stock of ORBIMAGE, it may appoint one of the two common
directors. The stockholders' agreement provides for vacancies to be filled using
the same nomination procedures that are used for elections.

A majority vote of the Board, including in some cases the affirmative vote
of at least one Series A director, is required before we can, among other
things:

- merge, consolidate, liquidate or sell all or substantially all of our
assets;

- modify the stock purchase agreement or the stockholders' agreement, or
the procurement agreement, the services agreement or the OrbView-2
License, if such modifications would affect satellite performance or
increase our costs by more than $1 million;

- issue or commit to issue equity securities or securities convertible into
or exchangeable or exercisable for equity securities;

- incur indebtedness for borrowed money or any capital lease in excess of
$0.5 million;

- select, approve or remove any officer; or

- declare any dividends on the common stock.

Restrictions on Transfer. Subject to limited exceptions, the stockholders
have agreed not to transfer, pledge, mortgage, hypothecate or otherwise encumber
any shares of common stock or Series A preferred stock. The stockholders have
also agreed as follows:

Right of First Purchase. Any stockholder desiring to transfer common
stock or Series A preferred stock must first give Orbital the right to
purchase such shares.

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Right of First Refusal. Conversely, if Orbital desires to transfer
common stock or Series C preferred stock, it must give stockholders the
right to purchase a proportionate amount of such common stock or Series C
preferred stock.

Tag-Along Rights. If Orbital proposes to transfer any shares of
common stock or Series C preferred, the Series A holders will have the
right to "tag along" in the transfer by requiring Orbital to sell a
proportionate amount of their Series A preferred stock.

Drag-Along Rights. If 70% of the common holders (on a fully diluted
basis) propose to transfer 70% or more of their common stock, the Series A
holders may be required to convert their Series A preferred stock into
common stock and transfer such common stock to the proposed transferee.

Subscription Rights. If we plan to offer to issue private equity
securities (including warrants, options or other rights to acquire equity
securities), we must notify our Series A holders of the terms of the offering
and offer a proportionate amount of the securities being offered (based on each
Series A holders current ownership) to each Series A holder. These subscription
rights will expire upon a public offering of the common stock.

Registration Rights. Holders of more than 35% of our outstanding common
stock may demand that we file up to three registration statements to permit the
sale and distribution of their common stock. Also, if we register any of our
common stock (excluding registrations on Form S-8 or Form S-4, or that are
incident to the registration of convertible securities), the common holders may
require us to include their common stock within such registration statement.
These registration rights are subject to customary underwriters' cutbacks and
other standard exceptions, and are not exercisable until (i) 180 days after an
initial public offering of common stock or (ii) after June 30, 2002, if we have
not consummated an initial public offering of our common stock by that time.

PROCUREMENT AGREEMENT

ORBIMAGE and Orbital are parties to a procurement agreement. The
procurement agreement, as amended requires Orbital to:

- design, develop, construct and launch OrbView-1, OrbView-3 and OrbView-4;

- grant us a license to market OrbView-2 imagery, including the right to
receive all payments to Orbital from NASA under Orbital's contract to
provide OrbView-2 imagery to NASA;

- build the U.S. central imagery receiving, processing and command and
control ground segment and any necessary infrastructure upgrades for all
four OrbView satellites.

Orbital (or its subcontractors) will retain ownership of all intellectual
property rights underlying the OrbView satellites and related ground systems,
and has granted us a license to use the necessary intellectual property to
operate the OrbView satellites.

Contract Costs. We estimate that the total cost of the OrbView-1,
OrbView-3 and OrbView-4 satellites, the OrbView-2 License and the related U.S.
ground systems will be approximately $285 million, net of $31 million which will
be funded by the U.S. Air Force through an agreement with Orbital ($280 million
of which we have agreed to pay under the procurement agreement). These estimated
costs include all satellite design, construction and launch costs and
hyperspectral capability, but exclude insurance costs. Of this amount, we had
spent approximately $225 million as of December 31, 1998. We expect to spend
approximately $43 million to complete OrbView-3 and OrbView-4 and $17 million to
complete modifications to the related U.S. ground systems. We generally pay our
costs under the procurement agreement on a monthly schedule based on the costs
incurred by Orbital, and pay the remaining amounts upon completion of specified
project milestones, such as critical design review and launch events. Our costs
under the procurement agreement include an extended performance incentive to
Orbital of: (a) up to $1 million per year during each year of the five-year
design lives of OrbView-3 and OrbView-4, based on the operational efficiency of
the satellites, for a maximum payment of up to $10 million; and (b) an
additional $1 million per year per satellite for each year that OrbView-3 or

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OrbView-4 remains in operation beyond its five year design life. See "Risk
Factors -- Contract Revenue -- Contracts may be terminated for a variety of
reasons which would result in a loss of contract revenues."

Risk of Loss. Delivery by Orbital and passing of the risk of loss from
Orbital to us of the OrbView-3 satellite will occur upon separation of the
Pegasus(R) launch vehicle from its carrier aircraft. Delivery and passing of the
risk of loss from Orbital to us of the OrbView-4 satellite will occur upon
intentional ignition of the Taurus(R) launch vehicle. Orbital has already
delivered the OrbView-2 ground command and control segment to us. Orbital will
deliver the OrbView-3 and OrbView-4 ground receiving, processing, and command
and control segments consistent with the OrbView-3 and OrbView-4 satellite
launch dates, although risk of loss of the command and control and the data
processing segments will pass to us on successful completion of specified
acceptance test procedures.

Modifications. We have the right to make changes to the procurement
agreement relating to the specifications for OrbView-3 and OrbView-4, including
changes to Orbital's statement of work, the 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 contract price and board approval in some
instances. Modifications to the procurement agreement that increase our costs by
more than $1 million or materially delay launch or decrease performance of
OrbView-3 or OrbView-4 require approval of a majority of our Board, including at
least one director appointed by the Series A holders. See "Certain Relationships
and Related Transactions -- Stockholders' Agreement." We have agreed to
negotiate with Orbital any price adjustments due to changes we request and to
resolve disputes regarding any such adjustments through arbitration.

Termination. We may terminate the procurement agreement if Orbital fails
to comply with the material terms of the agreement and does not cure such
failure within 60 days of our notice. Orbital may terminate the procurement
agreement if we fail to make the payments required by the agreement.

Limited Remedies. Orbital has made certain one-year warranties to us
regarding the workmanship of the items delivered by it under the procurement
agreement. It has also assigned to us certain third-party warranties that it has
or may have with respect to these items. However, for OrbView-3 and OrbView-4,
following launch, our sole remedy for launch failure, defects, failure to
conform with applicable specifications or any other requirements is limited to
insurance proceeds. Orbital's liability to us for all claims under the
procurement agreement, including breach of its warranties, is limited to $10
million. Orbital is not liable to us for any costs or other damages arising from
schedule delays.

SERVICES AGREEMENT

ORBIMAGE and Orbital are parties to a services agreement, under which
Orbital has agreed to provide to us, upon our request, for three years from the
date of launch of each OrbView satellite:

- general and administrative, accounting, tax, legal, regulatory, and other
similar services on a cost-reimbursable basis with no additional fee;

- office and other facilities-related services on a cost-reimbursable basis
with no additional fee; and

- in-orbit satellite operations for the OrbView satellites on a cost plus
10% fee basis.

Orbital is currently performing services for us under this services
agreement with respect to OrbView-1 and OrbView-2.

NON-COMPETITION AND TEAMING AGREEMENT

Under a non-compete agreement, Orbital has agreed that it will not, and
will not allow any of its affiliates to, enter into contracts to provide
integrated remote sensing satellite-based systems consisting of satellite bus,
payload, launch services and ground systems. Orbital may respond to a request
for a proposal for such an integrated system only if Orbital allows us to have
primary responsibility for the provision of imagery services from the system. In
addition, Orbital must offer us any satellite-based remote imaging project that
emerges from its research and development.
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The non-compete agreement permits Orbital to provide components for
integrated systems or subsystems, but does not permit Orbital to design, develop
or construct sensors capable of generating imagery similar, or technologically
superior, to the imagery of OrbView-2, OrbView-3, OrbView-4 or any satellite
that we purchase from Orbital or its affiliates. Subject to certain exceptions,
Orbital has also agreed not to invest, and not to let its affiliates invest,
more than $10 million in any entity that gathers and distributes satellite-based
imagery similar, or technologically superior, to the imagery of OrbView-2,
OrbView-3, OrbView-4, or any similar satellite that we purchase from Orbital or
its affiliates. The non-compete agreement will terminate on the earlier of (i)
June 30, 2003, the date on which the procurement agreement is terminated, (ii)
the first anniversary of an initial public offering by ORBIMAGE, or (iii) the
end of a 180-day period in which the Company's average common stock price
exceeds certain thresholds.

ORBVIEW-2 LICENSE

Orbital has granted us an exclusive worldwide license to use and sell
OrbView-2 imagery (and to sublicense third parties to distribute OrbView-2
imagery) for a license fee of approximately $62.7 million. The OrbView-2 License
is subject to the limitations imposed by Orbital's contract with NASA for
OrbView-2 imagery and the DoC license applicable to OrbView-2. Orbital has
agreed to use reasonable commercial efforts to obtain and maintain the permits
and licenses that are necessary for the continued operation of the OrbView-2
satellite. Orbital also has assigned to us all amounts that are due or will
become due to Orbital under Orbital's contract with NASA. We have the sole
responsibility for operating and controlling the OrbView-2 satellite.

The OrbView-2 License terminates:

- automatically, if Orbital assigns its contract with NASA to us;

- upon our discretionary determination that the OrbView-2 satellite has
failed;

- at our option, upon Orbital's uncured breach of its contract with NASA;
or

- by either party upon the other's insolvency.

Orbital retains a right of access to our ground station facilities to
perform its obligations under its contract with NASA in the event that we fail
to perform these obligations.

RADARSAT-2 LICENSE

We have entered into a license agreement with Orbital and MDA, dated as of
December 31, 1998, under which MDA has granted us:

- a ten-year exclusive worldwide license to distribute and market
RadarSat-2 imagery products and services, with an option to renew this
license for two years at a renewal price of $10,000 per year;

- a ten-year non-exclusive, royalty-free worldwide sublicense to use the
mark "RadarSat" to promote, market, sell and distribute RadarSat-2
imagery; and

- a perpetual, fully paid non-exclusive license for all RadarSat-2 image
processing and archiving software.

Under the license agreement, MDA has further agreed to:

- construct and operate the RadarSat-2 satellite;

- provide us with RadarSat-2 imagery reception, processing and archiving
services; and

- market RadarSat-2 imagery and serve as our exclusive worldwide
distributor of RadarSat-2 imagery.

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Purchase Price. The RadarSat-2 License will cost $60 million, net of
approximately $140 million funded by CSA through a contract with Orbital. We
will pay the $60 million purchase price in installments based on progress
payments during the satellite construction phase. Such payments will not exceed:
$15 million per year in 1999-2001; $10 million in 2002; and $5 million upon the
successful checkout of RadarSat-2.

Other Fees and Arrangements. We will pay MDA 12% of our annual net
revenues from RadarSat-2 imagery sales for data reception, processing and
archiving services. We will also pay MDA its costs plus 10% for marketing and
distribution services, and approximately $10 million per year to operate the
RadarSat-2 satellite.

Termination. Either ORBIMAGE or MDA may terminate the license agreement
governing the RadarSat-2 License if the other party defaults on its obligations
to pay amounts when due, breaches its representations or warranties, or fails to
perform any other of its material obligations under the license agreement. In
addition, either party may terminate the agreement if the CSA Contract is
terminated for any reason, including by the Canadian government for convenience.

Effects of Termination. Upon termination of the license agreement, our
exclusive license to market and distribute RadarSat-2 imagery will terminate,
except with respect to imagery we have already received, for which we will
continue to hold a non-exclusive license. In addition, MDA will have no further
imagery purchase obligations under the agreement.

If we terminate the license agreement because the CSA Contract terminates
or because MDA fails to obtain the regulatory approvals needed for it to perform
its obligations under the license agreement, MDA must reimburse us for the
amount of our payments toward the purchase price of the RadarSat-2 License as of
the date of termination. In addition, if MDA has not selected a launch vehicle
by December 31, 1999, we are not required to make any more payments under the
license agreement until MDA has selected a launch vehicle. If MDA has not
selected a launch vehicle by June 30, 2000, we are entitled to a refund of 50%
of the license fee that we have paid as of that date.

If MDA terminates the license agreement because of our default before
RadarSat-2 becomes operational, we must pay MDA the balance of the purchase
price of the RadarSat-2 License. If our default occurs after RadarSat-2 is
operational, we do not have to pay MDA any additional amounts for the RadarSat-2
License.

Indemnification. MDA has agreed to indemnify us for breaches of its
representations and warranties and other covenants under the license agreement.
We have agreed to indemnify MDA for breaches of our representations and
warranties and other covenants under the license agreement. These indemnities
survive expiration or termination of the RadarSat-2 License, but are limited to
$10 million.

Guarantee. Orbital has unconditionally guaranteed MDA's full and timely
performance of its obligations under the RadarSat-2 License. If MDA defaults,
Orbital agrees to pay all amounts due to us.

Follow-on projects. Orbital and MDA have agreed to offer us (subject to
negotiation) exclusive commercial distribution rights with respect to any
follow-on RadarSat-2 or similar project before June 30, 2003, if MDA or Orbital
obtains such rights.

OTHER AGREEMENTS

The distributorship contracts that we expect to offer to foreign
high-resolution imagery distributors may require the distributor to purchase
from us an imagery ground station or an OrbView upgrade to an existing ground
station. We are contractually obligated to procure any such ground stations or
upgrades from MDA, provided that the price is commercially competitive.

Orbital has guaranteed our performance under our distribution agreement
with Samsung. This agreement grants Samsung an exclusive license to receive,
process and sell high resolution OrbView-3 imagery of the Korean peninsula, and
a non-exclusive license to receive, process and sell high-resolution OrbView-4
imagery of South Korea.
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DESCRIPTION OF THE WARRANTS

Currently there are 150,000 warrants issued and outstanding to purchase our
common stock. The warrants were issued pursuant to a warrant agreement between
ORBIMAGE and Marine Midland Bank, as warrant agent, in a private transaction
that was not subject to the registration requirements of the Securities Act. The
following summary of certain provisions of the warrant agreement and a warrant
registration rights agreement does not purport to be complete and is qualified
in its entirety by reference to the warrant agreement, the warrant registration
rights agreement and the warrants, including the definitions therein of certain
terms.

GENERAL

Each warrant, when exercised, will entitle the holder thereof to purchase
8.75164 shares of common stock at an exercise price of $0.01 per share. The
exercise price and the number of warrant shares issuable on exercise of a
warrant are both subject to adjustment in certain cases referred to below. The
warrants are exercisable at any time on or after February 25, 1999. 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 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. We will give
notice of expiration not less than 90 nor more than 120 days prior to the
expiration date to the registered holders of the then outstanding warrants. If
we fail to give this notice, the warrants will not expire until 90 days after we
give such notice. In no event will holders be entitled to any damages or other
remedy for our failure to give such notice other than any such extension.

The warrants may be exercised by surrendering to the warrant agent warrant
certificates evidencing the warrants to be exercised with the accompanying form
of election to purchase, properly completed and executed together with payment
of the exercise price. Payment of the exercise price may be made in the form of
cash or a certified or official bank check, payable to the order of ORBIMAGE, or
by surrender of additional warrants. Upon surrender of the warrant certificate
and payment of the exercise price, the warrant agent will deliver or cause to be
delivered, to or upon the written order of such holder, stock certificates
representing the number of whole warrant shares or other securities or property
to which such holder is entitled under the warrants and warrant agreement,
including without limitation any cash payment to adjust for fractional interests
in warrant shares issuable upon such exercise. If less than all of the warrants
evidenced by a warrant certificate are exercised, a new warrant certificate will
be issued for the remaining number of warrants.

No fractional warrant shares will be issued upon exercise of the warrants.
If any fraction of a warrant share would, except for the foregoing provision, be
issuable on the exercise of any warrants (or specified portion thereof), we must
pay to the holder an amount in cash equal to the current market price per
warrant share, as determined on the day immediately preceding the date the
warrant is presented for exercise, multiplied by such fraction, computed to the
nearest whole cent.

Certificates for warrants will be issued in registered form only, and no
service charge will be made for registration or transfer or exchange upon
surrender of any warrant certificate at the office of the warrant agent
maintained for that purpose. We may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
registration or transfer or exchange of warrant certificates.

The holders of the warrants have no right to vote on matters submitted to
the stockholders of the Company and have no right to receive cash dividends. The
holders of the warrants 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.

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The warrant agreement provides that the warrants will not be exercisable by
any holder if the exercise by such holder would cause the Company to violate the
foreign ownership restrictions imposed by the Licenses.

ADJUSTMENTS

The number of warrant shares purchasable upon the exercise of the warrants
and the exercise price both are subject to adjustment in certain events,
including:

- the payment by the Company of dividends (or other distributions) on
common stock of the Company payable in common stock of the Company or
other shares of the Company's capital stock (other than shares of the
Company's Series A preferred stock issued as paid-in-kind dividends)
convertible into or exchangeable for shares of common stock of the
Company;

- subdivisions, combinations and reclassifications of common stock of the
Company;

- the issuance to all holders of common stock of the Company of rights,
options or warrants entitling them to subscribe for common stock of the
Company, or of securities convertible into or exchangeable for shares of
common stock of the Company, in either case for a consideration per share
of common stock which is less than the current market price per share (as
defined in the warrant agreement) of common stock of the Company; and

- the distribution to all holders of common stock of the Company of any of
the Company's assets, debt securities or any rights or warrants to
purchase securities (excluding those rights and warrants referred to in
the immediately preceding bullet and excluding cash dividends or other
cash distributions from current or retained earnings).

No adjustment in the exercise price will be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in the
exercise price; provided, however, that any adjustment that is not made will be
carried forward and taken into account in any subsequent adjustment.

In case of certain consolidations or mergers of the Company, or the sale of
all or substantially all of the assets of the Company to another corporation,
each warrant shall thereafter be exercisable for the right to receive the kind
and amount of shares of stock or other securities or property to which such
holder would have been entitled as a result of such consolidation, merger or
sale had the warrants been exercised immediately prior thereto.

RESERVATION OF SHARES

We have authorized and reserved for issuance such number of shares of
common stock as will be issuable upon the exercise of all outstanding warrants.
Such shares of common stock, when paid for and issued, will be duly and validly
issued, fully paid and non-assessable, free of preemptive rights and free from
all taxes, liens, charges and security interests with respect to the issue
thereof.

AMENDMENT

From time to time, ORBIMAGE and the warrant agent, without consent of the
holders of warrants, may amend or supplement the warrant agreement for certain
purposes, including curing defects or inconsistencies or making changes that do
not materially adversely affect the rights of any holder. Any amendment or
supplement to the warrant agreement that has a material adverse effect on the
interests of the holders of the warrants requires the written consent of the
holders of a majority of the then outstanding warrants. The consent of each
holder of the warrants materially affected is required for any amendment
pursuant to which the exercise price would be decreased (other than pursuant to
adjustments provided for in the warrant agreement as generally described above).

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REPORTS

Whether or not required by the rules and regulations of the Commission, so
long as any of the warrants remain outstanding, we shall cause copies of certain
periodic reports to be filed with the warrant agent and mailed to the holders at
their addresses appearing in the register of warrants maintained by the warrant
agent.

REGISTRATION RIGHTS AND LIQUIDATED DAMAGES

We are required under a registration rights agreement with each of the
holders of warrants to file a shelf registration statement under the Securities
Act covering the resale of the warrants and the issuance of the warrant shares
by November 22, 1998 and to use its best efforts to cause the warrant shelf
registration statement to be declared effective on or before February 25, 1999
and to remain effective until the earlier of such time as all warrants have been
exercised and the expiration date. If we do not comply with its registration
obligations under the warrant registration rights agreement, it will be required
to pay liquidated damages to holders of the warrants under certain
circumstances.

During any consecutive 365-day period, we are entitled to suspend the
availability of the warrant shelf registration statement for up to two 45
consecutive-day periods (except for the 45 consecutive-day period immediately
prior to the expiration date) if there is a possible acquisition or business
combination or other transaction, business development or event and the Board of
Directors determines in the exercise of its reasonable judgment that disclosure
of the event is not in the best interests of the Company and its stockholders,
or that obtaining any financial statements relating to an acquisition or
business combination required to be included in the shelf registration statement
would be impracticable. In such a case, we shall promptly notify the holders of
the suspension of the shelf registration statement's effectiveness; provided,
however, that in no event shall we be required to disclose the business purpose
for such suspension if the Company determines in good faith that such business
purpose must remain confidential. There can be no assurance that we will be able
to file, cause to be declared effective, or keep a registration statement
continuously effective until all of the warrants have been exercised or have
expired.

Each holder of warrants that sells such warrants and each holder of warrant
shares that sells warrant shares pursuant to the warrant shelf registration
statement generally will be required to be named as a selling security holder in
the related prospectus and to deliver a prospectus to the purchaser, will be
subject to certain of the civil liability provisions under the Securities Act in
connection with such sales and will be bound by certain provisions of the
respective registration rights agreements applicable to such holder (including
certain indemnification obligations). In addition, each holder of warrants and
warrant shares will be required to deliver information to be used in connection
with the warrant shelf registration statement to have its warrants and warrant
shares included in such shelf registration statement.

In the event that:

- the warrant shelf registration statement is not filed with the Commission
on or prior to the date specified for such filing;

- the warrant shelf registration statement has not been declared effective
by the Commission on or prior to the date specified for such
effectiveness; or

- following the date such warrant 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 warrant registration rights agreement, (each such
event referred to in these three bullets, a "Shelf Registration
Default"),

we shall pay as liquidated damages to each holder of warrants or warrant shares
an amount equal to $0.0025 per week per warrant for each week that the shelf
registration default continues. The amount of liquidated damages will increase
by an additional $0.0025 per week per warrant with respect to subsequent 90-day
periods until all Shelf Registration Defaults have been cured, up to a maximum
amount of liquidated damages of $0.0125 per week per warrant.

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DESCRIPTION OF CAPITAL STOCK

COMMON STOCK

ORBIMAGE has authorized 75,000,000 shares of common stock, $0.01 par value
per share, 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 stockholders 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, when issued, 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 that ORBIMAGE may issue in the future.

