Exhibit 2.1
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EXECUTION COPY
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RECAPITALIZATION AGREEMENT
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by and among
EARTHWATCH INCORPORATED,
XXXXXX XXXXXXX & CO., INCORPORATED,
AMERICAN HIGH-INCOME TRUST,
AMERICAN VARIABLE INSURANCE SERIES ASSET ALLOCATION FUND,
AMERICAN VARIABLE INSURANCE SERIES BOND FUND,
AMERICAN VARIABLE INSURANCE SERIES HIGH-YIELD BOND FUND,
THE BOND FUND OF AMERICA, INC.,
BALL TECHNOLOGIES HOLDINGS CORP.
and
ITT INDUSTRIES, INC.
Dated as of April 8, 1999
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TABLE OF CONTENTS
Section Page
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ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms.................................. 2
Section 1.2 Other Defined Terms.................................... 9
ARTICLE II
RECAPITALIZATION TRANSACTIONS
Section 2.1 Issuance and Sale and Subscription for and
Purchase of New Series A Preferred Stock
and New Series B Preferred Stock....................... 11
Section 2.2 Closing................................................ 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Incorporation and Authority of the Company............. 14
Section 3.2 Capital Stock.......................................... 14
Section 3.3 Subsidiaries........................................... 15
Section 3.4 Stockholder and Bondholder Approvals Required.......... 16
Section 3.5 No Conflict............................................ 16
Section 3.6 Consents and Approvals................................. 17
Section 3.7 Financial Statements................................... 17
Section 3.8 Absence of Undisclosed Liabilities and Liens........... 17
Section 3.9 Absence of Certain Changes or Events................... 18
Section 3.10 Absence of Litigation.................................. 18
Section 3.11 Compliance with Laws................................... 18
Section 3.12 Licenses and Permits................................... 19
Section 3.13 Sufficiency and Condition of Assets.................... 19
Section 3.14 Real Property.......................................... 19
Section 3.15 Employee Benefit and Labor Matters..................... 21
Section 3.16 Labor Matters.......................................... 23
Section 3.17 Taxes.................................................. 23
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Section Page
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Section 3.18 Environmental, Health and Safety......................... 24
Section 3.19 Intellectual Property.................................... 26
Section 3.20 Material Contracts....................................... 30
Section 3.21 Exemption from Registration; Proxy Statement............. 31
Section 3.22 State Takeover Statutes.................................. 31
Section 3.23 Insurance................................................ 32
Section 3.24 Brokers.................................................. 32
Section 3.25 Senior Note Indenture.................................... 32
Section 3.26 Transactions with Affiliates............................. 32
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Section 4.1 Incorporation and Authority of the Purchaser............. 32
Section 4.2 No Conflict.............................................. 33
Section 4.3 Consents and Approvals................................... 33
Section 4.4 Absence of Litigation.................................... 33
Section 4.5 Investment Purpose....................................... 33
Section 4.6 Brokers.................................................. 33
ARTICLE V
COVENANTS
Section 5.1 Conduct of Business Prior to the Closing................. 34
Section 5.2 Required Actions......................................... 37
Section 5.3 Issuance and Sale and Subscription for and
Purchase of New Series C Preferred Stock................. 39
Section 5.4 Preparation of Proxy Statement........................... 39
Section 5.5 Satellite Insurance...................................... 39
Section 5.6 Access to Information.................................... 40
Section 5.7 Regulatory and Other Authorizations; Consents............ 40
Section 5.8 Investigation............................................ 41
Section 5.9 FCC Application.......................................... 41
Section 5.10 Stockholders' Agreement.................................. 41
Section 5.11 Supplier Agreement....................................... 41
Section 5.12 Advisory Agreement....................................... 42
Section 5.13. Ball-EarthWatch Agreement................................ 42
Section 5.14. Equity Incentive Plan.................................... 42
Section 5.15. Post-closing Board....................................... 42
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Section Page
Section 5.16 Ball Release............................................. 42
Section 5.17 Reasonable Best Efforts.................................. 42
Section 5.18 Exclusivity.............................................. 42
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to Obligations of the Company................. 43
Section 6.2 Conditions to Obligations of the Purchasers.............. 44
Section 6.3 Additional Condition to Obligations of ITT............... 46
Section 6.4 Additional Condition to Obligations of MS................ 46
Section 6.5 Additional Condition to Obligations of MS and CapRe...... 46
ARTICLE VII
INDEMNIFICATION
Section 7.1 Survival of Representations and Warranties............... 46
Section 7.2 Indemnification for the Benefit of the Company........... 47
Section 7.3 Indemnification by the Company........................... 48
Section 7.4 Indemnification Procedures............................... 48
ARTICLE VIII
TERMINATION AND WAIVER
Section 8.1 Termination.............................................. 50
Section 8.2 Effect of Termination.................................... 50
Section 8.3 Waiver................................................... 51
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Expenses................................................. 51
Section 9.2 Survival................................................. 51
Section 9.3 Notices.................................................. 51
Section 9.4 Public Announcements..................................... 53
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Section Page
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Section 9.5 Headings................................................ 53
Section 9.6 Severability............................................ 53
Section 9.7 Entire Agreement........................................ 54
Section 9.8 Assignment.............................................. 54
Section 9.9 No Third Party Beneficiaries............................ 54
Section 9.10 Amendment............................................... 54
Section 9.11 Governing Law........................................... 54
Section 9.12 Counterparts............................................ 54
Section 9.13 Specific Performance.................................... 54
Section 9.14 Waiver of Jury Trial.................................... 55
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EXHIBITS
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Exhibit 2.2(h) Form of Stockholders' Agreement
Exhibit 2.2(i) Form of Supplier Agreement
Exhibit 2.2(j) Form of Advisory Agreement
Exhibit 5.2(b & c) Form of Amended and Restated Certificate of In-
corporation of the Company
Exhibit 5.2(d) Adjustment of Existing Derivative Securities
Exhibit 5.2(e) Form of New Senior Note Indenture
Exhibit 5.5 Terms and Conditions of Satellite Insurance
Exhibit 5.16 Form of Release
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DISCLOSURE SCHEDULE
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The Disclosure Schedule shall include the following Sections:
3.2 Capital Stock
3.3 Subsidiaries
3.4 Stockholder and Bondholder Approvals Required
3.5 No Conflict
3.6 Consents and Approvals
3.7 Financial Statements
3.8 Absence of Undisclosed Liabilities
3.9 Absence of Certain Changes or Events
3.10 Absence of Litigation
3.11 Compliance with Laws
3 12 Licenses and Permits
3.13 Sufficiency and Condition of Assets
3.14 Real Property
3.15 Employee Benefit and Labor Matters
3.16 Labor Matters
3.17 Taxes
3.18 Environmental, Health and Safety
3.19 Intellectual Property
3.20 Material Contracts
3.23 Insurance
3.26 Transactions with Affiliates
5.1 Conduct of Business Prior to the Closing
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THIS RECAPITALIZATION AGREEMENT, dated as of April 8, 1999, is made by
and among EarthWatch Incorporated, a Delaware corporation (the "Company'),
Xxxxxx Xxxxxxx & Co., Incorporated, a Delaware corporation ("MS"), American
High-Income Trust, a Massachusetts business trust, American Variable Insurance
Series Asset Allocation Fund, a Massachusetts business trust, American Variable
Insurance Series Bond Fund, a Massachusetts business trust, American Variable
Insurance Series High-Yield Bond Fund, a Massachusetts business trust, The Bond
Fund of America, Inc., a Maryland corporation) (collectively, "CapRe'), Ball
Technologies Holdings Corp., a Colorado corporation ("Ball"), and ITT
Industries, Inc., an Indiana corporation ("ITT and, together with MS and CapRe,
the "Purchasers").
RECITALS
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WHEREAS, each of the above parties wishes to effect a recapitalization
of the Company (the "Recapitalization") on the terms and subject to the
conditions set forth herein;
WHEREAS, as part of the Recapitalization, the Company wishes to issue
and sell to the Purchasers certain shares of New Common Stock and New Series A
Preferred Stock, New Series B Preferred Stock and New Series C Preferred Stock
(each as defined herein) on the terms and conditions set forth herein;
WHEREAS, as part of the Recapitalization, the Purchasers wish to
subscribe for and purchase from the Company certain shares of New Common Stock,
New Series A Preferred Stock, New Series B Preferred Stock and New Series C
Preferred Stock on the terms and conditions set forth herein; and
WHEREAS, as part of the Recapitalization, each share of Existing
Common Stock and Existing Preferred Stock shall be reclassified into a certain
number of shares of New Series C Preferred Stock;
WHEREAS, the Purchasers wish to protect their investment in shares of
New Common Stock, New Series A Preferred Stock, New Series B Preferred Stock
and New Series C Preferred Stock, while reserving primary control of the Company
and its operations in the hands of the holders of shares of Existing Common
Stock and Existing Preferred Stock (each as defined herein) and the Company's
Board of Directors pending receipt by the Company of the FCC Approval;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the Company, MS, CapRe, Ball and
ITT hereby agree as follows:
ARTICLE I
DEFINITIONS
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SECTION 1.1 Certain Defined Terms. Capitalized terms not defined
herein shall have their respective meanings specified in the Stockholders'
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
(a) "Affiliate" means, with respect to any specified person, any other
person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
person.
(b) "Agreement " or "this Agreement" means this Recapitalization
Agreement, dated as of April 8, 1999, by and among the Company, MS, CapRe,
Ball and ITT (including the Exhibits hereto and the Disclosure Schedule)
and all amendments hereto made in accordance with the provisions of Section
9.10.
(c) "Ball Option Shares" shall have the meaning set forth in
Section 5.3(a).
(d) "Books and Records" means all the books of account and other
financial records pertaining to the Company and its Subsidiaries.
(e) "Business" means the business of commercial remote sensing as
conducted and as currently intended to be conducted by the Company and its
Subsidiaries.
(f) "Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by law to be closed in
The City of New York.
(g) "Code" means the Internal Revenue Code of 1986, as amended
through the date hereof.
(h) "Communications Act" means the Communications Act of 1934, as
amended.
(i) "Controlled Group Liability" means any and all liabilities (i)
under Title IV of ERISA, (ii) under section 302 of ERISA, (iii) under
sections 412 and 4971 of the Code, (iv) as a result of a failure to comply
with the continuation coverage requirements of section 601 et seq. of ERISA
and section 4980B of the Code, and (v) under corresponding or similar
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provisions of foreign laws or regulations, other than such liabilities that
arise solely out of, or relate solely to, the Employee Benefit Plans.
(j) "DGCL" means the Delaware General Corporation Law.
(k) "Disclosure Schedule" means the Disclosure Schedule attached
hereto, dated as of the date hereof, and forming a part of this Agreement.
(1) "Employee Benefit Plan" means any employee benefit plan, program,
policy, practices, or other arrangement providing benefits to any current
or former employee, officer or director of the Company or any of its
subsidiaries or any beneficiary or dependent thereof that is sponsored or
maintained by the Company or any of its Subsidiaries or to which the
Company, or any of its Subsidiaries contributes or is obligated to
contribute, whether or not written, including without limitation any
employee welfare benefit plan within the meaning of Section 3(l) of ERISA,
any employee pension benefit plan within the meaning of Section 3(2) of
ERISA (whether or not such plan is subject to ERISA) and any bonus,
incentive, deferred compensation, vacation, stock purchase, stock option,
severance, employment, change of control or fringe benefit plan, program or
agreement.
(m) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended and any regulations promulgated or proposed
thereunder.
(n) "ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001
(b)(1) of ERISA that includes the first entity, trade or business, or that
is a member of the same "controlled group" as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.
(o) "Existing Stockholders' Agreement" shall have the meaning set
forth in Section 6.1(d).
(p) "Existing Stock Option Plan" means, collectively, the following
plans, agreements and/or arrangements of the Company providing option
grants and/or other equity incentives to the Company's employees, directors
and/or consultants: the EarthWatch Incorporated 1995 Stock Option/Stock
Issuance Plan and the WorldView Imaging Corporation 1994 Stock Option/Stock
Issuance Plan, and certain outstanding options listed on the Disclosure
Schedule and not granted under either such plan.
(q) "FCC" means the Federal Communications Commission.
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(r) "FCC Approval" means a determination by the FCC approving of or
consenting to the transfer of control of the Company to the extent required
under the terms of, or rules and regulations governing, the FCC Licenses,
without any condition materially adverse to any of the Company, MS, CapRe
and ITT.
(s) "FCC Licenses" means the following three licenses held by the
Company: Earth Station Longmont, Colorado (No. E950498); Earth Station
Fairbanks, Alaska (No. E950499); and Space Station 21/22-DSS-P-93;
43-DSS-LA-94(2); and 52-SAT-AMEND-95, authorized August 1, 1995.
(t) "Fully-Diluted Shares" means the number of shares of New Common
Stock issued and outstanding assuming the exercise of all outstanding
options, warrants and rights to acquire, and the conversion of any
securities convertible into, shares of New Common Stock, whether or not
then vested or exercisable. When calculating the percentage of the Fully-
Diluted Shares owned by a specified person, such person shall be deemed to
own all shares of New Common Stock beneficially owned by such person
assuming the exercise of all outstanding options, warrants and rights to
acquire, and the conversion of any securities convertible into, shares of
New Common Stock, whether or not then vested or exercisable.
(u) "Governmental Authority" means any United States federal, state
or local or any foreign or multinational government (or any subdivision
thereof), governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body having
jurisdiction or authority with respect to the particular matter at issue in
its context.
(v) "Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any
Governmental Authority.
(w) "High Yield Financing" means the issuance of high-yield
securities yielding net proceeds to the Company (after the setting aside of
cash to prefund interest and the payment of fees, expenses and other costs
associated with such issuance) of up to $125,000,000, such securities to be
secured by the Satellite Insurance, the terms and conditions of which
insurance are summarized in Exhibit 5.5 hereto, for the purpose of funding
the Company's operations through successful launch and operation of each of
QuickBird I and QuickBird 2, or any successor to such satellite.
(x) "High Yield Financing Closing Date" means the date on which the
consummation of the High Yield Financing occurs.
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(y) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
(z) "Income Tax" or "Income Taxes" means any federal, state, local or
foreign tax, fee, assessment, levy, duty, tariff or other charges of any
kind imposed by a governmental taxing authority and (a) based upon,
measured by, or calculated with respect to, net income or net receipts,
proceeds or profits, or (b) based upon, measured by, or calculated with
respect to multiple bases (including without limitation corporate franchise
or occupation taxes) if such tax may be based upon, measured by, or
calculated with respect to one or more bases described in clause (a) above,
in each case together with any and all interest, penalties, additions to
tax and additional amounts imposed with respect thereto.
(aa) "Indebtedness" means (a) indebtedness for borrowed money, (b)
obligations evidenced by bonds, notes, debentures or other similar
instruments or by letters of credit, including without limitation purchase
money obligations or other obligations relating to the deferred purchase
price of property (other than trade payables incurred in the ordinary
course of business consistent with past practice), (c) obligations as
lessee under leases which have been or should have been, in accordance with
U.S. GAAP, recorded as capital leases, (d) obligations under direct or
indirect guaranties in respect of indebtedness or obligations of others of
the kind referred to in clauses (a) through (c) above, (e) obligations in
respect of outstanding or unpaid checks or drafts or overdraft obligations
and (f) accrued interest, if any, on any of the foregoing.
(bb) "Initial Public Offering" means the consummation of the first
sale of shares of New Common Stock for cash by the Company, or by one or
more stockholders, in an underwritten public offering registered under the
1933 Act following the date hereof.
(cc) "IRS" means the Internal Revenue Service of the United States.
(dd) "knowledge' means, with respect to any party, the actual
knowledge of any officer or executive of such party.
(ee) "Leased Real Property" means the real property leased by the
Company or any of its Subsidiaries, as tenant, together with, to the extent
leased by the Company or any of its Subsidiaries, all buildings and other
structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, equipment and items of personal property of
the Company or any of its Subsidiaries attached or appurtenant thereto,
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and all easements, licenses, rights and appurtenances relating to the
foregoing.
(ff) "Liabilities" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable.
(gg) "Material Adverse Effect" means any change in, or effect on, the
Company, its Subsidiaries or the Business that is materially adverse to the
business, properties, results of operations, prospects or financial
condition of the Company and its Subsidiaries, taken as a whole.
(hh) "MS HSR Clearance Date" means the date on which any waiting
period under the HSR Act applicable to any HSR Notification and Report Form
filed by MS in connection with the conversion of its shares of convertible
Series B Preferred Stock to shares of voting Series B Preferred Stock (as
used in this definition, "convertible" and "voting" should be read
consistently with the definitions of "convertible voting security" and
"voting securities" under the HSR Act Premerger Notification Rules, 16
C.F.R. Sections 801.1(f)(l)-(2)) expires, terminates or is satisfied, at
which time the rights to elect directors provided to MS hereunder shall
first accrue and be exercisable.
(ii) "New Common Stock" means the Common Stock, par value $.001 per
share, of the Company to be issued as part of the Recapitalization.
(jj) "New Equity Plan" means the equity incentive plan to be adopted
following the Closing Date pursuant to Section 5.14.
(kk) "New Senior Note Indenture" means the Amended and Restated Senior
Notes Indenture, to be entered into prior to the Closing, by and between
the Company, as issuer, and The Bank of New York, as trustee, governing the
New Senior Notes, which indenture amends and restates in its entirety the
Senior Notes Indenture, and all exhibits thereto (including the "Security
Documents" referenced therein), substantially in the form attached as
Exhibit 5.2(e), as such indenture is subsequently amended, supplemented or
otherwise modified.
(11) "New Senior Notes" means the 12 1/2% Senior Notes due 2005 issued
pursuant to the New Senior Notes Indenture in connection with the Senior
Notes Approval, in replacement of the Senior Notes.
(mm) "New Series A Preferred Stock" means the Series A Preferred
Stock, par value $.001 per share, of the Company to be issued as part of the
Recapitalization.
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(nn) "New Series B Preferred Stock" means the Series B Preferred
Stock, par value $.001 per share, of the Company to be issued as part of
the Recapitalization.
(oo) "New Series C Preferred Stock" means the Series C Preferred
Stock, par value $.001 per share, of the Company to be issued as part of
the Recapitalization.
(pp) "1998 Balance Sheet" means the audited consolidated balance sheet
of the Company and its Subsidiaries, including the related schedules and
notes thereto, as of December 31, 1998.
(qq) "1998 Balance Sheet Date" means December 31, 1998.
(rr) "Odetics Warrant" means that certain warrant issued to Odetics,
Incorporated described in Section 3.2(f) of the Disclosure Schedule.
(ss) "Owned Real Property" means the real property owned by the
Company or any of its Subsidiaries, together with all buildings and other
structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, equipment and items of personal property of
the Company or any of its Subsidiaries attached or appurtenant thereto and
all easements, licenses, rights and appurtenances relating to the
foregoing.
(tt) "Permitted Encumbrances" means: (a) liens for Taxes and
assessments not yet due and payable; (b) liens for Taxes, assessments and
charges and other claims, the validity of which are being contested in good
faith; (c) imperfections of title, liens, security interests and other
encumbrances the existence of which, individually or in the aggregate, do
not have a Material Adverse Effect; (d) inchoate mechanics' and
materialmen's liens for construction in progress; and (e) workmen's,
repairmen's, warehousemen's and carriers' liens arising in the ordinary
course of business consistent with past practice.
(uu) "person" means any individual, partnership, firm, corporation,
limited liability company, association, trust, unincorporated organization
or other entity, as well as any syndicate or group that would be deemed to
be a person under Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended.
(vv) "Proxy Statement" means the document, including any amendments
and supplements thereto, used by the Company to describe the terms and
conditions of the Recapitalization to the holders of shares of Existing
Common Stock and Existing Preferred Stock.
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(ww) "Real Property" means the Leased Real Property and the Owned Real
Property.
(xx) "Related Party Transaction" means any transaction or series of
similar transactions to which the Company or any of its Subsidiaries is a
party, in which the amount involved exceeds $5,000,000 (other than (a)
compensation for services rendered or perquisites in lieu of compensation
received as an employee in the ordinary course of business consistent with
past practice pursuant to the Company's compensation and bonus policies and
procedures or (b) pursuant to the Existing Stock Option Plan and the New
Equity Plan (and related agreements) or the Stockholders' Agreement) and in
which any of the following persons has a direct or indirect material
interest: any director or employee of any of the Company or its
Subsidiaries, or any holder of more than 1% of the Fully-Diluted Shares.
(yy) "Satellite Insurance" means insurance on terms and conditions
substantially the same as those set forth in Exhibit 5.5 attached hereto,
including, without limitation, terms naming the collateral trustee in
respect of the New Senior Notes as sole loss payee thereon.
(zz) "Senior Note Indenture" means the Indenture, dated as of March
19, 1997, by and between the Company, as issuer, and The Bank of New York,
as trustee, governing the Company's 121/2% Senior Notes due 2001.