PREFERRED STOCK

ORBIMAGE has authorized 10,000,000 shares of preferred stock, $0.01 par
value per share, including: (a) 2,000,000 shares of Series A preferred stock, of
which 687,576 shares have been issued; (b) 2,000,000 shares of Series B
preferred stock, none of which have been issued; and (c) 2,000,000 shares of
Series C preferred stock, none of which have been issued. The Board is
authorized to issue preferred stock from time to time in one or more series,
with 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 the
Board determines by resolution providing for the issuance of such preferred
stock (other than as a paid-in-kind dividend). The Board currently has no plans
to issue preferred stock. The issuance of such stock could adversely affect the
rights of holders of the 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, payable in cash or in-kind with shares of Series A preferred
stock. In-kind dividends are paid 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. To date, all dividends have been paid
in-kind. If an event occurs that triggers a mandatory conversion of the Series A
preferred stock before the fourth anniversary of the issuance of the Series A
preferred stock (see "Certain Relationships and Related Transactions -- Series A
Preferred Stock -- Conversion Rights"), each holder of Series A stock shall
receive the dividends that would have accrued on such Series A stock 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 -- Stockholders' Agreement." Furthermore, the Series A holders have
the right to elect two additional directors to the Board upon the occurrence of
an "Election Event." An "Election Event" is our failure to:

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- declare and pay dividends on the Series A preferred stock when due which
remains uncured for more than thirty (30) days;

- 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");

- begin the integration and testing of the OrbView-3 satellite by March 15,
1999 or begin the integration and testing of the OrbView-4 satellite by
November 15, 1999. We may extend these dates by up to thirty (30) days if
our president (in consultation with the Series A directors) determines in
his discretion that such delay is advisable.

See "Certain Relationships and Related Transactions -- Procurement
Agreement." The directors elected upon the occurrence of an Election Event will
serve only as long as the Election Event continues. Certain transactions,
including certain additional issuances of our securities, 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 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. The per share conversion price of the Series A
preferred stock is currently $4.17. The Series A preferred stock will
automatically be converted into shares of common stock upon the earliest to
occur of any one of the following events:

- the closing of a public offering of our common stock that meets certain
criteria;

- 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 of
the Series A preferred stock; or

- the proposed sale of 70% or more of our common stock (on a fully diluted
basis), as more fully described in "Certain Relationships and Related
Transactions -- Stockholders' Agreement -- Restrictions on Transfer."

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DESCRIPTION OF THE NOTES

GENERAL

The notes were issued pursuant to an indenture between the Company and
Marine Midland Bank, as trustee. The indenture is subject to and governed by the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). 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, and holders of notes are
referred to the indenture and the Trust Indenture Act for a statement thereof.
The following summary of certain provisions of the notes, the indenture and the
registration rights agreement do not purport to be complete and are qualified in
their entirety by reference to the notes, the indenture and the registration
rights agreement. All terms defined in the indenture and not otherwise defined
herein are used in this section with the meanings set forth in the indenture. A
copy of the indenture and the registration rights agreement will be made
available to holders of notes upon request.

The 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 notes
will be secured to the extent set forth below under "-- Security." As of the
date the units offering was consummated, and upon the application of the net
proceeds therefrom, the Company has no indebtedness that is expressly
subordinated in right and priority of payment to the notes.

PRINCIPAL, MATURITY AND INTEREST

The notes were issued in an aggregate principal amount of $150.0 million.
The notes will mature on March 1, 2005. Interest on the notes accrues at the
rate of 11 5/8% per annum and is payable semi-annually in arrears on March 1 and
September 1 of each year to holders of record on the immediately preceding
February 15 and August 15. Interest on the notes is computed on the basis of a
360-day year comprising twelve 30-day months.

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 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.

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MANDATORY REDEMPTION

We 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."

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 to pay when due the first four
scheduled interest payments of such securities. 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 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.

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.

CERTAIN COVENANTS

The indenture restricts, among other things, the Company's ability to pay
dividends or make certain other restricted payments, incur liens, sell assets,
merge or consolidate with any other person, sell, assign, transfer, lease,
convey or otherwise dispose of substantially all of the assets of the Company,
enter into certain transactions with affiliates or incur additional
indebtedness. The indenture permits, under certain circumstances, the Company's
subsidiaries to be deemed unrestricted subsidiaries and thus not subject to the
restrictions.

EVENTS OF DEFAULT AND REMEDIES

The Indenture provides that each of the following constitutes an Event of
Default:

- default for 30 days in the payment when due of interest on, or liquidated
damages (if any) with respect to, the notes;

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- 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;

- default in the payment of principal and interest or liquidated damages,
if any, on the notes;

- 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 the other covenants in the
indenture for the notes;

- 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:

(i) 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

(ii) 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 (i) and (ii) 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 $5.0 million or more;

- 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 $5.0 million) aggregating in excess
of $5.0 million, which judgments are not paid, discharged or stayed
within 60 days after their entry;

- 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

- certain events of bankruptcy or insolvency with respect to the Company or
any of its Restricted Subsidiaries.

With certain exceptions, 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.

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RELATIONSHIP WITH ORBITAL

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 is a leading provider of turn-key space systems
with a heritage of designing and building satellites and providing launch
services for various satellites operating today. Orbital owns approximately 55%
of the outstanding voting stock of ORBIMAGE on a fully diluted basis. Its 1998
revenues were approximately $734 million. Orbital and its subsidiaries employ
approximately 4,500 people. Its products and services are grouped into three
business sectors:

- space and ground infrastructure systems;

- satellite access products; and

- 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; and a launch vehicle and satellite integration and test
facility at Vandenberg Air Force Base, California. Orbital also has 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.

To date, Orbital has contributed approximately $91.5 million in capital to
ORBIMAGE. We have entered into various agreements with Orbital pursuant to which
we will pay Orbital a fixed price of approximately $340 million, net of $140
million and $31 million which will be funded by CSA and the U.S. Air Force,
respectively, through contracts with Orbital. We have paid approximately $224
million to Orbital through December 31, 1998. Under these agreements, Orbital
has already:

- designed, developed, and launched OrbView-1;

- granted us the OrbView-2 License;

- constructed the U.S. ground segment for OrbView-1 and OrbView-2; and

- designed and began construction of OrbView-3 and OrbView-4.

In addition, under these agreements Orbital is:

- finishing constructing and will test and launch OrbView-3 and OrbView-4;

- building the U.S. ground segment for OrbView-3 and OrbView-4; and

- through MDA, providing us with the RadarSat-2 License.

We use some of Orbital's employees and centralized systems for corporate
and administrative services pursuant to a services agreement. We anticipate that
each of our executive officers will generally devote a sufficient portion of his
or her time to our business. However, any ORBIMAGE executive officer who is also
an Orbital employee also may devote a significant portion of his or her time to
the business of Orbital and its other subsidiaries.

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
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 ORBIMAGE, and may
face
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similar conflicts. Such officers' and Mr. Thompson's salary are paid by Orbital.
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, also have options to acquire Orbital common stock.
Potential conflicts could include:

- the amount of time that Mr. Thompson or other executive officers of both
Orbital and ORBIMAGE are able to devote to the day-to-day operations of
ORBIMAGE; or

- the decision making process involving situations that impact both Orbital
and ORBIMAGE.

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. These
procedures include requiring directors of both Orbital and ORBIMAGE to abstain
from voting as directors of each company on 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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CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES

Latham & Watkins, counsel to ORBIMAGE, has advised ORBIMAGE that the
following discussion is its opinion as to the material U.S. federal tax
consequences relevant to the ownership and disposition of the warrants and the
warrant shares by persons who (a) hold the warrants and warrant shares 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") and
(b) acquired the warrants on original issue for cash. This opinion 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.

This discussion does not discuss every aspect of U.S. federal taxation that
may be relevant to a particular taxpayer in light of its personal circumstances
or to persons who are otherwise subject to special tax treatment (including,
without limitation, banks, broker-dealers, insurance companies, pension and
other employee benefit plans, tax exempt organizations and entities, persons
holding warrants or warrant shares 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.

We have not sought and will not seek any rulings from the IRS concerning
the tax consequences of the ownership or disposition of the warrants or warrant
shares and, accordingly, there can be no assurance that the IRS will not
successfully challenge the tax consequences described below. YOU SHOULD CONSULT
WITH YOUR OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES TO YOU OF THE OWNERSHIP
AND DISPOSITION OF THE WARRANTS AND WARRANT SHARES, INCLUDING THE FEDERAL,
STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH OWNERSHIP AND
DISPOSITION AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAW.

U.S. HOLDERS

This section states the material U.S. federal income tax consequences of
the ownership and disposition of the warrants and warrant shares 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:

- a citizen or resident of the United States,

- a corporation or partnership (including entities treated as a
corporation or a partnership for federal income tax purposes)
created or organized in or under the laws of the United States or of
any state thereof or the District of Columbia, unless in the case of
a partnership, Treasury Regulations provide otherwise,

- an estate whose income is includible in gross income for U.S.
federal income tax purposes regardless of its source, or

- 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.

Tax Treatment of Warrants.

Generally. Because, among other things, the exercise price of each warrant
will be a nominal amount, it is likely that a warrant will be considered to be
constructively exercised for federal income tax

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purposes on the day on which the warrant first becomes exercisable, or possibly,
on the day of its issuance. In this event,

- no gain or loss would be recognized to a U.S. Holder upon either
such deemed exercise or actual exercise of the warrant;

- the tax basis of the warrant shares deemed received will be equal to
the tax basis of the warrant until the warrant is actually
exercised, at which time the tax basis of the warrant shares would
be increased by the exercise price paid;

- the holding period of the warrant shares deemed received should
begin on the date the warrant is considered to be constructively
exercised (i.e., either the issue date of the warrant or the date
the warrant first becomes exercisable); and

- the federal income tax consequences of the ownership and disposition
of the warrant will be the same as if the warrant deemed exercised
actually was a share of common stock as discussed below under the
heading "-- Tax Treatment of Warrant Shares."

In the event that a warrant is not treated as constructively exercised, a
U.S. Holder will recognize gain or loss upon the sale, lapse or other taxable
disposition of a warrant in an amount equal to the difference between the amount
of cash and the fair market value of other property received (if any) by the
U.S. Holder and the U.S. Holder's tax basis in the warrant. Any gain or loss
realized on the sale, lapse or other taxable disposition of a warrant will be
capital gain or loss. This gain or loss will be long-term capital gain or loss
if a U.S. Holder has held the warrant for more than one year.

In addition, if a warrant is not treated as constructively exercised, the
cash exercise of a warrant by a U.S. Holder will not be taxable to the
exercising U.S. Holder, except with respect to cash (if any) received in lieu of
a fractional share. A U.S. Holder will have a tax basis in the warrant shares
received upon exercise of a warrant equal to such holder's tax basis in the
warrant exercised, plus the amount of cash used to pay the exercise price, minus
the portion of such holder's basis in the warrant and cash used to pay the
exercise price attributable to cash (if any) received in lieu of fractional
shares. A U.S. Holder will have a holding period in shares of warrant shares
received upon exercise of a warrant which commences on the day after the date of
such exercise.

In addition, if a warrant is not treated as constructively exercised,
although the law is not entirely clear, the surrender of one or more warrants in
payment of the exercise price of another warrant should not result in taxable
gain or loss to the U.S. Holder, except with respect to cash (if any) received
in lieu of a fractional share, because such exercise is treated as either (i) a
tax-free recapitalization, or (ii) the exercise of a warrant with a zero
exercise price pursuant to its original terms. In such a case, a U.S. Holder
should have a tax basis in the warrant shares received upon exercise of a
warrant which equals such U.S. Holder's tax basis in the warrant exercised,
minus the portion of such holder's basis in the warrant attributable to cash (if
any) received in lieu of a fractional share. If the exercise of a warrant is
treated as a recapitalization, a U.S. Holder will have a holding period in
warrant shares acquired upon exercise of a warrant which commences on the date
the warrants were first acquired. If, however, such exercise is treated as the
exercise of a warrant with a zero exercise price pursuant to its original terms,
a U.S. Holder will have a holding period that commences the day after the date
of such exercise.

Notwithstanding the foregoing, the IRS could assert that a cashless
exercise of a warrant should be treated as a taxable exchange in which gain or
loss should be recognized.

Adjustment in Exercise Price or Conversion Ratio. An adjustment to the
exercise price or conversion ratio of the warrants, or the failure to make such
adjustments, may in certain circumstances result in constructive distributions
to the Holders of warrants which could be taxable as dividends under Section 305
of the Code. In such event, a Holder's tax basis in the warrant would be
increased by the amount of any such dividend.

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Tax Treatment of Warrant Shares.

Distributions. Dividends paid on warrant shares received upon exercise
will be taxable to U.S. Holders as ordinary income, to the extent paid out of
our current or accumulated earnings and profits, then as a tax-free return of
capital to the extent of the U.S. Holder's tax basis in the warrant shares, and
thereafter as capital gain from the sale or exchange of the warrant shares.
Subject to certain restrictions, dividends received by a corporate U.S. Holder
generally will be eligible for the 70% dividends received deduction.

Dispositions of Warrant Shares. A U.S. Holder will recognize capital gain
or loss upon the sale, exchange or other taxable disposition of the warrant
shares in an amount equal to the difference between the amount of cash and the
fair market value of other property received (if any) by the U.S. Holder and the
U.S. Holder's tax basis in the warrant shares. Any gain or loss realized on the
sale, or other taxable disposition of the warrant shares will be capital gain or
loss. This gain or loss would be long-term capital gain or loss if a U.S. Holder
has held the warrant shares for more than one year.

Liquidated Damages.

We intend to take the position that the liquidated damages described above
under "Description of the Warrants -- Registration Rights and 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.

We are required to furnish to record holders of the warrant shares, other
than corporations and other exempt holders, and to the IRS, information with
respect to dividends paid on the warrant shares.

Certain U.S. Holders may be subject to backup withholding at the rate of
31% with respect to dividends paid on the warrant shares or with respect to
proceeds received from a disposition of the warrant shares. Generally, backup
withholding applies only if:

- 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;

- the IRS notifies the payor that the TIN furnished by the payee is
incorrect;

- 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

- 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 states the material United States federal income and estate
tax consequences of the ownership and disposition of warrants and warrant shares
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. 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.

Dividends on Warrant Shares. In general, dividends (i.e., distributions or
deemed distributions) received by a Non-U.S. Holder of warrant shares will be
subject to withholding of U.S. federal income tax

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at a 30% rate, unless such rate is reduced by an applicable income tax treaty.
Dividends that are effectively connected with such Non-U.S. Holder's conduct of
a trade or business in the United States (or, if a tax treaty applies, dividends
that are attributable to a U.S. permanent establishment of such Holder) are
generally subject to U.S. federal income tax at on a net income basis and are
exempt from the 30% withholding tax (assuming compliance with certain
certification requirements) discussed above. Any such effectively connected
dividends received by a Non-U.S. Holder that is a corporation may also, under
certain circumstances, be subject to an additional "branch profits tax" at a 30%
rate or such lower rate as may be applicable under an income tax treaty. For
withholding purposes we are required to treat all distributions as if made out
of our current or accumulated earnings and profits.

Gain on Disposition of Warrants or Warrant Shares. Non-U.S. Holders
generally will not be subject to U.S. federal income taxation on gain recognized
on a disposition of warrants or warrant shares 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 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. Warrants or warrant shares owned or treated as owned
by an individual who is a Non-U.S. Holder at the time of death will be included
in the individual's taxable estate and may be subject to United States federal
estate tax, unless an applicable estate tax treaty provides otherwise.

U.S. Information Reporting Requirements and Backup Withholding Tax.

We must report annually to the IRS and to each Non-U.S. Holder the amount
of dividends paid to each Non-U.S. Holder on warrant shares (and the tax
withheld with respect thereto), regardless of whether withholding was reduced or
eliminated by an applicable tax treaty. Pursuant to tax treaties or other
agreements, the IRS may make its reports available to tax authorities in the
recipient's country of residence. Under current law, dividends paid to an
address in a foreign country are ordinarily presumed to be paid to a resident of
such country for purposes of U.S. backup withholding and for purposes of
determining the applicability of a tax treaty rate, absent knowledge that such
presumption is not warranted. As such, U.S. backup withholding tax generally
will not apply to dividends paid on warrant shares to a Non-U.S. Holder at an
address outside the United States. See the discussion below under the heading
"New Withholding Regulations" for a change in this presumption for payments
received after December 31, 1999.

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
warrants or warrant shares 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 warrants or warrant shares 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.

New Withholding Regulations. 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. For
example, the new withholding regulations adopt a certificate rule under which a
foreign stockholder who wishes to claim the benefit of an applicable treaty rate
with respect to dividends received from a United States corporation will be
required

73
<PAGE> 78

to satisfy certain certification and other requirements. In addition, 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.
YOU SHOULD BE AWARE THAT THE DISCUSSION UNDER "TAXATION OF NON-U.S. HOLDERS"
DOES NOT GIVE EFFECT TO THESE NEW WITHHOLDING REGULATIONS. YOU ARE STRONGLY
URGED TO CONSULT WITH YOUR TAX ADVISOR FOR INFORMATION ON THESE NEW WITHHOLDING
REGULATIONS.

PLAN OF DISTRIBUTION

The warrant shares offered hereby are issuable upon exercise of the
outstanding warrants. No underwriter has been or will be engaged by us in
connection with the offering of the warrant shares. The exercise price of the
warrants was determined through negotiation between ORBIMAGE and the initial
purchasers in connection with the unit offering.

The warrants and the warrant shares may be sold from time to time to
purchasers directly by the selling holders. Alternatively, the selling holders
may from time to time offer such securities through underwriters, dealers or
agents who may receive compensation in the form of underwriting discounts,
concessions or commissions from the selling holders and/or the purchasers of the
securities for whom they may act as agents. The selling holders and any
underwriters, dealers or agents that participate in the distribution of the
warrants or the warrant shares may be deemed to be "underwriters" under the
Securities Act, and any profit on the sale of such securities by them and any
discounts, commissions or concessions received by any such underwriters, dealers
or agents might be deemed to be underwriting discounts and commissions under the
Securities Act.

At the time a particular offer of the warrants or the warrant shares is
made, if required, the number of warrants or warrant shares being offered and
the terms of the offering, including the name or names of any underwriters,
dealers or agents, the purchase price paid by any underwriter for warrants or
warrant shares purchased from the selling holders, any discounts, commissions
and other items constituting compensation from the selling holders and any
discounts, commissions or concessions allowed or reallowed or paid to dealers,
and the proposed selling price to the public will be set forth in one or more
supplements to this prospectus.

To the best of our knowledge, there are currently no plans, arrangements or
understandings between any selling holders and any broker, dealer or underwriter
regarding the sale of the warrants and warrant shares by the selling holders.
There is no assurance that any selling holder will sell any or all of the
warrants and warrant shares offered by it hereunder or that any such selling
holder will not transfer, devise or gift such warrants or warrant shares by
other means not described herein.

To comply with the securities laws of certain states, if applicable, the
offered securities will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, in certain states the offered
securities may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.

Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the offered securities may not simultaneously
engage in market making activities with respect to the common stock for a period
of two business days prior to the commencement of such distribution. In addition
and without limiting the foregoing, each selling holder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, which provisions may limit the timing of purchases and sales of
shares of our common stock by the selling holders.

LEGAL MATTERS

The validity of the warrants and warrant shares offered hereby will be
passed upon by Latham & Watkins, Washington, D.C.

74
<PAGE> 79

EXPERTS

The financial statements of ORBIMAGE as of December 31, 1998 and 1997, and
for each of the years in the three-year period ended December 31, 1998, have
been included herein and in the registration statement in reliance upon the
report of KPMG LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.

75
<PAGE> 80

INDEX TO FINANCIAL STATEMENTS

ORBITAL IMAGING CORPORATION

<TABLE>
<S> <C>
Independent Auditors' Report................................ F-2
Statements of Operations for the years ended December 31,
1996, 1997 and 1998....................................... F-3
Balance Sheets as of December 31, 1997 and 1998............. F-4
Statements of Stockholders' Equity for the years ended
December 31, 1996, 1997 and 1998.......................... F-5
Statements of Cash Flows for the years ended December 31,
1996, 1997 and 1998....................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>

F-1
<PAGE> 81

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Orbital Imaging Corporation:

We have audited the accompanying balance sheets of Orbital Imaging
Corporation ("ORBIMAGE") as of December 31, 1997 and 1998, and the related
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1998. These financial
statements are the responsibility of ORBIMAGE'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 1998, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1998, in
conformity with generally accepted accounting principles.

KPMG LLP

January 22, 1999
Washington, D.C.