(aaa) "Senior Notes" means Notes issued pursuant to the Senior
Note Indenture.
(bbb) "Senior Notes Approval" means the consent by indenture trustee
in respect of the Senior Notes and by the holders of 100% of the aggregate
principal amount of the Senior Notes to (i) the replacement of the Senior
Notes with the New Senior Notes (including the extension of maturity of the
Senior Notes to March 1, 2005) and the amendment and restatement of the
Senior Note Indenture with the New Senior Note Indenture and (ii) the
release by the indenture trustee for the Senior Notes of all collateral
securing the Senior Notes upon the securing of the New Senior Notes with
the Satellite Insurance and the naming of the indenture trustee for the New
Senior Notes as sole loss payee thereon.
(ccc) "Subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership or
membership interests of which is sufficient to elect at least a majority of
its board of directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned or
controlled directly or indirectly by such person.
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(ddd) "Tax" or "Taxes" means any and all taxes, fees, assessments,
levies, duties, tariffs, imposts, and other charges of any kind (together
with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any govemmental taxing
authority including without limitation: taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, assets, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, severance,
occupation, or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, estimated, value added, or gains
taxes; license, registration and documentation fees; and customs' duties,
tariffs, and similar charges.
(eee) "Tax Group" has the meaning given to it in Section 3.17 of this
Agreement.
(fff) "Tax Return" means any return, declaration, report, claim for
refund, information statement, schedule or other document (including any
related or supporting information and including any Form 1099 or other
document or report required to be provided by the Company or any of its
Subsidiaries to third parties) relating to Taxes, including any document
required to be retained or provided to any governmental authority relating
to the Company or any of its Subsidiaries or any consolidated group of
which any such entity was a member at the applicable time, and any amended
Tax Returns.
(ggg) "Taxing Authority" means any Governmental Authority having
jurisdiction over the assessment, determination, collection or other
imposition of any Tax.
(hhh) "U.S. GAAP" means United States generally accepted accounting
principles.
(iii) "Warrant Agreement" means the Warrant Agreement, dated as of
March 19, 1997, by and between the Company and The Bank of New York, as
Warrant Agent.
(jjj) "Waterstone Agreement" means that certain Consultant Agreement,
dated as of June 25, 1998, as amended, by and between the Company and The
Waterstone Group, described in Section 3.2(g) of the Disclosure Schedule.
SECTION 1.2 Other Defined Terms. The following terms shall have the
meanings defined for such terms in the sections set forth below:
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Term: Section:
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Advisor 3.22
Advisory Agreement 2.2(f)
AHIT 2.1(c)
AVISAAF 2.1(d)
AVISBF 2.1(e)
AVISHYBF 2.1(f)
Ball Preamble
BFA 2.1(g)
CapRe Preamble
CapRe New Series B Purchase Price 2.1(c)
Closing 2.2
Closing Date 2.2
Company Preamble
Company Indemnified Party 7.2(a)
Company Shareholders Meeting 5.2(a)
Copyrights 3.19(a)(iii)
Environmental Claims 3.18(b)
Environmental Law 3.18(b)
Environmental Permits 3.18(a)
Existing Common Stock 3.2(a)
Existing Derivative Securities 3.2(a)
Existing Preferred Stock 3.2(a)
Financial Statements 3.7
Hazardous Materials 3.18(b)
Indemnified Party 7.4
Indemnifying Party 7.4
Intellectual Property Assets 3.19(a)
ITT Preamble
Losses 7.2(a)
Marks 3.19(a)(i)
Material Contracts 3.20(a)
MS Preamble
MS New Series B Purchase Price 2.1(b)
New Series A Purchase Price 2.1(a)
Patents 3.19(a)(ii)
PCBs 3.18(b)
Purchaser Indemnified Party 7.3(a)
Purchasers Preamble
Qualified Plans 3.15(c)
Recapitalization Recitals
Stockholders' Agreement 2.2(d)
Supplier Agreement 2.2(e)
Tangible Property 3.14(d)
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Term: Section:
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Tax Group 3.17
Trade Secrets 3.19(a)(iv)
Transferred Assets Recitals
ARTICLE II
RECAPITALIZATION TRANSACTIONS
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SECTION 2.1 Issuance and Sale and Subscription for and Purchase of New
Series A Preferred Stock and New Series B Preferred Stock. Upon the terms and
subject to the conditions of this Agreement, at the Closing,
(a) The Company shall issue and sell to ITT, and ITT shall subscribe
for and purchase from the Company, 7,142,857 fully-paid and nonassessable
shares of New Series A Preferred Stock for an aggregate cash payment in an
amount equal to Twenty-Five Million Dollars ($25,000,000) (the "New Series
A Purchase Price"). The Series A Purchase Price shall be payable as
provided in Section 2.2(a).
(b) The Company shall issue and sell to MS and MS shall subscribe for
purchase from the Company, 4,285,714 fully-paid and nonassessable shares of
New Series B Preferred Stock and one fully-paid and non-assessable share of
New Common Stock for an aggregate cash payment in an amount equal to
Fifteen Million Dollars ($15,000,000) (the "MS New Series B Purchase
Price"). The MS Series B Purchase Price shall be payable as provided in
Section 2.2(b).
(c) The Company shall issue and sell to American High-Income Trust
("AHIT") and AHIT shall subscribe for purchase from the Company, 714,286
fully-paid and nonassessable shares of New Series B Preferred Stock for an
aggregate cash payment in an amount equal to Two Million Five Hundred
Thousand Dollars ($2,500,000) (the "AHIT New Series B Purchase Price"). The
AHIT Series B Purchase Price shall be payable as provided in Section
2.2(c).
(d) The Company shall issue and sell to American Variable Insurance
Series Asset Allocation Fund ("AVISAAF") and AVISAAF shall subscribe for
purchase from the Company, 285,714 fully-paid and nonassessable shares of
New Series B Preferred Stock for an aggregate cash payment in an amount
equal to One Million Dollars ($1,000,000) (the "AVISAAF New Series B
Purchase Price"). The AVISAAF Series B Purchase Price shall be payable as
provided in Section 2.2(d).
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(e) The Company shall issue and sell to American Variable Insurance
Series Bond Fund ("AVISBF") and AVISBF shall subscribe for purchase from
the Company, 71,429 fully-paid and nonassessable shares of New Series B
Preferred Stock for an aggregate cash payment in an amount equal to Two
Hundred Fifty Thousand Dollars ($250,000) (the "AVISBF New Series B
Purchase Price"). The AVISBF Series B Purchase Price shall be payable as
provided in Section 2.2(e).
(f) The Company shall issue and sell to American Variable Insurance
Series High-Yield Bond Fund ("AVISHYBF") and AVISHYBF shall subscribe for
purchase from the Company, 857,143 fully-paid and nonassessable shares of
New Series B Preferred Stock for an aggregate cash payment in an amount
equal to Three Million Dollars ($3,000,000) (the "AVISHYBF New Series B
Purchase Price"). The AVISHYBF Series B Purchase Price shall be payable as
provided in Section 2.2(f).
(g) The Company shall issue and sell to The Bond Fund of America,
Inc. ("BFA") and BFA shall subscribe for purchase from the Company, 928,571
fully-paid and nonassessable shares of New Series B Preferred Stock for an
aggregate cash payment in an amount equal to Three Million Two Hundred
Fifty Thousand Dollars ($3,250,000) (the "BFA New Series B Purchase
Price"). The BFA Series B Purchase Price shall be payable as provided in
Section 2.2(g).
SECTION 2.2 Closing. The consummation of the transactions
contemplated by Section 2.1 of this Agreement shall take place at a closing (the
"Closing") to be held at the offices of Wachtell, Lipton, Xxxxx & Xxxx, 00 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00 A.M. New York City time, as soon as
reasonably practicable following the satisfaction or waiver of all conditions to
the obligations of the parties set forth in Article VI, or at such other place
or at such other time or on such other date as the parties mutually agree upon
in writing (the day on which the Closing takes place being the "Closing Date").
At the Closing, the following shall take place:
(a) ITT shall pay to the Company the New Series A Purchase Price, by
wire transfer in immediately available funds to an account or accounts
designated by the Company in a written notice to ITT at least two Business
Days before the Closing Date. The Company shall deliver to ITT stock
certificates evidencing the New Series A Preferred Stock and the New Common
Stock purchased by ITT.
(b) MS shall pay to the Company the MS New Series B Purchase Price,
by wire transfer in immediately available funds to an account or accounts
designated by the Company in a written notice to MS at least two Business
Days before the Closing Date. The Company shall deliver to
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MS stock certificates evidencing the New Series B Preferred Stock and the
New Common Stock purchased by MS.
(c) AHIT shall pay to the Company the AHIT New Series B Purchase
Price, by wire transfer in immediately available funds to an account or
accounts designated by the Company in a written notice to CapRe at least
two Business Days before the Closing Date. The Company shall deliver to
CapRe stock certificates evidencing the New Series B Preferred Stock and
the New Common Stock purchased by AHIT.
(d) AVISAAF shall pay to the Company the AVISAAF New Series B
Purchase Price, by wire transfer in immediately available funds to an
account or accounts designated by the Company in a written notice to CapRe
at least two Business Days before the Closing Date. The Company shall
deliver to CapRe stock certificates evidencing the New Series B Preferred
Stock and the New Common Stock purchased by AVISAAF.
(e) AVISBF shall pay to the Company the AVISBF New Series B Purchase
Price, by wire transfer in immediately available funds to an account or
accounts designated by the Company in a written notice to CapRe at least
two Business Days before the Closing Date. The Company shall deliver to
CapRe stock certificates evidencing the New Series B Preferred Stock and
the New Common Stock purchased by AVISBF.
(f) AVISHYBF shall pay to the Company the AVISHYBF New Series B
Purchase Price, by wire transfer in immediately available funds to an
account or accounts designated by the Company in a written notice to CapRe
at least two Business Days before the Closing Date. The Company shall
deliver to CapRe stock certificates evidencing the New Series B Preferred
Stock and the New Common Stock purchased by AVISHYBF.
(g) BFA shall pay to the Company the BFA New Series B Purchase Price,
by wire transfer in immediately available funds to an account or accounts
designated by the Company in a written notice to CapRe at least two
Business Days before the Closing Date. The Company shall deliver to CapRe
stock certificates evidencing the New Series B Preferred Stock and the New
Common Stock purchased by BFA.
(h) The Company and each of the Purchasers shall enter into a
Stockholders' Agreement (the "Stockholders' Agreement"), substantially in
the form attached hereto as Exhibit 2.2(h).
(i) The Company and ITT shall enter into a Supplier Agreement (the
"Supplier Agreement"), substantially in the form attached hereto as Exhibit
2.2(i).
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(j) The Company and MS shall enter into an Advisory Agreement (the
"Advisory Agreement"), substantially in the form attached hereto as Exhibit
2.2(j).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to each Purchaser as follows:
SECTION 3.1 Incorporation and Authority of the Company. The Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has all necessary corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, to enter into this
Agreement, to carry out its obligations hereunder and to consummate the transac-
tions contemplated hereby. The Company is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualification, except for such failures which, when taken together with all
other such failures, would not have a Material Adverse Effect. Except for the
stockholder and bond-holder approvals described in Section 3.4, the execution
and delivery of this Agreement by the Company, the performance by the Company of
its obligations hereunder and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and (assuming due authorization, execution
and delivery by each of the Purchasers) constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms. The Company has delivered to each of ITT, MS and CapRe correct and
complete copies of the Certificate of Incorporation and the Bylaws of the
Company and each Subsidiary, as currently in effect.
SECTION 3.2 Capital Stock.
--------------
(a) Except as set forth in Section 3.2 of the Disclosure Schedule,
there are no options, warrants, convertible securities or other rights,
agreements, arrangements or commitments relating to the capital stock of,
or other equity interest in, the Company obligating the Company to issue,
sell, transfer or otherwise dispose of or sell any shares of capital stock
of, or other equity interest in, the Company (any such options, warrants,
convertible securities or other rights, agreements, arrangements,
commitments or other equity interests set forth in Section 3.2 of the
Disclosure Schedule
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are referred to herein as the "Existing Derivative Securities"). The
Company has issued and has outstanding (a) 204,548 shares of common stock,
par value $.001 per share (65,000,000 shares authorized) (the "Existing
Common Stock"); (b) 19,368,326 shares of Series A Participating Pre-ferred
Stock, par value $.001 per share (21,500,000 shares authorized); (c)
311,300 shares of Series B Participating Preferred Stock, par value $.001
per share (5,000,000) shares authorized); (d) 7,000,000 shares of 12%
Series C Convertible Senior Preferred Stock, par value $.001 per share
(7,000,000 shares authorized); and (e) 1,000,000 shares of Series D
Participating Preferred Stock, par value $.001 per share (1,000,000 shares
authorized) (together with the series of preferred stock referred to in (b)
through (d) above, the "Existing Preferred Stock"), which constitute all
the issued and outstanding shares of capital stock of the Company and are
owned of record and beneficially solely by the individuals and entities and
in the amounts and proportions set forth in Section 3.2 of the Disclosure
Schedule. The shares of Existing Common Stock and Existing Preferred Stock
have been duly authorized and validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive rights.
Both the Existing Common Stock and the Existing Preferred Stock are owned
as shown in Section 3.2 of the Disclosure Schedule free and clear of all
pledges, security interests and all other liens, encumbrances and adverse
claims. Except as set forth in Section 3.2 of the Disclosure Schedule,
there are no voting trusts, stockholders' agreements, proxies or other
agreements or understandings in effect with respect to the voting or
transfer of any of the Existing Common Stock or the Existing Preferred
Stock.
(b) The shares of New Series A Preferred Stock and New Series B
Preferred Stock which are being issued and sold to ITT and MS and CapRe,
respectively, when issued, sold and delivered in accordance with the terms
hereof for the consideration expressed herein, will have been duly and
validly authorized and will be fully paid and nonassessable.
SECTION 3.3 Subsidiaries. Section 3.3 of the Disclosure Schedule sets
forth, with respect to each Subsidiary, its type of entity, the jurisdiction of
its incorporation or organization, its authorized capital stock, partnership
capital or equivalent, the number and type of its issued and outstanding shares
of capital stock, partnership interests or similar ownership interests and the
Company's current ownership of such shares, partnership interests or similar
ownership interests. Except as set forth in Section 3.3 of the Disclosure
Schedule, all of the outstanding equity securities and other securities of each
Subsidiary are owned by the Company or any of its Subsidiaries, free and clear
of all liens and encumbrances. Each Subsidiary is duly organized and validly
existing under the laws of its respective jurisdiction of incorporation and has
the requisite power and authority to own, operate or lease the properties and
assets owned, operated or leased by such Subsidiary and to carry on its business
in all material respects as
-15-
currently conducted by such Subsidiary and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualification, except for such failures which, when taken together with all
other such failures, would not have a Material Adverse Effect.
SECTION 3.4 Stockholder and Bondholder Approvals Required.
(a) Set forth in Section 3.2 of the Disclosure Schedule is a correct
and complete list of holders of each series of the Existing Preferred
Stock. Set forth in Section 3.4(a) of the Disclosure Schedule is the
correct proportion of such holders by series of Existing Preferred Stock,
as well as the identity of any individual holders, whose approval is
required to amend and restate in its entirety the Certificate of
Incorporation of the Company, to reclassify into New Series C Preferred
Stock the Existing Preferred Stock or otherwise to approve the
Recapitalization and all the transactions contemplated thereby.
(b) Set forth in Section 3.2 of the Disclosure Schedule is a correct
and complete list of holders of the Existing Common Stock and the Existing
Derivative Securities. Set forth in Section 3.4(b) of the Disclosure
Schedule is the correct proportion of such holders, as well as the identity
of any individual holders, whose approval is required to amend and restate
in its entirety the Certificate of Incorporation of the Company, to
reclassify into New Series C Preferred Stock the Existing Common Stock or
otherwise to approve the Recapitalization and all the transactions
contemplated thereby.
(c) Set forth in Section 3.4(c) of the Disclosure Schedule is a
correct and complete list of holders of the Company's Senior Notes. Also
set forth in Section 3.4(c) of the Disclosure Schedule is the correct
proportion of such holders of Senior Notes whose approval is required for
the effectiveness of the Senior Notes Approval.
SECTION 3.5 No Conflict. Assuming that all consents, approvals,
authorizations and other actions described in Section 3.6 of the Disclosure
Schedule have been obtained and all filings and notifications listed in Section
3.6 of the Disclosure Schedule have been made, and except as described in
Section 3.5 of the Disclosure Schedule, the execution, delivery and performance
of this Agreement by the Company do not and shall not (a) violate or conflict
with the Certificate of Incorporation or the Bylaws of the Company or any of its
Subsidiaries, (b) conflict with or violate any law, rule, regulation order,
writ, judgment, injunction, decree, determination or award or threaten any
governmental
-16-
authorization applicable to the Company, any of its Subsidiaries or the
Business, or (c) result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or, except for liens or other encumbrances imposed in
connection with the Stockholders' Agreement, the Supplier Agreement or the
Advisory Agreement or applicable securities laws, result in the creation of any
lien or other encumbrance on the New Series A Preferred Stock or New Series B
Preferred Stock or on any of the assets or properties of the Company or any of
its Subsidiaries pursuant to, any note, bond, mortgage, indenture (including the
Senior Note Indenture and the New Senior Note Indenture), contract, agreement,
lease, license, permit, franchise or other instrument relating to such assets
or properties to which the Company or any of its Subsidiaries is a party or by
which any of such assets or properties is bound or affected, except, in the case
of clause (b) or (c), as would not, in the aggregate, have a Material Adverse
Effect or prevent or materially delay the consummation by the Company of the
transactions contemplated hereby.
SECTION 3.6 Consents and Approvals. The execution, delivery and
performance of this Agreement by the Company do not and shall not require any
consent, approval, authorization or other order of, action by, filing with or
notification to, any Governmental Authority, except (a) as described in Section
3.6 of the Disclosure Schedule, (b) the notification and waiting period
requirements of the HSR Act and (c) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification, would
not prevent or materially delay the consummation by the Company of the
transactions contemplated by this Agreement and would not, in the aggregate,
have a Material Adverse Effect.
SECTION 3.7 Financial Statements. The Company has delivered to each
Purchaser true, correct and complete copies of the audited consolidated balance
sheets of the Company and its Subsidiaries as of December 31, 1998 and December
31, 1997 and the related audited consolidated statements of income and cash
flows (all such financial statements, including without limitation any and all
notes thereto, referred to as the "Financial Statements"). The Financial
Statements present fairly and accurately the consolidated financial condition
and results of operations of the Company and its Subsidiaries as of such dates
or for the periods covered thereby and have been prepared in accordance with
U.S. GAAP applied on a basis consistent with the past practices of the Company
with only such deviations from U.S. GAAP as are referred to in the notes
thereto.
SECTION 3.8 Absence of Undisclosed Liabilities and Liens.
(a) There are no Liabilities of the Company or any of its
Subsidiaries, other than Liabilities (i) reflected or reserved against on
the 1998 Balance Sheet, or (ii) incurred since the 1998 Balance Sheet Date
in the
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ordinary course of business consistent with past practice and disclosed in
Section 3.8 of the Disclosure Schedule.
(b) Except as set forth in Section 3.8 of the Disclosure Schedule,
there are no liens, security interests or other encumbrances with respect
to any assets of the Company or any of its Subsidiaries, other than
Permitted Encumbrances.
SECTION 3.9 Absence of Certain Changes or Events. Since the 1998
Balance Sheet Date, except as disclosed in Section 3.9 of the Disclosure
Schedule, the Business has been conducted in the ordinary course consistent with
past practice, and there has not been any circumstance, development or event
which has had or would reasonably be expected to have, in the aggregate, a
Material Adverse Effect. Without limiting the generality of the foregoing, since
the 1998 Balance Sheet Date none of the Company or any of its Subsidiaries has
taken any of the actions referred to in Section 5.1(b), except as set forth in
Section 3.9 of the Disclosure Schedule.
SECTION 3.10 Absence of Litigation. Except as set forth in Section
3.10 of the Disclosure Schedule, (a) there are no claims, actions, proceedings
or investigations pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries or any of the assets or
properties of the Company or any of its Subsidiaries, before any Governmental
Authority that, if determined adversely to the Company or any of its
Subsidiaries, in the aggregate, would have a Material Adverse Effect or would
prevent, restrict or materially delay the consummation by the Company of the
transactions contemplated hereby and (b) the Company, its Subsidiaries and their
respective assets and properties are not subject to any Governmental Order
having a Material Adverse Effect.
SECTION 3.11 Compliance with Laws.