F-2
<PAGE> 82

ORBITAL IMAGING CORPORATION

STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1996 1997 1998
------- ----------- -----------
<S> <C> <C> <C>
Revenues.................................................. $ 1,055 $ 2,062 $ 11,663
Direct expenses........................................... 4,320 6,312 15,215
------- ----------- -----------
Gross loss................................................ (3,265) (4,250) (3,552)
Selling, general and administrative expenses.............. 1,630 2,845 7,124
------- ----------- -----------
Loss from operations...................................... (4,895) (7,095) (10,676)
Interest income, net of interest expense of $4,860 in
1998.................................................... -- 1,261 1,845
------- ----------- -----------
Loss before benefit for income taxes...................... (4,895) (5,834) (8,831)
Benefit for income taxes.................................. -- (1,752) (3,312)
------- ----------- -----------
Net loss.................................................. $(4,895) $ (4,082) $ (5,519)
======= =========== ===========
Loss per common share -- basic and assuming dilution
(1)..................................................... $ -- $ (0.42) $ (0.51)
Loss available to common stockholders (1)................. $ -- $ (6,890) $ (12,843)
Weighted average shares outstanding (1):
Basic................................................... -- 16,431,854 25,214,000
Assuming dilution....................................... -- 22,262,975 41,764,949
</TABLE>

- ---------------

(1) All potentially dilutive securities, such as convertible preferred stock,
warrants and stock options are antidilutive for each year presented. Prior
to May 8, 1997, ORBIMAGE was an operating division of Orbital, and loss per
common share for the year ended December 31, 1996 was not considered
meaningful.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

F-3
<PAGE> 83

ORBITAL IMAGING CORPORATION
BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1997 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 10,883 $ 25,082
Available-for-sale securities, at fair value.............. 11,337 34,401
Restricted held-to-maturity securities, at amortized
cost................................................... -- 16,724
Receivables and other current assets, net of allowances of
$0 and $165, respectively.............................. 134 3,199
-------- --------
Total current assets................................. 22,354 79,406
Restricted held-to-maturity securities, at amortized cost... -- 7,813
Property, plant and equipment, at cost, less accumulated
depreciation of $5,144 and $7,630, respectively........... 11,054 15,956
Satellites and related rights, at cost, less accumulated
depreciation and amortization of $12,947 and $22,367,
respectively.............................................. 104,226 196,598
Other assets................................................ 115 8,196
-------- --------
Total assets......................................... $137,749 $307,969
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses..................... $ 4,335 $ 16,879
Current portion of deferred revenue....................... 7,725 8,522
Deferred tax liabilities.................................. 468 580
-------- --------
Total current liabilities............................ 12,528 25,981
Senior notes................................................ -- 141,620
Deferred revenue, net of current portion.................... 29,667 23,698
Deferred tax liabilities.................................... 10,194 3,190
Capitalized lease obligation, net of current portion........ -- 108
-------- --------
Total liabilities.................................... 52,389 194,597
Stockholders' equity:
Preferred stock, par value $0.01; 10,000,000 shares
authorized; Series A 12% cumulative convertible,
2,000,000 shares authorized, 392,887 and 687,576 shares
issued and outstanding, respectively (liquidation value
of $40,074 and $70,133, respectively).................. 4 7
Common stock, par value $0.01; 75,000,000 shares
authorized; 25,214,000 shares issued and outstanding... 252 252
Additional paid-in-capital................................ 111,636 152,488
Accumulated deficit....................................... (26,532) (39,375)
-------- --------
Total stockholders' equity........................... 85,360 113,372
-------- --------
Total liabilities and stockholders' equity........ $137,749 $307,969
======== ========
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

F-4
<PAGE> 84

ORBITAL IMAGING CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY

(IN THOUSANDS, EXCEPT SHARE DATA)

<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 AS OF DECEMBER 31,
1995........................... -- $-- -- $ -- $ 34,703 $(14,747) $ 19,956
Capital contributed.............. -- -- -- -- 13,625 -- 13,625
Tax-sharing charge............... -- -- -- -- (2,407) -- (2,407)
Net loss......................... -- -- -- -- -- (4,895) (4,895)
------- -- ---------- ---- -------- -------- --------
BALANCE AS OF DECEMBER 31,
1996........................... -- -- -- -- 45,921 (19,642) 26,279
Shares issued in private
offering, net.................. 372,705 4 -- -- 33,543 -- 33,547
Shares issued to Orbital......... -- -- 25,200,000 252 31,066 -- 31,318
Shares issued to director........ -- -- 14,000 -- 50 -- 50
Preferred stock dividends paid in
shares......................... 20,182 -- -- -- 2,018 (2,018) --
Accrual of preferred stock
dividends...................... -- -- -- -- 790 (790) --
Tax-sharing charge............... -- -- -- -- (1,752) -- (1,752)
Net loss......................... -- -- -- -- -- (4,082) (4,082)
------- -- ---------- ---- -------- -------- --------
BALANCE AS OF DECEMBER 31,
1997........................... 392,887 4 25,214,000 252 111,636 (26,532) 85,360
Shares issued in private
offering, net.................. 227,295 2 -- -- 21,273 -- 21,275
Common stock warrants issued,
net............................ -- -- -- -- 8,676 -- 8,676
Preferred stock dividends paid in
shares......................... 67,394 1 -- -- 5,948 (5,949) --
Accrual of preferred stock
dividends...................... -- -- -- -- 1,375 (1,375) --
Capital contributed.............. -- -- -- -- 3,580 -- 3,580
Net loss......................... -- -- -- -- -- (5,519) (5,519)
------- -- ---------- ---- -------- -------- --------
BALANCE AS OF DECEMBER 31,
1998........................... 687,576 $7 25,214,000 $252 $152,488 $(39,375) $113,372
======= == ========== ==== ======== ======== ========
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

F-5
<PAGE> 85

ORBITAL IMAGING CORPORATION

STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1997 1998
-------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $ (4,895) $ (4,082) $ (5,519)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation, amortization and other................... 3,981 5,541 13,124
Deferred tax benefit................................... -- (1,752) (3,312)
Changes in assets and liabilities:
Increase in receivables and other current assets....... 150 (84) (1,608)
(Increase) decrease in other assets.................... (419) 371 (17)
Increase in accounts payable and accrued expenses...... -- 4,335 12,370
Increase (decrease) in deferred revenue................ 175 2,005 (5,172)
-------- --------- ---------
NET CASH (USED IN) PROVIDED BY OPERATING
ACTIVITIES........................................ (1,008) 6,334 9,866
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (12,617) (49,029) (108,541)
Purchases of restricted held-to-maturity securities....... -- -- (32,185)
Purchases of available-for-sale securities................ -- (115,751) (119,783)
Maturities of restricted held-to-maturity securities...... -- -- 7,568
Maturities of available-for-sale securities............... -- 102,442 60,905
Sales of available-for-sale securities.................... -- 1,972 35,818
Payment for business acquisition.......................... -- -- (5,000)
-------- --------- ---------
NET CASH USED IN INVESTING ACTIVITIES................ (12,617) (60,366) (161,218)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of senior notes................ -- -- 135,600
Net proceeds from issuance of common stock warrants....... -- -- 8,676
Net proceeds from issuance of preferred stock............. -- 33,547 21,275
Net proceeds from issuance of common stock................ -- 31,368 --
Capital contributed....................................... 13,625 -- --
-------- --------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES............ 13,625 64,915 165,551
-------- --------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... -- 10,883 14,199
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR................ -- -- 10,883
-------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR...................... $ -- $ 10,883 $ 25,082
======== ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid............................................... $ -- $ -- $ 9,009
======== ========= =========
Non-cash items:
Capital contributed--tax basis adjustment................... -- -- $ 3,580
Capitalized lease obligation................................ -- -- 223
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F-6
<PAGE> 86

ORBITAL IMAGING CORPORATION

NOTES TO FINANCIAL STATEMENTS

(1) RELATIONSHIP WITH ORBITAL

In 1991, the ORBIMAGE operating division of Orbital Sciences Corporation
("Orbital") was established to manage the development of remote imaging
satellites which would collect, process and distribute digital imagery of land
areas, oceans and the atmosphere. In 1992, Orbital Imaging Corporation
("ORBIMAGE") 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"). Orbital purchased additional common
stock, bringing its total common equity invested to approximately $91.5 million.
Also on May 8, 1997, ORBIMAGE executed certain contracts with Orbital whereby
all assets and liabilities of Orbital's operating division, ORBIMAGE, were sold
to ORBIMAGE at the historical cost. 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 three contracts with Orbital: the ORBIMAGE System Procurement
Agreement dated November 18, 1996, as amended (the "System Procurement
Agreement"), the OrbView-2 License Agreement dated May 8, 1997 (the "License
Agreement") and the Amended and Restated Administrative Services Agreement dated
May 8, 1997 (the "Administrative Services Agreement"). Under the System
Procurement Agreement, ORBIMAGE purchased (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 system assets
used to command and control the satellites as well as receive and process
imagery. Under the License Agreement, Orbital has granted an exclusive worldwide
license to ORBIMAGE to use and sell OrbView-2 imagery. Pursuant to the terms of
the License Agreement, Orbital has assigned to ORBIMAGE all amounts that are due
or become due to Orbital under a contract Orbital has with NASA to deliver
OrbView-2 imagery, and ORBIMAGE has sole responsibility for operating and
controlling the satellite. Under the Administrative Services Agreement, ORBIMAGE
is reimbursing Orbital for management, accounting, legal, financial services,
office space and other administrative services, as well as certain direct
operating services provided by Orbital.

ORBIMAGE has also entered into an agreement with Orbital and MacDonald,
Dettwiler and Associates, Ltd. ("MDA"), a wholly-owned Canadian subsidiary of
Orbital, under which ORBIMAGE has acquired the exclusive worldwide distribution
rights for the RadarSat-2 satellite imagery (the "RadarSat-2 License"). Under
the RadarSat-2 License, MDA will own and operate the RadarSat-2 satellite, and
MDA will provide operations, data reception, processing, archiving and
distribution services to ORBIMAGE. ORBIMAGE's acquisition of the RadarSat-2
License will cost $60.0 million, net of approximately $140.0 million which will
be funded by the Canadian Space Agency through a contract with Orbital. ORBIMAGE
will pay the $60.0 million purchase price in installments based on progress
payments during the satellite construction phase. Such payments will not exceed
$15.0 million per year in 1999-2001; $10.0 million in 2002; and $5.0 million
upon the successful checkout of RadarSat-2.

Pursuant to the System Procurement Agreement as amended, ORBIMAGE has
committed to purchase various satellites, rights and ground systems for
approximately $279.9 million, net of $31.0 million which will be funded by the
U.S. Air Force through a contract with Orbital. ORBIMAGE incurred costs of
approximately $12.6 million, $47.6 million and $94.3 million for the years ended
December 31, 1996, 1997 and 1998, respectively, under the System Procurement
Agreement. As of December 31, 1998, ORBIMAGE has remaining commitments under the
System Procurement Agreement of $55.4 million, net of $31.0 million which will
be funded by the U.S. Air Force through a contract with Orbital.

ORBIMAGE incurred costs of approximately $2.0 million, $3.2 million and
$2.7 million for the years ended December 31, 1996, 1997 and 1998, respectively,
under the Administrative Services Agreement.
F-7
<PAGE> 87
ORBITAL IMAGING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(1) RELATIONSHIP WITH ORBITAL -- (CONTINUED)

The term of the Administrative Services Agreement is expected to terminate on or
before December 31, 2001.

Amounts due to Orbital of $3.7 million and $9.2 million as of December 31,
1997 and 1998, respectively were included in accounts payable and accrued
expenses.

Certain officers and directors of ORBIMAGE are also officers and directors
of Orbital.

(2) NATURE OF OPERATIONS

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. ORBIMAGE recognized revenues related to the OrbView-2 satellite of $1.3
million and $9.1 million for the years ended December 31, 1997 and 1998,
respectively. The OrbView-3 satellite is currently scheduled to begin operations
in the second half of 1999 and will provide one-meter panchromatic and
four-meter multispectral imagery of the Earth. The OrbView-4 satellite will
provide one-meter and two-meter panchromatic, four-meter multispectral, and
eight-meter hyperspectral imagery of the Earth and is expected to be operational
in mid-2000. 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.

(3) 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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates. Certain
amounts in prior years' financial statements have been reclassified to conform
to the current year 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 on a
straight-line basis over the delivery term of the contract. Deferred revenue
represents 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. Such costs include both specifically identifiable services and certain
pooled costs allocated by Orbital based on ORBIMAGE's proportional use. 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.

Stock-Based Compensation

Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation ("SFAS 123") requires companies to recognize as expense
the fair value of all stock-based awards on the
F-8
<PAGE> 88
ORBITAL IMAGING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(3) SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

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 provision of
APB 25 and provide the pro forma disclosure provisions of SFAS 123 (see Note
16). No compensation expense has been recognized in connection with stock option
grants to employees in the accompanying statements of operations. To the extent
that ORBIMAGE grants stock options to non-employee consultants or advisors,
ORBIMAGE records costs equal to the fair value of the options granted as of the
measurement date as determined using a Black-Scholes model.

Cash and Cash Equivalents

ORBIMAGE considers all highly liquid investments with original maturities
of three months or less to be cash equivalents.

Securities

Management determines the appropriate classification of securities at the
time of purchase and reevaluates such designation as of each balance sheet date.
Debt securities are classified as held-to-maturity when ORBIMAGE has the
positive intent and ability to hold the securities to maturity. Held-to-
maturity securities are stated at amortized cost, adjusted for amortization of
premiums and accretion of discounts to maturity. Such amortization and accretion
are included in interest income. The held-to-maturity securities are restricted
by provisions of the senior notes. (See Note 12.)

Securities not classified as held-to-maturity are classified as
available-for-sale. Available-for-sale securities are carried at fair value,
with the unrealized gains and losses, net of tax, reported in a separate
component of stockholders' equity. The amortized cost of available-for-sale
securities is adjusted for amortization of premiums and accretion of discounts
to maturity. Amortization, accretion, and realized gains and losses are included
in interest income. The cost of securities sold is based on the specific
identification method.

Securities with original maturities of more than three months, but not more
than one year, are classified as current assets. Securities with original
maturities of more than one year are classified as long-term assets.

Financial Instruments

The carrying amounts for ORBIMAGE's cash and cash equivalents, receivables,
accounts payable and accrued expenses approximate fair value. The fair values
for securities (see Note 8) and senior notes (see Note 12) were based on quoted
market prices.

ORBIMAGE does not have any derivative financial instruments as of December
31, 1998, and believes that the interest rate risk associated with its senior
notes and the market risk associated with its securities are not material to the
results of operations of ORBIMAGE. The available-for-sale securities subject
ORBIMAGE's financial position to interest rate risk.

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 system assets pursuant to the System
Procurement Agreement. ORBIMAGE is constructing the ORBIMAGE digital catalogue,
a digital imagery catalogue and processing system, to

F-9
<PAGE> 89
ORBITAL IMAGING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(3) SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
support OrbView-2, OrbView-3 and OrbView-4 imagery processing and distribution.
ORBIMAGE capitalizes certain direct and indirect costs incurred in the
construction of the ORBIMAGE digital catalogue. Amortization of the capitalized
costs will begin when the ORBIMAGE digital catalogue is placed in service.

ORBIMAGE capitalizes interest costs in connection with the construction of
satellites, related ground system assets, and the ORBIMAGE digital catalogue.
The capitalized interest is recorded as part of the historical cost of the asset
to which it relates and will be amortized over the asset's useful life when
placed in service. For the year ended December 31, 1998, capitalized interest
totaled $10.9 million. No interest was capitalized for the years ended December
31, 1996 or 1997.

Depreciation and amortization are provided using the straight-line method
as follows:

<TABLE>
<S> <C>
Ground system assets..................... 8 years
Furniture and equipment.................. 3 to 5 years
OrbView-1................................ 3 years
OrbView-2................................ 7 1/2 years
Leasehold improvements................... Shorter of estimated useful life of lease
or lease term
</TABLE>

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.

(4) BUSINESS ACQUISITION

In 1998, ORBIMAGE acquired substantially all of the assets of TRIFID
Corporation ("TRIFID") for $5.0 million. The acquisition was accounted for using
the purchase method of accounting and resulted in excess of purchase price over
net assets acquired of approximately $3.0 million, which is being amortized on a
straight-line basis over ten years. The financial results of TRIFID have been
included in ORBIMAGE's results since April 30, 1998.

The following unaudited supplemental financial information presents
ORBIMAGE's results of operations for the years ended December 31, 1997 and 1998,
on a pro forma basis, as though the TRIFID acquisition were consummated on
January 1, 1997 (in thousands, except share data):

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-----------------
1997 1998
------- -------
<S> <C> <C>
Revenues.................................................... $ 5,531 $12,486
Net loss.................................................... (4,213) (5,521)
Loss per common share -- basic and assuming dilution (1).... $ (0.43) $ (0.51)
</TABLE>

- ---------------
(1) All potentially dilutive securities, such as convertible preferred stock,
warrants and stock options are antidilutive for each year presented.

F-10
<PAGE> 90
ORBITAL IMAGING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(5) EMPLOYEE BENEFIT PLAN

In February 1998, the FASB issued Statement No. 132, Employers' Disclosures
about Pensions and Other Postretirement Benefits, that supersedes the disclosure
requirements of Statement No. 87, Employers' Accounting for Pensions, and
Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions. ORBIMAGE adopted Statement No. 132 effective January 1, 1998. Adoption
of the new benefits disclosure rules did not impact ORBIMAGE's financial
position, results of operations or cash flows.

ORBIMAGE's employees participate in the Orbital Imaging Corporation
Retirement Savings Plan, a defined contribution plan (the "Plan") in accordance
with Section 401(k) of the Internal Revenue Code of 1986, as amended. ORBIMAGE's
contributions to the Plan are made based on certain plan provisions and at the
discretion of the Board of Directors. For the years ended December 31, 1997 and
1998, ORBIMAGE's contribution expense was $44,000 and $257,000, respectively.
ORBIMAGE's contribution to the Plan for the year ended December 31, 1998
includes contributions to accounts of employees who joined ORBIMAGE as part of
the TRIFID acquisition. (See Note 4.)

(6) COMPREHENSIVE INCOME (LOSS)

As of January 1, 1998, ORBIMAGE adopted Statement of Financial Accounting
Standard ("SFAS") No. 130, Reporting Comprehensive Income. SFAS No. 130
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption of SFAS No. 130 had no impact on
ORBIMAGE's net loss or stockholders' equity. For the years ended December 31,
1996, 1997 and 1998, there were no material differences between net loss as
reported and comprehensive income (loss).

(7) LOSS PER COMMON SHARE

The computations of basic and diluted loss per common share for the years
ended December 31, 1997 and 1998 were as follows (in thousands, except share
data):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1997 1998
----------- -----------
<S> <C> <C>
Numerator for basic and diluted loss per common share:
Net loss.................................................. $ (4,082) $ (5,519)
Preferred stock dividends................................. (2,808) (7,324)
---------- ----------
Loss available to common stockholders....................... $ (6,890) $ (12,843)
========== ==========
Denominator for basic loss per common share -- weighted
average shares............................................ 16,431,854 25,214,000
Effect of dilutive securities:
Convertible preferred stock............................... 5,641,668 14,665,412
Warrants.................................................. -- 1,312,746
Stock options............................................. 189,453 572,791
---------- ----------
Denominator for diluted loss per common share -- adjusted
weighted average shares assuming dilution................. 22,262,975 41,764,949
========== ==========
Loss per common share -- basic and diluted (1).............. $ (0.42) $ (0.51)
========== ==========
</TABLE>

F-11
<PAGE> 91
ORBITAL IMAGING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(7) LOSS PER COMMON SHARE -- (CONTINUED)
Orbital, and loss per common share for the year ended December 31, 1996 was
not considered meaningful.

(8) SECURITIES

As of December 31, 1997 and 1998, ORBIMAGE had available-for-sale
securities invested primarily in commercial paper with an amortized cost basis
of $11.3 million and $34.4 million, respectively. There were no differences
between the amortized cost basis of the available-for-sale securities and their
fair values.

As of December 31, 1998, ORBIMAGE had held-to-maturity securities invested
in U.S. Treasury securities with a fair value of $24.6 million and an amortized
cost basis of $24.5 million, resulting in an unrealized gain of $0.1 million.
These securities have maturities ranging from six months to two years and are
pledged as security for repayment of interest on the senior notes. There were no
held-to-maturity securities as of December 31, 1997.

Included in cash and cash equivalents was $8.9 million and $24.0 million of
commercial paper as of December 31, 1997 and 1998, respectively.

(9) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of December 31, 1997 and 1998 consisted of
the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1998
------- -------
<S> <C> <C>
Land........................................................ $ 213 $ 213
Ground system assets........................................ 15,985 21,450
Furniture and equipment..................................... -- 1,293
Leasehold improvements...................................... -- 630
Accumulated depreciation and amortization................... (5,144) (7,630)
------- -------
Total............................................. $11,054 $15,956
======= =======
</TABLE>

Depreciation and amortization totaled $1.6 million, $1.7 million and $2.5
million for the years ended December 31, 1996, 1997 and 1998, respectively.

F-12
<PAGE> 92
ORBITAL IMAGING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(10) SATELLITES AND RELATED RIGHTS

Satellites and related rights as of December 31, 1997 and 1998 consisted of
the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1997 1998
-------- --------
<S> <C> <C>
In service:
OrbView-1................................................. $ 12,327 $ 12,327
Accumulated depreciation.................................. (11,513) (12,327)
-------- --------
814 --
OrbView-2 License......................................... 64,543 64,543
Accumulated amortization.................................. (1,434) (10,040)
-------- --------
63,109 54,503
Satellites in process....................................... 40,303 142,095
-------- --------
Total............................................. $104,226 $196,598
======== ========
</TABLE>

Satellite depreciation and amortization totaled $2.4 million, $3.9 million
and $9.4 million for the years ended December 31, 1996, 1997 and 1998,
respectively.

(11) INCOME TAXES

ORBIMAGE's losses for income tax purposes for the year ended December 31,
1996 and the period from January 1, 1997 through May 7, 1997 (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 expense associated with satellites and related rights
deducted currently for income tax purposes. Prior to May 8, 1997, ORBIMAGE 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, ORBIMAGE recorded tax-sharing charges of
$2.4 million and $1.8 million for the years ended December 31, 1996 and 1997,
respectively, as a direct charge to additional paid-in capital.

The benefit for income taxes for the years ended December 31, 1996, 1997
and 1998 consisted of the following (in thousands):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1996 1997 1998
----- ------- -------
<S> <C> <C> <C>
Current benefit:
U.S. Federal.............................................. $-- $ -- $ --
State..................................................... -- -- --
-- ------ ------
Total current benefit............................. -- -- --
Deferred benefit:
U.S. Federal.............................................. -- 1,533 3,021
State..................................................... -- 219 291
-- ------ ------
Total deferred benefit............................ -- 1,752 3,312
-- ------ ------
Total benefit for income taxes.................... $-- $1,752 $3,312
== ====== ======
</TABLE>

F-13
<PAGE> 93
ORBITAL IMAGING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(11) INCOME TAXES -- (CONTINUED)

The income tax benefit for the years ended December 31, 1996, 1997 and 1998
were different from those computed using the statutory U.S. Federal income tax
rate as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1996 1997 1998
----- ----- -----
<S> <C> <C> <C>
U.S. Federal statutory rate................................. (34.0)% (34.0)% (34.0)%
Tax sharing agreement with Orbital.......................... 34.0 -- --
State income taxes.......................................... -- -- (3.2)
Other....................................................... -- 4.0 (0.3)
----- ----- -----
Effective rate.............................................. 0.0% (30.0)% (37.5)%
===== ===== =====
</TABLE>

The tax effects of significant temporary differences as of December 31,
1997 and 1998 were as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1998
------- -------
<S> <C> <C>
Deferred tax assets:
Differences in revenue recognition........................ $14,949 $12,162
Net operating loss carryforward........................... 585 5,904
Other....................................................... 62 172
------- -------
Deferred tax assets......................................... $15,596 $18,238
======= =======
Deferred tax liabilities:
Differences in the tax treatment of satellites and related
rights................................................. $26,258 $22,008
======= =======
</TABLE>

As of December 31, 1998, ORBIMAGE had U.S. Federal net operating loss
carryforwards totaling $16.4 million, which expire beginning the year ending
December 31, 2012.

(12) SENIOR NOTES

General

On February 25, 1998, ORBIMAGE issued 150,000 units consisting of senior
notes and 1,312,746 warrants for common stock, raising net proceeds of
approximately $144.6 million. The gross proceeds of the units offering of $150.0
million were allocated: $141.0 million to the senior notes and $9.0 million to
the value of the warrants recorded as a debt discount. The debt discount is
amortized as an adjustment to interest expense over the term of the senior notes
resulting in an effective yield of approximately 13.6%. As of December 31, 1998,
the senior notes had a fair value of $150.0 million as estimated by quoted
market prices.

Interest

Interest on the senior notes accrues at a rate of 11 5/8% per annum and is
payable semi-annually in arrears on March 1 and September 1. ORBIMAGE purchased
U.S. Treasury securities in an amount sufficient to pay the interest on the
senior notes for the first four periods. As of December 31, 1998, held-
to-maturity securities restricted for the payment of interest on the senior
notes totaled $24.5 million.

F-14
<PAGE> 94
ORBITAL IMAGING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(12) SENIOR NOTES -- (CONTINUED)
Mandatory Redemption

The senior notes mature on March 1, 2005. ORBIMAGE will not be required to
make mandatory redemption or sinking fund payments with respect to the senior
notes. However, ORBIMAGE may be obligated, under certain circumstances, to make
an offer to purchase: (i) all outstanding senior notes at a redemption price of
101% of the principal amount thereof, plus accrued and unpaid interest and
liquidated damages (if any) to the date of purchase, upon a change of control,
and (ii) outstanding senior notes with a portion of the net proceeds of certain
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 the
purchase.

Covenants

The indenture for the senior notes restricts, among other things,
ORBIMAGE's ability to pay dividends.

(13) LEASE COMMITMENTS

Aggregate minimum rental commitments under non-cancelable operating and
capital leases (primarily for office space and equipment) as of December 31,
1998 were as follows (in thousands):

<TABLE>
<CAPTION>
OPERATING CAPITAL
--------- -------
<S> <C> <C>
1999........................................................ $132 $135
2000........................................................ 11 115
---- ----
$143 250
====
Less: Interest at 12%....................................... (26)
Less: Current portion....................................... (116)
----
Total............................................. $108
====
</TABLE>

(14) PREFERRED STOCK

ORBIMAGE has authorized 10,000,000 shares of $0.01 par value preferred
stock, of which: (a) 2,000,000 shares of the Series A preferred stock have been
authorized, of which 687,576 shares were issued and outstanding as of December
31, 1998; (b) 2,000,000 shares of the Series B preferred stock have been
authorized, none of which have been issued and (c) 2,000,000 shares of the
Series C preferred stock have been authorized, none of which have been issued.

Dividends

The Series A preferred stock is assigned a stated value of $100 per share
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 120 shares of
Series A preferred stock for each 1,000 shares of Series A preferred stock
outstanding. To date, all dividends have been paid in-kind. As of December 31,
1998, cumulative preferred stock dividends in arrears totaled 13,752 shares.
Upon mandatory conversion prior to the fourth anniversary of the issuance of any
Series A preferred stock, 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.

F-15
<PAGE> 95
ORBITAL IMAGING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(14) PREFERRED STOCK -- (CONTINUED)
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 stock (if and when
issued), Series C preferred stock (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.

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. The per share 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:

- the closing, under certain circumstances, of a public offering of the
common stock;

- 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

- the proposed sale of no less than 70% of the common stock on a fully
diluted basis.

(15) COMMON STOCK WARRANTS

In connection with the units offering on February 25, 1998, ORBIMAGE issued
150,000 warrants, which entitle the holders to acquire 1,312,746 shares of
ORBIMAGE's common stock. The exercise price is $0.01 per share. Each warrant
entitles the holder to buy 8.75164 shares of common stock. The warrants are
exercisable at any time on or after February 25, 1999, or on the occurrence of a
Company change in control, which ever happens first. The warrants expire on
March 1, 2005.

(16) STOCK OPTION PLAN

Through ORBIMAGE's stock option plan (the "Plan"), ORBIMAGE may issue to
its employees, Orbital's employees, consultants or advisors incentive or
non-qualified options to purchase up to 4,800,000 shares of ORBIMAGE's common
stock. Under the 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 the grant as
determined by the Board of Directors. ORBIMAGE's options generally vest in
one-third increments over a three-year period.

F-16
<PAGE> 96
ORBITAL IMAGING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(16) STOCK OPTION PLAN -- (CONTINUED)
The following table summarizes the activity relating to the Plan for the years
ended December 31, 1996, 1997 and 1998:

<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF OPTION PRICE AVERAGE OUTSTANDING AND
SHARES PER SHARE EXERCISE PRICE EXERCISABLE
--------- ------------ -------------- ---------------
<S> <C> <C> <C> <C>
OUTSTANDING AS OF DECEMBER 31, 1995.... -- -- -- --
Granted............................ 1,408,000 $ 3.60 $3.60
Exercised.......................... -- -- --
Canceled or expired................ -- -- --
--------- ---------- ----- ---------
OUTSTANDING AS OF 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
Canceled or expired................ (8,000) 3.60 3.60
--------- ---------- ----- ---------
OUTSTANDING AS OF DECEMBER 31, 1997.... 1,884,000 3.60-4.17 3.75 707,250
Granted............................ 761,500 4.17-5.10 4.55
Exercised.......................... -- -- --
Canceled or expired................ (9,000) 4.17-5.10 4.69
--------- ---------- ----- ---------
OUTSTANDING AS OF DECEMBER 31, 1998.... 2,636,500 $3.60-5.10 $3.98 1,181,451
========= ========== ===== =========
</TABLE>

As of December 31, 1998, the weighted average remaining contractual life of
the options outstanding was 8.4 years.

ORBIMAGE uses the minimum value method for options issued to employees and
directors to determine the pro forma impact to its net loss. 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. The assumptions used to determine the
pro forma impact for the years ended December 31, 1996, 1997 and 1998 were as
follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Volatility.............................................. 0.0% 0.0% 0.0%
Dividend yield.......................................... 0.0% 0.0% 0.0%
Risk-free interest rate................................. 5.8% 6.0% 5.5%
Expected average life................................... 4.5 years 4.5 years 6.0 years
Weighted average exercise price per share............... $3.60 $3.75 $3.98
</TABLE>

ORBIMAGE previously estimated the impact of employee and director stock
options based upon an assumed volatility of 30%. Prior year amounts have been
adjusted to reflect the use of the minimum value method. The fair value of the
options granted to employees and directors during the years ended December 31,
1996, 1997 and 1998 were estimated at $0.82 per share, $0.97 per share and $1.26
per share, respectively.

Had ORBIMAGE determined compensation expense 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 pro forma net loss and pro forma basic loss
per common share would have been approximately $4.4 million and $0.44,
respectively, for the year ended December 31, 1997 and $6.1 million and $0.53,
respectively, for the year ended December 31, 1998. Pro forma diluted loss per
common share for the years ended

F-17
<PAGE> 97
ORBITAL IMAGING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(16) STOCK OPTION PLAN -- (CONTINUED)
December 31, 1997 and 1998 would be the same as the pro forma basic loss per
share shown above since all potentially dilutive securities are antidilutive.
Had ORBIMAGE determined compensation expense 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 $5.3
million for the year ended December 31, 1996. Prior to May 8, 1997, ORBIMAGE was
an operating division of Orbital, and pro forma loss per common share for the
year ended December 31, 1996 was not considered meaningful. Pro forma net loss
as stated above is not necessarily representative of the effects of reported net
income (loss) for future years due to, among other things, the vesting period of
the stock options and the fair value of the additional stock options in future
years.

(17) SEGMENT INFORMATION

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information, which
establishes reporting standards for a company's operating segments and related
disclosures about its products, services, geographic areas and major customers.
ORBIMAGE adopted SFAS No. 131 effective January 1, 1998. SFAS No. 131 requires
comparative segment information; however, ORBIMAGE operated as a single segment
for the years ended December 31, 1996, 1997 and 1998.

ORBIMAGE recognized revenues related to contracts with the National
Aeronautics and Space Administration of approximately $0.8 million, $2.0 million
and $9.6 million for the years ended December 31, 1996, 1997 and 1998,
respectively, representing approximately 76%, 95% and 82%, respectively, of
total revenues recognized during those years.

F-18
<PAGE> 98

GLOSSARY OF TERMS

COMMISSION -- The Securities and Exchange Commission.

COMMON STOCK -- The common stock of the Company, par value $0.01 per share.

COMPANY -- Orbital Imaging Corporation, a Delaware corporation ("ORBIMAGE").

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.

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.

IN-ORBIT INSURANCE -- Insurance covering the period following the date a
satellite has been placed into commercial service.

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, which 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, which is
providing 1-kilometer resolution imagery of the Earth's surface in eight
spectral bands.

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, which is designed to
provide 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 2000, which is designed to
provide 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.

RSI -- Radarsat International Inc., a Canadian company operating a commercial
radar imaging satellite.

SAMSUNG AEROSPACE -- Samsung Aerospace Industries, Ltd.

G-1
<PAGE> 99

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.

G-2
<PAGE> 100

- ------------------------------------------------------
- ------------------------------------------------------

WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT
RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL OR
BUY ANY SECURITIES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN
THIS PROSPECTUS IS CURRENT AS OF THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
About this Prospectus.................. ii
Where to Find More Information......... ii
Note Regarding "Forward-Looking
Statements".......................... iii
Prospectus Summary..................... 1
Summary Financial Data................. 8
Risk Factors........................... 9
Use of Proceeds........................ 21
Market Price of and Dividends on the
Common Stock and Related Stockholder
Matters.............................. 21
Capitalization......................... 22
Selected Historical Financial Data..... 23
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 24
Business............................... 28
Regulation............................. 43
Management............................. 46
Principal Stockholders................. 51
Selling Holders........................ 53
Certain Relationships and Related
Transactions......................... 54
Description of the Warrants............ 60
Description of Capital Stock........... 63
Description of the Notes............... 65
Relationship with Orbital.............. 68
Certain U.S. Federal Income Tax
Consequences......................... 70
Plan of Distribution................... 74
Legal Matters.......................... 74
Experts................................ 75
Index to Financial Statements.......... F-1
Glossary of Terms...................... G-1
</TABLE>

150,000 WARRANTS TO PURCHASE

COMMON STOCK

AND

1,312,746 SHARES OF

COMMON STOCK

ORBITAL LOGO

ORBITAL IMAGING CORPORATION

--------------------

PROSPECTUS

--------------------

FEBRUARY , 1999

------------------------------------------------------
------------------------------------------------------
<PAGE> 101

PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, which will be paid
solely by the Company. All amounts shown are estimates, except the Commission
registration fee:

<TABLE>
<S> <C>
Commission registration fee................................. $ 4
Warrant agent and transfer agent fees and expenses.......... 5,000
Printing and mailing expenses............................... 50,000
Legal fees and expenses..................................... 50,000
Accounting fees and expenses................................ 20,000
--------
Total............................................. $125,004
========
</TABLE>

ITEM 14. 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 corporation's
directors to a corporation or its stockholders, except for liabilities related
to breach of the 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 15. RECENT SALES OF UNREGISTERED SECURITIES

From September 30, 1995 to the present, the Company has sold and issued the
following securities on the dates and for the consideration stated below:

- On February 25, 1998, the Company offered and sold 150,000 units in a
private offering exempt from registration pursuant to Rule 144A of the
Securities Act. The initial purchasers were Bear, Stearns & Co. Inc.,
Merrill Lynch & Co. and NationsBanc Montgomery Securities LLC, who
subsequently resold the units to "qualified institutional buyers" (as
defined in Rule 144A). Each unit consisted of an

II-1
<PAGE> 102

11 5/8% senior note due 2005 in the principal amount of $1,000 and a
warrant to purchase 8.75164 shares of the Company's common stock. On July
24, 1998, the Company filed an exchange offer registration statement
offering to exchange a substantially similar 11 5/8% Series B senior note
for each outstanding note held by the qualified institutional buyers.

- Concurrently with the units offering, the Company issued 227,295 shares
of Series A preferred stock for an aggregate purchase price of $22.7
million to a group of "accredited investors."

- On December 30, 1997, the Company issued 14,000 shares of common stock
for an aggregate purchase price of $58,380 to an individual pursuant to
the exercise of certain options.

- On July 3, 1997, the Company issued 72,605 shares of Series A preferred
stock for an aggregate purchase price of $7.3 million to the Export
Development Corporation, an "accredited investor."

- On May 7, 1997, the Company issued 300,100 shares of Series A preferred
stock for an aggregate purchase price of $30.0 million to a group of
"accredited investors."

All of the sales of Series A preferred stock described above were made in
reliance on one or more exemptions from registration under the Securities Act,
including exemptions for sales to accredited investors provided for by
Regulation D and exemptions for sales to non-U.S. persons outside the U.S.
provided for by Regulation S promulgated under the Securities Act.

II-2
<PAGE> 103

ITEM 16. 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.
4.2* Specimen of the Company's common stock certificate.
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 Specimen of the Company's warrant certificate (included in
Exhibit 4.4).
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
warrants and warrant shares, 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+ Non-Competition 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.
10.9+ Agreement between National Aeronautics and Space
Administration and Orbital Sciences Corporation, dated March
29, 1991, as amended.
10.10 RadarSat-2 Master Agreement dated as of December 31, 1998 by
and among Orbital Sciences Corporation, MacDonald, Dettwiler
and Associates Ltd. and Orbital Imaging Corporation.
10.11 Hyperspectral Imaging Data Agreement dated December 31, 1998
by and between Orbital Sciences Corporation and Orbital
Imagining Corporation.
10.12 Amendment No. 1 to Amended and Restated Orbimage System
Procurement Agreement dated as of December 31, 1998 by and
between Orbital Sciences Corporation and Orbital Imaging
Corporation.
11 Statement re Computation of Loss Per Common Share (included
in Notes to Financial Statements).
23.1* Consent of KPMG LLP, independent auditors.
23.2* Consent of Latham & Watkins (included in Exhibit 5.1).
</TABLE>

II-3
<PAGE> 104

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
24* Powers of Attorney of directors and officers of the Company
(included on signature page to this Registration Statement).
27 Financial Data Schedule.
</TABLE>

- ---------------
+ Incorporated by reference to the identically numbered exhibit to the
Company's Registration Statement on Form S-4, as amended (Reg. No.
333-49583).

* Previously filed.

** Confidential treatment was granted pursuant to Rule 406 under the Securities
Act of 1933, as amended, in connection with the Company's registration
statement on Form S-4, as amended (Reg. No. 333-49583). Certain portions of
the exhibit have been omitted. The omitted portions of such exhibits have
been separately filed with the Securities and Exchange Commission.

(b) FINANCIAL STATEMENT SCHEDULES

All schedules have been omitted because they are not applicable or not
required or the required information is included in the financial statements or
notes thereto.

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.

(iii) To include any material with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;

(2) That, for the purpose 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 that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

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

II-4
<PAGE> 105

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-5
<PAGE> 106

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-1 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 February 24,
1999.

ORBITAL IMAGING CORPORATION

By: /s/ GILBERT D. RYE
------------------------------------------
Gilbert D. Rye
President and Chief Operating Officer

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>

/s/ GILBERT D. RYE President and February 24, 1999
- ------------------------------------------------ Chief Operating Officer
Gilbert D. Rye (Principal Executive
Officer)

/s/ ARMAND D. MANCINI Vice President, February 24, 1999
- ------------------------------------------------ Chief Financial Officer
Armand D. Mancini (Principal Financial and
Accounting Officer)

* Chairman of the Board, February 24, 1999
- ------------------------------------------------ Director
David W. Thompson

* Director February 24, 1999
- ------------------------------------------------
James A. Abrahamson

* Director February 24, 1999
- ------------------------------------------------
Bruce W. Ferguson

* Director February 24, 1999
- ------------------------------------------------
Richard Reiss, Jr.

* Director February 24, 1999
- ------------------------------------------------
William W. Sprague

*By: /s/ ARMAND D. MANCINI February 24, 1999
----------------------------------------------
Armand D. Mancini
Attorney-in-fact
</TABLE>

II-6
<PAGE> 107

INDEX TO EXHIBITS

- ---------------
+ Incorporated by reference to the identically numbered exhibit to the
Company's Registration Statement on Form S-4, as amended (Reg. No.
333-49583).

II-7
<PAGE> 108

* Previously filed.

II-8

<PAGE> 1
EXHIBIT 10.10

RADARSAT-2 MASTER AGREEMENT

THIS RADARSAT-2 MASTER AGREEMENT (this "Agreement") is entered into as
of the 31st day of December, 1998, by and among ORBITAL SCIENCES CORPORATION, a
Delaware corporation ("Orbital"), its wholly owned subsidiary MACDONALD,
DETTWILER AND ASSOCIATES LTD., a Canadian corporation ("MDA"), and ORBITAL
IMAGING CORPORATION, a Delaware corporation ("ORBIMAGE").

WHEREAS, MDA is constructing and will own and operate a synthetic
aperture radar (SAR) earth observation satellite system called RADARSAT-2
pursuant to that certain Master Agreement between MDA and the Canadian Space
Agency (the "CSA") dated December 18, 1998 (as it may be amended from time to
time, the "CSA Contract") under which CSA has committed to provide
C$217,585,529 for the purchase of RADARSAT-2 data; and

WHEREAS, MDA and ORBIMAGE desire to enter into this Agreement pursuant
to which (i) MDA will grant to ORBIMAGE the right to distribute and market
worldwide RADARSAT-2 data received from the RADARSAT-2 satellite ("RADARSAT-2
Data") and products that are derived from, based on or use the RADARSAT-2 Data,
subject to the terms and conditions provided herein and (ii) MDA will
sublicense to ORBIMAGE certain trademarks, service marks and names.

NOW THEREFORE, in consideration of the agreements and covenants
contained herein, the parties hereto agree as follows.

SECTION 1 - GRANT OF LICENSE

1.1. License to Market. MDA hereby grants to ORBIMAGE a ten
(10)-year, exclusive worldwide license (the "License") to promote, market,
sell, modify and use RADARSAT-2 Data received from the RADARSAT-2 satellite in
any form, including products derived from or based on RADARSAT-2 Data for any
purposes, including, without limitation, the right to sublicense such rights,
provided that ORBIMAGE shall remain liable for its obligations hereunder.

1.2. Sublicense of Marks. MDA hereby grants to ORBIMAGE a ten
(10)-year, non-exclusive royalty free and worldwide sublicense to use the mark
"RADARSAT" in association with the promotion, marketing, sale and distribution
of RADARSAT-2 Data, including promotional products or materials.
Notwithstanding anything herein to the contrary, the foregoing sublicense and
ORBIMAGE's rights with respect to use of the "RADARSAT" mark are subject in all
respects to the CSA Contract, including but not limited to Article 19.

1.3. Ownership Rights in Data. MDA acknowledges that, during the
term of the License, all proprietary and ownership rights in the RADARSAT-2
Data shall be the sole and exclusive property of ORBIMAGE, subject to the CSA
Contract and the License granted herein.
<PAGE> 2
1.4 License Fee. In consideration of the grant of the Licensee
hereunder, ORBIMAGE hereby agrees to pay MDA US$60 million (the "Initial
Payment") plus C$217,585,529 (the "Subsequent Payment") for the License and
sublicense granted under this Section 1. Such payments shall be made in
accordance with Schedule 1.4 hereto. The amount of the Subsequent Payment
shall be adjusted downward on an equitable basis to the extent MDA purchases
less RADARSAT-2 Data from ORBIMAGE than is contemplated by Section 2 below.
The Subsequent Payment shall immediately become due and payable upon the
complete and total failure of the RADARSAT-2 system.

1.5. License Renewal. At the end of the initial term of the
License and the sublicense granted under Section 1.2, ORBIMAGE shall have the
option to renew annually both the License and the sublicense for an aggregate
fee of US$10,000 per year. Any such renewal shall otherwise be subject to and
in accordance with the then current terms and conditions of this Agreement.

SECTION 2 - DATA PURCHASE

MDA hereby agrees to purchase from ORBIMAGE all the RADARSAT-2 Data
that MDA is required to deliver under the CSA Contract. ORBIMAGE hereby agrees
to cause such data to be delivered to MDA in a timely manner in accordance with
the data delivery requirements under the CSA Contract. The purchase price for
such data shall be C$217,585,529. MDA shall pay ORBIMAGE the purchase price in
twenty-eight (28) equal installments over a period of seven years commencing
ten days after the date the RADARSAT-2 satellite is commissioned (as defined in
the CSA Contract) and payable on a quarterly basis thereafter. If the
RADARSAT-2 system is declared a complete and total failure before all payments
have been made under this Section 2, then the unpaid portion of the data
purchase price shall become immediately due and payable.