(a) None of the Company or any of its Subsidiaries is in violation
of any law, rule, regulation, order, judgment or decree applicable to the
Company or any of its Subsidiaries relating to the Business or by which any
of the properties of the Company or any of its Subsidiaries is bound,
except (a) as set forth in Section 3.11 of the Disclosure Schedule and (b)
where such violations, in the aggregate, would not have a Material Adverse
Effect. Except as set forth in Section 3.11 of the Disclosure Schedule,
none of the Company or any of its Subsidiaries has, in the last three
years, received any written communication from any Governmental Authority
that alleges that the Company or any of its Subsidiaries is not in
compliance in any material respect with any material law, rule, regulation,
ordinance, order, judgment or decree that has not been resolved.
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(b) The Company and its Subsidiaries are in compliance with all
applicable provisions under the Communications Act and all applicable rules
and regulations promulgated thereunder.
SECTION 3.12 Licenses and Permits.
(a) Except as set forth in Section 3.12 of the Disclosure Schedule,
the Company and its Subsidiaries have all governmental licenses, permits
and authorizations necessary to conduct the Business, including without
limitation all governmental licenses, permits and authorizations necessary
to export and launch Quickbird 1, except for such governmental licenses,
permits and authorizations the absence of which, in the aggregate, would
not have a Material Adverse Effect. None of the Company or any of its
Subsidiaries has, within the last two years, received written notice or
otherwise has knowledge that any Governmental Authority has the right or
intends to suspend, modify, cancel or terminate any material license,
permit, certificate or other authorization relating to the Business as
currently conducted.
(b) The FCC Licenses constitute all such licenses necessary to
operate the Business as currently conducted.
SECTION 3.13 Sufficiency and Condition of Assets. Except as set
forth in Section 3.13 of the Disclosure Schedule, as of the Closing the Company
and its Subsidiaries own or have valid rights to use all of the assets, rights
and interests which are used in, and are sufficient for, the operation of the
Business as it is currently being conducted. The tangible assets of the Company
and its Subsidiaries are in good working order, reasonable wear and tear
excepted, and are suitable for the use for which they are intended in all
material respects.
SECTION 3.14 Real Property.
(a) Section 3.14(a) of the Disclosure Schedule sets forth a list of
all the Owned Real Property. The Company and its Subsidiaries have good,
valid, marketable and insurable title in fee simple to the Owned Real
Property, free and clear of all liens, security interests and other
encumbrances, except (i) as disclosed in Section 3.14(a) of the Disclosure
Schedule and (ii) Permitted Encumbrances.
(b) Section 3.14(b) of the Disclosure Schedule sets forth a list of
all Leased Real Property. Except as described in Section 3.14(b) of the
Disclosure Schedule, the Company has made available to the Purchaser
correct and complete copies of all leases and subleases relating to the
Leased Real Property. The Company and its Subsidiaries have good marketable
and insurable leasehold estates in the Leased Real Property, free and clear
of all liens, security interests and other encumbrances, except
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Permitted Encumbrances. Except as disclosed in Section 3.14(b) of the
Disclosure Schedule or as would not have a Material Adverse Effect, each
such lease or sublease is legal, valid, binding and enforceable and in full
force and effect, and shall not cease to be legal, valid, binding and
enforceable and in full force and effect as a result of the consummation of
the transactions contemplated by this Agreement. To the knowledge of the
Company, no party to any such lease or sublease is in material breach or
default thereunder.
(c) Except as set forth on Section 3.14(c) of the Disclosure
Schedule, (i) none of the Company or any of its Subsidiaries has, within
the last two years, received written notice of any pending or threatened
condemnation or eminent domain proceedings or their local equivalent that
would materially affect the Owned Real Property or the Leased Real
Property, (ii) the Owned Real Property and Leased Real Property, the use
and occupancy thereof by the Company and its Subsidiaries, and the conduct
of the Business thereon and therein does not violate in any material
respect any deed restrictions, or applicable building codes, zoning,
subdivision or other land use or similar laws the violation of which would
materially adversely affect the use, value or occupancy of any such
property or the conduct of the Business thereon, (iii) none of the Company
or any of its Subsidiaries has, within the last two years, received written
notice of a material violation of the restrictions or Laws described in the
foregoing clause (ii), and (iv) none of the structures or improvements on
any of the Leased Real Property or Owned Real Property encroaches upon real
property of another person, and no structure or improvement of another
person encroaches upon any of the Leased Real Property or Owned Real
Property, except for any such encroachment that would not materially
adversely affect the use, value or occupancy of any such property.
(d) Except as set forth in Section 3.14(d) of the Disclosure
Schedule, the buildings, facilities, machinery, equipment, furniture,
leasehold and their improvement, fixtures, vehicles, structures, and
related capitalized items and other tangible property relating to the
Business (the "Tangible Property") are in good operating condition and
repair, free (in the case of buildings or structures located on the Owned
Real Property or Leased Real Property) of any material structural or
engineering defects, and, subject to normal wear and tear and continued
repair and replacement in accordance with past practice, are substantially
suitable for their intended use. During the past five years there has not
been any significant interruption of the operations of the Business due to
inadequate maintenance of the Tangible Property.
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SECTION 3.15 Employee Benefit and Labor Matters.
(a) Section 3.15(a) of the Disclosure Schedule contains a complete
list of all material Employee Benefit Plans.
(b) With respect to each Employee Benefit Plan, other than Employee
Benefit Plans maintained solely to provide legally-mandated benefits to
employees located in jurisdictions outside of the United States, the
Company has made available to the Purchasers a true, correct and complete
copy of each Employee Benefit Plan. Except as specifically provided in the
foregoing documents delivered to the Purchasers, there are no amendments to
any Employee Benefit Plan that have been adopted or approved nor has the
Company or any of its Subsidiaries undertaken to make any such amendments
or to adopt or approve any new Employee Benefit Plan.
(c) Schedule 3.15 identifies each Employee Benefit Plan that is
intended to be a "qualified plan" within the meaning of Section 401 (a) of
the Code ("Qualified Plans "). The Internal Revenue Service has issued a
favorable determination letter with respect to each Qualified Plan and the
related trust that has not been revoked, and there are no existing
circumstances nor any events that have occurred that could adversely affect
the qualified status of any Qualified Plan or the related trust. No
Employee Benefit Plan is intended to meet the requirements of Code Section
501 (c)(9).
(d) All contributions required to be made to any Employee Benefit
Plan by applicable law or regulation or by any plan document or other
contractual undertaking, and all premiums due or payable with respect to
insurance policies funding any Employee Benefit Plan, for any period
through the date hereof have been timely made or paid in full or, to the
extent not required to be made or paid on or before the date hereof, have
been fully reflected on the Financial Statements to the extent required by
GAAP. Each Employee Benefit Plan that is an employee welfare benefit plan
under Section 3(l) of ERISA is either (i) funded through an insurance
company contract and is not a "welfare benefit fund" with the meaning of
Section 419 of the Code or (ii) unfunded.
(e) With respect to each Employee Benefit Plan, the Company and its
Subsidiaries have complied, and are now in compliance, in all material
respects with all provisions of ERISA, the Code and all laws and
regulations applicable to such Employee Benefit Plans and each Employee
Benefit Plan has been administered in all material respects in accordance
with its terms. There is not now, nor do any circumstances exist that could
give rise to, any requirement for the posting of security with respect to
an
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Employee Benefit Plan or the imposition of any lien on the assets of the
Company or any of its Subsidiaries under ERISA or the Code.
(f) No Employee Benefit Plan is subject to Title IV or Section 302 of
ERISA or Section 412 or 4971 of the Code.
(g) There does not now exist, nor do any circumstances exist that
could result in, any Controlled Group Liability that would be a liability
of the Company following the Closing. Without limiting the generality of
the foregoing, neither the Company nor any ERISA Affiliate of the Company
has engaged in any transaction described in Section 4069 or Section 4204 or
4212 of ERISA.
(h) The Company has no liability for life, health, medical or other
welfare benefits to former employees or beneficiaries or dependents
thereof, except for health continuation coverage as required by Section
4980B of the Code or Part 6 of Title I of ERISA and at no expense to the
Company. There has been no communication to employees by the Company or any
of its Subsidiaries which could reasonably be interpreted to promise or
guarantee such employees retiree health or life insurance or other retiree
death benefits on a permanent basis.
(i) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or
in conjunction with any other event) result in, cause the accelerated
vesting or delivery of, or increase the amount or value of, any payment or
benefit to any employee, officer or director of the Company or any of its
Subsidiaries. Without limiting the generality of the foregoing, no amount
paid or payable by the Company or any of its Subsidiaries in connection
with the transactions contemplated hereby (either solely as a result
thereof or as a result of such transactions in conjunction with any other
event) will be an "excess parachute payment" within the meaning of Section
280G of the Code.
(j) None of the Company or any of its Subsidiaries nor any other
person, including any fiduciary, has engaged in any "prohibited
transaction" (as defined in Section 4975 of the Code or Section 406 of
ERISA), which could subject any of the Employee Benefit Plans or their
related trusts, the Company, any of its subsidiaries or any person that the
Company or any of its Subsidiaries has an obligation to indemnify, to any
tax or penalty imposed under Section 4975 of the Code or Section 502 of
ERISA.
(k) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted, or to Company's knowledge, no set of circum-
-22-
stances exists which may reasonably give rise to a claim or lawsuit,
against the Employee Benefit Plans, any fiduciaries thereof with respect to
their duties to the Employee Benefit Plans or the assets of any of the
trusts under any of the Employee Benefit Plans which could reasonably be
expected to result in any material liability of the Company or any of its
Subsidiaries to the Department of Treasury, the Department of Labor, any
Employee Benefit Plan or any participant in an Employee Benefit Plan.
(1) The Company, its Subsidiaries and each member of their respective
business enterprise has complied with the Worker Adjustment and Retraining
Notification Act.
(m) All Employee Benefit Plans subject to the laws of any
jurisdiction outside of the United States (i) have been maintained in
accordance with all applicable requirements, (ii) if they are intended to
qualify for special tax treatment meet all requirements for such treatment,
and (iii) if they are intended to be funded and/or book-reserved are fully
funded and/or book reserved, as appropriate, based upon reasonable
actuarial assumptions.
(n) For purposes of this Section 3.15, the term "employee" shall be
considered to include individuals rendering personal services to the
Company or any of its Subsidiaries as independent contractors.
SECTION 3.16 Labor Matters. No labor organization or group of
employees of the Company or any of its Subsidiaries has made a pending demand
for recognition or certification, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or threatened to be brought or filed, with the National Labor
Relations Board or any other labor relations tribunal or authority. There are no
organizing activities, strikes, work stoppages, slowdowns, lockouts, material
arbitrations or material grievances, or other material labor disputes pending or
threatened against or involving the Company or any of its Subsidiaries. Each of
the Company and its Subsidiaries is in compliance with all applicable laws and
collective bargaining agreements respecting employment and employment practices,
terms and conditions of employment, wages and hours and occupational safety and
health
SECTION 3.17 Taxes. The Company hereby represents and warrants to
the Purchasers that, except as set forth in Disclosure Schedule 3.17:(i) all
material Tax Returns required to be filed (taking into account extensions) on or
before the Closing Date for taxable periods ending on or before the Closing Date
by, or with respect to any activities of, or property owned by, the Company, its
Subsidiaries, or each affiliated, consolidated, combined or unitary group that
included or includes the Company or any of its Subsidiaries (a "Tax Group'),
have been or will be filed in accordance with all applicable laws and are true,
cor-
-23-
rect and complete in all material respects as filed, all Taxes shown as due on
such Tax Returns have been or will be timely paid, and reserves reflected on the
most recent balance sheet of the Company are sufficient to cover all Taxes
(whether or not shown as due on any Tax Return) accrued as of such date and,
adjusted for the passage of time, will be sufficient to cover all Taxes as of
the Closing Date; (ii) all Taxes required to be withheld by the Company or any
of its Subsidiaries have been withheld, and such withheld Taxes have either been
duly and timely paid to the proper Government Authorities or set aside in
accounts for such purpose if not yet due; (iii) no Tax Return filed by the
Company or any of its Subsidiaries is currently under audit by any Taxing
Authority or is the subject of any judicial or administrative proceeding, and to
the knowledge of the Company no Taxing Authority is threatening to commence any
such audit; (iv) no Taxing Authority is now asserting against the Company or any
of its Subsidiaries any deficiency or claim for Taxes or any adjustment of
Taxes; (v) other than any Tax sharing or indemnification agreement between the
Company, on the one hand, and any of its Subsidiaries, on the other hand,
neither the Company nor any of its Subsidiaries is subject to or bound by any
Tax sharing agreement (or other arrangement or practice for the sharing of
Taxes); (vi) neither the Company nor any of its Subsidiaries has ever been a
member of a Tax Group, other than one for which the Company was the common
parent; (vii) neither the Company nor any of its Subsidiaries has waived any
statute of limitations with respect to any Tax or agreed to any extension of
time for filing any Tax Return that has not been filed, and neither the Company
nor any of its Subsidiaries has consented to extend the period in which any Tax
may be assessed or collected by any Taxing Authority; (viii) there are no liens
for Taxes (other than Taxes not yet due) upon any of the assets of the Company
or any of its Subsidiaries; (ix) the Company has no liability for the Taxes of
any person other than the Company and its Subsidiaries; (x) there are no
outstanding powers of attorney enabling any party to represent the Company or
any of its Subsidiaries with respect to Tax matters; and (xi) neither the
Company nor any of its Subsidiaries has been a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
SECTION 3.18 Environmental, Health and Safety.
(a) Except as set forth in Section 3.18 of the Disclosure Schedule
or except as would not have a Material Adverse Effect: (i) the Company and
its Subsidiaries currently hold all the environmental and health and safety
permits, licenses and approvals of Governmental Authorities and agencies
necessary for the current use, occupancy or operation of the Business and
required by any Environmental Law ("Environmental Permits") and are in
compliance with all such Environmental Permits; (ii) the Company and its
Subsidiaries are in compliance with all applicable Environmental Laws;
(iii) neither the Company nor any of its Subsidiaries is currently in
receipt of any written claim, demand, notice or complaint al-
-24-
leging violation of, or liability under, any Environmental Laws; (iv)
except as permitted by or as would not result in any liability under
applicable Environmental Laws, there are no underground or aboveground
storage tanks or any surface impoundments, septic tanks, pits, sumps or
lagoons in which Hazardous Materials are being treated, stored or disposed
on any of the Owned Real Property or Leased Real Property or, with respect
to the period of the Company's or any of its Subsidiaries' ownership,
tenancy or operation of such property, on any real property formerly owned,
leased or operated by the Company or any of its Subsidiaries; (v) there is
no asbestos or asbestos-containing material on any of the Owned Real
Property or Leased Real Property, except to the extent not prohibited by,
or as would not result in any liability under, applicable Environmental
Laws; (vi) neither the Company nor any of its Subsidiaries has released,
discharged or disposed of Hazardous Materials on any of the Owned Real
Property or Leased Real Property or on any real property formerly owned,
leased or operated by the Company or any of its Subsidiaries; (vii) neither
the Company nor any of its Subsidiaries is undertaking any investigation or
assessment or remedial or response action relating to any release,
discharge or disposal of or contamination with Hazardous Materials at any
site, location or operation, either voluntarily or pursuant to the order of
any Governmental Authority or the requirements of any Environmental Law;
and (viii) there are no past, pending or threatened in writing
Environmental Claims against the Company, any of its Subsidiaries or any
Real Property and, to the Company's knowledge, there are no facts that are
reasonably expected to form the basis of any such Environmental Claim.
(b) For purposes of this Agreement, the following terms have the
meanings set forth below:
(i) "Environmental Claims" means any and all actions, suits,
demands, demand letters, claims, complaints, liens, written notices of
noncompliance or violation, written notices of liability or potential
liability, investigations, proceedings, consent orders or consent
agreements relating in any way to any Environmental Law, any
Environmental Permit or any Hazardous Material or arising from any
actual or alleged injury or threat of injury to health, safety or the
environment.
(ii) "Environmental Law" means any foreign, federal, state or
local Law, statute, ordinance, rule, regulation or common law, and any
judicial or administrative interpretation thereof, including without
limitation any judicial or administrative order, consent decree or
judgment, in each case in effect and as amended as of the Closing
Date, relating to, regulating or imposing liability or standards of
conduct concerning pollution or protection of the
-25-
environment, health or safety or the generation, use, handling,
transportation, treatment, storage, disposal, release or discharge of
any Hazardous Materials.
(iii) "Hazardous Materials" means any pollutants, contaminants,
toxic or hazardous substances, materials, wastes, constituents,
compounds, chemicals, including without limitation petroleum or any
by-products thereof, any form of natural gas, asbestos or asbestos-
containing materials, polychlorinated biphenyls ("PCBs") or PCB-
containing equipment, radon or other radioactive elements,
carcinogenic or mutagenic agents, pesticides, explosives, flammables,
corrosives and urea formaldehyde foam insulation, in each case that
form the basis of liability, or are subject to regulation, under any
Environmental Laws as of the Closing Date.
SECTION 3.19 Intellectual Property.
(a) Intellectual Property Assets. For purposes of this Agreement, the
term "Intellectual Property Assets" includes without limitation the
following tangible and intangible assets of the Company:
(i) the name "EarthWatch Incorporated," all fictional business
names, trading names, registered and unregistered trademarks, service
marks, trade dress and applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published works and unpublished
works (collectively, "Copyrights"); and
(iv) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively, "Trade
Secrets") owned, used, or licensed by the Company or any of its
Subsidiaries as licensee or licensor.
(b) Agreements. Section 3.19(b) of the Disclosure Schedule contains a
complete and accurate list of all material contracts relating to the
Intellectual Property Assets to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound, except for any license implied by the sale of a product and
perpetual, paid-up licenses for commonly available software programs under
which the Company or any of its Subsidiaries is the licensee. There are no
-26-
outstanding and, to the Company's knowledge, no threatened disputes or
disagreements with respect to any such agreement.
(c) Know-How Necessary for the Business.
(i) The Intellectual Property Assets are all those necessary for
the operation of the Company's and its Subsidiaries' businesses as
they are currently conducted. The Company and its Subsidiaries are the
owners of all right, title, and interest in and to each of the
Intellectual Property Assets, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse claims,
and have the right to use without payment to a third party all of the
Intellectual Property Assets.
(ii) Except as set forth in Section 3.19(c) of the Disclosure
Schedule, all former and current employees of the Company and its
Subsidiaries have executed written contracts with the Company or its
Subsidiaries that assign to the Company all rights to any inventions,
improvements, discoveries, or information relating to the business of
the Company or any of its Subsidiaries. No employee of the Company or
any of its Subsidiaries has entered into any contract that materially
restricts or limits in any way the scope or type of work for the
Company in which the employee may be engaged or requires the employee
to transfer, assign, or disclose information concerning his work for
the Company to anyone other than the Company or its Subsidiaries.
(d) Patents.
--------
(i) Section 3.19(d) of the Disclosure Schedule contains a
complete and accurate list of all Patents. The Company and its
Subsidiaries are the owners of all right, title, and interest in and
to each of the Patents, free and clear of all liens, security
interests, charges, encumbrances, entities, and other adverse claims.
(ii) All of the issued Patents are currently in compliance with
formal legal requirements (including without limitation payment of
filing, examination, and maintenance fees and proofs of working or
use), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety days
after the Closing Date.
(iii) No Patent has been or is now involved in any interference,
reissue, reexamination, or opposition proceeding. To the Company's
knowledge, there is no potentially interfering patent or patent
application of any third party.
-27-
(iv) To the knowledge of the Company, no Patent is infringed or,
to the Company's knowledge, has been challenged or threatened in any
way. To the knowledge of the Company, none of the products
manufactured and sold, nor any process or know-how used, by the
Company or any of its Subsidiaries infringes or is alleged to infringe
any patent or other proprietary right of any other person.
(v) All products made, used, or sold under the Patents have been
marked with the proper patent notice.
(e) Trademarks.
(i) Section 3.19(e) of the Disclosure Schedule contains a
complete and accurate list of all Marks. The Company and its
Subsidiaries are the owners of all right, title, and interest in and
to each of the Marks, free and clear of all liens, security interests,
charges, encumbrances, equities, and other adverse claims.
(ii) All Marks that have been registered with the United States
Patent and Trademark Office are currently in compliance with all
formal legal requirements (including without limitation the timely
post-registration filing of affidavits of use and incontestability and
renewal applications), are valid and enforceable, and are not subject
to any maintenance fees or taxes or actions falling due within ninety
days after the Closing Date.
(iii) No Xxxx has been or is now involved in any opposition,
invalidation, or cancellation and, to the Company's knowledge, no such
action is threatened with the respect to any of the Marks.
(iv) To the Company's knowledge, there is no potentially
interfering trademark or trademark application of any third party.
(v) To the Company's knowledge, no Xxxx is infringed or, to the
Company's knowledge, has been challenged or threatened in any way. To
the Company's knowledge, none of the Marks used by the Company or any
of its Subsidiaries infringes or is alleged to infringe any trade
name, trademark, or service xxxx of any third party.
(vi) All products and materials containing a Xxxx xxxx the proper
federal registration notice where permitted by law.