SECTION 3 - SCOPE OF WORK

3.1. MDA shall furnish the management, labor, facilities,
personnel and materials required for the performance of the following
work (collectively, the "Work"):

3.1.1 RADARSAT-2 System. The parties hereto acknowledge
that MDA shall, pursuant to the terms of the CSA Contract, construct
the RADARSAT-2 system that is capable of meeting RADARSAT-2 Data
requirements set forth in the RADARSAT-2 Statement of Work attached
hereto as Schedule 3 (as it may be amended from time to time, the
"RADARSAT-2 SOW") and the Mission Requirements Specifications that are
part of the CSA Contract, provided, however, that such system is not a
deliverable to ORBIMAGE under this Agreement;

3.1.2. RADARSAT-2 Operations. MDA shall operate the
RADARSAT-2 system in accordance with the RADARSAT-2 SOW;

2
<PAGE> 3
3.1.3. RADARSAT-2 Data Reception, Processing and Archiving.
MDA shall provide ORBIMAGE with RADARSAT-2 data reception, processing
and archiving services in accordance with the RADARSAT-2 SOW;

3.1.4 Sensor Model. No more than 90 days prior to the
scheduled launch of the RADARSAT-2 satellite MDA shall, at no
additional cost, license and deliver a copy to ORBIMAGE of all
applicable RADARSAT-2-related software, algorithms and/or models in
the form and of the type that is required for the purpose of
performing image processing and generating value-added products from
(a) level one data and above and (b) raw or zero level data .
Subject to the final sentence of this Section 3.1.4, ORBIMAGE shall
have the right to sublicense and provide copies of such software,
algorithms and/or models to third parties pursuant to a data purchase
agreement that provides, among other things, such person to maintain
such software, algorithms and/or models as confidential and provided
further that ORBIMAGE agrees that it shall not provide any copies to
any entities or persons that are in the business of designing and/or
constructing remote sensing ground stations.MDA's obligation to
deliver software will include code, including source code, if the
delivery of such code to imagery customers and value-added processors
is standard industry practice. With respect to models, software and
algorithms for raw or zero level data processing, on a case by case
basis, with MDA's prior approval, which shall not be unreasonably
withheld, ORBIMAGE shall have the right to provide such items to its
customers for their imagery processing use. MDA hereby consents to
ORBIMAGE's use of raw and level zero models, software and algorithms
for its own internal use and to ORBIMAGE's sublicensing of such items
to U.S. government customers for their own internal use.

3.1.5 Optional U.S. Ground Facility. At ORBIMAGE's option,
MDA shall supply ORBIMAGE with a RADARSAT-2 reception, processing and
archiving facility in the United States for the sole purpose of
enabling ORBIMAGE to meet U.S. government national security customer
requirements for RADARSAT-2 Data and products. In the event ORBIMAGE
exercises this option, MDA shall make customary representations and
warranties regarding the performance and capabilities of the facility.

3.2 Software License.

3.2.1 For the use of ORBIMAGE under the terms identified in Section
3.1.4, MDA hereby grants to ORBIMAGE a perpetual, fully paid non-exclusive
license for the software, algorithms and/or models delivered pursuant to
Section 3.1.4 (including all modifications and upgrades thereto that are
developed by MDA during the term of this Agreement). Maintenance of the
software delivered to ORBIMAGE will be provided by MDA pursuant to MDA's
standard software maintenance agreement.

3.2.2 For the exclusive use of ORBIMAGE at ORBIMAGE facilities and
at the facility identified in Section 3.1.5 above, MDA hereby grants to
ORBIMAGE a perpetual, fully paid non-exclusive license for all RADARSAT-2 image
processing and archiving software (including all modifications and upgrades
thereto that are developed by MDA during the term of this

3
<PAGE> 4
Agreement and that are applicable to the installed system). In connection with
the delivery of a ground station as contemplated by Section 3.1.5 above, MDA
shall deliver one copy of such software (executable and object code) to
ORBIMAGE as soon as is practicable after ORBIMAGE requests it, for installation
by MDA at said facilities, which software shall be capable of performing the
functions contemplated by this Section 3.2. and consistent with the RADARSAT-2
SOW. Maintenance of the software delivered to ORBIMAGE will be provided by MDA
pursuant to MDA's standard software maintenance agreement.

3.3. Insurance. At ORBIMAGE's expense, MDA or Orbital shall
procure launch, satellite checkout and on-orbit insurance as requested by
ORBIMAGE, subject to availability of such insurance and ORBIMAGE's agreement to
the price, terms and conditions of such insurance.

SECTION 4 - CONSIDERATION

4.1 Consideration. The price for the Work and other items
deliverable under Section 3 is as follows:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
CLIN PRICE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
0001 RADARSAT-2 Operations (3.1.2) Cost-reimbursable at MDA's standard Canadian
Government pricing rates not to exceed US$10
million per year, with a target of US$8 million
per year. This service shall commence, and
payments relating thereto shall become payable,
three (3) months prior to launch, provided,
however, that if the launch is delayed, no
further pre-launch payments beyond these three
(3) months shall be required. The pre-launch
payment shall be included in the calculation of
the maximum amount payable during the first year
of operations.
- ------------------------------------------------------------------------------------------------------------
0002 RADARSAT-2 Data Reception, Processing and 12% of annual net revenues recognized by
Archiving (3.1.3) ORBIMAGE from sales of RADARSAT-2 data
(excluding revenues under the CSA Contract)
commencing upon the commissioning of the
RADARSAT-2 system. Under this CLIN, ORBIMAGE
and MDA acknowledge that they will further
negotiate the appropriate compensation based on
data volumes and level of processing.
- ------------------------------------------------------------------------------------------------------------
</TABLE>

4
<PAGE> 5
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
0003 Sensor Model (3.1.4) No charge
- ------------------------------------------------------------------------------------------------------------
0004 U.S. Ground Facility (3.1.5, option) Cost-reimbursable plus 10% fee
- ------------------------------------------------------------------------------------------------------------
0005 Data Processing and Archiving Software License No charge
(3.2)
- ------------------------------------------------------------------------------------------------------------
0006 Software Installation Cost-reimbursable at MDA's standard Canadian
Government pricing rates
- ------------------------------------------------------------------------------------------------------------
0007 Software maintenance Cost-reimbursable at MDA's standard Canadian
Government pricing rates
- ------------------------------------------------------------------------------------------------------------
0008 Insurance Cost-reimbursable
- ------------------------------------------------------------------------------------------------------------
0009 Marketing Services (Sec. 5.1.2) Cost-reimbursable plus 10% fee, starting upon
the commencement of marketing activities in
accordance with Section 5.1 below.
- ------------------------------------------------------------------------------------------------------------
</TABLE>

4.2. Audit Rights. ORBIMAGE shall have the right to audit on a
reasonable basis, from time to time (under a duty of confidentiality) MDA's
records for the purpose of confirming any amounts payable under this Section 4
and Section 5, by giving fifteen (15) days written notice to MDA. MDA shall
have the right to audit on a reasonable basis, from time to time (under a duty
of confidentiality) ORBIMAGE's records for the purpose of confirming any
amounts payable under CLIN 0003, by giving fifteen (15) days written notice to
ORBIMAGE. The audit shall be carried out by auditing party or its
representatives. The audited party shall make its records available to the
auditing party during normal business hours no later than thirty (30) days
after audited party's receipt of the auditing party's request. The auditing
party shall complete its audit within fifteen (15) days of obtaining access to
such records, and shall deliver its results to the other within thirty (30)
days of the completion of the audit. The costs of the audit shall be borne by
the auditing party unless it is determined that the audited party has
overcharged by more than five percent (5%), in which case the audited party
shall pay for the cost of the audit. Any amounts overpaid by either party
shall be credited against the other party's next payments owed hereunder. This
Section 4.2 shall survive for one (1) year following termination of this
Agreement.

4.3 Invoicing. MDA shall invoice ORBIMAGE for the milestones set
forth in Schedule 1.4, part 1 upon completion of each event and receipt of
payment from CSA. MDA shall invoice ORBIMAGE for all other deliverables under
this Agreement within ten (10) days of the end of each month. Except as
otherwise set forth in Schedule 1.4, ORBIMAGE shall pay invoices within ten
(10) days of receipt.

5
<PAGE> 6
4.4 Taxes. The Price does not include any federal, state,
provincial or local sales, use or excise taxes levied upon or measured by the
sale, the sales price, or the use of the items to be delivered or services
required to be performed hereunder. MDA shall list separately on its invoice
any such tax lawfully applicable to the items to be delivered or services
required to be performed hereunder and payable by ORBIMAGE. The Price shall
not, however, include any taxes on property owned by the Canadian Government,
or any Canadian, U.S. or foreign federal, state, provincial or local income
taxes imposed on MDA, which shall be the sole liability of MDA.

4.4.1 In cases where MDA and/or ORBIMAGE are wholly or
partially exempt from such taxes and duties or otherwise entitled to
relief by way of protest, refund claims, litigation or other
proceedings, MDA shall take all necessary steps to facilitate such
exemption or relief by:

(a) Using reasonable efforts to bring about the
exemption or relief before submitting the invoices to ORBIMAGE;
and

(b) Complying with all formalities necessary to
enable ORBIMAGE to claim reimbursement with respect to taxes that
have been paid. For this purpose, MDA shall comply with the
reasonable instructions given to it by ORBIMAGE and provide in due
time the information that ORBIMAGE reasonably requires.

4.4.2. If any such tax is determined to be legally due from
either MDA or ORBIMAGE, ORBIMAGE shall pay it separately. ORBIMAGE
shall pay, or reimburse MDA, for all reasonable out-of-pocket expenses
incurred in connection with the activities contemplated by Section
4.4.1.

4.4.4 Notwithstanding anything herein to the contrary, no
party shall be obligated to gross up any payments owed to the other
party to take into account amounts deducted or withheld for taxes,
contributions or otherwise.

4.5 Duty. All customs or import/export duties required by law
shall be paid by MDA.

SECTION 5 - DUTIES OF MDA

5.1. Appointment of MDA as Distributor. Subject to the terms and
conditions of this Agreement, ORBIMAGE hereby appoints and authorizes MDA to
act as its exclusive worldwide distributor of RADARSAT-2 Data, and MDA accepts
such appointment. In connection with such appointment, ORBIMAGE hereby grants
to MDA an exclusive, unrestricted worldwide license, (including the right to
sublicense ) to promote, market and sell RADARSAT-2 Data and Basic Products,
and a non-exclusive license to modify, sell and use RADARSAT-2 Data, and
value-added products. "Basic Products" are defined as data sets generated by
the RADARSAT-2 system and the following products produced from such data sets:
(i) system-corrected products (radiometrically and geometrically-corrected
satellite data using ephemeris data), (ii) precision-

6
<PAGE> 7
corrected products using external ground control data, and (iii) ortho imagery
using digital elevation models.

5.1.1 Marketing. The RADARSAT-2 marketing operations will
be performed by MDA or an affiliate of MDA established for the
purposes of marketing RADARSAT imagery and will be overseen by the
RADARSAT-2 VP of Marketing and Sales who shall be based in Richmond,
British Columbia. The RADARSAT-2 VP of Marketing and Sales shall be
responsible for coordinating between ORBIMAGE and MDA to develop all
marketing and sales policies, strategies (including but not limited to
strategies relating to value-added applications and opportunities),
targets, resources and budgets. All marketing and sales policies
(including subdistributorships), strategies, targets and resources and
budgets shall be approved and periodically monitored by ORBIMAGE.
ORBIMAGE and MDA shall promptly commence negotiations to develop
within the next six months a detailed marketing plan that is designed
to maximize RADARSAT-2 market penetration. The parties hereto
acknowledge and agree that pursuant to the license granted in Section
5.1 above, MDA has and other third parties shall have the right to
develop, at their expense, value-added products using RADARSAT-2 Data
and to resell such products in accordance with the terms of the
detailed marketing plan and strategies to be developed under this
Section 5.1.1, provided, however, that the terms governing resales of
such value-added products, including but not limited to, compensation
payable to ORBIMAGE in connection therewith, shall be negotiated by
ORBIMAGE and MDA with each other or with the other third party
reseller, as applicable, on a case-by-case basis, consistent with the
terms of the CSA Contract

5.1.2 Compensation. ORBIMAGE shall pay MDA for the
services provided under this Section 5.1 (CLIN 0010) on a
cost-reimbursable basis plus 10%. As part of the development of a
marketing strategy, ORBIMAGE and MDA will negotiate the proper
strategy with respect to the execution of RADARSAT-2 customer
contracts. To the extent that MDA enters in RADARSAT-2 data sales
agreements directly with RADARSAT-2 customers, MDA will remit or
assign 100% of the payments it receives for such sales to ORBIMAGE.

5.2. Regulatory Approvals. MDA shall use commercially reasonable
efforts to obtain and maintain all material licenses, consents, approvals or
authorizations of and declarations or filings ("Regulatory Licenses") with any
Canadian or United States governmental authority required to be obtained or
maintained by MDA in order to perform its obligations under this Agreement and
to permit the launch and operation of the RADARSAT-2 satellite including,
without limitation, allocation by the International Telecommunications Union or
the U.S. Federal Communications Commission of the appropriate frequencies
necessary to launch, operate and receive data from the RADARSAT-2 satellite as
contemplated by the CSA Contract. So long as the RADARSAT-2 satellite is
operational, as determined by ORBIMAGE, MDA shall not, without the express
written consent of ORBIMAGE, which in the case of clause (a) shall not be
unreasonably withheld, (a) amend, or modify, or (b) cancel or surrender, any of
said Regulatory Licenses if such action will have a material adverse effect on
ORBIMAGE's rights under this Agreement, and shall prior to the expiration of
any such Regulatory License extend or renew

7
<PAGE> 8
same. Each party covenants and agrees that if and to the extent any
modifications or amendments are reasonably requested by the other party with
respect to such Regulatory Licenses, they shall cooperate with each other in
connection therewith.

5.3. CSA Contract.

5.3.1 Generally. The parties hereto acknowledge and agree
that the terms and conditions of this Agreement, including all
licenses or sublicenses granted hereunder, are subject to all rights
of the CSA and MDA's obligations or rights pursuant to the CSA
Contract, which shall take precedent. Notwithstanding the foregoing,
any disputes between ORBIMAGE and MDA regarding the interpretation of
the CSA Contract and MDA's rights or obligations thereunder in the
context of this Agreement shall be considered a dispute subject to
Section 11 of this Agreement.

5.3.2. Maintenance of CSA Contract. MDA agrees to maintain
in full force and effect the CSA Contract and shall not, without the
express written consent of ORBIMAGE, assign the CSA Contract to any
person other than an affiliate of Orbital or MDA.

5.3.3 ORBIMAGE Review and Approval Rights. Whenever
practicable, MDA shall coordinate in advance with ORBIMAGE any
material changes to the CSA Contract that impact ORBIMAGE's rights
contemplated by this Agreement, including but not limited to the
RADARSAT-2 Mission Requirement Specifications, Product Specifications,
Concept of Operations, System Integration Verification and Test Plan
and Commissioning Plan, the Data Policy and Data Supply Agreements
that are part of the CSA Contract. ORBIMAGE and MDA shall negotiate in
good faith an equitable adjustment to the license fee set forth in
Section 1.4 above if MDA and CSA amends the CSA Contract without
ORBIMAGE's prior consent and such changes have a material adverse
impact on (a) ORBIMAGE's ability to receive RADARSAT-2 Data that
conforms with the specifications set forth in the RADARSAT-2 SOW
regarding capacity, resolution and appropriate image quality
parameters, or (b) the commercial viability of ORBIMAGE's RADARSAT-2
program. Failure to agree on an equitable adjustment shall be a
dispute settled in accordance with Section 11 below. Notwithstanding
anything herein to the contrary, under no circumstances shall MDA's
failure to obtain prior approval, review or concurrence of any items
requiring such actions in the RADARSAT-2 SOW constitute a default that
gives rise to termination rights under Section 7 of this Agreement.

5.3.4 Access to Data. If CSA's usage of the RADARSAT-2
satellite under the CSA Contract exceeds 10% of its imaging capacity
over a two-month period and such usage has a material adverse impact
on the commercial viability of the RADARSAT-2 program, then the
parties shall negotiate an equitable adjustment to the license fee set
forth in Section 1.4 above.

SECTION 6 - FUTURE RIGHTS

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<PAGE> 9
MDA and Orbital each hereby agrees that to the extent either party
obtains unencumbered commercial distribution rights on any follow-on RADARSAT
project or any other synthetic aperture radar imaging satellite project prior
to June 30, 2003, MDA or Orbital (as appropriate) shall offer to ORBIMAGE the
exclusive right to be the commercial distributor of satellite imagery from such
project, subject to mutual agreement between the parties regarding
consideration and other material terms.

SECTION 7 - TERMINATION; LIMTATION OF LIABILITY

7.1. Termination by ORBIMAGE for Default. ORBIMAGE may terminate
this Agreement at any time after the occurrence of any of the following events
of default:

7.1.1 MDA fails to pay any amount due hereunder and such
failure shall remain uncured for a period of thirty (30) days after the due
date thereof.

7.1.2 MDA or Orbital breaches the representations and
warranties made under this Agreement.

7.1.3. MDA fails to observe or perform any of its other
material obligations hereunder and such failure shall remain uncured for a
period of sixty (60) days after receipt by MDA of written notice thereof.
Notwithstanding the foregoing, if the default is susceptible to cure but cannot
with due diligence be wholly cured within sixty (60) days following the notice
of default and the defaulting party has made diligent efforts to cure such
default within such period and thereafter diligently pursues the curing of such
default, no remedies shall be exercisable under this Agreement during the
period of such cure efforts.

7.1.4 The CSA Contract is terminated by CSA or MDA for any
reason.

7.2. Termination by MDA for Default or Convenience. MDA may
terminate this Agreement at any time after the occurrence of any of the
following events:

7.2.1. ORBIMAGE fails to pay any amount due hereunder and
such failure shall remain uncured for a period of thirty (30) days
after the due date thereof.

7.2.2 ORBIMAGE breaches the representations and warranties
made under this Agreement.

7.2.2. ORBIMAGE shall fail to observe or perform any of its
other material obligations hereunder and such failure shall remain
uncured for a period of sixty (60) days after receipt by ORBIMAGE of
written notice thereof. Notwithstanding the foregoing, if the default
is susceptible to cure but cannot with due diligence be wholly cured
within sixty (60) days following the notice of default and the
defaulting party has made diligent efforts to cure such default within
such period and thereafter diligently

9
<PAGE> 10
pursues the curing of such default, no remedies shall be exercisable
under this Agreement during the period of such cure efforts.

7.2.3 The CSA Contract is terminated by MDA or CSA for any
reason.

7.3. MDA Continuing Obligations to CSA. MDA acknowledges and agrees
that any and all costs and expenses or damages payable to CSA arising from or
in connection with a breach under the CSA Contract relating to the design,
development, construction and systems integration of the RADARSAT-2 system, and
not otherwise directly related to any action or inaction of ORBIMAGE, shall be
the obligation of MDA.

7.4. Automatic Termination. This Agreement shall automatically
terminate without any liability to any party if any of the following events
have not occurred by February 15, 1999

7.4.1 Approval of the transactions contemplated hereby by the
Boards of Directors of Orbital and ORBIMAGE.

7.4.2 Receipt of a fairness opinion from an independent
financial advisor as to the fairness of the transaction from a
financial point of view pursuant to that certain Indenture dated as of
February 25, 1998 between ORBIMAGE and Marine Midland Bank.

7.5. Damages; Remedies Upon Certain Defaults

7.5.1 Termination Relating to CSA Contract; Regulatory
Approvals. In the event this Agreement is terminated by either party
under Sections 7.1.4 or 7.2.3 above, or is terminated by ORBIMAGE
because of MDA's breach of Section 5.2, then the parties agree that
MDA's sole liability shall be to reimburse ORBIMAGE for an amount
equal to the lesser of (a) the aggregate amount paid in cash for the
license fee or (b) the undepreciated portion of the Initial Payment
that is included in the remaining book value of the License as it is
reported on ORBIMAGE's balance sheet, but in no event shall such
amount exceed $60 million.

7.5.2 MDA Liability for Failure to Procure Launch Vehicle
on Timely Basis. If a launch vehicle for the RADARSAT-2 satellite has
not been selected by December 31, 1999 and this Agreement has not
otherwise been terminated pursuant to Section 7.5.1 above, then
ORBIMAGE shall be relieved from making any further payments under
Section 1.4 until such time as a launch vehicle has been selected.
Furthermore, if a launch vehicle has not been selected by June 30,
2000, then ORBIMAGE shall also be entitled to a refund of 50% of the
License fee paid as of such date, and the total aggregate License fee
shall be adjusted downward accordingly.

7.5.3 ORBIMAGE Termination Liability. If MDA terminates
this Agreement for ORBIMAGE's default prior to the successful
commissioning (as specified in the RADARSAT-2 SOW) of the RADARSAT-2
system, then ORBIMAGE's liability to MDA shall be equal to the
difference between US$60 million and any amounts paid by ORBIMAGE to
date. If MDA terminates this Agreement for ORBIMAGE's default after

10
<PAGE> 11
the successful commissioning (as specified in the RADARSAT-2 SOW) of
the RADARSAT-2 system, ORBIMAGE's sole liability for damages shall be
limited to amounts owing for services and items delivered under
Section 3, and under no circumstances shall ORBIMAGE have any
liability to MDA to pay any additional amounts owed under Section 1.4
for the license fee (other than amounts accrued but not yet paid).

7.6. Termination of License and Data Purchase Obligation. Upon
termination of this Agreement, (a) the License shall terminate except with
respect to RADARSAT-2 Data received prior to such termination, in which case
the License shall continue but shall be non-exclusive and (b) MDA shall have no
further data purchase obligations under Section 2 above.

7.7. Limitation of Liability

7.7.1. Assumption of Risk; Limitation of Liabilities. Each
of the parties acknowledges and understands that (a) the RADARSAT-2
system is a new, untested system that entails a high degree of risk of
(i) delay in or cancellation of deployment and (ii) launch vehicle,
satellite and other equipment or software failure or impaired
performance, and there can be no assurance that the RADARSAT-2 system
will be an economically viable system even if successfully deployed,
or that the RADARSAT-2 system will be capable of performing in
accordance with the CSA Contract or delivering any data whatsoever.
Each party shall bear all responsibility, risk and cost associated
with developing and maintaining its respective business, and MDA shall
not be liable to ORBIMAGE or any of its agents or customers for costs
or damages caused by any schedule delays, launch failure, failure of
the RADARSAT-2 system or any component thereof, or defects or
inaccuracies in the RADARSAT-2 system or RADARSAT-2 Data.

7.7.2 Limitation of Direct Damages. Where either party has
terminated this Agreement for breach and except as otherwise
specifically set forth above, under no circumstances shall either
party be liable to the other for any damages greater than U.S. $10
million for any claim of any nature whatsoever arising under this
Agreement, whether such claim relates to the indemnification
provisions set forth in Section 8 below, or arises in connection with
either party's breach of contract, breach of express or implied
warranty, arising in tort, at law or in equity.

7.7.3 NO LIABILITY FOR CONSEQUENTIAL DAMAGES.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IN NO EVENT
SHALL MDA, ORBITAL OR ORBIMAGE BE LIABLE TO EACH OTHER UNDER THIS
AGREEMENT FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL
DAMAGES, EVEN IF SUCH PARTY HAD OR SHOULD HAVE HAD KNOWLEDGE OF THE
POSSIBILITY OF SUCH DAMAGES.

SECTION 8 - REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION

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<PAGE> 12
8.1. MDA Representations and Warranties. MDA represents and
warrants that (a) it has full right and authority to enter into this Agreement
and to perform its obligations hereunder and that the performance of its
obligations hereunder does not contravene or constitute a default under any
applicable law, rule or regulation or any contract binding upon MDA, (b)this
Agreement is enforceable against MDA in accordance with its terms, (c) MDA
shall have all licenses, permits and other authorizations from any agency or
department of the Canadian government necessary for MDA to perform its
obligations under this Agreement, and to permit the construction and operation
of the RADARSAT-2 system under the CSA Contract, and (d) MDA's operation of the
RADARSAT-2 system under the CSA Contract and the provision of services
hereunder will not violate any Canadian copyright, trade secret, trademark,
patent rights or other intellectual property rights of any third party in
Canada, which MDA represents is the only jurisdiction in which services are to
be delivered by MDA under the CSA Contract.

8.2. Compliance with CSA Contract. MDA is in compliance with the
CSA Contract and is aware of no event that has occurred that would give rise to
a default under the CSA Contract.

8.3 MDA Indemnification. MDA agrees to indemnify and hold harmless
ORBIMAGE and its officers, directors, employees, agents and representatives
against all claims, demands or liabilities (including reasonable attorneys
fees) of (a) third parties arising out of or in connection with MDA's breach of
any representations, warranties, covenants or agreements contained herein and
(b) RADARSAT International Inc. ("RSI"), its directors, officers shareholder or
other affiliates relating to RSI's right of first refusal as provided for in
Article 18 of the CSA Contract. This indemnification obligation shall survive
the expiration or termination of this Agreement.

8.4. ORBIMAGE Representations and Warranties. ORBIMAGE represents
and warrants that it (a) has full right and authority to enter into this
Agreement and to perform its obligations hereunder and that the performance of
its obligations hereunder does not contravene or constitute a default under any
applicable law, rule or regulation or any contract binding upon ORBIMAGE, (c)
this Agreement is enforceable against ORBIMAGE in accordance with its terms,
(c) ORBIMAGE shall have all licenses, permits and other authorizations from any
United States or foreign government agency or department necessary for ORBIMAGE
to perform its obligations under this Agreement, and (c) ORBIMAGE's use of the
RADARSAT-2 Data shall not violate any United States copyright, trade secret,
trademark, patent rights or other intellectual property rights of any third
party.

8.5. ORBIMAGE Indemnification. ORBIMAGE agrees to indemnify and
hold harmless MDA and Orbital, and each of their officers, directors,
employees, agents and representatives against all claims, demands or
liabilities (including reasonable attorneys' fees) of third parties arising
from or in connection with ORBIMAGE's breach of any representations,
warranties, covenants or agreements contained herein. This indemnification
obligation shall survive the expiration or termination of this Agreement.

8.6. Orbital Representations and Warranties. Orbital represents
and warrants that it (a) has full right and authority to enter into this
Agreement and to perform its obligations hereunder and that the performance of
its obligations hereunder does not contravene or constitute a default

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<PAGE> 13
under any applicable law, rule or regulation or any contract binding upon
Orbital and (b) this Agreement is enforceable against Orbital in accordance
with its terms.

SECTION 9 - DISCLAIMER OF WARRANTIES AND LIMITATION OF LIABILITY

9.1 DISCLAIMER OF WARRANTIES. MDA AND ORBITAL HAVE NOT AND SHALL
NOT BE DEEMED TO HAVE MADE ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH
RESPECT TO THE RADARSAT-2 SATELLITE, THE RADARSAT-2 SYSTEM, THE RADARSAT-2
DATA, OR ANY SERVICES TO BE PROVIDED UNDER THIS AGREEMENT. MDA AND ORBITAL
EXPRESSLY DISCLAIM AND ORBIMAGE HEREBY EXPRESSLY WAIVES, RELEASES AND RENOUNCES
ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF MDA OR ORBITAL AND RIGHTS,
CLAIMS AND REMEDIES OF ORBIMAGE AGAINST MDA AND ORBITAL, EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY FAILURE, NONCONFORMANCE OR
DEFECT IN THE RADARSAT-2 SYSTEM, THE RADARSAT-2 DATA, OR ANY SERVICES TO BE
PROVIDED OR ITEMS TO BE DELIVERED UNDER THIS AGREEMENT, INCLUDING, BUT NOT
LIMITED TO: (a) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE; (b) ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE; (c) ANY WARRANTIES AS TO THE
ACCURACY, AVAILABILITY OR CONTENT OF THE RADARSAT-2 DATA OR ANY SERVICES
PROVIDED BY OR THROUGH ORBITAL UNDER THIS AGREEMENT; AND (iv) ANY OBLIGATION,
LIABILITY, RIGHT, CLAIM OR REMEDY UNDER ANY TORT, NEGLIGENCE, STRICT LIABILITY,
OR OTHER EQUITABLE THEORY. NO REPRESENTATION OR OTHER AFFIRMATION OF FACT,
INCLUDING, BUT NOT LIMITED TO, STATEMENTS REGARDING CAPACITY OR SUITABILITY FOR
USE, THAT IS NOT CONTAINED IN THIS AGREEMENT SHALL BE DEEMED TO BE A WARRANTY
BY MDA OR ORBITAL.

SECTION 10 - ORBITAL GUARANTEE

In order to induce ORBIMAGE to enter into this Agreement and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, Orbital hereby unconditionally
and irrevocably guarantees (the "Guaranty") the full and timely performance of
MDA's obligations (including payment obligations) under this Agreement
(individually and collectively, the "Obligations"). Upon any default in the
Obligations, Orbital hereby agrees to immediately pay all amounts due to
ORBIMAGE on written demand by ORBIMAGE at the place and in the manner
specified. The Guaranty is absolute and is a guaranty of payment and not of
collection. Orbital waives all rights that it may have, if any, to require
that ORBIMAGE exhaust its remedies action against MDA in order to enforce the
Obligations. The Guarantee shall not be discharged except by the payment in
full of the Obligations. Orbital expressly waives notice of acceptance of the
Guaranty and waives diligence, presentment, demand, protest and notice of any
kind with respect to the Guaranty. Orbital agrees to pay to all of ORBIMAGE's
costs and expenses incurred by

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<PAGE> 14
ORBIMAGE in connection with the enforcement of the Guaranty, including, without
limitation, reasonable attorneys' fees and expenses. No action which ORBIMAGE
may take or omit to take in connection with this Agreement or the Guaranty, nor
any course of dealings with MDA, Orbital or any other person shall release,
impair or affect this Guaranty or the Orbital's liability under the Guaranty,
or afford Orbital any recourse against ORBIMAGE.

SECTION 11 - DISPUTE RESOLUTION

11.1 The Presidents of ORBIMAGE, MDA and Orbital (or, for so long
as the President of Orbital is an executive officer of ORBIMAGE, then an
Executive Vice President designated by Orbital's President) shall negotiate in
good faith the resolution of any dispute arising under this Agreement. If the
parties are unable to resolve the dispute in forty-five (45) days, then any
controversy or claim in respect of this Agreement or the performance hereunder
by any party hereto shall be settled by final and binding arbitration
administered by the American Arbitration Association ("AAA") under its
Commercial Arbitration Rules. In the event that more than one claim or
controversy arises under this Agreement, such claims or controversies may be
consolidated in a single arbitral proceeding. Such arbitration shall take
place in Washington, D.C. before a panel of three (3) neutral arbitrators
selected pursuant to such Rules. The arbitrators' award shall include an
allocation of arbitration fees, expenses and compensation, and may include an
award to the prevailing party of its attorneys' fees, costs and expenses in
connection with the arbitration. A judgment on the award rendered by the
arbitrators may be entered in and enforced by any court having jurisdiction
thereof, each party hereby consenting to the jurisdiction of such court over it
and waiving, to the fullest extent permitted by law, any defense or objection
relating to in personam jurisdiction, subject matter jurisdiction, venue or
convenience of the forum. All matters arising in any action to enforce an
arbitral award shall be determined in accordance with the law and practice of
the forum court. The existence of any dispute between the parties, whether the
same is the subject of an arbitration proceeding or not, shall not relieve the
parties of their obligations under this Agreement.

SECTION 12 - ASSIGNMENT

Neither party shall assign its rights or obligations hereunder without
the prior written consent of the other party.

SECTION 13 - MISCELLANEOUS

13.1 All notices, requests and other communications to any party
hereunder shall be in writing (including any facsimile transmission or similar
writing), and shall be sent either by telecopy, by reputable overnight courier
or delivered in person addressed as follows:

(a) If to MDA, to it at:

13800 Commerce Parkway
Richmond, British Columbia

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<PAGE> 15
Canada V6V 2J3
Telecopy: (604) 278-2386
Attention: Bernie S. Clark

(b) If to Orbital, to it at:
21700 Atlantic Boulevard
Dulles, VA 20166
Telecopy: (703) 406-5572
Attention: General Counsel

(c) If to ORBIMAGE, to it at:
ORBITAL IMAGING CORPORATION
21700 Atlantic Boulevard
Dulles, VA 20166
Telecopy: (703) 406-5552
Attention: Gilbert D. Rye

with a copy to General Counsel

or to such other persons or addresses as any party may designate by written
notice to any other. Each such notice, request or other communication shall be
effective (a) if given by telecopy, when such telecopy is transmitted and the
appropriate answerback is received, (b) if given by reputable overnight
courier, on one (1) business day after being delivered or (c) if given by any
other means, when received at the address specified in this Section.

13.2 This Agreement shall be binding upon the parties, their
successors and permitted assigns.

13.3 This Agreement and all attachments (which are hereby made part
of this Agreement) contain the entire understanding among MDA, ORBIMAGE and
Orbital and supersede all prior written and oral understandings relating to the
subject hereof. No representations, agreements, modifications or
understandings not contained herein shall be valid or effective unless agreed
to in writing and signed by both parties. Any modification or amendment of
this Agreement must be in writing and signed by all parties.

13.4 The construction, interpretation and performance of this
Agreement, as well as the legal relations of the parties arising hereunder,
shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia, without giving effect to the conflict or choice of
law provisions hereof. The parties consent to the personal jurisdiction of any
state or federal court located in Virginia in any action arising under this
Agreement and agree that actions arising under this Agreement may be brought in
such jurisdiction. The parties agrees that service of process may be made upon
each other in any such action in the same manner in which notice may be given
pursuant to this Agreement. No party may bring any action for a claim under
this Agreement later than one (1) year after the termination of this Agreement;
provided that claims

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<PAGE> 16
under any provision of this Agreement that survives termination of this
Agreement may be brought within one (1) year of the later of the occurrence of
the event giving rise to the claim and actual knowledge thereof by the party
asserting such claim.

13.5 It is understood and agreed that no failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof, or the exercise of any other right, power or
privilege hereunder. No waiver of any terms or conditions of this Agreement
shall be deemed to be a waiver of any subsequent breach of any term or
condition. All waivers must be in writing and signed by the party sought to be
bound.

13.6 If any part of this Agreement shall be held unenforceable, the
remainder of this Agreement will nevertheless remain in full force and effect,
unless such unenforceability impairs the fundamental purpose or expectations of
the parties hereto.

13.7 Headings in this Agreement are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.

13.8 MDA, ORBIMAGE and Orbital are independent contractors to one
another, and with respect to this Agreement, no party has the authority to bind
any other in any way or to any third party, and nothing in this Agreement shall
be construed as granting any party the right or authority to act as a
representative, agent, employee or joint venturer of any other.

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<PAGE> 17

IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.

MACDONALD, DETTWILER AND ASSOCIATES LTD.

By:
---------------------------------------------------
Name:
Title:

ORBITAL SCIENCES CORPORATION

By:
---------------------------------------------------
Name: Jeffrey V. Pirone
Title: Executive Vice President and
Chief Financial Officer

ORBITAL IMAGING CORPORATION

By:
---------------------------------------------------
Name: Gilbert D. Rye
Title: President

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Schedule 1.4
Payment Terms

1. The payment terms for the US$60 million shall be as follows:

ORBIMAGE shall pay MDA within ten days after MDA has notified ORBIMAGE of its
receipt of a milestone payment from CSA or, if CSA is making progress payments
to MDA, then within ten days after MDA has notified ORBIMAEG of its receipt of
such progress payment. The amount paid by ORBIMAGE shall be equal to (z% times
$55 million), where z% equals the percentage of the particular CSA milestone or
progress payment to the total value of the CSA contract (currently
C$217,585,529), provided, however, that in no event will ORBIMAGE be obligated
to pay more than the annual amount set forth below in any given year.

<TABLE>
<CAPTION>
Year Annual Amount Cumulative Amount
- ---- ------------- -----------------
<S> <C> <C>
1999 $15,000,000 $15,000,000
2000 $15,000,000 $30,000,000
2001 $15,000,000 $45,000,000
2002 $10,000,000 $55,000,000
</TABLE>

ORBIMAGE will make a final payment of $5,000,000 upon the verification and
commissioning of the RADARSAT-2 system in accordance with the RADARSAT-2 SOW.
Commissioning will be deemed to have occurred when the RADARSAT-2 meets
acceptance criteria as set forth in the RADARSAT-2 SOW.

2. The payment terms for the C$217,585,529 shall be as follows:

Simultaneously with ORBIMAGE's receipt of payments under Section 2 - Data
Purchase.

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SCHEDULE 3

STATEMENT OF WORK

FOR

RADARSAT-2 MASTER AGREEMENT

between

ORBITAL IMAGING CORPORATION

(ORBIMAGE)

and

MACDONALD, DETTWILER & ASSOCIATES, LTD.

(MDA)

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TABLE OF CONTENTS

<TABLE>
<S> <C>
1.0 INTRODUCTION/SCOPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 COMPLIANCE DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 REFERENCE DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.0 DESIGN, CONSTRUCTION, INTEGRATION,
TEST, AND DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 ORBIMAGE PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 DESIGN REVIEWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 RADARSAT-2 ON-ORBIT VERIFICATION & COMMISSIONING . . . . . . . . . . . . . . . . . 3

3.0 RADARSAT-2 OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 DATA ORDERING, PROCESSING AND DISTRIBUTION . . . . . . . . . . . . . . . . . . . . 4
3.2 OPERATIONS STATUS REPORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 OPERATIONAL INSIGHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

4.0 PROGRAM MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 PROGRAM INSIGHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 PROGRAM DOCUMENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

APPENDIX A
ORBIMAGE RADARSAT-2 CDRL . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>

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<PAGE> 21
1.0 INTRODUCTION/SCOPE

MacDonald, Dettwiler & Associates, Ltd. (MDA) was selected by the Canadian
Space Agency (CSA) to become the private sector partner for the RADARSAT-2
Program. As such, MDA and CSA agreed to jointly fund the RADARSAT-2 Program
and CSA has agreed that MDA will own and operate the RADARSAT-2 Spacecraft and
Mission Control assets and will deliver the Earth observation business on a
commercial basis in accordance with the RADARSAT-2 Master Agreement.

In a separate agreement between Orbital Imaging Corporation (ORBIMAGE) and MDA,
MDA has granted ORBIMAGE a license to promote, market, sell and use RADARSAT-2
data. This Statement of Work describes the work that MDA will execute in the
design, construction, fabrication, integration test, delivery, operation and
commercialization of the RADARSAT-2 System.

1.1 COMPLIANCE DOCUMENTS

The following documents are applicable to and are part of this Statement of
Work. Changes to these documents require the approval or concurrence (as
indicated) of ORBIMAGE. MDA retains design authority for the RADRSAT-2 System.
ORBIMAGE approval (or concurrence) shall not be unreasonably withheld and will
only be withheld if approval or concurrence would have a material impact to the
business of selling RADARSAT-2 data/products.

1.1.1 RADARSAT-2 Mission Requirements Specification, RN-DI-50-8804,
Issue 2/0: October 10, 1998.

1.1.2 RADARSAT-2 Product Specification, RN-RP-50-9786, latest issue
concurred by ORBIMAGE.

1.1.3RADARSAT-2 Operations Statement of Work, RN-CO-50-9914, latest
issue concurred by ORBIMAGE.

1.1.4 RADARSAT-2 Ordering, Processing and Distribution
Plan/Procedures latest issue approved by ORBIMAGE.

1.1.5 System Integration, Verification and Test Plan(s), latest
revision concurred by ORBIMAGE.

21
<PAGE> 22
1.1.6 RADARSAT-2 Commissioning Plan, latest issue concurred by
ORBIMAGE.

1.2 REFERENCE DOCUMENTS

The following documents are to be used as reference documents. Although
changes to these documents do not require ORBIMAGE approval, MDA shall be
required to notify ORBIMAGE of any changes which would (1) negatively impact
ORBIMAGE's ability to market and sell RADARSAT-2 products; (2) affect
ORBIMAGE's operations costs; or (3) negatively impact system capacity allocated
to ORBIMAGE.

1.2.1 RADARSAT-2 Master Agreement between MDA and CSA.

1.2.2 Schedule A-1, Statement of Work RN-CO-50-9739 for RADARSAT-2
Master Agreement between MDA and CSA dated December 1998,
including:

- Annex A - RADARSAT-2 Spacecraft Construction
Statement of Work.

- Annex B - RADARSAT-2 Ground Segment Statement of
Work.

1.2.3 Schedule D-1, RADARSAT-2 Data Policy for RADARSAT-2 Master
Agreement between MDA and CSA dated December 1998.

1.2.4 Schedule D-2, Data Supply Agreement for RADARSAT-2 Master
Agreement between MDA and CSA dated December 1998.

1.2.5 Schedule F-2, CSA/MDA Operations Agreement for RADARSAT-2
Master Agreement between MDA and CSA dated December 1998.

1.2.6 Schedule F-3, MOU between CSA and NRCan for RADARSAT-2 Master
Agreement between MDA and CSA dated December 1998.

1.2.7 Schedule G-1, IRB Requirement for RADARSAT-2 Master Agreement
between MDA and CSA dated December 1998.

1.2.8 System Specification for RADARSAT-2 System RN-SP-50-9806,
latest approved issue.

22
<PAGE> 23
1.2.9 RADARSAT-2 Space Segment Requirement Specification
RN-SP-50-9752, latest approved issue.

1.2.10 RADARSAT-2 Concept of Operations, RN-RP-50-9916

1.2.11 RADARSAT-2 Business Plan - contained in Part 1 of the
RADARSAT-2 Proposal (MDA proposal number 01-2249
submitted November 28, 1997). Annual updates to be
concurred by ORBIMAGE.

2.0 DESIGN, CONSTRUCTION, INTEGRATION, TEST, AND DELIVERY

MDA shall design, construct, integrate, test, deliver and commission the
RADARSAT-2 system in accordance with the CSA contract and the provisions of the
Statement of Work.

2.1 ORBIMAGE PARTICIPATION

During this phase of the program, MDA shall provide ORBIMAGE with insight to
the program and shall invite ORBIMAGE (and its consultants) to attend all
technical reviews.

2.2 DESIGN REVIEWS

As a minimum, the following reviews shall be conducted with the CSA and
ORBIMAGE will be invited to attend. Reviews will be held on dates agreed
between MDA and CSA.

2.2.1 Mission Requirements Design Review

2.2.2 Operations Concept Review

2.2.3 Preliminary Design Reviews

2.2.3.1 Spacecraft BUS PDR

2.2.3.2 Payload PDR

2.2.3.3 Ground Segment PDR

2.2.3.4 Mission Level PDR

2.2.4 Critical Design Reviews

2.2.4.1 Spacecraft BUS CDR

2.2.4.2 Payload CDR

23
<PAGE> 24
2.2.4.3 Ground Segment CDR

2.2.4.4 Mission Level CDR

2.2.5 Operations Planning Review

2.2.6 Test Readiness Review

2.2.7 Pre-Shipment Review

2.2.8 Operations Validation Review

2.2.9 Launch Readiness Review

2.2.10 System Commissioning Review

2.3 RADARSAT-2 ON-ORBIT VERIFICATION AND SYSTEM COMMISSIONING

MDA shall develop and implement the System Integration, Verification and Test
Plan as well as the System Commissioning Plan. The combined objective of these
plans are to establish the means by which MDA shall demonstrate compliance with
the Mission Requirements specification and readiness of the entire RADARSAT-2
System to begin commercial operations as required by the RADARSAT-2 Master
Agreement. These plans shall establish the acceptance criteria for the
RADARSAT-2 System.

24
<PAGE> 25
3.0 RADARSAT-2 OPERATIONS

MDA shall operate the RADARSAT-2 System in accordance with the CSA Contract,
Reference 1.2.2 above and the provision of this Statement of Work.

3.1 DATA ORDERING, PROCESSING AND DISTRIBUTION

In addition to the requirements of Reference 1.2.2, MDA shall develop and
implement a RADARSAT-2 Data Ordering, Processing and Distribution
Plan/Procedure. This plan shall be approved by ORBIMAGE and provide specific
details on how customers may order products, and how these products shall be
processed, distributed, archived, and billed. In addition, an ICD describing
the interface between the "distributors" (commercial and Government) and the
RADARSAT-2 Ground Segment shall be developed, implemented and tested.

3.2 OPERATIONS STATUS REPORTING

MDA shall provide ORBIMAGE with a daily operational status report via e-mail
summarizing the status of the RADARSAT-2 System and all outages which have
occurred over the past 24 hours.

3.3 OPERATIONAL INSIGHT

MDA shall provide ORBIMAGE full insight into on-orbit operations, anomalies,
and corrective actions planned. Details on anomalies shall be included in a
monthly operations report to be provided to ORBIMAGE. The monthly operations
report shall summarize the activities from the previous month and note any
significant operations and/or outages planned for the following month.

25
<PAGE> 26
4.0 PROGRAM MANAGEMENT

MDA shall provide the personnel and management (in accordance with the CSA
Contract, Reference 1.2.2, and the provision of this Statement of Work) to
execute all required tasks required by this Statement of Work.