-28-
(f) Copyrights.
(i) Section 3.19(f) of the Disclosure Schedule contains a
complete and accurate list of all Copyrights. The Company and its
Subsidiaries are the owners of all right, title, and interest in and
to each of the Copyrights, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse claims.
(ii) All the Copyrights have been registered and are currently in
compliance with formal legal requirements, are valid and enforceable,
and are not subject to any maintenance fees or taxes or actions
falling due within ninety days after the date of Closing.
(iii) To the Company's knowledge, no Copyright is infringed or,
to the Company's knowledge, has been challenged or threatened in any
way. To the Company's knowledge, none of the subject matter of any of
the Copyrights infringes or is alleged to infringe any copyright of
any third party or is a derivative work based on the work of a third
party.
(iv) All works encompassed by the Copyrights have been marked
with the proper copyright notice.
(g) Trade Secrets.
(i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and sufficient in
detail and content to identify and explain it and to allow its full
and proper use without material reliance on the knowledge or memory of
any individual.
(ii) The Company and its Subsidiaries have taken all reasonable
precautions to protect the secrecy, confidentiality, and value of its
Trade Secrets.
(iii) The Company and its Subsidiaries have good title and the
right (not necessarily exclusive) to use the Trade Secrets. The Trade
Secrets are not part of the public knowledge or literature, and, to
the Company's knowledge, have not been used, divulged, or appropriated
either for the benefit of any person (other than the Company and its
Subsidiaries) or to the detriment of the Company or any of its
Subsidiaries. No Trade Secret is subject to any adverse claim or has
been challenged or threatened in any way.
-29-
SECTION 3.20 Material Contracts.
(a) Section 3.20 of the Disclosure Schedule lists the following
contracts (the "Material Contracts") in effect as of the date of this
Agreement to which the Company or any of its Subsidiaries is a party:
(i) any commitment, contract, agreement or purchase order that
the Company reasonably anticipates shall, in accordance with its
terms, involve aggregate payments or receipts by the Company or any of
its Subsidiaries of more than $1,000,000 within the 12-month period
following the date of this Agreement;
(ii) any lease of personal property involving any annual expense
in excess of $10,000 that is not cancelable without liability within
30 days;
(iii) any contracts or agreements containing covenants limiting
the freedom of the Company or any of its Subsidiaries to engage in any
line of business or compete with any person;
(iv) any material license agreement, assignment or contract
(whether as licensor or licensee, assignor or assignee) relating to
any patents, trademarks, copyrights or other intellectual property;
(v) any contract that creates a joint venture or partnership or
other sharing of profits, losses, costs or liabilities;
(vi) any contract or agreement relating to clean-up, abatement or
other actions in connection with the remediation of any liabilities
relating to Hazardous Substances;
(vii) any contract with an affiliate;
(viii) any credit agreement, loan agreement, guarantee, note or
other evidence of Indebtedness or agreement providing for
Indebtedness; and
(ix) any amendment, supplement and modification (whether oral or
written) in respect of any of the foregoing.
Except as set forth in Section 3.20 of the Disclosure Schedule,
correct and complete copies of all written contracts listed or required to be
listed in Section 3.20 of the Disclosure Schedule have been made available to
each Purchaser before the date hereof.
-30-
(b) None of the Company or any of its Subsidiaries is (and, to the
knowledge of the Company, no other party is) in breach or violation of, or
default under, any of the Material Contracts, where such breach or
violation or default would have a Material Adverse Effect. Each Material
Contract is a valid agreement, arrangement or commitment of the Company or
any of its Subsidiaries that is a party thereto, enforceable against the
Company or any such Subsidiary, as the case may be, in accordance with its
terms and, to the knowledge of the Company, is a valid agreement,
arrangement or commitment of each other party thereto, enforceable against
such party in accordance with its terms, except in each case as would not
have a Material Adverse Effect.
SECTION 3.21 Exemption from Registration; Proxy Statement.
(a) The transactions contemplated as part of the Recapitalization,
individually and in the aggregate, shall be exempt from registration under
the Securities Act of 1933, as amended, including the rules and regulations
promulgated thereunder.
(b) None of the information supplied by the Company for inclusion or
incorporation by reference in the Proxy Statement will, at the time the
Proxy Statement is distributed to holders of the Existing Common Stock and
the Existing Preferred Stock and as of the Closing, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. If
at any time prior to the Closing, the Company becomes aware of the
occurrence of any event with respect to the Company or any its Subsidiaries
which is required to be described in the Proxy Statement (or in any
amendment of, or supplement to, the Proxy Statement) so as to maintain the
accuracy and completeness of the Proxy Statement, the Company shall notify
each of the Purchasers and promptly prepare an appropriate amendment or
supplement in which such event shall be described and disseminate such
amendment or supplement to the holders of shares of the Existing Common
Stock and the Existing Preferred Stock.
SECTION 3.22 State Takeover Statutes. The Board of Directors of the
Company has approved this Agreement and the transactions contemplated hereby and
such approval constitutes the approval of the Recapitalization and the other
transactions contemplated hereby by the Board of Directors of the Company under
the provisions of Section 203 of the DGCL such that Section 203 of the DGCL does
not apply to this Agreement and the transactions contemplated hereby. To the
knowledge of the Company, no other state takeover statute is applicable to the
Recapitalization or the transactions contemplated thereby.
-31-
SECTION 3.23 Insurance. Except as set forth in Section 3.23 of the
Disclosure Schedule, each of the Company and its Subsidiaries and all of their
assets are covered by valid and currently effective insurance policies issued in
favor or the Company and/or its Subsidiaries that are customary and appropriate
under the circumstances. All such policies are in full force and effect, all
premiums due thereon have been paid and the Company and its Subsidiaries have
complied with the provisions of such policies (except for failures in full force
and effect, to pay premiums and comply which, in the aggregate, would not have a
Material Adverse Effect).
SECTION 3.24 Brokers. Except for MS (as advisor, the "Advisor"), no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company or any of
its Subsidiaries. The Company is solely responsible for the fees and expenses of
the Advisor.
SECTION 3.25 Senior Note Indenture. As of the date hereof, there
exists no "Default" or "Events of Default" under and as defined in the Senior
Note Indenture.
SECTION 3.26 Transactions with Affiliates. Except as set forth in
Section 3.26 of the Disclosure Schedule, none of the Company or any of its
Subsidiaries has any outstanding contract, agreement or other arrangement with
any of its Affiliates or provides or receives goods or services to or from any
of its Affiliates or (b) has engaged in any transaction outside the ordinary
course of business consistent with past practice with any of its Affiliates
(other than the Company or any of its Subsidiaries and Affiliates) since January
1, 1996.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
------------------------------------------------
Each Purchaser, individually and on its own behalf and not on behalf
of any other Purchaser, represents and warrants to the Company and each other
Purchaser as follows:
SECTION 4.1 Incorporation and Authority of the Purchaser. Such
Purchaser is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has all necessary organizational
power and authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by such Purchaser, the performance by such
Purchaser of its obligations hereunder and the consummation by such Purchaser of
the transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of such Purchaser. This Agreement has been duly
executed and
-32-
delivered by such Purchaser, and (assuming due authorization, execution and
delivery by the Company and the other parties hereto other than such Purchaser)
constitutes a legal, valid and binding obligation of such Purchaser enforceable
against such Purchaser in accordance with its terms.
SECTION 4.2 No Conflict. Assuming that all consents, approvals,
authorizations and other actions described in Section 4.3 have been obtained and
all filings and notifications described in Section 4.3 have been made, and
except as may result from any facts or circumstances relating solely to the
Company, the execution, delivery and performance of this Agreement by such
Purchaser do not and shall not (a) violate or conflict with the Certificate of
Incorporation or Bylaws of such Purchaser or (b) conflict with or violate any
material law, rule, regulation, order, writ, judgment, injunction, decree,
determination applicable to such Purchaser, except in the case of this clause
(b) as would not, in the aggregate, materially delay the consummation by such
Purchaser of the transactions contemplated hereby.
SECTION 4.3 Consents and Approvals. The execution, delivery and
performance of this Agreement by such Purchaser do not and shall not require any
material consent, approval, authorization or other order of, action by, or
filing with or notification to, any Governmental Authority, except (a) the
notification and waiting period requirements of the HSR Act, (b) where failure
to obtain such consent, approval, authorization or action, or to make such
filing or notification, would not prevent or materially delay the consummation
by such Purchaser of the transactions contemplated by this Agreement and (c) as
may be necessary as a result of any facts or circumstances relating solely to
the Company.
SECTION 4.4 Absence of Litigation. There are no claims, actions,
proceedings or investigations pending or, to the knowledge of such Purchaser,
threatened against such Purchaser before any Governmental Authority that are
reasonably likely to prevent or materially delay the consummation by such
Purchaser of the transactions contemplated hereby.
SECTION 4.5 Investment Purpose. Such Purchaser is acquiring the New
Series A Preferred Stock, the New Series B Preferred Stock or the New Common
Stock, as the case may be, solely for the purpose of investment and not with a
view to, or for offer or sale in connection with, any distribution thereof.
SECTION 4.6 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of such Purchaser.
-33-
ARTICLE V
COVENANTS
---------
SECTION 5.1 Conduct of Business Prior to the Closing.
(a) Unless each of MS, CapRe and ITT otherwise agrees in writing and
except as otherwise set forth in this Agreement or in Section 5.1 of the
Disclosure Schedule, between the date of this Agreement and the earlier to
occur of (i) receipt by the Company of the FCC Approval and (ii) October
31, 1999, the Company and its Subsidiaries shall (A) conduct the Business
only in the ordinary course consistent with past practice pursuant to the
Company's strategic plan, (B) use reasonable efforts to preserve the
current relationships of the Company and its Subsidiaries with their
respective customers, suppliers, distributors, agents, officers and
employees and other persons with which the Company and its Subsidiaries
have significant business relationships, and (C) use reasonable efforts to
maintain all of the assets owned or used by the Business in the ordinary
course of business consistent with past practice.
(b) Except as contemplated or expressly provided in this Agreement,
the Stockholders' Agreement or the Disclosure Schedule, between the date of
this Agreement and the earlier to occur of (i) receipt by the Company of
the FCC Approval and (ii) October 31, 1999, the Company and its
Subsidiaries shall not do any of the following without the prior written
consent of each of ITT, MS and CapRe (which consent shall not be
unreasonably withheld):
(i) the amendment of the Certificate of Incorporation, Bylaws or
other organizational documents of the Company or any of its
Subsidiaries, including without limitation any and all certificates of
designations of any series of preferred stock of the Company, or the
amendment, termination or waiver of any provision under the
Stockholders' Agreement;
(ii) the declaration, setting aside, making or paying of any
dividend or other distribution in respect of the Company's or any of
its Subsidiaries' shares or equity interests, or the purchase or
redemption, directly or indirectly, of such shares or equity interests
(other than pursuant to the Stockholders' Agreement and the Existing
Stock Option Plan (and related agreements));
(iii) an Initial Public Offering or (other than with respect to
shares of New Series C Preferred Stock, securities convertible or
exercisable into shares of New Series C Preferred Stock or rights or
warrants entitling the holders thereof to subscribe for or pur-
-34-
chase shares of New Series C Preferred Stock issued in connection with
the High-Yield Financing, shares of New Common Stock, New Series A
Preferred Stock, New Series B Preferred Stock and New Series C
Preferred Stock issued pursuant to the Recap Agreement (including any
shares reclassified upon filing of the Amended and Restated
Certificate of Incorporation of the Company and conversion of any
shares issued in accordance with the Recap Agreement or reclassified
upon filing of the Amended and Restated Certificate of Incorporation
of the Company) or the issuance of securities pursuant to the
Waterstone Agreement or the exercise of the Odetics Warrant or the
exercise of options pursuant to the Existing Stock Option Plan (and
related agreements) or the grant or exercise of options pursuant to
the New Equity Plan (and related agreements), such grant or exercise
under the New Equity Plan, together with all prior grants or exercises
under the New Equity Plan since the Closing Date, representing in the
aggregate no more than 15% of the Fully-Diluted Shares as of the
Closing Date) the issuance, delivery or sale of any shares or equity
interests, or any options, warrants, conversion or other rights to
purchase any such shares or equity interests, or any securities
convertible into or exchangeable for such shares or equity interests,
or the issuance of any other security in respect of or in lieu of or
in substitution for shares or equity interests, or the entry into any
agreements restricting the transfer of, or affecting the rights of
holders of shares or equity interests, the granting of any preemptive
or anti-dilutive rights to any holder of any class of securities, or
the granting of registration rights with respect to any class of
securities, or the changing of the number of shares of Common Stock
reserved for issuance;
(iv) the acquisition (by merger, consolidation, or acquisition of
stock or assets) of any corporation, partnership or other business
organization or division thereof;
(v) except in the ordinary course of business consistent with
past practice, (A) the issuance of any debt securities, (B) the
incurrence of any indebtedness for borrowed money, (C) the assumption
grant, guarantee or endorsement, or making any other accommodation or
arrangement making the Company or any of its Subsidiaries responsible
for, the Liabilities of any person (other than the Company or another
of its Subsidiaries, as the case may be) or (D) the making of any
loans, advances or capital contributions to, or investments in any
person (other than the Company or another of its Subsidiaries);
-35-
(vi) except in the ordinary course of business consistent with
past practice, the creation of any security interest, pledge, lien or
other encumbrance on any properties or assets (whether tangible or
intangible) of the Company or any of its Subsidiaries, other than (A)
Permitted Encumbrances and (B) security interests, pledges, liens and
encumbrances that shall be released at or prior to the Closing;
(vii) the engaging in any Related Party Transaction;
(viii) except in the ordinary course of business consistent with
past practice, the filing of any Tax Return or the making or revoking
of any Tax election;
(ix) except in the ordinary course of business consistent with
past practice, the acquisition of any assets or properties (in one or
more related transactions) for cash or otherwise;
(x) the replacement of the Company's independent auditors or the
making of any change in any method of financial accounting or
accounting practice, except for any such change required by reason of
a concurrent change in generally accepted accounting principles;
provided that the Company shall give the Purchaser prompt notice of
any such change;
(xi) except in the ordinary course of business consistent with
past practice, (A) the sale, assignment, transfer, lease or other
disposition of or agreement to sell, assign, transfer, lease or
otherwise dispose of any of the material assets of the Company or any
of its Subsidiaries or (B) the cancellation of any indebtedness owed
to the Company or any of its Subsidiaries;
(xii) except in the ordinary course of business consistent with
past practice, (A) the entry into or adoption or amendment of any
existing agreement or arrangement relating to severance; (B) the entry
into or adoption or amendment of any existing severance plan; (C) the
entry into or amendment or adoption of any employee benefit plan or
employment or consulting agreement (including without limitation the
plans, programs, agreements and arrangements referred to in Section
3.15); (D) the grant of any increases in compensation, except
compensation increases associated with promotions and annual reviews
in the ordinary course of business consistent with past practice or
provided pursuant to collective bargaining agreements; or (E) the
adoption of any material change in the overall compensation structure
of the Company and its Subsidiaries;
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(xiii) the approval of (i) a complete liquidation or dissolution
of the Company, (ii) a merger or consolidation (A) in which the
Company or any of its Subsidiaries is a constituent corporation or (B)
with respect to which the shares or other entity interests would have
the right to vote under applicable state law or the applicable
organizational documents, (iii) the sale of all or substantially all
of the assets, or (iv) any similar business combination;
(xiv) the removal of the Company's Chief Executive Officer,
except upon an adjudication of cause by an independent third party;
(xv) the entry into or modification, termination, amendment or
grant of any waiver in respect of any Material Contract (except in the
ordinary course of business consistent with past practice); and
(xvi) the entry into any agreement with respect to the
foregoing.
SECTION 5.2 Required Actions. As soon as practicable following the
date of the Agreement and prior to the Closing, the Company shall do the
following:
(a) Take all action in accordance with all federal and state
securities laws, the DGCL and the Certificate of Incorporation and Bylaws
of the Company, reasonably necessary to convene a special meeting of the
holders of the Existing Common Stock and the Existing Preferred Stock (the
"Company Shareholders Meeting") to be held on the earliest practical date
determined by the Company pursuant to its obligations under subsections (b)
and (c) below;
(b) With respect to the Existing Preferred Stock, (i) prepare and
distribute to all holders of shares of each series of Existing Preferred
Stock all reasonably necessary documents for the purpose of soliciting and
obtaining the approval in writing of holders of shares of each series of
Existing Preferred Stock at least equal in number to the minimum number set
forth for each such series in Section 3.4(a) of the Disclosure Schedule to
amend and restate in its entirety the Certificate of Incorporation of the
Company, substantially in the form attached hereto as Exhibit 5.2(b & c),
to reclassify each series of Existing Preferred Stock into New Series C
Preferred Stock and otherwise to approve the Recapitalization and all the
transactions contemplated thereby, all to the extent such approval is
required by applicable law; (ii) recommend to holders of shares of each
series of Existing Preferred Stock the approval of each of such amendment
and restatement and such Recapitalization; (iii) use its best efforts to
so-
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licit from holders of such minimum number of shares of each series of
Existing Preferred Stock, and take all other action reasonably necessary or
advisable to secure, the approval of such holders required to approve each
of such amendment and restatement and such Recapitalization; and (iv) file
with the Secretary of State of the State of Delaware all documents, and
take any other action, reasonably necessary to effect each of such
amendment and restatement and such Recapitalization referred to in this
Section 5.2(b);
(c) With respect to the Existing Common Stock, (i) prepare and
distribute to all holders of shares of Existing Common Stock all reasonably
necessary documents for the purpose of soliciting and obtaining the
approval in writing of holders of shares of Existing Common Stock at least
equal in number to the minimum number set forth in Section 3.4(b) of the
Disclosure Schedule to amend and restate in its entirety the Certificate of
Incorporation of the Company, substantially in the form attached hereto as
Exhibit 5.2(b & c), to reclassify the Existing Common Stock into New Series
C Preferred Stock and otherwise to approve the Recapitalization and all the
transactions contemplated thereby, all to the extent such approval is
required by applicable law; (ii) recommend to holders of shares of Existing
Common Stock the approval of each of such amendment and restatement, such
reclassification and such Recapitalization; (iii) use its best efforts to
solicit from holders of such minimum number of shares of Existing Common
Stock, and take all other action reasonably necessary or advisable to
secure, the approval of such holders required to approve each of such
amendment and restatement, such reclassification and such Recapitalization;
and (iv) file with the Secretary of State of the State of Delaware all
documents, and take any other action, reasonably necessary to effect each
of such amendment and restatement, such reclassification and such
Recapitalization referred to in this Section 5.2(c);
(d) With respect to the Existing Derivative Securities, use its
reasonable best efforts to take all action necessary to effectuate the
adjustment of such Existing Derivative Securities substantially as set
forth in Exhibit 5.2(d), including, if applicable, making modifications
under the Existing Stock Option Plan or the Warrant Agreement and obtaining
consents from holders of Existing Derivative Securities.
(e) With respect to the Senior Notes, (i) prepare and distribute to
all holders of Senior Notes all reasonably necessary documents for the
purpose of soliciting and obtaining the Senior Notes Approval; (ii)
recommend the Senior Notes Approval to the holders of Senior Notes; (iii)
use its best efforts to solicit the Senior Notes Approval from the holders
of all Senior Notes, and take all other action reasonably necessary or
advisable to secure the Senior Notes Approval; and (iv) take any other
action
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reasonably necessary under the Senior Note Indenture to effectuate the
Senior Note Approval.
SECTION 5.3 Issuance and Sale and Subscription for and Purchase of
New Series C Preferred Stock.
(a) Prior to the close of business on the 10th Business Day following
the Closing Date, Ball shall deliver to the Company written notice of its
decision whether or not to subscribe for and purchase 714,286 fully-paid
and nonassessable shares of New Series C Preferred Stock (the "Ball Option
Shares") for an aggregate cash payment in an amount equal to Two Million
Five Hundred Thousand Dollars ($2,500,000) (the "New Series C Purchase
Price").
(b) In the event that Ball shall inform the Company in such notice
referred to in paragraph (a) above of its decision to subscribe for and
purchase the Ball Option Shares, (1) on the High Yield Financing Closing
Date, the Company shall issue and sell to Ball and Ball shall subscribe for
purchase from the Company, the Ball Option Shares for an aggregate cash
payment in an amount equal to the New Series C Purchase Price and (2) Ball
shall pay to the Company the New Series C Purchase Price, by wire transfer
in immediately available funds to an account or accounts designated by the
Company in a written notice to Ball at least two Business Days prior to the
High Yield Financing Closing Date. The Company shall deliver to Ball stock
certificates evidencing the Ball Option Shares purchased by Ball.
SECTION 5.4 Preparation of Proxy Statement. Consistent with the
timing for the Company Shareholders Meeting as determined by the Company, the
Company shall prepare and distribute to holders of the Existing Common Stock and
the Existing Preferred Stock the Proxy Statement as soon as is reasonably
practicable following the date hereof. If, at any time prior to the Effective
Time, the Company shall obtain knowledge of any information pertaining to the
Company contained in or omitted from the Proxy Statement that would require an
amendment or supplement to the Proxy Statement, the Company will promptly take
such action as shall be required to amend or supplement the Proxy Statement. The
Company also shall take such other reasonable actions (other than qualifying to
do business in any jurisdiction in which it is not so qualified) required to be
taken under any applicable state securities laws in connection with the issuance
of shares of New Series C Preferred Stock in the Recapitalization.
SECTION 5.5 Satellite Insurance. Following the Closing, the Company
shall use its best efforts to obtain the Satellite Insurance in accordance with
the terms and provisions of the New Senior Note Indenture.
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SECTION 5.6 Access to Information. From the date of this Agreement
until the Closing, upon reasonable notice, the Company shall, and shall cause
the officers, employees, auditors and agents of the Company and its Subsidiaries
to, (i) afford the officers, employees and authorized agents and representatives
of each Purchaser reasonable access, during normal business hours, to the
offices, properties, books and records and management employees of the Company
and its Subsidiaries and (ii) furnish to the officers, employees and authorized
agents and representatives of each Purchaser access to, and copies of, such
additional financial and operating data and other documents and information
regarding the assets, properties, goodwill and business of the Company and its
Subsidiaries as each such Purchaser may from time to time reasonably request;
provided, however, that such investigation shall not unreasonably interfere with
any of the businesses or operations of the Company, its Subsidiaries or any
Affiliate of the Company; provided further, that the Company shall only be
obligated to use its reasonable efforts to cause the auditors of the Company to
make any work papers available to any person.
SECTION 5.7 Regulatory and Other Authorizations; Consents.
(a) Each of the Company and each Purchaser, individually and on its
own behalf and not on behalf of any other Purchaser, agrees to use its
reasonable best efforts to obtain all authorizations, consents, orders and
approvals of all federal, state, local and foreign regulatory bodies
(including without limitation the FCC) and officials that may be or become
necessary for the performance of its obligations pursuant to this Agreement
and to cooperate fully with the other parties in promptly seeking to obtain
all such authorizations, consents, orders and approvals. To the extent
required by law, each of the Company and MS agrees to make an appropriate
filing of a Notification and Report Form pursuant to the HSR Act with
respect to the transactions contemplated hereby within five Business Days
of the date hereof and to supply promptly any additional information and
documentary material that may be requested pursuant to the HSR Act. The
parties shall cooperate with each other in connection with the making of
all such filings or responses, including without limitation providing
copies of all such documents to the non-filing or nonresponding party and
its advisors prior to filing or responding. The parties hereto shall not
take any action that shall have the effect of delaying, impairing or
impeding the receipt of any required approvals. Notwithstanding anything to
the contrary contained in this Agreement, neither MS nor the Company shall
be required to sell or dispose of any assets or take any other action
(other than the filing of the Notification and Report Form and the supply
of additional information or documentation) in order to obtain approval or
the expiration of the waiting period under the HSR Act.
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(b) Each of the Company and each Purchaser, individually and on its
own behalf and not on behalf of any other Purchaser, agrees to cooperate in
obtaining any other consents and approvals which may be required in
connection with the transactions contemplated by this Agreement.
SECTION 5.8 Investigation. In connection with each Purchaser's
investigation of the Company, its Subsidiaries and the Business, each such
Purchaser has received from the Company certain estimates, projections and other
forecasts for the Company, its Subsidiaries and the Business, and certain plan
and budget information. The Purchaser acknowledges that there are uncertainties
inherent in attempting to make such projections, forecasts, plans and budgets,
that the Purchaser is familiar with such uncertainties, that the Purchaser is
taking full responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections, forecasts, plans and budgets so
furnished to it, and that the Purchaser shall not assert any claim against the
Company, its Subsidiaries or any of their directors, officers, employees,
agents, stockholders, Affiliates, consultants, counsel, accountants, investment
bankers or representatives, or hold the Company, its Subsidiaries or any such
persons liable, with respect thereto. Accordingly, the Company makes no
representation or warranty with respect to any estimates, projections,
forecasts, plans or budgets referred to in this Section 5.8.
SECTION 5.9 FCC Application. Within 10 Business Days of the execution
of this Agreement, the Company shall make an application or applications to the
FCC requesting its written consent to the transfer of control of the Company's
FCC Licenses. The Company shall cooperate in providing all information and
taking all steps necessary, desirable and proper to expedite the preparation and
filing of such application(s) and its prosecution to FCC Approval. In the event
any person or entity petitions the FCC to deny the application(s) or otherwise
challenges the grant of FCC Approval before the FCC or the FCC on its own motion
denies the application(s), or in the event FCC Approval of the application(s) is
obtained and any person or entity appeals or otherwise attacks such FCC Approval
before the FCC, or in any judicial proceeding, then the Company agrees to oppose
such petition or challenge before the FCC or defend such action and the FCC
Approval diligently and in absolute good faith at the Company's cost and
expense.
SECTION 5.10 Stockholders' Agreement. At the Closing, the Company
and the Purchasers shall enter into the Stockholders' Agreement.
SECTION 5.11 Supplier Agreement. At the Closing, the Company and ITT
shall enter into the Supplier Agreement.
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SECTION 5.12 Advisory Agreement. At the Closing, the Company and MS
shall enter into the Advisory Agreement.
SECTION 5.13 Ball-EarthWatch Agreement. Each of the Company and Ball
shall perform all of its obligations under the Ball-EarthWatch Agreement, dated
as of the date hereof, by and between the Company and Ball, prior to the
Closing.
SECTION 5.14 Equity Incentive Plan. Within 180 days following the
Closing Date, the Board of Directors of the Company shall propose and approve,
and the Company shall adopt, a new equity-based incentive plan for the benefit
of certain employees of the Company (the "New Equity Plan"), such plan to become
effective within 180 days after the Closing Date.
SECTION 5.15 Post-closing Board. Each of the Company and each
Purchaser, individually and on its own behalf and not on behalf of any other
Purchaser, agrees to use its best efforts, immediately after the Closing (except
as provided below as to MS), to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable, (a) to fix
the size of the Board of Directors of the Company at 10 directors and (b) to
obtain the resignation or removal of all directors on the Board of Directors of
the Company as of the Closing, other than Xxxxxxx X. Xxxxxxxxx, III, who are not
affiliated with Ball and to fill such vacancies as are created by such
resignations with two directors designated by ITT and one director designated by
each of MS and CapRe (i.e., a total of four directors for ITT, MS and CapRe, in
the aggregate); provided, however, that MS shall not be entitled to designate a
director prior to the MS HSR Clearance Date, during which period one seat on the
Board of Directors shall remain vacant.
SECTION 5.16 Ball Release. From the date hereof until the close of
business on the 10th Business Day following the Closing Date, the Company shall
use its best efforts to cause all holders of Existing Common Stock, Existing
Preferred Stock and the Senior Notes to execute and deliver to Ball a Release
substantially in form attached hereto as Exhibit 5.16.
SECTION 5.17 Reasonable Best Efforts. Each of the Company and each
Purchaser, individually and on its own behalf and not on behalf of any other
Purchaser, agrees to use its reasonable best efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable, to consummate and make effective the transactions contemplated by
this Agreement as promptly as practicable after the date hereof, subject to the
final sentence of Section 5.7(a).
SECTION 5.18 Exclusivity. None of the Company, any of its
Subsidiaries and the officers, trustees and representatives of the Company and
its
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Subsidiaries shall, directly or indirectly, provide information to, engage in
negotiations with, solicit, facilitate or otherwise engage in discussions with,
or enter into any agreement with, any potential purchaser interested in engaging
in a direct or indirect acquisition of all or part of the Company, its
Subsidiaries, or their shares, an option on their shares or assets, or a loan,
recapitalization, merger or similar transaction other than the Purchasers.
ARTICLE VI
CONDITIONS TO CLOSING
---------------------
SECTION 6.1 Conditions to Obligations of the Company. The obligations
of the Company to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment or waiver, at or prior to the Closing, of
each of the following conditions:
(a) Representations and Warranties; Covenants. (i) The representations
and warranties of each of the Purchasers contained in this Agreement shall
be true and correct (without giving effect to any "materiality" or
material adverse effect qualification or exception contained therein) as of
the date hereof and at and as of the Closing, with the same force and
effect as if made at and as of such date (or, in the case of
representations and warranties of each such Purchaser which address matters
only as of a particular date, as of such date), except where the failure to
be so true and correct would not, in the aggregate, have a material adverse
effect on the ability of each such Purchaser to consummate the transactions
contemplated by this Agreement; and (ii) the covenants and agreements
contained in this Agreement to be complied with by each Purchaser at or
prior to the Closing shall have been complied with in all material
respects;
(b) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the purchase of the New Series A Preferred Stock or
New Series B Preferred Stock contemplated hereby shall have expired or
shall have been terminated;
(c) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, injunction
or other Governmental Order which is in effect and has the effect of making
the transactions contemplated by this Agreement illegal or otherwise
restraining or prohibiting consummation of such transactions;
(d) Officer's Certificate. The Company shall have received from each
Purchaser an officer's certificate to the effect that each of the
conditions specified in Section 6.1(a) is satisfied (with respect only to
such Purchaser and not to any other Purchaser) in all respects; and
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(e) Existing Amended and Restated Stockholders' Agreement. That
certain Amended and Restated Stockholders' Agreement, dated as of March 29,
1995, as amended as of June 12, 1995, April 3, 1996, January 20, 1997 and
August 22, 1997, by and among the Company, Ball, Nuova Telespazio s.p.a.,
Hitachi, Ltd. and certain others (the "Existing Stockholders' Agreement")
shall have been terminated by the required consent or agreement of the
parties thereto pursuant to the terms thereof.
SECTION 6.2 Conditions to Obligations of the Purchasers. The
obligations of each Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment or waiver, at or prior to the
Closing, of each of the following conditions:
(a) Representations and Warranties; Covenants. (i) The representations
and warranties of the Company contained in this Agreement shall be true and
correct (without giving effect to any "materiality" or Material Adverse
Effect qualification or exception contained therein) as of the date hereof
and as of the Closing with the same force and effect as if made at and as
of such date (or, in the case of representations and warranties of the
Company which address matters only as of a particular date, as of such
date), except where the failure to be so true and correct would not, in the
aggregate, have a Material Adverse Effect; and (ii) the covenants and
agreements contained in this Agreement to be complied with by the Company
at or prior to the Closing shall have been complied with in all material
respects;
(b) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the purchase of the New Series A Preferred Stock or
New Series B Preferred Stock contemplated hereby shall have expired or
shall have been terminated;
(c) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, injunction
or other Governmental Order which is in effect and has the effect of making
the transactions contemplated by this Agreement illegal or otherwise
restraining or prohibiting consummation of such transactions;
(d) Required Actions.
(i) The Company shall have obtained the approval in writing of
holders of shares of each series of the Existing Preferred Stock at
least equal in number to the minimum number set forth for each such
series in Section 3.4(a) of the Disclosure Schedule to amend and
restate in its entirety the Certificate of Incorporation of the
Company, to reclassify into New Series C Preferred Stock the Existing
Preferred Stock and otherwise to approve the Recapitali-
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zation and all the transactions contemplated thereby, all to the
extent required by applicable law, and such Certificate of
Incorporation shall have been amended and restated substantially in
the form attached hereto as Exhibit 5.2(b & c), such shares shall have
been so reclassified and such Recapitalization shall have been
approved.
(ii) The Company shall have obtained the approval in writing of
holders of shares of the Existing Common Stock at least equal in
number to the minimum number set forth in Section 3.4(b) of the
Disclosure Schedule to amend and restate in its entirety the
Certificate of Incorporation of the Company, to reclassify into New
Series C Preferred Stock the Existing Common Stock and otherwise to
approve the Recapitalization and all the transactions contemplated
thereby, all to the extent required by applicable law, and such
Certificate of Incorporation shall have been amended and restated
substantially in the form attached hereto as Exhibit 5.2(b & c), such
shares and securities shall have been so reclassified and such
Recapitalization shall have been approved.
(iii) All of the Existing Derivative Securities shall have been
adjusted substantially in the manner set forth in Exhibit 5.2(d).
(iv) The Company shall have obtained the Senior Notes Approval,
and all documents contemplated in connection therewith, including the
New Senior Note Indenture and the security documents in respect of the
Satellite Insurance, shall have been executed and delivered in full
force and effect.
(e) Stockholders' Agreement. The Company shall have executed and
delivered to each Purchaser the Stockholders' Agreement;
(f) Senior Note Approval. After giving effect to the Senior Note
Approval, the representation and warranty set forth in Section 3.25 shall
be true and correct as of the Closing Date;
(g) Opinion. Each of the Purchasers shall have received from Xxxxxx
Godward LLP an opinion reasonably satisfactory to the parties addressed to
the Purchasers and dated as of the Closing Date;
(h) Existing Amended and Restated Stockholders' Agreement. The
Existing Stockholders' Agreement shall have been terminated by the required
consent or agreement of the parties thereto pursuant to the terms thereof;
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(i) Officer's Certificate. Each Purchaser shall have received from
each of the Company an officer's certificate to the effect that each of the
conditions specified in Section 6.2(a), (d), (f) and (h) is satisfied in
all respects; and
(j) Consummation by Other Purchasers. In the event that any of MS,
CapRe or ITT shall fail to consummate the purchases of Series A Preferred
Stock and Series B Preferred Stock contemplated by this Agreement by reason
of breach, failure to waive any unfulfilled condition or otherwise, then
none of MS, CapRe or ITT shall be obligated to consummate the transactions
contemplated by this Agreement.
SECTION 6.3 Additional Condition to Obligations of ITT. The
obligation of ITT to consummate the transactions contemplated by this Agreement
shall be subject to the execution and delivery, at or prior to the Closing, by
the Company to ITT of the Supplier Agreement.
SECTION 6.4 Additional Condition to Obligations of MS. The
obligation of MS to consummate the transactions contemplated by this Agreement
shall be subject to the execution and delivery, at or prior to the Closing, by
the Company to MS of the Advisory Agreement.
SECTION 6.5 Additional Condition to Obligations of MS and CapRe. The
obligations of each of MS and CapRe to consummate the transactions contemplated
by this Agreement shall be subject to the exercise, at or prior to the Closing,
by holders of all of the Senior Notes not held by CapRe of all Warrants (as
defined in the Warrant Agreement) not held by CapRe in accordance with the terms
and conditions of the Warrant Agreement.
ARTICLE VII
INDEMNIFICATION
---------------
SECTION 7.1 Survival of Representations and Warranties. Subject to
the limitations and other provisions of this Agreement, the representations and
warranties of the parties hereto contained in this Agreement shall survive the
Closing and shall remain in full force and effect for a period of three years
after the Closing Date; provided, however, that (i) the representations and
warranties contained in Sections 3.15, 3.17 and 3.18 shall survive until 30 days
after the expiration of the statute of limitations related thereto and (ii) the
representations and warranties contained in Sections 3.1, 3.2, 3.4, 3.5 and 3.6
shall survive indefinitely.
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SECTION 7.2 Indemnification for the Benefit of the Company.
(a) Each Purchaser agrees, individually and on its own behalf and not
on behalf of any other Purchaser, to indemnify the Company and its
Affiliates, officers, directors, employees, agents, successors and assigns
(as used in this Section 7.2, each a "Company Indemnified Party") against
and hold them harmless from all Liabilities, losses, damages, claims,
costs, and expenses (including without limitation reasonable attorney's
fees) (collectively, "Losses") actually incurred by them arising out of (i)
the breach of any representation or warranty of such Purchaser contained
herein and (ii) the breach of any covenant or agreement of such Purchaser
contained herein. Anything in Section 7.1 to the contrary notwithstanding,
no claim may be asserted nor may any action be commenced against such
Purchaser for breach of any representation or warranty contained herein,
unless written notice of such claim or action is received by such Purchaser
describing in reasonable detail the facts and circumstances with respect to
the subject matter of such claim or action on or prior to the date on which
the representation or warranty on which such claim or action is based
ceases to survive as set forth in Section 7.1, regardless of whether the
subject matter of such claim or action shall have occurred before or after
such date.
(b) Subject to Section 9.13, the Company hereby acknowledges and
agrees that its sole and exclusive remedy with respect to any and all
claims relating to the subject matter of this Agreement shall be pursuant
to the indemnification provisions set forth in this Article VII and hereby
waives, to the fullest extent permitted under applicable law, any and all
rights, claims and causes of action it may have against any or all
Purchasers arising under or based upon any federal, state, local or foreign
statute, law, ordinance, rule or regulation (including without limitation
any such rights, claims or causes of action arising under or based upon
common law or otherwise); provided, however, that the preceding clause
shall not apply to claims for fraud.
(c) Except as expressly set forth in this Agreement, no Purchaser is
making any representation, warranty, covenant or agreement with respect to
the matters contained herein. Anything herein to the contrary
notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein shall give rise to any right on the part of the
Company, after the consummation of the purchase and sale of the
transactions contemplated by this Agreement, to rescind this Agreement or
any of the transactions contemplated hereby.
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SECTION 7.3 Indemnification by the Company.
(a) The Company agrees to indemnify each Purchaser and its
Affiliates, and their officers, directors, employees, members, agents,
successors and assigns (as used in this Section 7.3, each a "Purchaser
Indemnified Party") against and hold them harmless from all Losses actually
incurred by them arising out of the breach of (i) any representation or
warranty of the Company contained herein or (ii) any covenant or agreement
of the Company contained herein. Anything in Section 7.1 to the contrary
notwithstanding, no claim may be asserted nor may any action be commenced
against the Company for breach of any representation or warranty contained
herein, unless written notice of such claim or action is received by the
Company describing in reasonable detail the facts and circumstances with
respect to the subject matter of such claim or action on or prior to the
date on which the representation or warranty on which such claim or action
is based ceases to survive as set forth in Section 7.1, regardless of
whether the subject matter of such claim or action shall have occurred
before or after such date.
(b) Subject to Section 9.13, each Purchaser hereby acknowledges and
agrees that its sole and exclusive remedy with respect to any and all
claims relating to the subject matter of this Agreement shall be pursuant
to the indemnification provisions set forth in this Article VII and hereby
waives, to the fullest extent permitted under applicable law, any and all
rights, claims and causes of action it may have against the Company arising
under or based upon any federal, state, local or foreign statute, law,
ordinance, rule or regulation (including without limitation any such
rights, claims or causes of action arising under or based upon common law
or otherwise); provided, however, that the preceding clause shall not apply
to claims for fraud.
(c) Except as expressly set forth in this Agreement, the Company is
not making any representation, warranty, covenant or agreement with respect
to the matters contained herein. Anything herein to the contrary
notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein shall give rise to any right on the part of any
Purchaser, after consummation of the transactions contemplated by this
Agreement, to rescind this Agreement or any of the transactions
contemplated hereby.
SECTION 7.4 Indemnification Procedures. A Purchaser Indemnified
Party or a Company Indemnified Party, as the case may be (for purposes of this
Section 7.4, an "Indemnified Party"), shall give the indemnifying party under
Section 7.2 or 7.3, as applicable (for purposes of this Section 7.4, an
"Indemnifying Party"), prompt written notice of any claim, assertion, event or
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proceeding by or in respect of a third party of which such Indemnified Party
has knowledge concerning any Loss as to which such Indemnified Party may request
indemnification hereunder. The Indemnifying Party shall have the right to
direct, through counsel of its own choosing, which counsel shall be reasonably
satisfactory to the Indemnified Party, the defense or settlement of any claim or
proceeding the subject of indemnification hereunder at its own expense. If the
Indemnifying Party elects to assume the defense of any such claim or proceeding,
the Indemnified Party may participate in such defense, but in such case the
expenses of the Indemnified Party shall be paid by the Indemnified Party. The
Indemnified Party shall provide the Indemnifying Party with reasonable access to
its records and personnel relating to any such claim, assertion, event or
proceeding during normal business hours and shall otherwise reasonably cooperate
with the Indemnifying Party in the defense or settlement thereof, and the
Indemnifying Party shall reimburse the Indemnified Party for all its reasonable
out-of-pocket expenses in connection therewith. If the Indemnifying Party elects
to direct the defense of any such claim or proceeding, the Indemnified Party
shall not pay, or permit to be paid, any part of any claim or demand arising
from such asserted liability unless the Indemnifying Party consents in writing
prior to such payment or unless the Indemnifying Party withdraws from the
defense of such asserted liability or unless a final judgment from which no
appeal may be taken by or on behalf of the Indemnifying Party is entered against
the Indemnified Party for such liability. No settlement in respect of any third
party claim may be effected by the Indemnifying Party without the Indemnified
Party's prior written consent (which consent shall not be unreasonably withheld)
unless the settlement involves a full and unconditional release of the
Indemnified Party. If the Indemnifying Party shall fail to undertake any such
defense, the Indemnified Party shall have the right to undertake the defense or
settlement thereof, at the Indemnifying Party's expense. If the Indemnified
Party assumes the defense of any such claim or proceeding pursuant to this
Section 7.4 and proposes to settle such claim or proceeding prior to a final
judgment thereon or to forgo any appeal with respect thereto, then the
Indemnified Party shall give the Indemnifying Party prompt written notice
thereof, and the Indemnifying Party shall have the right to participate in the
settlement or assume or reassume the defense of such claim or proceeding.