4.1 PROGRAM INSIGHT

MDA shall support informal weekly teleconferences less than one hour in
duration with ORBIMAGE to discuss program progress and issues and shall support
up to one technical interchange per month (at MDA facility) as may be required.
In addition, MDA shall provide a program status briefing to ORBIMAGE on a
Quarterly basis either by inviting ORBIMAGE to attend the regular Quarterly
Review held with the CSA or by a separate meeting held by video conference
(expected duration approximately two hours).

4.2 PROGRAM DOCUMENTATION

Specific data to be delivered to ORBIMAGE is included in Appendix A to this SOW
(ORBIMAGE CDRL for RADARSAT-2). All documentation generated for the RADARSAT-2
Program shall be included on the Data Accession List. Documentation not
required to be delivered pursuant to Appendix A shall be made available (as
requested by ORBIMAGE) at MDA facilities.

26
<PAGE> 27

APPENDIX A

ORBIMAGE RADARSAT-2 CDRL

MDA shall provide two hard copies of all documents. In addition, soft copies
of documents requiring ORBIMAGE approval or concurrence shall be provided.

For documents not marked "Approve" or "Concur" MDA reserves the right to modify
the CDRL list by combining or eliminating documents if this facilitates the
execution of the development program.

NOTES:

For Approval/Concurrence* - such documents require formal approval or
concurrence in writing.

MDA retains design authority for the RADRSAT-2 System. ORBIMAGE approval (or
concurrence) shall not be unreasonably withheld and will only be withheld if
approval or concurrence would have a material impact to the business of selling
RADARSAT-2 data/products.

Documents listed below which are designated as "(existing document)" have been
produced prior to the agreement between ORBIMAGE and MDA. Through execution of
this agreement these documents are deemed to be accepted by ORBIMAGE.

For Review - documentation to be evaluated and comments sent for consideration.
MDA shall review the recommendations and advise if these will be implemented.

For Information - documentation of a routine nature to be sent to convey
information, facts or status. A formal response is not required but comments
may be provided.

*Concurrence means a bilateral consensus is needed by both MDA and ORBIMAGE.
<PAGE> 28

<TABLE>
<CAPTION>
CDRL TITLE SOW REFERENCE SUBMISSION APPROVAL/CONCURRENCE/
REVIEW/INFORMATION
<S> <C> <C> <C>
BU-01 System Business Plan 3.0 Submitted with Information (existing document)
Draft RADARSAT-2 Proposal

BU-01 System Business Plan 3.0 ANNUALLY Concur
Update

IT-01 System Integration, 2.0 MPDR Concur
Verification and Test
Plan (Includes on
Orbit Checkout and
Calibration Plan)

IT-04 System Verification 2.0 30 Days After Review
Report Verification Event

OC-02 Concept of Operations 3.0 Operations Concept Information (existing document)
(First Release) Review

OC-02 Concept of Operations 3.0 As required Concur
(updates)

OC-03 Operations Segment 2.0 Operations Concept Information (existing document)
Specification (DRAFT) Review

OC-03 Operations Segment 2.0 Ground Segment PDR Information
Specification (FINAL)

OC-04 Operations Transition 3.0 15 months before launch Information
Plan

OC-06 Human Resources 4.0 Final Operations Information
Development Planning Review
(Training) Plan

OC-07 Exercise and 2.0 Final Operations Information
Rehearsals Plan Planning Review

OC-08 Launch and Early 2.0 Final Operations Information
Orbit Plan Planning Review

OC-09 Commissioning Plan 2.0 Final Operations Concur
Planning Review

OC-10 Mission Operations 3.0 Final Operations Information
Plan (DRAFT) Planning Review
</TABLE>

28
<PAGE> 29
<TABLE>
<CAPTION>
CDRL TITLE SOW REFERENCE SUBMISSION APPROVAL/CONCURRENCE/
REVIEW/INFORMATION
<S> <C> <C> <C>
OC-10 Mission Operations 3.0 Ops Validation Review Information
Plan (FINAL)

OC-11 Data Policy (First 4.0 Incorporated into Master Information (existing document)
Release) Agreement between MDA
and CSA

OC-11 Data Policy (UPDATES) 4.0 As Required Concur

PM-01 Program Management 4.0 Submitted with Information (existing document)
Plan Initial RADARSAT-2 Proposal

PM-01 Program Management 4.0 Mission Requirements Information (existing document)
Plan Review (MRR)

PM-01 Program Management 4.0 As Required Information
Plan Update

PM-02 Monthly Program 4.0 Monthly Information
Status Reports

PM-04 Quarterly Program 4.0 Quarterly Information
Status Reviews

PM-05 Product Assurance 2.0 MRR + 4 Months Information (existing document)
Policy

SE-01 Mission Requirements 1.0 Submitted with Information (existing document)
Spec Initial RADARSAT-2 Proposal

SE-01 Mission Requirements 1.0 MRR + 2 Months Information (existing document)
Spec UPDATE

SE-01 Mission Requirements 1.0 MPDR Concur
Spec Final

SE-02 System Engineering 2.0 Submitted with Information (existing document)
Management Plan RADARSAT-2 Proposal

SE-02 System Engineering 2.0 SSRR Information
Management Plan
Update

SE-03 System Spec First 2.0 SSRR Information (existing document)
Issue
</TABLE>

29
<PAGE> 30
<TABLE>
<CAPTION>
CDRL TITLE SOW REFERENCE SUBMISSION APPROVAL/CONCURRENCE/
REVIEW/INFORMATION
<S> <C> <C> <C> <C>
SE-03 System Spec Update 2.0 MPDR Information

SE-04 System Budgets 2.0 MPDR Information
Document

SE-06 System Product Specs 1.0 SSRR Information (existing document)
Draft

SE-06 System Product Specs 1.0 MPDR Concur
Final

SE-08 System Design 2.0 MPDR Information
Document

OI-1 RADARSAT-2 Data 3.0 GS PDR Approval
Ordering, Processing
and Distribution
Plan/Procedure
(DRAFT)

OI-1 RADARSAT-2 Data 3.0 MCDR Approval
Ordering, Processing
and Distribution
Plan/Procedure
(FINAL)

OI-2 RADARSAT-2 3.0 Every 24 hours after Information
Operational Status commissioning (via
Report e-mail)

OI-3 RADARSAT-2 Monthly 3.0 Once per month after Information
Operations Report commissioning

OI-4 RADARSAT-2 3.0 MCDR Information
Distributor to Ground
Segment ICD

OI-5 Data Accession List 4.0 Quarterly Information
</TABLE>

30
<PAGE> 31

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CDRL # DOCUMENT TITLE RELEASE SOW SUBMISSION APPROVAL/
REFERENCE REVIEW/
INFORMATION
<S> <C> <C> <C> <C> <C>
SE SPACE SEGMENT SYSTEM ENGINEERING DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
SS-SE-01 Space Segment Requirements Specification Draft 2.0 SSRR - 15 Days Information
(existing
document)
- -------------------------------------------------------------------------------------------------------------------------------
SS-SE-01 Space Segment Requirements Specification Final 2.0 MPDR - 15 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
SS-SE-02 Space Segment Requirements Review Package 2.0 SSRR - 15 Days Information
(existing
document)

- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
BU BUS MODULE DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
SS-BU-01 Bus Module Requirements Review Package Review 2.0 Concept Review - 30 Information
Days (existing
document)
- -------------------------------------------------------------------------------------------------------------------------------
SS-BU-02 Bus Module Preliminary Design Review Package Review 2.0 PDR - 15 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
SS-BU-03 Bus Module Critical Design Review Package Review 2.0 CDR - 15 Days Information

- -------------------------------------------------------------------------------------------------------------------------------
SS-BU-04 Bus Module Test Readiness Review Package Review 2.0 TRR - 15 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
SS-BU-05 Bus Module Verification Reports Information
- -------------------------------------------------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------------------------------------------------------
PL SAR PAYLOAD DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
SS-PL-01 SAR Payload Requirements Review Package Review 2.0 Concept Review - 30 Information
Days (existing
document)
- -------------------------------------------------------------------------------------------------------------------------------
SS-PL-02 SAR Payload Preliminary Design Review Package Review 2.0 PDR - 30 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
SS-PL-03 SAR Payload Critical Design Review Package Review 2.0 CDR - 30 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
SS-PL-04 SAR Payload Test Readiness Review Package Review 2.0 TRR - 30 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
SS-PL-05 SAR Payload Verification Reports Information
- -------------------------------------------------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------------------------------------------------------
SC SPACECRAFT DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
SS-SC-01 Spacecraft Pre-shipment Review Package Final 2.0 Pre-Shipment Review - Information
30 Days

- -------------------------------------------------------------------------------------------------------------------------------
SS-SC-02 Spacecraft Launch Readiness Package Final 2.0 LRR - 30 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
SS-SC-03 System Commissioning Review Package Final 2.0 Launch - 30 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
SS-SC-04 Spacecraft Qualification Plan Draft SSRR - 15 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
SS-SC-04 Spacecraft Qualification Plan Final MPDR - 15 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
SS-SC-05 Spacecraft Specification Draft MPDR - 15 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
SS-SC-05 Spacecraft Specification Final MCDR - 15 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
SS-SC-06 Spacecraft Verification Requirements Draft SSRR - 15 Days Information
Specification
- -------------------------------------------------------------------------------------------------------------------------------
SS-SC-06 Spacecraft Verification Requirements Final MPDR - 15 Days Information
Specification
- -------------------------------------------------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------------------------------------------------------
IT INTEGRATION AND TEST DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
SS-IT-01 Spacecraft Assembly, Integration and Test Plan Draft 2.0 Prelim I&T Plan Rev - Information
15 Days
- -------------------------------------------------------------------------------------------------------------------------------
SS-IT-01 Spacecraft Assembly, Integration and Test Plan Final 2.0 MPDR - 15 Days Information
Update
- -------------------------------------------------------------------------------------------------------------------------------
SS-IT-02 Spacecraft Verification Report Final 2.0 30 Days After Information
Completion of Test
- -------------------------------------------------------------------------------------------------------------------------------

SS-IT-03 Spacecraft Test Data Review Packages One Per Phase Information
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

31
<PAGE> 32
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CDRL # DOCUMENT TITLE RELEASE SUBMISSION INFORMATION/REVIEW/
APPROVAL
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GS-SE GROUND SEGMENT UPGRADE SYSTEM
ENGINEERING DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
GS-SE-01 Systems Engineering Management Final GSSDR Information
Plan
- -------------------------------------------------------------------------------------------------------------------------------
GS-SE-02 Ground Segment Upgrade Final GSRR + 60 Days Information
Requirements Specification
- -------------------------------------------------------------------------------------------------------------------------------
GS-SE-03 Ground Segment High Level Design Draft GSSDR - 15 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-SE-03 Ground Segment High Level Design Final GSSDR + 60 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-SE-04 Ground Segment Requirements Final GSSDR + 60 Days Information
Tractability Matrix
- -------------------------------------------------------------------------------------------------------------------------------
GS-SE-06 Ground Segment Facility Upgrade Draft GSCDR - 15 Days Information
Plan
- -------------------------------------------------------------------------------------------------------------------------------
GS-SE-06 Ground Segment Facility Upgrade Final GSCDR + 60 Days Information
Plan
- -------------------------------------------------------------------------------------------------------------------------------
GS-SE-07 Ground Segment Logistics Support Final GSCDR + 60 Days Information
Plan
- -------------------------------------------------------------------------------------------------------------------------------

GS-SE-08 Ground Segment Training Plan Final GSCDR + 60 Days Information
- -------------------------------------------------------------------------------------------------------------------------------
GROUND SEGMENT UPGRADE SUB-PROJECTS
- -------------------------------------------------------------------------------------------------------------------------------
ORDER HANDLING SYSTEM UPGRADE SUB-PROJECT
- -------------------------------------------------------------------------------------------------------------------------------
GS-OH ORDER HANDLING SYSTEM DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
GS-OH-01 Requirements Specification Final GSSDR * Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-OH-02 High Level Design Final GSPDR * Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-OH-03 ICD Upgrade Final GSSDR* Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-OH-04 User Document Upgrade Final GSCDR + 4 Months* Information
- -------------------------------------------------------------------------------------------------------------------------------
ACQUISITION AND RECEPTION PLANNING SYSTEM UPGRADE
SUB-PROJECT
- -------------------------------------------------------------------------------------------------------------------------------

GS-AP ACQUISITION AND RECEPTION
PLANNING SYSTEM DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
GS-AP-01 Requirements Specification Final GSSDR * Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-AP-02 High Level Design Final GSPDR * Information
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

32
<PAGE> 33
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CDRL # DOCUMENT TITLE RELEASE SUBMISSION INFORMATION/REVIEW/
APPROVAL
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
IMAGE QUALITY CONTROL SYSTEM UPGRADE
SUB-PROJECT
- -------------------------------------------------------------------------------------------------------------------------------
GS-IQ IMAGE QUALITY CONTROL SYSTEM
DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
GS-IQ-01 Requirements Specification Final GSSDR * Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-IQ-02 High Level Design Final GSPDR * Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-IQ-03 ICD Upgrade Final GSSDR* Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-IQ-04 User Document Upgrade Final GSCDR + 4 Mos.* Information
- -------------------------------------------------------------------------------------------------------------------------------

MISSION CONTROL FACILITY UPGRADE SUB-PROJECT
- -------------------------------------------------------------------------------------------------------------------------------
GS-MC MCF UPGRADE DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
GS-MC-01 Requirements Specification Final GSSDR * Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-MC-02 High Level Design Final GSPDR * Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-MC-04 User Document Upgrade Final GSCDR + 4 Months* Information
- -------------------------------------------------------------------------------------------------------------------------------
RADARSAT-2 SIMULATOR SUB-PROJECT
- -------------------------------------------------------------------------------------------------------------------------------
GS-SM RADARSAT-2 SIMULATOR DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
GS-SM-01 Requirements Specification Final GSSDR * Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-SM-02 High Level Design Final GSPDR * Information

- -------------------------------------------------------------------------------------------------------------------------------
GS-SM-04 User Document Upgrade (First Final GSCDR + 4 Months* Information
Draft)
- -------------------------------------------------------------------------------------------------------------------------------
TRACKING, TELEMETRY AND COMMAND STATION UPGRADE
SUB-PROJECT
- -------------------------------------------------------------------------------------------------------------------------------
GS-IT TTCS UPGRADE DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
GS-IT-01 Requirements Specification Final GSPDR* Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-TT-02 High Level Design Final GSPDR * Information
- -------------------------------------------------------------------------------------------------------------------------------
CANADIAN DATA PROCESSING FACILITY UPGRADE
SUB-PROJECT
- -------------------------------------------------------------------------------------------------------------------------------
GS-CD CDPF UPGRADE DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
GS-CD-01 Requirements Specification Final GSSDR * Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-CD-02 High Level Design Final GSPDR * Information

- -------------------------------------------------------------------------------------------------------------------------------
GS-CD-03 ICD Upgrade Final GSSDR* Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-CD-04 User Document Upgrade Final GSCDR + 4 Months* Information
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

33
<PAGE> 34
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CDRL # DOCUMENT TITLE RELEASE SUBMISSION INFORMATION/
REVIEW/
APPROVAL
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

RECEPTION AND ARCHIVING SYSTEM UPGRADE SUB-PROJECT
(CCRS)
- -------------------------------------------------------------------------------------------------------------------------------
GS-AR RECEPTION AND ARCHIVING
DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
GS-AR-01 Requirements Specification Final GSSDR * Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-AR-02 ICD Upgrade Final GSSDR* Information
- -------------------------------------------------------------------------------------------------------------------------------
CATALOG SYSTEM UPGRADE SUB-PROJECT (CCRS)
- -------------------------------------------------------------------------------------------------------------------------------
GS-CT CATALOG UPGRADE DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
GS-CT-01 Requirements Specification Final GSSDR * Information
- -------------------------------------------------------------------------------------------------------------------------------
GS-CT-02 ICD Upgrade Final GSSDR* Information
- -------------------------------------------------------------------------------------------------------------------------------

GROUND SEGMENT INTEGRATION AND TEST
- -------------------------------------------------------------------------------------------------------------------------------
GS-IT INTEGRATION AND TEST DOCUMENTS
- -------------------------------------------------------------------------------------------------------------------------------
GS-IT-01 Integration, Verification and Draft GSCDR - 15 Days Information
Test Plan
- -------------------------------------------------------------------------------------------------------------------------------
GS-IT-01 Integration, Verification and Final GSCDR + 60 Days Information
Test Plan
- -------------------------------------------------------------------------------------------------------------------------------
GS-IT-02 Integration, Verification and Final 30 Days After Information
Test Report Completion of Test
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*These dates are approximate only and will be refined once development
schedules for the systems are finalized.

<PAGE> 1
EXHIBIT 10.11

HYPERSPECTRAL IMAGING
DATA AGREEMENT

This Hyperspectral Imaging Data Agreement (this "Agreement" or "HSI
Data Agreement") is made and entered into this 31st day of December 1998
between Orbital Sciences Corporation ("Orbital"), a Delaware corporation, and
Orbital Imaging Corporation ("ORBIMAGE"), a Delaware Corporation.

WITNESSETH

WHEREAS, the parties desire to enter into this Agreement for purposes
of ORBIMAGE providing Hyperspectral Imaging ("HSI") Data Sets to Orbital for
delivery to its U.S. Air Force ("USAF") customer in accordance with Contract
No. F29601-97-C-0110 (the "HSI Contract").

NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

1) DEFINITIONS

"HSI Contract" shall mean the U.S Air Force/Phillips Laboratory contract
(Contract No. F29601-97-C-0110), between Orbital and the USAF duly executed on
August 5, 1997.

"ORBIMAGE System Procurement Agreement" shall mean the agreement between
Orbital and ORBIMAGE dated November 18, 1996, and as amended on May 8, 1997,
December 31, 1997, February 26, 1998 and December 31, 1998.

2) ORBITAL'S PURCHASE OF HSI DATA SETS

Orbital hereby agrees to purchase HSI Data Sets from ORBIMAGE for
delivery to its USAF customer in accordance with the HSI Contract. Except with
the prior written consent of ORBIMAGE, which shall not be unreasonably
withheld, Orbital shall not make any use of the HSI Data sets delivered by
ORBIMAGE other than pursuant to the HSI Contract. Orbital agrees to pay
ORBIMAGE $31,000,000 for HSI Data Sets in accordance with CLIN 0003 of the HSI
Contract. This amount shall be adjusted to reflect the final combined value of
HSI Contract CLINs 0001 through 0003. Orbital shall forward such payment upon
the launch of OrbView-4 in accordance with the Milestone Payment Schedule set
forth in Exhibit A. To the extent the USAF exercises any options under the HSI
Contract to purchase HSI Data Sets, Orbital shall purchase such Data Sets from
ORBIMAGE at a price equal to the total value of the option exercised as paid by
USAF. Orbital will pay ORBIMAGE for all such purchases no later than ten (10)
days after Orbital receives any payment from USAF.

3) ORBIMAGE LIMITATION OF LIABILITY

ORBIMAGE HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE ANY
REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE HYPERSPECTRAL DATA
SETS TO BE PROVIDED TO ORBITAL UNDER THIS SECTION OF THE HSI DATA AGREEMENT.
ORBIMAGE SHALL NOT BE LIABLE TO ORBITAL FOR ANY INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES ARISING UNDER OR RELATING TO THE HSI CONTRACT.

1
<PAGE> 2

4) NO THIRD PARTY BENEFICIARY RIGHTS

Nothing herein shall be construed to confer any third-party
beneficiary rights to the USAF under this HSI Data Agreement. Orbital agrees
to indemnify ORBIMAGE for any damages arising from any claims by the USAF
against ORBIMAGE relating to the HSI Contract.

5) TERMINATION

In the event the USAF terminates its requirements for HSI Data under
the HSI Contract, Orbital shall likewise have the right to terminate this
Agreement.

6) STANDARDS OF CONDUCT

ORBIMAGE agrees to use commercially reasonable efforts to supply
Orbital with data sets required to be delivered under the HSI Contract and to
ensure that such data sets conform with the specifications under the HSI
Contract (unless such failure to conform is attributable to work performed by
Orbital under the ORBIMAGE System Procurement Agreement). Orbital shall employ
commercially reasonable standards of business conduct in the performance of its
obligations under the HSI Contract.

7) GOVERNING LAW

This Agreement shall be construed in accordance with and governed by
the laws of the Commonwealth of Virginia without giving effect to the
provisions, policies or principles thereof relating to choice or conflict of
laws.

8) ENTIRE AGREEMENT

This Agreement and attachments contains the entire understanding
between the parties concerning the HSI Data Sets that ORBIMAGE will provide
Orbital in support of the HSI contract and supersedes all prior written and
oral understandings relating to the subject hereof.

IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.

ORBITAL SCIENCES CORPORATION (ORBITAL)

By:
------------------------------------------
Name: Jeffrey V. Pirone
Title: Executive Vice President, Finance and
Chief Financial Officer

ORBITAL IMAGING CORPORATION (ORBIMAGE)

By:
------------------------------------------
Name: Gilbert D. Rye
Title: President and Chief Operating Officer

2
<PAGE> 3
EXHIBIT A
MILESTONE PAYMENT SCHEDULE
($ IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
DATE MILESTONE PAYMENTS MONTHLY PAYMENTS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2000
- ----------------------------------------------------------------------------------------------------------------------
March For HSI Data Sets * $31,000
- ----------------------------------------------------------------------------------------------------------------------
TOTAL PAYMENT $31,000
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

* Payment is for HSI Data Sets as required under CLIN 0003 of the HSI Contract
and is due upon launch of OrbView-4.

<PAGE> 1
EXHIBIT 10.12

AMENDMENT NO. 1 TO
AMENDED AND RESTATED
ORBIMAGE SYSTEM PROCUREMENT AGREEMENT

Amendment No. 1 (this "Amendment") is made and entered into as of the
31st day of December 1998 between Orbital Sciences Corporation, a Delaware
Corporation ("Orbital"), and Orbital Imaging Corporation, a Delaware
Corporation ("OIC" or "ORBIMAGE").

WITNESSETH

WHEREAS, the parties have previously entered into the Amended and
Restated ORBIMAGE System Procurement Agreement dated February 26, 1998; and

WHEREAS, the parties desire to amend the Amended and Restated ORBIMAGE
System Procurement Agreement as set forth below.