-49-
ARTICLE VIII
TERMINATION AND WAIVER
SECTION 8.1 Termination.
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) by the mutual written consent of each of the Company and
each of the Purchasers; or
(ii) by any of the Company or any Purchaser, if any Governmental
Authority with jurisdiction over such matters shall have issued a
Governmental Order restraining or otherwise prohibiting (A) the
issuance and sale and subscription for and purchase of the New Series
A Preferred Stock or the New Series B Preferred Stock (B) any of the
actions referred to in Section 5.2 and such order, decree, ruling or
other action shall have become final and unappealable; provided,
however, that the provisions of this Section 8.1(a)(ii) shall not be
available to a party unless such party shall have complied with its
obligations under Section 5.7 or otherwise used its reasonable best
efforts to oppose any such Governmental Order or to have such
Governmental Order vacated or made inapplicable to the transactions
contemplated by this Agreement; or
(iii) by any of the Company or any Purchaser, if the Closing
shall not have occurred by June 30, 1999; provided, however, that if
the waiting period (and any extension thereof) under the HSR Act
applicable to any transaction contemplated hereby has not expired or
been terminated by such date, such date shall be extended to the date
on which such waiting period expires or is terminated; provided
further, however, that the right to terminate this Agreement under
this Section 8.1(a)(iii) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been
the cause of, or shall have resulted in, the failure of the Closing to
occur prior to such date.
Time shall be of the essence in this Agreement.
SECTION 8.2 Effect of Termination. In the event of termination of
this Agreement as provided in Section 8.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto except (a)
that the provisions of this Section 8.2 and Article IX shall survive termination
of this Agreement and (b) that nothing herein shall relieve either party from
liability for any willful breach hereof.
-50-
SECTION 8.3 Waiver. At any time prior to the Closing, the Company,
on the one hand, or the Purchasers acting unanimously, on the other hand, may
(a) extend the time for the performance of any of the obligations or other acts
of the other party hereto, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto or
(c) waive compliance with any of the agreements or conditions contained herein.
Any such extension or waiver shall be valid only if set forth in an instrument
in writing signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Expenses. All costs and expenses, including without
limitation fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Closing shall have occurred; provided, however,
that, if the Closing occurs, all such expenses may be borne by the Company.
SECTION 9.2 Survival. In addition to the survival periods set forth
in Section 7.1, the covenants of the parties that contemplate or may involve
actions to be taken after the Closing shall survive until such actions shall
have been taken or performed in accordance with their terms.
SECTION 9.3 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by cable, by telecopy, by telegram, by telex or
by registered or parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 9.3):
(A) if to either of the Company:
EarthWatch Incorporated
0000 Xxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, III
with a copy to:
Xxxxxx Godward LLP
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
-00-
Xxxxxxx, Xxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx C.T. Linfield, Esq.
(B) if to MS:
Xxxxxx Xxxxxxx & Co., Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
(C) if to CapRe:
Capital Research and Management Company
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxx
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
(D) if to Ball:
Ball Technologies Holdings Corp.
00 Xxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxx
-52-
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
(E) if to ITT:
ITT Industries, Inc.
0 Xxxx Xxx Xxx Xxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
SECTION 9.4 Public Announcements. Unless otherwise required by
applicable law or any stock exchange requirements, no party to this Agreement
shall make, or cause to be made, any press release or public announcement in
respect of this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media without the prior written consent of the other
parties, and the parties shall cooperate as to the timing and contents of any
such press release or public announcement; provided, however, that the Company
may make, or cause to be made, announcements in respect of this Agreement or
the transactions contemplated hereby to its employees without the consent of any
Purchaser.
SECTION 9.5 Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 9.6 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in
-53-
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
SECTION 9.7 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, between
the Company and each Purchaser with respect to the subject matter hereof.
SECTION 9.8 Assignment. This Agreement shall not be assigned without
the express written consent of the Company and each Purchaser (which consent may
be granted or withheld in the sole discretion of the Company or any Purchaser),
except that no consent shall be required for any Purchaser to assign its rights
and delegate its duties hereunder, in whole or in part, to one or more of its
subsidiaries.
SECTION 9.9 No Third Party Beneficiaries. Except as provided in
Article VIII, this Agreement shall be binding upon and inure solely to the
benefit of the parties hereto, their successors and their permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other person any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
SECTION 9.10 Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by the Company and each
Purchaser.
SECTION 9.11 Governing Law. This Agreement shall be governed by the
laws of the State of New York, without reference to the choice of law principles
thereof. All actions and proceedings arising out of or relating to this
Agreement shall be heard and determined in any New York state or federal court
sitting in The City of New York, and the parties hereto hereby consent to the
jurisdiction of such courts in any such action or proceeding.
SECTION 9.12 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 9.13 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof.
-54-
SECTION 9.14 Waiver of Jury Trial. Each of the Company and each
Purchaser hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the actions of the Company or
any Purchaser in the negotiation, administration, performance and enforcement
thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-55-
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
EARTHWATCH INCORPORATED
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President and CEO
XXXXXX XXXXXXX & CO., INCORPORATED
By:
------------------------------------------
Name:
Title:
AMERICAN HIGH-INCOME TRUST
By Capital Research and Management Company
By:
------------------------------------------
Name:
Title:
AMERICAN VARIABLE INSURANCE
SERIES ASSET ALLOCATION FUND
By Capital Research and Management Company
By:
------------------------------------------
Name:
Title:
[SIGNATURE PAGE TO RECAPITALIZATION AGREEMENT]
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
EARTHWATCH INCORPORATED
By:
------------------------------------------
Name:
Title:
XXXXXX XXXXXXX & CO., INCORPORATED
By: /s/ Xxxxxxx Xxxxxxx
------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Managing Director
AMERICAN HIGH-INCOME TRUST
By Capital Research and Management Company
By:
------------------------------------------
Name:
Title:
AMERICAN VARIABLE INSURANCE SERIES ASSET
ALLOCATION FUND
By Capital Research and Management Company
By:
------------------------------------------
Name:
Title:
[SIGNATURE PAGE TO RECAPITALIZATION AGREEMENT]
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
EARTHWATCH INCORPORATED
By:
------------------------------------------
Name:
Title:
XXXXXX XXXXXXX & CO., INCORPORATED
By:
------------------------------------------
Name:
Title:
AMERICAN HIGH-INCOME TRUST
By Capital Research and Management Company
By: /s/ Xxxx X. Xxxxx, Xx.
------------------------------------------
Name: Xxxx X. Xxxxx, Xx.
Title: Executive Vice President
AMERICAN VARIABLE INSURANCE
SERIES ASSET ALLOCATION FUND
By Capital Research and Management Company
By: /s/ Xxxx X. Xxxxx, Xx.
------------------------------------------
Name: Xxxx X. Xxxxx, Xx.
Title: Executive Vice President
[SIGNATURE PAGE TO RECAPITALIZATION AGREEMENT]
AMERICAN VARIABLE INSURANCE SERIES BOND FUND
By Capital Research and Management Company
By: /s/ Xxxx X. Xxxxx, Xx.
------------------------------------------
Name: Xxxx X. Xxxxx, Xx.
Title: Executive Vice President
AMERICAN VARIABLE INSURANCE SERIES HIGH-YIELD
BOND FUND
By Capital Research and Management Company
By: /s/ Xxxx X. Xxxxx, Xx.
------------------------------------------
Name: Xxxx X. Xxxxx, Xx.
Title: Executive Vice President
THE BOND FUND OF AMERICA, INC.
By Capital Research and Management Company
By: /s/ Xxxx X. Xxxxx, Xx.
------------------------------------------
Name: Xxxx X. Xxxxx, Xx.
Title: Executive Vice President
BALL TECHNOLOGIES HOLDINGS CORP.
By:
------------------------------------------
Name:
Title:
ITT INDUSTRIES, INC.
By:
------------------------------------------
Name:
Title:
[SIGNATURE PAGE TO RECAPITALIZATION AGREEMENT]
By:
------------------------------------------
Name:
Title:
AMERICAN VARIABLE INSURANCE SERIES HIGH-YIELD
BOND FUND
By Capital Research and Management Company
By:
------------------------------------------
Name:
Title:
THE BOND FUND OF AMERICA, INC.
By Capital Research and Management Company
By:
------------------------------------------
Name:
Title:
BALL TECHNOLOGIES HOLDINGS CORP.
By: /s/ Xxxxxx X. Xxxxxxxxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxxx
Title: President
ITT INDUSTRIES, INC.
By:
------------------------------------------
Name:
Title:
[SIGNATURE PAGE TO RECAPITALIZATION AGREEMENT]
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
EARTHWATCH INCORPORATED
By:
------------------------------------------
Name:
Title:
XXXXXX XXXXXXX & CO., INCORPORATED
By:
------------------------------------------
Name:
Title:
CAPITAL RESEARCH AND MANAGEMENT COMPANY
By:
------------------------------------------
Name:
Title:
BALL TECHNOLOGY HOLDINGS CORP.
By:
------------------------------------------
Name:
Title:
ITT INDUSTRIES, INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Senior Vice President
[SIGNATURE PAGE TO RECAPITALIZATION AGREEMENT]
EXHIBIT 2.2(h)
[Attached as Exhibit 4.1 to this Registration Statement.]
EXHIBIT 2.2(i)
[Attached as Exhibit 10.1 to this Registration Statement.]
EXHIBIT 5.2(b&c)
[Attached as Exhibit 3.1 to this Registration Statement.]
EXHIBIT 5.2(d)
--------------
Adjustment of Existing Derivative Securities
As of the Closing, each Existing Derivative Security that is
outstanding and unexercised immediately prior thereto shall cease to represent a
right to acquire shares of Existing Common Stock or Existing Preferred Stock and
shall be reclassified automatically into an option or warrant, as the case may
be, to purchase shares of New Series C Preferred Stock (each a "New Derivative
Security") in an amount and at an exercise price determined as provided below
(and otherwise subject to the Company's Existing Stock Option Plan and the
Warrant Agreement any other agreement governing Existing Derivative Securities,
as applicable, under which the Existing Derivative Securities were issued).
The number of shares of New Series C Preferred Stock to be subject to
a New Derivative Security shall be equal to the product of (i) the number of
shares of Existing Common Stock or Existing Preferred Stock subject to the
Existing Derivative Security immediately prior to the Closing and (ii) and the
Existing Derivative Security Reclassification Ratio (as defined below);
provided, that any fractional shares of New Series C Preferred Stock from such
multiplication shall be rounded to the nearest whole share; provided, however,
that in the case of any Existing Derivative Security to which Sections 422 and
423 of the Code, applies by reason of its qualification under any of Sections
422-424 of the Code, the Company shall cause the exercise price, the number of
the shares purchasable pursuant to such option and the terms and conditions of
exercise of such option to be determined in a good faith effort to comply with
Section 424(a) of the Code.
The exercise price per share of New Series C Preferred Stock under a
New Derivative Security shall be equal to the exercise price per share of
Existing Common Stock or Existing Preferred Stock under the original Existing
Derivative Security immediately prior to the Closing divided by the Existing
Derivative Security Reclassification Ratio; provided, that such exercise price
shall be rounded to the nearest whole cent; provided, however, that in the case
of any Existing Derivative Security to which Sections 422 and 423 of the Code,
applies by reason of its qualification under any of Sections 422-424 of the
Code, the Company shall cause the exercise price, the number of the shares
purchasable pursuant to such option and the terms and conditions of exercise of
such option to be determined in a good faith effort to comply with Section
424(a) of the Code.
For purposes of this Exhibit 5.2(d), the "Existing Derivative Security
Reclassification Ratio" shall equal (i) 0.210 in the case of Existing Derivative
Securities for which Common Stock is the underlying security and (ii) 0.441 in
the case of Existing Derivative Securities for which the Company's existing
Series A Participating Preferred Stock is the underlying security.
-2-
EXHIBIT 5.5
-----------
DRAFT
EARTHWATCH INCORPORATED
QUICKBIRD 1 SATELLITE LAUNCH AND IN-ORBIT OPERATIONS INSURANCE
DECLARATIONS
1. Insured
EarthWatch Incorporated
2. Insured's Address
0000 Xxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Xxxxxx Xxxxxx of America
3. Losses Payable
Losses under this Policy shall be adjusted with the Insured and shall be
payable to the Collateral Agent, or to its order. The Insurers consent,
agree and acknowledge that the Collateral Agent has been granted a security
interest in all of the Insured's right, title and interest under this
Policy as collateral security for the payment and performance of the
Insured's obligations to the Secured Parties.
4. Policy Period
Thirty-six (36) months, commencing at 12:01 am local time at the Insured's
Address on March 15, 1999.
5. Amount of Insurance
The maximum Amount of Insurance for the Satellite declared hereon is
US$265,000,000. The minimum Amount of Insurance for the Satellite shall be
US$200,000,000. The declared Amount of Insurance for a Satellite shall be
advised to Insurers no later than thirty (30) days before Attachment of
Risk for the Satellite is expected to occur.
6. Attachment of Risk
Risk of loss under this Policy shall attach for each Satellite separately
at Intentional Ignition, provided Intentional Ignition occurs during the
Policy Period.
7. Termination of Risk
Risk of loss under this Policy shall terminate for the Satellite upon the
earliest of the following:
EarthWatch, Incorporated - QuickBird Launch and In-Orbit Operations Insurance
Policy
EarthWatch Confidential - Draft - April 14, 1999 - Page 1
DRAFT
a. in the event of Terminated Ignition, upon Launch Termination, subject
to Condition 23. (Reinstatement of Coverage and Reattachment of Risk
Following Terminated Ignition); or
b. at 12:01 AM local time at the Insured's address on the day which is
twenty-four (24) months following Attachment of Risk; or
c. when the Satellite is agreed to be a Total Loss under this
Policy; or
d. when agreed claims under this Policy for the Satellite equal the
Amount of Insurance for the Satellite; or
e. at the expiration of the Policy Period.
In the event a launch occurs within the Policy Period but insufficient time
remains for b. above to occur before the Policy Period expires, the
Insurers agree to extend the Policy Period to expire upon b., c., or d.
above.
8. Premium
Premium for the Satellite shall be calculated by multiplying the declared
Amount of Insurance by the premium rate of thirteen and one-tenth percent
(13.1%). The premium for the Satellite shall be discounted an annual rate
of blank percent (XX%) representing the net present value of money for the
premium due at the time of policy issuance.
The premium for the mission is deemed fully earned at Attachment of Risk,
subject to Condition 23. (Reinstatement of Coverage and Reattachment of
Risk Following Terminated Ignition).
Premium for the Satellite shall be payable as follows:
a. A premium for $56 million is due for the currently declared Amount of
Insurance of the Satellite shall be payable no later than thirty (30)
days after inception of the Policy,
b. A deposit premium of five percent (5%) of the remaining premium due
for the Satellite shall be payable no later than thirty (30) days
after inception of the Policy,
c. Seventy-five percent (75%) of the balance premium due for the
Satellite shall be payable no later than thirty (30) days before
Attachment of Risk is expected to occur,
d. Ten percent (10%) of the premium due for the Satellite shall be
payable one hundred twenty (120) days after Attachment of Risk occurs,
and
e. Ten percent (10%) of the premium due for the Satellite shall be
payable three hundred sixty-five (365) days after Attachment of Risk
occurs.
EarthWatch, Incorporated - QuickBird Launch and In-Orbit Operations Insurance
Policy
EarthWatch Confidential - Draft - April 14, 1999 - Page 2
DRAFT
Full premium for the Satellite is due in the event of a Total Loss.
Should the launch of the Satellite be canceled or delayed beyond the Policy
Period before its Attachment of Risk, the Insurers recognize that risk will
not attach under this Policy. In this case, the Insurers agree to return to
the Collateral Agent any premium paid, without interest, within thirty (30)
days of notification from the Insured that the launch has been canceled or
will be delayed beyond the Policy Period. Upon return of said premium, this
Policy shall be deemed null and void.
If the premium has been paid to the Insurers, and the Satellite's scheduled
launch date is delayed more than three (3) calendar months from its last
advised scheduled launch date, at the Insured's request, the Insurers will
return ninety percent (90%) of the premium without interest. The return
premium will be paid by the Insurers to the Collateral Agent within thirty
(30) days from the date they receive the Insured's written request for
such return. The remaining ninety percent (90%) of the premium due for the
Satellite will again become payable thirty (30) days before the rescheduled
launch date for the Satellite.
9. Launch Schedule
The preliminary Launch Schedule is as follows:
-------------------------------------------------------
Satellite Launch Vehicle Scheduled Launch Date
-------------------------------------------------------
QuickBird-1 Cosmos Q4 1999
-------------------------------------------------------
10. Franchise
For the Satellite, a fifteen percent (15%) franchise shall apply to each
and every loss and in the aggregate of the declared Amount of Insurance for
the Satellite, but shall not apply to Total Loss.
EarthWatch, Incorporated - QuickBird Launch and In-Orbit Operations Insurance
Policy
EarthWatch Confidential - Draft - April 14, 1999 - Page 3
DRAFT
INSURING AGREEMENT
In consideration of the payment of the Premium, in reliance upon the statements
in the Declarations and in the Underwriting Information provided to the
Insurers, and subject to all of the terms, conditions, limitations and
exclusions of this Policy, the Insurers agree as follows for the Satellite:
a. In the event of a Terminated Ignition that results in damage to the
Satellite, to indemnify the Insured up to the applicable Amount of
Insurance for all costs resulting from the Terminated Ignition which
are directly incurred by the Insured in testing, de-mating the
Satellite from the Launch Vehicle, Satellite defueling operations,
disassembling, inspecting, transporting, repairing, refurbishing,
storing, assembling and integrating, retesting and restoring the
Satellite to flightworthy condition, such that a subsequent
Intentional Ignition can occur; and/or
b. In the event of a Partial Loss due to an occurrence between Attachment
of Risk and Termination of Risk, to indemnify the Insured the
applicable Partial Loss Amount under provision of Definition 10.a.
(Partial Loss) or to indemnify the Insured for any loss or damage
under the provision of Definition 10.b. (Partial Loss); and/or
c. In the event of a Total Loss due to an occurrence between Attachment
of Risk and Termination of Risk, to pay the Insured the Amount of
Insurance stated in Declaration 5 (Amount of Insurance).
Except as provided for Condition 23. (Reinstatement of Coverage and Reattachment
of Risk Following Terminated Ignition) and in Condition 21 (Corrective Measures)
of this Policy, in no event shall the total amount paid for claims under this
Policy exceed the Amount of Insurance as stated in Declaration 5 (Amount of
Insurance) of this Policy.
A loss shall not be covered under this Policy unless the event giving rise to
such loss has manifested itself by telemetry or payload performance data or lack
thereof, or any other ground measurement, recorded between Attachment of Risk
and Termination of Risk and the Insured has filed a proof of loss with the
Insurers in respect of such loss in accordance with Condition 3 (Insured's
Duties) of this Policy.
In the event of a loss under this Policy where a Satellite can be operated in
any one of several configurations, the configuration to be used in calculating
the Projected Commercial Value shall be that which minimizes the claim and that
which allows the Insured to use the Satellite for its intended commercial
purposes.
In the event the Insured has previously been indemnified for a loss on a
Satellite under this Policy, the amount of indemnity for a subsequent loss on
that Satellite shall be adjusted to eliminate any duplicative recovery for loss.
EarthWatch, Incorporated - QuickBird Launch and In-Orbit Operation Insurance
Policy
EarthWatch Confidential - Draft - April 14, 1999 - Page 4
DRAFT
DEFINITIONS
1. Contract
"Contract" means, as applicable:
a. the Contract for QuickBird Spacecraft number SE.1M.PRJ.0004.A, dated
June 9, 1998 between Ball Aerospace & Technologies Corp. and the
Insured including Amendments and Exhibits attached thereto;
b. the Agreement for QuickBird Sensor Subsystem number SE.1M.SSS.002.A
dated October 14, 1996 between Xxxxxxx Kodak Company and the Insured
including Attachments and Amendments attached thereto;
c. the Agreement for EarthWatch QuickBird Solar Array Assembly number
SE.1M.EPS.004 dated August 27, 1997 between Fokker Space B.V. and the
Insured including Attachments and Amendments attached thereto,
and including any subsequent change, revision, amendment, waiver,
modification or other executed agreement the Insurers have accepted in
writing in accordance with Condition 18 (Material Changes), which
acceptance shall not be unreasonably withheld.
2. Intentional Ignition
a. "Intentional Ignition" means the issuance of the launch command from
the launch sequencer.
3. Launch Services Agreement
"Launch Services Agreement" means the launch services agreement dated July
1, 1998 between the Insured and the Launch Services Contractor, and
including any subsequent change, revision, amendment, waiver, modification
or other executed agreement the Insurers have accepted in writing in
accordance with Condition 18 (Material Changes), which acceptance shall not
be unreasonably withheld.
4. Launch Services Contractor
"Launch Services Contractor" means United Start Corporation.
5. Launch Vehicle
EarthWatch, Incorporated - QuickBird Launch and in-Orbit Operations Insurance
Policy
EarthWatch Confidential - Draft - April 14, 1999 - Page 5
DRAFT
a. "Launch Vehicle" means the Cosmos launch vehicle designated by the
Insured and to be used for the launch of the Satellite in accordance
with the Launch Services Agreement.
6. Satellite
"Satellite" means the QuickBird-1 spacecraft manufactured and to be
launched pursuant to the Contract and respective Launch Services Agreement.
7. Satellite Performance Specifications
"Satellite Performance Specifications", also referred to as the "SPS",
means the collection of documents which represent the flowdown of
requirements to various subsystems from a single, top-level, set of
specifications.
8. Terminated ignition
"Terminated Ignition" shall mean that, following Intentional Ignition,
launch does not occur and the launch pad is declared by the launch vehicle
services contractor to have been returned to the level of safety equivalent
to that which existed immediately prior to Attachment of Risk. The
effective moment of such Terminated Ignition is the moment when the pad
reaches such level of safety.
9. Underwriting Information
"Underwriting Information" means the documentation provided to the Insurers
by the Insured with respect to the subject matter of this Policy.
10. Partial Loss
"Partial Loss" means:
a. the Projected Commercial Value is less than the Design Commercial Value
but where the Satellite is not a Total Loss; or
b. such other loss not contemplated by paragraph a. of this Definition, in
which event the Insured shall clearly establish the alternative basis
for such claim and in which case the Insured, using reasonable judgment
and after examining all the technical alternatives for correcting the
failure, demonstrates that the Satellite cannot be used for its
intended commercial purposes.
11. Partial Loss Amount
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Policy
EarthWatch Confidential - Draft - April 14, 1999 - Page 6
DRAFT
"Partial Loss Amount" means in the event of a Partial Loss due to an event
occurring between Attachment of Risk and Termination of Risk, to indemnify
the Insured in an amount calculated as follows:
Partial Loss Amount = (Amount of Insurance) * (PLF)
Where
PLF means Partial Loss Fraction
12. Partial Loss Fraction
"Partial Loss Fraction" means the value determined by the formula:
PLF = 1 - (PCV/DCV)
Where
PLF means Partial Loss Fraction
PCV means Projected Commercial Value
DCV means Design Commercial Value
13. Projected Commercial Value
"Projected Commercial Value" means the commercial value over the 5-year
mission life predicted at some intermediate point during the Satellite's
lifetime. It is the sum of the Achieved Commercial Value at that time plus
the remaining value extrapolated using the Satellite's performance values
at that time. It is determined according to the following formula:
PCV = ACV + (INST\\OUTPUT\\ X BUS\\THROUGHPUT\\ X RL\\ORBITS\\)
where
PCV means Projected Commercial Value
ACV means Achieved Commercial Value
INST\\OUTPUT\\ means Instrument Output
BUS\\THROUGHPUT\\ means Bus Throughput
RL\\ORBITS\\ means Remaining Lifetime
14. Achieved Commercial Value
"Achieved Commercial Value" means the commercial value of the spacecraft
calculated at some intermediate point during the spacecraft's lifetime and
is determined according the formula:
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n = actual
ACV = [sigma] INST\\OUTPUT\\(n) X BUS\\THROUGHPUT\\(n)
n = 1
Where
ACV means Achieved Commercial Value
INST\\OUTPUT\\ means Instrument Output
BUS\\THROUGHPUT\\ means Bus Throughput
(n) means the respective values for each orbit to the intermediate point
15. Design Commercial Value
"Design Commercial Value" means the full value of the Satellite in terms of
its imaging potential assuming it performs according to the SPS over its
5-year mission life and determined according to the formula:
DCV = INST\\OUTPUT\\ X BUS\\THROUGHPUT\\ X DL\\ORBITS\\
Where
DCV means Design Commercial Value
INST\\OUTPUT\\ means Instrument Output
BUS\\THROUGHPUT\\ means Bus Throughput
DL\\ORBITS\\ means Design Lifetime
16. Design Lifetime
"Design Lifetime" means the amount of time expressed in orbits that the
Satellite is expected to successfully operate on its intended orbit and is
defined as a number between zero (0) and 27,200 and which shall be advised
to Insurers no later than thirty (30) days before Launch.
17. Remaining Lifetime
"Remaining Lifetime" means the amount of time expressed in orbits that the
Satellite is expected to successfully operate on its intended orbit from a
specified moment in time and is defined as a number between zero (0) and
27,200.
18. Bus Throughput
"Bus Throughput" means a normalized measure (from 0 to 1) of the
Satellite's ability to support the acquisition, on-board storage, and
transmission of commercially usable imagery and is determined by the
following formula:
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BUS\\THROUGHPUT\\ = N\\events\\
-----------
19
where N\\events\\ is the number of imaging events the spacecraft is able to
complete successfully during the 23.5 minute imaging period of the design
imaging sequence of the Satellite.
19. Instrument Output
"Instrument Output" means the commercially useful image width that the
instrument can produce. The panchromatic band is worth four times the
collective multispectral bands, so that INST\\OUTPUT\\ is determined by the
following formula:
INST\\OUTPUT\\ = 0.8 x NS\\pan\\ + 0.05 X NS\\blue\\ +0.05 X NS\\green\\
+0.05 X NS\\red\\ +0.05 X NS\\NIR\\
Where
NS means Normalized Size
NS\\pan\\ means Normalized Size of the panchromatic band
NS\\blue\\, NS\\green\\, NS\\red\\ and NS\\NIR\\ mean Normalized Size of
the multispectral bands
20. Normalized Size
Normalized Size means the size of an image relative to its design width. It
is measured in each individual band (pan, blue, green, red, or NIR), and is
given by the following formula:
NS\\XXX\\ = Largest number of contiguous taps in band xxx that meet image
quality reqts.
--------------------------------------------------------------
Total number of taps in band xxx
An NS value of 1 represents a full-width image, whereas an NS value of 0.5
represents a half-width image.
The normalized image size NS counts the number of contiguous taps which
meet minimum image quality requirements. A tap will meet the minimum image
quality requirements if the following criteria for M\\band\\ and N\\ID\\
are met:
M\\band\\ > 3, where M\\band\\ = A X T X MTF\\Nvq\\
---------------------------------
square root (B X T + n/2/\\RMS\\)
In this equation:
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T = the ratio of the average response of the band for a given
Earth radiance to the pre-launch value;
MTF\\Nyq\\ = the band MTF at the so-called Xxxxxxx frequency (a spatial
frequency equal to 1/2 times the reciprocal of the detector
spacing) for that band;
n\\RMS\\ = the number of root-mean-square (RMS) counts of temporal
noise from the sensor in that band with no significant
illumination;
A, B = constant values specific to each band, given in Table 1.
Pan Blue Green Red NIR
--------=========================================
A 129 42.1 75.6 71.6 76.1
-------------------------------------------------
B 3.90 1.64 2.17 1.49 1.23
-------------------------------------------------
Table 1. Parameters for image quality equation.
M\\band\\ is a close approximation to the low-light SNR x MTF specification
given in the Spacecraft Performance Specification.
and
N\\ID\\, where N\\ID\\ represents the number of inoperable detectors
21. Total Loss
"Total Loss" means:
a. the complete loss, destruction or failure of the Satellite; or
b. a loss or failure such that the Projected Commercial Value is reduced
to be less than thirty-four percent (34%) of the Design Commercial
Value.
22. Collateral Agent
"Collateral Agent" means The Bank of New York, a New York banking
corporation, having its principal corporate trust office at 000 Xxxxxxx
Xxxxxx, Xxxxx 21 West, New York, New York 10286 in its capacity as
collateral agent for itself and for the ratable benefit of the other
Secured Parties, and its successors and assigns.
23. Secured Parties
"Secured Parties" means the Collateral Agent, the Existing Notes Indenture
Trustee, any Permitted Specified Indebtedness Representative and any holders or
other obligees from time to time of the Existing Notes Obligations or any
Permitted Specified Indebtedness Obligations, all
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as defined in the Collateral Pledge and Security Agreement between the Insured
and The Bank of New York dated as of April 8, 1999 as from time to time amended
or otherwise modified.
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EXCLUSIONS
This Policy does not apply to loss, damage or failure caused by or resulting
from:
1. War, hostile or warlike action in time of peace or war, including action in
hindering, combating or defending against an actual, impending or expected
attack by:
a. any government or sovereign power (de jure or de facto);
b. any authority maintaining or using a military, naval or air force;
c. any military, naval or air force; or
d. any agent of such government, power, authority or force.
2. Any anti-satellite device, or device employing atomic or nuclear fission
and/or fusion, or device employing laser or directed energy beams.
3. Insurrection, strikes, riots, civil commotion, rebellion, revolution, civil
war, usurpation or action taken by a government or governmental authority
in hindering, combating or defending against such an occurrence, whether
there be a declaration of war or not.
4. Confiscation by order of any government or governmental authority or
agent (whether secret or otherwise) or public authority.
5. Nuclear reaction, nuclear radiation or radioactive contamination of any
nature, whether such loss or damage be direct or indirect, except for
radiation naturally occurring in the space environment.
6. Electromagnetic or radio frequency interference, except for physical
damage to the Satellite directly resulting from such interference.
7. Willful or intentional acts of the Insured and/or its contractors or
subcontractors designed to cause loss or failure of a Satellite and/or
Launch Vehicle except for the acts of the range safety officer acting
within the limit of his authority; however, this exclusion shall not apply
to actions of any employees, contractors or subcontractors of the Insured
while acting outside of their authorized responsibilities, or without the
knowledge of the Insured.
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CONDITIONS
1. Declarations
By the acceptance of this Policy, the Insured agrees that the statements in
the Declarations and the Underwriting Information are its agreements and
representations, and are, to the best of its knowledge and belief, true,
and that this Policy is issued in reliance upon such agreements and the
truth of such representations. This Policy embodies all agreements existing
between the Insured and the Insurers.
2. Due Diligence
The Insured shall use due diligence and do and concur in doing all things
practicable to avoid or diminish any loss under this Policy and shall act
at all times as if uninsured.
3. Insured's Duties
In the event of an occurrence likely to result in a claim with respect to
the Satellite under this Policy, the Insured or the Collateral Agent on
behalf of the Insured shall:
a. file a notice of occurrence with the Insurers. The notice of
occurrence shall:
i. be in writing and contain sufficient particulars to identify the
Insured and all reasonably obtainable information describing the
circumstances of the occurrence as appropriate; and
ii. be filed with the Insurers as soon as possible but not later than
the earlier of:
A. thirty (30) days after the officers and/or the program
manager of the Insured become aware of the occurrence; or
B. thirty (30) days after the applicable Termination of Risk;
and
b. if a claim is to be made with respect to the Satellite, file a proof
of loss with the Insurers as soon as practicable but in any event no
later than one hundred and eighty (180) days after filing the
applicable notice of occurrence with the Insurers.
The proof of loss shall:
i. state the date, time, nature and probable cause of each occurrence
that results in a claim;
ii. state the basis for the amount of the claim;
iii. establish the occurrence by telemetry data or lack thereof, or any
other ground measurement, recorded between Attachment of Risk and
Termination of Risk;
iv. be signed and sworn to by an officer of the Insured;
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v. be notarized as to the signatory of the proof of loss; and
vi. include such other information as the Insurers may reasonably require
or request, in accordance with Condition 4 (Access to Information).
The Insurers shall accept, reject, or request further clarification regarding a
filed proof of loss within thirty (30) days of its receipt.
4. Access To Information
The Insured shall respond to all specific reasonable requests from the Insurers
regarding the design, test, manufacturing, quality control and performance
information available to the Insured relating to the subject matter of this
Policy. Information provided in accordance with this Condition and relating
solely to technical aspects of the QuickBird 1 Satellite shall not be provided
to the Collateral Agent in accordance with Condition 24, unless the Collateral
Agent specifically requests such information. In the event that the Collateral
Agent requests such information, the Insured shall have no obligation to provide
such should the provision of such be contrary to U.S. law and regulations.
In the event that a notice of occurrence is filed under Condition 3
(Insured's Duties), the Insured shall do the following:
a. conduct review sessions with the Insurers to discuss any issues
relating to the occurrence;
b. be diligent in securing the Insurers' access to all information used
in or resulting from any investigation or review of the causes or
effects of the loss or failure; and
c. make available for inspection and copying all information necessary to
establish the loss and verify the accounting methods employed to
compute any return or recovery claim payment.
To the extent that any information requested by the Insurers in accordance
with this Condition is subject to proprietary information non-disclosure
agreements or, disclosure restrictions under any export license issued by
the United States government in connection with the Contract or any
contract between the Insured and its contractors or subcontractors, the
Insured shall use its best efforts to obtain such information.
5. Claims Payment
Payment for a loss shall be made within sixty (60) days after the Insurers
agree to the applicable Proof of Loss.
The Amount of Insurance for the Satellite will be reduced by the amount of
any claim payment previously made to the Insured in respect of such
Satellite.
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6. Net Present Value
All losses which relate to the future rather than to the present operation
of the Satellite will be calculated by discounting from the day the proof
of loss is agreed to the first day each loss is expected to materialize.
Discounting will be performed to the time of agreement of the proof of loss
discounting the amount of the agreed claim. The interest rate to be used
for discounting shall be the yield on U.S. Treasury bills of one (1) year
maturity as of the date of the agreement of the proof of loss.
7. Arbitration
Any dispute arising from this Policy, including any question regarding its
existence, validity or termination, shall be referred by the Insured and/or
the Insurers to be finally settled by arbitration pursuant to the Rules of
the American Arbitration Association by a majority decision of three (3)
arbitrators appointed in accordance with the said Rules of Arbitration.
Each party to the dispute shall bear the expense of preparing and
presenting its own case, regardless of the outcome of the arbitration. The
expense of the arbitration shall be equally divided between such parties.
The place of arbitration shall be Denver, Colorado, United States of
America and the language of the arbitration shall be English.
8. Abandonment
In the event of loss, there shall be no abandonment of any property to the
Insurers unless the Insurers give their written consent.
9. Subrogation
To the extent of any claim payment under this Policy, the Insurers shall be
subrogated to all of the Insured's rights of recovery thereof against any
person or organization. The Insured shall do nothing to prejudice such
rights and shall execute and deliver instruments and papers and do whatever
else is necessary to secure such rights. The Insured shall cooperate with
the Insurers and, upon the Insurers' request, and at the Insurers' expense,
shall assist in effecting settlement, securing evidence, and in the conduct
of suits.
The Insurers agree not to exercise rights of subrogation against any
subsidiary or affiliated company of the Insured or any Company managed by
the Insured; and the Insurers agree not to exercise rights of subrogation,
to the extent the Insured has waived rights in written contracts prior to
Attachment of Risk, against United Start Corporation, Lockheed Xxxxxx
Astronautics, Ball Aerospace & Technologies Corp., Kodak, Fokker or any of
their respective governments, contractors or sub-contractors.
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After inception of the Policy, the Insured shall not agree to any further
waiver of rights of recovery under the terms of the Contract or under the
terms of any future contracts relating to the subject matter of this Policy
without the prior written consent of the Insurers.
10. Changes
Notice to or knowledge possessed by any agent or other person shall not
effect a waiver or change in any part of this Policy nor estop the Insurers
nor the Insured from asserting any right under the terms of this Policy.
The terms of this Policy may be waived or changed only upon mutual
agreement between the Insured, Collateral Agent and the Insurers and
evidenced by an endorsement issued by the Insurers to form a part of this
Policy.
11. Assignment
The Insurers shall not be bound by any assignment of interest under this
Policy unless the Insured obtains the written agreement of the Insurers
before assignment. Notwithstanding, the foregoing, Insurers acknowledge
that Insured, pursuant to the Collateral Pledge Agreement by and among The
Bank of New York and EarthWatch Incorporated, shall assign all of Insured's
rights in and to the proceeds under this Policy, effective as of the time
this Policy takes effect; and Insurers consent to and waive notice of such
assignment.
12. Misrepresentation and Fraud
This Policy shall be null and void if the Insured knowingly conceals or
misrepresents, in writing or otherwise, any material fact or circumstance
concerning the insurance provided under this Policy or the subject matter
hereof.
This Policy shall also be null and void if the Insured defrauds or attempts
to defraud the Insurers whether before or after loss.
In the event of this Policy being declared null and void by the Insurers in
accordance with their rights pursuant to this Condition, the Insurers shall
notify the Insured in writing and this Policy will become null and void ab
initio.
13. Cancellation
This Policy may be canceled only by mutual agreement between the Insured,
the Collateral Agent and the Insurers, or unilaterally by the Insurers for
non-payment of Premium.
In the event of non-payment of Premium, the Insurers shall provide written
notice to the Insured and the Collateral Agent of such cancellation stating
a date when, not less that fifteen (15) days thereafter, such cancellation
shall be effective. In the event the due Premium is paid in full within the
notice period, the applicable notice of cancellation by the
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Insurers shall cease to have any force or effect. In the event of non-
payment of Premium, the Collateral Agent shall have the right, but not the
obligation, to the pay the Premium on behalf of the Insured.
14. Return of Claim Payment
Where:
a. a claim payment has been made under this Policy; and
b. the Insurers and the Insured subsequently agree in writing to reduce
or eliminate the claim because of events occurring after payment of
the claim by the Insurers,
the Insured shall return to the Insurers, within thirty (30) days of such
an agreement, all amounts, without interest, by which the claim has been
reduced or eliminated.
Reasonable sums expended by the Insured to reduce or eliminate the loss
shall be deducted from any claim payments returnable to the Insurers
pursuant to this Condition. The applicable Amount of Insurance will be
reinstated to the extent of the agreed amount by which the claim has been
reduced or eliminated from the date of the occurrence giving rise to such
claim.
15. Salvage
In the event a claim for loss is paid hereunder, the Insurers shall have,
at their option, the right to receive the maximum salvage, if any, from or
title to the Satellite in the event the Insurers have paid a claim for a
Total Loss, or salvage from the portion of the Projected Commercial Value
for which a claim for Partial Loss has been paid.
With the written consent of Insurers the Insured may continue to operate
that portion of capacity of the Satellite for which a claim for a Partial
Loss is paid hereunder. In such event, the Insurers shall receive ten
percent (10%) of the gross operating revenue from that portion of capacity
of the Satellite for which a claim has been paid hereunder or fair market
value of equivalent goods or services derived with respect to such capacity
after the said loss is paid, up to the amount of the payments made by the
Insurers in respect of such capacity of the Satellite under this Policy.
In the event the Insured with the consent of the Insurers sells, leases or
otherwise disposes of the Satellite for which a claim for Total Loss is
paid hereunder or a portion of Satellite life or capacity for which a claim
for Partial Loss is paid hereunder, the Insurers shall receive ninety
percent (90%) of the proceeds of the sale, up to the amount of payment made
by the Insurers for the Satellite or portion of the Satellite life or
capacity for which a claim was paid under this Policy. The Insured shall be
permitted to deduct from any such sale proceeds any reasonable costs
incurred by the Insured with the consent of the Insurers directly related
to such sale.
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The Insurers acknowledge and agree that in the event the Insurers have paid
a claim for a Total Loss and the Satellite is offered for sale pursuant to
the exercise of the Insurers' rights under this Condition, they shall meet
with the Insured for discussions about the business and financial issues
associated with the offer for sale, including the following conditions:
a. for a period of six (6) months from the date when the Insurers notify
the Insured in writing they plan to sell the Satellite, the Insurers
shall offer the Insured the first right of refusal for the purchase of
the Satellite in respect of any offer to purchase the Satellite
received from a bona fide purchaser;
b. the exercise of such rights by the Insurers will be limited by the
rights of the Insured pursuant to the Contract; and
c. the Insured shall, subject to the Contract, provide to the Insurers
such documents as are reasonably necessary to operate the Satellite
and/or sell the Satellite to a third party provided that the Insurers
and/or third party purchaser of the Satellite execute non-disclosure
agreements required by the owners of such documents and comply with
any export license issued by the U. S. Government relating to the
Satellite.
16. Use of the Satellite After Loss
The Insured may use the Satellite and/or that portion for which a claim for
Total and Constructive Total Loss or Partial Loss is paid hereunder for
scientific and/or incidental communications purposes that do not produce
operating revenue or income of any nature. Such use shall:
a. be subject to the prior written agreement of the Insurers; and
b. not reduce claim payments made by the Insurers or affect salvage paid
under this Policy.