NOW, THEREFORE, the parties agree as follows:

SECTION 1. Amendments to Article 2.

(a) In Sections 2.3.1 and 2.5.1, delete references to (Exhibit C, Part
1A) and (Exhibit C, Part 1B) and replace each with "(Exhibit C)".

(b) Section 2.4 is amended to read in its entirety as follows:

"Section 2.4. Provision of OrbView Command and Control Segment and
OrbView Data Processing Segment. Orbital shall design, construct, deliver and
test the OrbView-3 and OrbView-4 Command and Control Segment ("CCS"), defined
hereunder to encompass the CCS, Tasking and Distribution Segment ("TADS") and
Ground Terminals ("GTS or Earth Terminals"), the OrbView-3 and OrbView-4 Data
Processing Segment ("DPS"), and spare equipment in accordance with the OrbView
High Resolution Imagery System Mission Requirements Document (Exhibit C),
Statement of Work (Exhibit C) and the Joint OrbView-3 and OrbView-4 Command and
Control and Data Processing and Distribution Requirements Specification
(Exhibit D, Part 1). Orbital shall design, construct and deliver the OrbView-1
and OrbView-2 Command and Control Segment in accordance with the OrbView-1 and
OrbView-2 Command and Control Statement of Work (Exhibit D, Part 2)."

"Section 2.4.1. Provision of the OrbView High Resolution
System Ground Segment Upgrades for NIMA. Orbital shall develop,
deliver and test OrbView Ground Segment infrastructure upgrades to
support NIMA requirements in accordance with the Statement of Work for
Orbital Support to NIMA's Commercial Imagery Initiative (Exhibit C).

(d) Section 2.5.2 is amended to read in its entirety as follows:

"Section 2.5.2. Provision of Launch. Orbital shall launch the
OrbView-4 Satellite as the primary payload using a Taurus Launch
Vehicle in accordance with the applicable Launch Vehicle Statement of
Work and Specifications. Orbital shall have the right to procure one
or more secondary payloads for the OrbView-4 Taurus Launch Vehicle,
subject to OIC's written consent, which shall not be unreasonably
withheld. "

SECTION 2. Amendments to Article 3.

1
<PAGE> 2

(a) Section 3.1 is amended to read in its entirety as follows:

"Section 3.1. The price for the work hereunder (collectively, the
"Price") is as follows:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
CLIN FIXED PRICE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
001 OrbView-1 System (2.1) $12,327,000
- ---------------------------------------------------------------------------------------------------------
002 OrbView-2 License (2.2) 62,743,000
- ---------------------------------------------------------------------------------------------------------
003 OrbView-3 Satellite and Launch (2.3.1, 2.3.2) 69,200,000
- ---------------------------------------------------------------------------------------------------------
004 Data Processing Segment and Command and Control Segment (2.4) 29,850,000
- ---------------------------------------------------------------------------------------------------------
005 OrbView-4 Satellite (2.5.1) 73,500,000
- ---------------------------------------------------------------------------------------------------------
008 OrbView-4 Launch (2.5.2) 21,750,000
- ---------------------------------------------------------------------------------------------------------
007 Ground Segment Upgrades for NIMA (2.4.1) 480,000
- ---------------------------------------------------------------------------------------------------------
TOTAL FIXED PRICE $269,850,000

- ---------------------------------------------------------------------------------------------------------

006 Insurance COST-REIMBURSABLE
- ---------------------------------------------------------------------------------------------------------
009 On-Orbit Performance Incentive $10,000,000
- ---------------------------------------------------------------------------------------------------------
010 OrbView-4 HSI Modifications $31,000,000
- ---------------------------------------------------------------------------------------------------------
</TABLE>

SECTION 3. Amendments to Article 5.

(a) Section 5.3 is amended to read in its entirety as follows:

"Section 5.3. Monthly Payment Schedule Invoices. Within 15 days
after the end of each month, Orbital shall submit certified invoices reflecting
actual incurred costs for the preceding month and any unpaid balance from prior
months. OIC shall pay such invoices to the extent provided in Section 5.1
within 10 days from the date of receipt."

(b) Section 5.4 is amended to read in its entirety as follows:

"Section 5.4. Milestone Schedule Payments. Exhibit F also sets forth
a Milestone Payment Schedule for CLIN 003 through CLIN 005. Orbital shall
invoice OIC for the CLIN 003 through CLIN 005 and CLIN 008 Milestones set forth
in Exhibit F upon achieving, and OIC acceptance, of such milestones. Such
invoices shall be paid within 10 days of receipt. In addition, milestone
payments for CLIN 007 shall be made in accordance with Exhibit F. Orbital
shall submit separate invoices to OIC upon achieving, and OIC acceptance, of
such CLIN 007 milestones with no more than 1 milestone event invoiced in a
single month. CLIN 007 invoices shall be payable within 45 days of receipt.
All CLIN 007 payments shall be unliquidated payments until acceptance of the
final milestone by OIC.

"Section 5.6. On-Orbit System Performance Incentive. For the
OrbView-3 satellite, OrbView-4 satellite and OrbView-3/4 ground system
elements, OIC agrees to pay Orbital an on-orbit system performance incentive
not to exceed a fixed price of $1,000,000 per operational year for each
satellite. The on-orbit performance incentive shall be paid during each
satellite's 5 year operational life. This equates to a maximum payment of
$10,000,000. The Milestone Payment Schedule for the CLIN 009 on-orbit
performance incentive is provided in Exhibit F. The first payment shall be
made 12 months following completion, and OIC acceptance, of on-orbit system
verification of the respective OrbView satellite and ground segment elements.
The actual on-orbit performance incentive payable for each satellite for each
12 month period shall be $1,000,000 multiplied by the value of the Global
Efficiency Metric ("GEM"), which can range from one to zero. The GEM formula
is represented as the product of the performance parameters defined in the
Statement of Work (Exhibit C). The GEM parameters shall be measured initially
by Orbital as part of the OrbView-3 and OrbView-4 on-orbit system checkout to

2
<PAGE> 3
establish performance compliance using a benchmark test. OIC will repeat this
benchmark test, on an annual basis, to obtain the GEM value and actual
incentive payable to Orbital. Orbital may participate in such testing at its
own expense. Payment shall be made by OIC within 15 days of completion of the
GEM evaluation report."

SECTION 4. Amendments to Article 6.

(a) Sections 6.1 (c), (d), (e), and (f) are amended to read in their
entirety as follows:

"(c). Orbital shall complete on-orbit verification of the OrbView-3
Satellite and related ground segment to support commercial operations no later
than 60 days following launch of the OrbView-3 Satellite subject to Section 7.4
below. Final acceptance of the OrbView-3 Satellite and the phased ground
system elements shall be deemed to have occurred upon completion and OIC
acceptance of on-orbit checkout, calibration, and verification of the
satellite/ground system conducted in accordance with the Exhibit C Statement of
Work and Mission Requirements Document.

(d). Delivery of the OrbView-3/4 Data Processing Segment ("DPS")
shall be phased as follows: (1) delivery for OrbView-3 shall include full DPS
functionality with approximately 50% throughput for basic and geo-corrected
data products. Delivery and verification shall occur no later than 60 days
following OrbView-3 launch; and (2) remaining DPS capability shall be delivered
and verified no later than 60 days prior to OrbView-4 launch. Orbital shall
perform installation, segment acceptance testing, and system verification for
each phased delivery in accordance with Exhibit C Statement of Work and Mission
Requirements Document.

(e). Delivery of the Command and Control Segment for OrbView-1 and
OrbView-2 shall be as defined in subparagraphs (1) and (2). Phased delivery of
the OrbView-3 and OrbView-4 Command and Control Segment shall be as described
in subparagraphs (3), (4) and (5). Orbital shall perform installation, segment
acceptance testing and system verification for each phased delivery in
accordance with the Exhibit C Statement of Work and Mission Requirements
Document.

(1) Completed work for the OrbView-1 and OrbView-2 Systems shall
be delivered at the time of closing the private financing contemplated by OIC.

(2) Remaining work for OrbView-2 shall be delivered in April,
1997.

(3) OrbView Command and Control Segment ("CCS") for OrbView-3 and
OrbView-4 shall be delivered no later than 60 days prior to each satellite's
respective launch date.

(4) Full functionality and redundancy for the Northern Ground
Terminal and full functionality for the CONUS Ground Terminal shall be
delivered and verified no later than 45 days prior to the OrbView-3 launch
date.

(5) Full functionality for the Tasking and Distribution Segment
("TADS") shall be delivered and verified no later than 60 days following
OrbView-3 launch.

(f). Orbital shall complete on-orbit verification of the OrbView-4
Satellite and related ground segment to support commercial operations no later
than 60 days following launch of the OrbView-4 Satellite subject to Section 7.4
below. Final acceptance of the OrbView-4 Satellite and remaining OrbView-3/4
ground system elements shall be deemed to have occurred upon completion and OIC
acceptance of on-orbit checkout, calibration, and verification of the
satellite/ground system conducted in accordance with the Exhibit C Statement of
Work and Mission Requirements Document."

SECTION 5. Amendments to Article 7.

(a) Section 7.3 (b) and (c) are amended to add the following as the
last sentence to each paragraph:

3
<PAGE> 4
"Orbital shall perform, at its expense, acceptance and system verification
tests over a thirty (30) day period following each phased delivery as well
as a final integrated system verification test over a thirty (30) day
period after test of the last phased delivery in accordance with Exhibit C
Statement of Work and Mission Requirements Document."

(a) Section 7.4 is amended to read in its entirety as follows:

"Section 7.4. On-Orbit System Checkout. For a period of thirty (30)
days after launch of each satellite, Orbital shall perform, at its expense,
on-orbit system checkout, calibration, and verification of the OrbView-3 and
OrbView-4 satellites and OrbView-3/4 ground segment to demonstrate compliance,
as determined by ORBIMAGE acting reasonably, with Exhibit C OrbView High
Resolution Imagery System Mission Requirements Document and in accordance with
the Exhibit C Statement of Work."

SECTION 6. Amendments to Article 8.

(a) Paragraph (e) is amended to read in its entirety as follows:

"(e) with respect to the CCS (to include TADS and GTS) and DPS for
OrbView-3 and OrbView-4, upon successful completion, and OIC acceptance, of the
final ATPs and on-orbit system verifications subsequent to all phased
deliveries as defined in Section 6.1 and the Exhibit C Statement of Work and
Mission Requirements Document; and"

SECTION 7. Amendments to Article 10.

(a) Section 10.2.(a) subparagraphs (i.) through (iv.) are deleted in
their entirety and the following new paragraph (i.) is hereby
incorporated:

"(i.) for all segments of the OrbView-3 and OrbView-4 Command and
Control Segment (including the TADS and GTS) and Data Processing
Segment for a period of one (1) year after the later to occur of (A)
final acceptance of the last phased delivery of the OrbView ground
segment or (B) completion of OrbView-4 on-orbit system verification
activities."

SECTION 8. Amendments to Article 11.

(a) Article 11 is amended to read in its entirety as follows:

(a) HSI Contract. Pursuant to that certain contract between Orbital and
the U.S. Air Force/Philips Laboratory ("USAF") awarded August 5, 1997,
(Contract No. F29601-97-C-0110) (the "HSI Contract"), Orbital has, among other
things, undertaken to design a hyperspectral imaging ("HSI") sensor to be
integrated onto the OrbView-4 camera, to supply a mission data center and
mobile ground station, and to provide related work and services including
certain post-launch support, all as are further detailed in the HSI Contract.
Notwithstanding anything in this Agreement to the contrary, the terms and
conditions of this Article 11 are subject to all rights of the USAF pursuant to
the HSI Contract.

(b) OIC Procurement of HSI Modifications. OIC hereby agrees to procure
from Orbital HSI Sensor modifications to the OrbView-4 Satellite to add
hyperspectral capability and other work and services. OIC agrees to pay
Orbital $31,000,000 for the HSI Sensor modifications and other work and
services on the OrbView-4 Satellite in accordance with CLIN 010 of this
Agreement. This amount shall be adjusted to reflect the final combined value
of HSI Contract CLINs 0001 through 0003. OIC shall forward such payment upon
the launch of OrbView-4 in accordance with the Milestone Payment Schedule set
forth in Exhibit F.

(c) OIC On-Orbit Support. Orbital shall subcontract with OIC to provide
on-orbit support to the USAF contemplated by the HSI Contract. Orbital shall
pay OIC for such on-orbit support in accordance

4
<PAGE> 5
with such subcontract. If OIC declines to perform such work, then Orbital
shall perform such work at no cost to OIC, provided, however, that OIC shall
grant Orbital reasonable access to the OrbView-4 Satellite and ground segment
to enable Orbital to perform such work.

(d) Hardware. Orbital agrees to deliver to OIC all hardware that is
produced or procured under the HSI Contract that is not otherwise deliverable
to USAF. Orbital shall also deliver one set of technical drawings, reports and
other documentation ("HSI Documentation") relating to such hardware. OIC shall
only be entitled to use such hardware and HSI Documentation for the purpose of
operating and maintaining the OrbView-4 Satellite system and any follow-on
systems that have similar hyperspectral capability.

(e) Software. To the extent permitted under the HSI Contract, the Federal
Acquisition Regulations and all applicable subcontracts, Orbital hereby grants
to OIC a perpetual, royalty free, non-exclusive, non-transferable license to
use the software, algorithms, and all other intellectual property (including
but not limited to any code) to be developed or purchased by Orbital under the
HSI Contract ("HSI Software"). To the extent Orbital has possession of source
code, object code, and any other code and documentation relating to the HSI
Software ("HSI Code") and is not otherwise prohibited from doing so, Orbital
shall deliver to OIC one copy of the HSI Code in a form sufficient to enable
OIC to operate and maintain the OrbView-4 Satellite and any follow-on systems
that have similar hyperspectral capability. OIC shall only be entitled to use
the HSI Software and HSI Code for the purpose of operating and maintaining the
OrbView-4 Satellite and any follow-on systems that have similar hyperspectral
capability. Orbital shall use commercially reasonable efforts to cause its
subcontracts to permit sublicensing of HSI Software and HSI Code to OIC
consistent with the terms of this Section 11(d).

(f) No Third Party Beneficiary Rights. Nothing herein shall be construed
to confer any third-party beneficiary rights in the USAF under this Procurement
Agreement. Orbital agrees to indemnify OIC for any damages arising from any
claims by the USAF against OIC relating to the HSI Contract.

(g) Rights on HSI Contract Termination. In the event the HSI Contract is
terminated by any party thereto for any reason, OIC shall likewise have the
right to terminate the HSI Modifications as set forth in Section 11 (b). In
addition, OIC shall have the same rights with respect to the HSI Work as set
forth in Section 12.2 of this Agreement.

(h) Modifications to HSI Contract. Orbital shall consult with OIC
regarding changes to the HSI Contract and shall not agree to any material
modifications without OIC's prior written consent, which shall not be
unreasonably withheld.

SECTION 9. Amendments to List of Exhibits and Schedules.

Exhibit C is amended to read in its entirety as follows:

"Exhibit C (a) OrbView High Resolution Imagery System
Mission Requirements Document, 5L5-RS1000
Revision D, dated December 22, 1998;

(b) Statement of Work for the OrbView High
Resolution Imaging System, Revision A,
dated December 22, 1998;

SECTION 10. Amendment to Appendix A. The following defined terms are hereby
incorporated under Appendix A.

"HSI Contract" shall mean the U.S Air Force /Phillips Laboratory contract
(Contract No. F29601-97-C-0110), between Orbital and the USAF duly executed on
August 5, 1997.

5
<PAGE> 6
"HSI Data Agreement" shall mean this Hyperspectral Imaging Data Agreement
between Orbital and ORBIMAGE dated December 31, 1998.

SECTION 11. Amendment to Exhibit F. A revised Exhibit F is attached hereto.

SECTION 12. No Further Changes. Except as modified by this Amendment, the
Amended and Restated ORBIMAGE System Procurement Agreement dated February 26,
1998 remains unmodified and in full force and effect.

IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to
the Amended and Restated ORBIMAGE System Procurement Agreement to be executed
as of the date first written above.

<TABLE>
<S> <C>
ORBITAL SCIENCES CORPORATION ORBITAL IMAGING CORPORATION

By: By:
--------------------------- ---------------------------
Jeffrey V. Pirone Gilbert D. Rye
Executive Vice President and CFO President and COO
</TABLE>

6
<PAGE> 7
AMENDMENT NO. 1 - EXHIBIT F
PAYMENT SCHEDULE ($ IN THOUSANDS)

<PAGE> 8

<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------
December 31, 1997 $130,700
- -------------------------------------------------------------------------------------------------------
MILESTONE PAYMENTS MONTHLY PAYMENTS
- -------------------------------------------------------------------------------------------------------
1998
- -------------------------------------------------------------------------------------------------------
January 7,000
- -------------------------------------------------------------------------------------------------------
February OrbView-4 CDR 1,500 7,300
- -------------------------------------------------------------------------------------------------------
March 10,700
- -------------------------------------------------------------------------------------------------------
April 11,700
- -------------------------------------------------------------------------------------------------------
May 11,850
- -------------------------------------------------------------------------------------------------------
June OrbView-3 PDR 1,500 9,250
- -------------------------------------------------------------------------------------------------------
July 9,550
- -------------------------------------------------------------------------------------------------------
August 8,450
- -------------------------------------------------------------------------------------------------------
September OrbView-3 CDR 1,500 6,600
- -------------------------------------------------------------------------------------------------------
October 6,100
- -------------------------------------------------------------------------------------------------------
November 4,500
- -------------------------------------------------------------------------------------------------------
December 4,400
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
1999
- -------------------------------------------------------------------------------------------------------
January CLIN 007-M/S 1- SRR update 62 3,838
- -------------------------------------------------------------------------------------------------------
February Start OrbView-3 I&T 1,500 4,430
- -------------------------------------------------------------------------------------------------------
March CLIN 004-Execution of MDA SubK Rebaseline 1,000 1,838
- -------------------------------------------------------------------------------------------------------
April CLIN 007-M/S 2- Concept for Task 2.1& 2,2 62 2,438
- -------------------------------------------------------------------------------------------------------
May CLIN 007-M/S 3- Design for Task 2.3 62 2,700
- -------------------------------------------------------------------------------------------------------
June CLIN 007-M/S 4- Design for Tasks 2.1 & 2.2 62 1,632
- -------------------------------------------------------------------------------------------------------
July CLIN 007-M/S 5-Test Plan Submit/Start Test 62 400
- -------------------------------------------------------------------------------------------------------
August CLIN 007-M/S 6- Delivery/Demo of Upgrades 170 832
- -------------------------------------------------------------------------------------------------------
September OV-3 Launch; GTS Spares Delivered 106 600
- -------------------------------------------------------------------------------------------------------
October Start OrbView-4 I&T 1,500 700
- -------------------------------------------------------------------------------------------------------
November OrbView-3 On-Orbit Verification Complete 1,500 700
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
December Taurus motors delivered- OrbView-4 3,500 700
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
2000
- -------------------------------------------------------------------------------------------------------
January 700
- -------------------------------------------------------------------------------------------------------
February 400
- -------------------------------------------------------------------------------------------------------
March OrbView-4 Launch 3,750 200
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
March CLIN 010 OrbView-4 HSI Sensor Modifications ** 31,000 200
- -------------------------------------------------------------------------------------------------------
April GTS spares delivered 106
- -------------------------------------------------------------------------------------------------------
May OrbView-4 On-Orbit Verification Complete 1,500
- -------------------------------------------------------------------------------------------------------
June
- -------------------------------------------------------------------------------------------------------
July OrbView-3 On-Orbit Performance* 1,000
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
2001
- -------------------------------------------------------------------------------------------------------
May OrbView-4 On-Orbit Performance* 1,000
- -------------------------------------------------------------------------------------------------------
July OrbView-3 On-Orbit Performance* 1,000
- -------------------------------------------------------------------------------------------------------
2002
- -------------------------------------------------------------------------------------------------------
May OrbView-4 On-Orbit Performance* 1,000
- -------------------------------------------------------------------------------------------------------
July OrbView-3 On-Orbit Performance* 1,000
- -------------------------------------------------------------------------------------------------------
2003
- -------------------------------------------------------------------------------------------------------
May OrbView-4 On-Orbit Performance* 1,000
- -------------------------------------------------------------------------------------------------------
July OrbView-3 On-Orbit Performance* 1,000
- -------------------------------------------------------------------------------------------------------
2004
- -------------------------------------------------------------------------------------------------------
May OrbView-4 On-Orbit Performance* 1,000
- -------------------------------------------------------------------------------------------------------
July OrbView-3 On-Orbit Performance* 1,000
- -------------------------------------------------------------------------------------------------------
2005
- -------------------------------------------------------------------------------------------------------
July OrbView-4 On-Orbit Performance* 1,000
-------
- -------------------------------------------------------------------------------------------------------
60,442 250,408
- -------------------------------------------------------------------------------------------------------
* Actual payment based on measured performance

** Subject to the terms set forth in Article 11 (b).

- -------------------------------------------------------------------------------------------------------
TOTAL PAYMENT 310,850
- -------------------------------------------------------------------------------------------------------
</TABLE>

8
<PAGE> 9

<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 LLP

Washington, D.C.
February 24, 1999

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 25,082
<SECURITIES> 59,938
<RECEIVABLES> 3,199
<ALLOWANCES> 165
<INVENTORY> 0
<CURRENT-ASSETS> 79,406
<PP&E> 212,554
<DEPRECIATION> 29,997
<TOTAL-ASSETS> 307,969
<CURRENT-LIABILITIES> 25,981
<BONDS> 141,620
0
7
<COMMON> 252
<OTHER-SE> 113,113
<TOTAL-LIABILITY-AND-EQUITY> 307,969
<SALES> 11,663
<TOTAL-REVENUES> 11,663
<CGS> 15,215
<TOTAL-COSTS> 15,215
<OTHER-EXPENSES> 7,124
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,845)
<INCOME-PRETAX> (8,831)
<INCOME-TAX> (3,312)
<INCOME-CONTINUING> (5,519)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,519)
<EPS-PRIMARY> (0.51)
<EPS-DILUTED> (0.51)

</TABLE>