17. Titles
The titles of the various sections and paragraphs of this Policy, and of
any endorsements or supplemental agreements attached to or incorporated
into this Policy, are inserted solely for convenience and shall not be
deemed to limit or otherwise affect the terms contained in the paragraphs
to which they relate.
18. Material Changes
If the Insured shall:
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a. waive or modify any of the material technical specifications or
requirements of the Contract(s), the Satellite Performance
Specifications and\or Launch Service Contract(s); or
b. become aware of any material change in any of the Underwriting
Information previously provided to the Insurers; or
c. change, revise or amend the Contract(s),
the Insured shall promptly notify Insurers of any change, waiver,
modification, revision and\or amendment. The Insurers shall have the right
to review all of the terms and conditions of this Policy with the Insured
and to the extent any change, waiver, modification, revision and\or
amendment results in a material increase in risk of loss or material change
in insurable interest under this Policy, to re-negotiate the affected terms
under this Policy.
In the event any change, waiver, modification, revision and\or amendment
results in a material increase in risk of loss or material change in
insurable interest under this Policy, Insurers shall promptly notify the
Insured to this effect.
If the Insured does not so notify the Insurers of any change, waiver,
modification, revision or amendment as required above, any loss resulting
directly from any change, waiver, modification, revision and\or amendment
shall not be covered by this Policy.
Total Loss or Partial Loss or change in the operating status of the
Satellite which occurs after Attachment of Risk will not be considered a
material change in information for the Satellite.
19. Governing Law
This Policy shall be governed by and construed in accordance with the laws
and regulations of the State of Colorado, United States of America and
without regard to its choice of law provisions.
20. Other Insurance
With prior approval of the Insurers and the Collateral Agent, the Insured
may secure other in-orbit operations insurance for the Satellite provided
that, in the event the Insured recovers on claims in respect of the
Satellite under one or more policies for which the Insured also recovers
under this Policy, the Insured's recovery under this Policy shall be
reduced by a proportional amount reflecting such other recoveries.
21. Corrective Measures
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If, in the opinion of the Insurers, a loss covered by this Policy can be
reduced or eliminated by changes to ground installations, computer software
or other measures of a similar nature to be undertaken at the Insurers'
sole cost and expense, the Insured agrees to discuss the feasibility of
such corrective measures with the Insurers.
In the event the Insured agrees to take the corrective measures as stated
above but such measures do not achieve satisfactory correction of or
compensation for the loss, the Insurers will bear the necessarily incurred
cost and expense in addition to the applicable Amount of Insurance or, in
the event of Partial Loss, in addition to the amount of claim payable.
22. Inspection And Audit
In the event that the Insured makes a claim under this Policy, subject to
Condition 4 (Access to Information), the Insurers, through their authorized
representative, shall be privileged to inspect the books and records of the
Insured pertaining to the subject matter of this insurance during the
Policy Period or within a period of up to three years after a claim is made
under this Policy.
23. Reinstatement of Coverage and Reattachment of Risk following Terminated
Ignition
a. In the event of a Terminated Ignition such that a subsequent
Intentional Ignition can occur for the affected Satellite during the
Policy Period and there is no damage to either the Launch Vehicle or
the Satellite, the Insurers agree to reattach coverage under this
Policy if the Insured provides the Insurers as its certification,
certification it has received from the launch vehicle services
contractor and the Satellite manufacturer that, to the best of the
launch vehicle services contractor's and Satellite manufacturer's
knowledge and belief, no damage to the Launch Vehicle or the
Satellite, respectively, has occurred and the Satellite and Launch
Vehicle are in flightworthy condition.
b. In the event of a Terminated Ignition which results in damage to
either the Satellite or the Launch Vehicle but not is not a Total
Loss, such that a subsequent Intentional Ignition can occur during the
Policy Period the Insurers agree to reattach coverage under this
Policy if the Insured provides the Insurers as its certification,
certification it has received from the Satellite manufacturer and the
launch vehicle services contractor that the damage has been
satisfactorily repaired, and that to the best of such manufacturer's
and contractor's knowledge and belief the Satellite and Launch Vehicle
are in flightworthy condition.
c. In the event of a Terminated Ignition which results in a claim under
this Policy but not a Total Loss, such that a subsequent Intentional
Ignition can occur prior to expiry of the Policy period and (b) above
is satisfied, Insurers upon written notification from the Insured
prior to reattachment agree to reinstate the Amount of Insurance if
the Insured pays the Insurers an additional premium calculated at the
basic premium rate stated in Declaration 8 applied to the amount of
indemnification paid under the
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Insuring Agreement. In such event, the additional premium shall be due
and payable as soon as practicable, but no later than three (3)
business days following the reattachment.
d. In the event of a Terminated Ignition such that the Insured determines
that a subsequent launch will not occur under this Policy for the
affected Satellite, this Policy shall terminate with respect to said
Satellite and;
i) In the event the Insured does not make a claim for loss
arising between Attachment of Risk and said Terminated
Ignition the Insurers will retain premium calculated at a
rate of 0.50% applied to the applicable Amount of Insurance
and return all other premium received hereunder for the
Satellite, without interest, within thirty (30) days from
the date the Insurers are advised accordingly by the
Insured; or
ii) In the event the Insured has made a claim for loss
arising between Attachment of Risk and said Terminated
Ignition, the Insurers will earn full premium for the
Satellite.
24. Notices
Unless otherwise provided for in this Policy, all written communications under
this Policy, including but not limited to copies of the policy, correspondence,
notices, consents, and requests, shall be addressed as follows:
a. If to the Insured:
EarthWatch Inc.
Attention: Director of Contracts
0000 Xxxx Xxxx
Xxxxxxxx, XX 00000-0000
XXX
Facsimile: x0-000-000-0000
b. If to the Insurers:
[Address of Insurers to be inserted]
and:
Xxxxxx Xxxxxxx Inspace
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
XXX
Facsimile: x0-000-000-0000.
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Unless otherwise provided for in this Policy, the Collateral Agent shall receive
copies of all written communications sent to or received by the Insured. Such
Copies shall be delivered to:
The Bank of New York
Attention: Corporate Trust Administration
000 Xxxxxxx Xxxxxx, Xxxxx 00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
XXX
Facsimile: x0-000-000-0000
Where practical, all notices shall be given by facsimile transmission unless
adequate notice can be given by registered mail.
Notice to Collateral Agent includes receipt of the sole original policy as
executed by the Insurers and the Insured. Such original shall be provided by
Xxxxxx Xxxxxxx Inspace.
25. Negotiation of Claims
In the event that the Insurer disputes a claim or a claimed amount submitted
under the Policy, the Insured cannot agree to a compromise of the claim or a
claimed amount without the consent of the Collateral Agent.
* * * * *
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EXHIBIT 5.16
------------
GENERAL RELEASE AGREEMENT
-------------------------
GENERAL RELEASE AGREEMENT, dated as of _________ __, 1999 (this
"Release"), by and between Ball Technologies Holdings Corp., a Colorado
corporation ("Ball Technologies"), and the Person named as "Releasor" on the
signature page hereto (the "Releasor").
WHEREAS, Ball Technologies, EarthWatch Incorporated, a Delaware
corporation (the "Company"), Xxxxxx Xxxxxxx & Co., Incorporated, a Delaware
corporation, American High-Income Trust, a Massachusetts business trust,
American Variable Insurance Series Asset Allocation Fund, a Massachusetts
business trust, American Variable Insurance Series Bond Fund, a Massachusetts
business trust, American Variable Insurance Series High-Yield Bond Fund, a
Massachusetts business trust, The Bond Fund of America, Inc., a Maryland
corporation, and ITT Industries, Inc., an Indiana corporation, have entered into
that certain Recapitalization Agreement, dated on or about April 7, 1999,
substantially in the form attached hereto as Annex A (the "Recapitalization
Agreement"), relating to, among other things, the recapitalization of the
Company. All capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Recapitalization Agreement; and
WHEREAS, as of the date hereof, the Releasor owns, of record and
beneficially, the number of shares (or the aggregate principal amount, as
applicable) of Existing Common Stock, Existing Preferred Stock and/or Senior
Notes specified in Annex B hereto.
NOW, THEREFORE, in consideration of Ball Technologies' execution of,
and performance of its obligations under the Recapitalization Agreement, the
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. Release. The Releasor, for himself, herself or itself and for each
of such Releasor's Associated Parties (as defined in Section 2 hereof), hereby
generally, irrevocably, unconditionally and completely releases and forever
discharges each of the Releasees (as defined in Section 2 hereof) from, and
hereby irrevocably, unconditionally and completely waives and relinquishes, all
disputes, claims, controversies, charges, demands, rights, obligations, debts,
accounts, reckon-
ings, liabilities, actions and causes of action of every kind and nature
whatsoever, except for those involving intentional misconduct on the part of the
Releasees (whether accrued or unaccrued and whether or not known, suspected or
disclosed at this time) (collectively, "Claims"), which Claims (a) may be
asserted or exercised by the Releasor in such Releasor's capacity as a
shareholder, director, officer or employee of the Company or in any other
capacity with respect to the Company or (b) are based upon any breach of any
express, implied, oral or written contract or agreement between the Company and
any Releasee, and in each case that (i) the Releasor or any Associated Party of
the Releasor may have had in the past, may now have or may have in the future
against any of the Releasees, and (ii) has arisen or arises directly or
indirectly out of, or relates directly or indirectly to, any circumstance,
agreement, activity, action, omission, event or matter occurring or existing
prior to the date of this Release, including, without limitation, (A) the
Existing Stockholders' Agreement, (B) the Property Transfer Agreement, (C) the
Supply Agreement and (D) the Engineering Services Agreement (collectively, the
"Released Claims"); provided, that the foregoing releases shall not apply to
any Claim arising under the Recapitalization Agreement or any other agreement
arrangement or transaction, including this Release, referenced in or
contemplated by the Recapitalization Agreement.
2. Definitions
(a) The term "Associated Parties," when used herein with respect
to the Releasor, shall mean and include: (i) such Releasor's direct and indirect
subsidiaries, divisions and affiliated companies; (ii) such Releasor's heirs,
executors, administrators; and (iii) the predecessors, successors and past,
present and future assigns of the respective persons and entities identified or
otherwise referred to in clauses "(i)" through "(ii)" of this sentence.
(b) The term "Ball" shall mean Ball Corporation, an Indiana
corporation.
(c) The term "Engineering, Services Agreement" shall mean that
certain Contract for Engineering Services, effective March 1, 1996, by and
between the Company and Ball Aerospace & Technologies Corp. (as amended,
restated or otherwise modified from time to time).
(d) The term "Existing Stockholders' Agreement" shall mean that
certain Amended and Restated Stockholders' Agreement, dated as of
2
March 29, 1995, as amended June 12, 1995, April 3, 1996, January 20, 1997 and
August 22, 1997, by and among Ball, the Company and the other Persons named
therein.
(e) The term "Property Transfer Agreement" shall mean that
certain Property Transfer Agreement, dated as of January 27, 1995, as amended,
by and between Ball and the Company (as amended, restated or otherwise modified
from time to time).
(f) The term "Releasees" shall mean and include: (i) Ball; (ii)
Ball Technologies; (iii) each of the direct and indirect subsidiaries, divisions
and affiliated companies of Ball and of Ball Technologies; and (iv) the
predecessors, successors and past, present and future assigns, and the former,
current and future directors, officers, employees, agents and representatives of
the respective entities identified or otherwise referred to in clauses "(i)"
through "(iii)" of this sentence, other than the Releasor.
(g) The term "Supply Agreement" shall mean that certain Letter
Contract effective February 5, 1996, as amended, that certain Agreement between
the Company and Ball Aerospace & Technologies Corp., effective October 13, 1997,
and that certain Contract for QuickBird Spacecraft, effective June 9, 1998, as
amended (as amended, restated or otherwise modified from time to time).
3. Representations-and Warranties. The Releasor represents and
warrants that:
(a) the Releasor has not assigned, transferred, conveyed or
otherwise disposed of any Claim against any of the Releasees, or any direct or
indirect interest in any such Claim, in whole or in part;
(b) to the Releasor's knowledge, no other person or entity has
any interest in any of the Released Claims;
(c) to the Releasor's knowledge, no Associated Party of the
Releasor has or had any Claim against any of the Releasees; and
(d) this Release has been duly and validly executed and delivered
by the Releasor and (assuming due authorization, execution and delivery by Ball
Technologies) is a valid and binding obligation of the Releasor, enforceable
3
against the Releasor in accordance with its terms, except as enforceability may
be limited by bankruptcy, moratorium or similar laws affecting the rights and
remedies of creditors rights, and general principles of equity, whether applied
by a court of law or equity.
4. Miscellaneous.
(a) This Release sets forth the entire understanding of the
parties relating to the subject matter hereof and supersedes all prior
agreements and understandings among or between any of the Releasors and
Releasees relating to the subject matter hereof.
(b) If any provision of this Release or any part of any such
provision is held under any circumstances to be invalid or unenforceable in any
jurisdiction, then (i) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (ii) the invalidity or unenforceability of such provision or part
thereof under such circumstances and in such jurisdiction shall not affect the
validity or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (iii) such invalidity or
enforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Release. Each provision of this
Release is separable from every other provision of this Release, and each part
of each provision of this Release is separable from every other part of such
provision.
(c) This Release shall be construed in accordance with, and
governed in all respects by, the laws of the State of New York (without giving
effect to principles of conflicts of laws).
(d) EACH PARTY HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS RELEASE.
THE PARTIES ACKNOWLEDGE THAT THIS WAIVER IS IRREVOCABLE, MEANING THAT, EXCEPT AS
MUTUALLY AGREED IN WRITING BY BALL TECHNOLOGIES AND THE RELEASOR, IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING. IN THE EVENT OF LITIGATION, THIS RELEASE
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
4
5. Notice.
(a) For the purposes of this Release, notices, demands and all
other communications provided for in this Release shall be in writing and shall
be addressed as follows: If to the Releasor, to the address specified on the
signature page hereto; and if to Ball Technologies, to Ball Technologies
Holdings Corp., 00 Xxxxx Xxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, telecopy: (303)
460-2691, Attention: Xxxxxx X. Xxxxx; or to such other address as a party may
have furnished to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
(b) Notices and communications given in accordance with the
foregoing shall conclusively be deemed to have been received and to be effective
on the day on which delivered in person, or, if sent by United States certified
or registered mail, postage prepaid, on the fifth Business Day after the day on
which mailed, provided that a telecopy or cable of identical content has been
sent to the relevant address specified above within two days after the posting
date of such mail.
6. Miscellaneous. This Release shall be binding upon and inure to the
benefit of the parties hereto and their respective legal and personal
representatives, agents, successors, assigns, spouses, beneficiaries,
purchasers, executors, administrators, heirs, distributees, devisees and
legatees. The captions of this Release are for convenience of reference only and
shall not affect in any manner any of the terms, covenants or conditions hereof.
This Release may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
document.
5
IN WITNESS WHEREOF, each party hereto has executed this Release, or
caused this Release to be executed by its duly authorized officer, on the day
and year first above written.
BALL TECHNOLOGIES
HOLDINGS CORP.
By:_________________________
Name:
Title:
RELEASOR
[By:]________________________
Name:
[Title:]
Address:___________________
___________________
___________________
Telecopy:
Telephone:
[Attention:]
6
DISCLOSURE SCHEDULE
This Disclosure Schedule is delivered pursuant to that certain
Recapitalization Agreement, dated April 8, 1999, by and among EarthWatch
Incorporated (the "Company" or "EarthWatch"), Xxxxxx Xxxxxxx & Co.,
Incorporated, American Variable Insurance Series Asset Allocation Fund, American
Variable Insurance Series Bond Fund, American High-Income Trust, American
Variable Insurance Series High-Yield Bond Fund and The Bond Fund of America,
Inc., Ball Technologies Holdings Corp. and ITT Industries, Inc. (the
"Agreement"). Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.
Nothing in this Disclosure Schedule is intended to broaden the scope of any
representation or warranty of the Company contained in the Agreement or to
create any covenant on the part of the Company. Inclusion of any item in the
Disclosure Schedule (1) does not represent a determination by the Company that
such item (a) is material, nor shall it be deemed to establish a standard of
materiality, or (b) did not arise in the ordinary course of business and (2)
shall not constitute, or be deemed to be, an admission to any third party
concerning such item by the Company.
All references to "Section" or "subsection" refer to a Section or
subsection in the Agreement, unless the context otherwise requires. The
reference to specific subsections is not intended to and shall not be construed
as limiting the noted exceptions to that particular subsection. The headings in
the Disclosure Schedule are for convenience of reference only and shall not
affect the disclosures contained herein. Disclosures made herein shall not be
interpreted to apply to only the cross-referenced section of the Agreement but
shall be interpreted to apply and be responsive to every other section of the
Agreement to which they are applicable to the extent such interpretation may be
clearly inferred by the disclosure.
Whenever the Disclosure Schedule includes descriptions of certain documents
or brief summaries of certain aspects of the Company or its business, such
descriptions and summaries are qualified by reference to the actual documents or
other matters to which they refer. Except where otherwise noted as applicable,
copies of the referenced documents and agreements have been provided to counsel
for the Purchasers.
The information set forth in this Disclosure Schedule assumes that the
transactions contemplated by the Agreement have not occurred.
Section 3.1
Incorporation and Authority of the Company
Due to the Company's focus on the transactions contemplated by the Agreement,
the Company has postponed the prescribed schedule for an annual meeting of the
stockholders of the Company. Upon the closing of the transactions contemplated
by the Agreement, the Company shall hold an annual meeting of stockholders in
accordance with its bylaws.
Section 3.2
Capital Stock
(a) There are outstanding options to purchase an aggregate of 1,408,812 shares
of the Company's Common Stock at an exercise price of $.80 per share
pursuant to the Company's 1995 Stock Option/Stock Issuance Plan (the "1995
Plan"). Such optionholders are set forth on Attachment 3.2(a) attached
hereto. The total number of shares of the Company's Common Stock available
for issuance under the 1995 Plan is 586,641.
(b) There are outstanding options to purchase an aggregate of 12,900 shares of
the Company's Common Stock at an exercise price of $.80 per share which
have been issued outside of any equity incentive plan of the Company to
certain employees of CTA Incorporated. Such optionholders are set forth on
Attachment 3.2(b) attached hereto.
(c) There are outstanding options to purchase an aggregate of 17,800 shares of
the Company's Series A Preferred Stock at exercise prices ranging from $.02
per share to $.10 per share pursuant to the Company's 1994 Stock
Option/Stock Issuance Plan (the "WorldView Plan"), which plan was initially
adopted by WorldView Imaging Corporation ("WorldView"), the Company's
predecessor. Such optionholders are set forth on Attachment 3.2(c) attached
hereto.
(d) There are currently a number of persons who have begun employment with the
Company or plan to begin employment with the Company on or about March 29,
1999 who have not been granted the stock options set forth in their offer
letters. Such options constitute options to purchase an aggregate of 47,200
shares of the Company's Existing Common Stock and will be issued pursuant
to the New Equity Plan. Such options will be converted into options to
purchase shares of the Company's New Series C Preferred Stock according to
the applicable conversion rate in the Recapitalization.
Additionally, the Company has outstanding an employment offer letter to
one person. If such offer is accepted, an option to purchase 4,500 shares
of the Company's Existing Common Stock will be granted to such person. The
Company plans to notify such prospective employee that, in the event such
employment offer is accepted, the option will be converted into an option
to purchase shares of the Company's New Series C Preferred Stock according
to the applicable conversion rate in the Recapitalization and shall be
granted under the terms of the New Equity Plan to be adopted pursuant to
Section 5.14 of the Agreement.
(a) (e) In connection with the closing of the issuance and sale of an aggregate
of 50,000 Units (collectively, the "Units"), each Unit consisting of one
(1) 12-1/2% Senior Note (collectively, the "Senior Notes") and one (1)
warrant to purchase 31.12 shares of the Company's Common Stock on March 19,
1997, the Company issued warrants to purchase an aggregate of 1,556,000
shares of the Company's Common Stock (the
"Warrants"). Such Warrants have an exercise price of $.01 per share and
expire on March 19, 2001. The record holders of the Units are set forth on
Attachment 3.2(d) attached hereto.
(b) (f) On May 30, 1994, the Company issued a warrant to Odetics, Incorporated
to purchase 28,250 shares of the Company's Series A Preferred Stock at an
exercise price of $2.00 per share. Such warrant expires on May 27, 2001.
(c) (g) The Company is obligated to issue The Waterstone Group 30,500 shares of
Existing Common Stock at a value of $.80 per share in partial consideration
for services rendered by The Waterstone Group under the terms of the
Consultant Agreement, by and between the Company and The Waterstone Group,
dated as of June 25, 1998, as amended (the "Waterstone Agreement"). The
Company anticipates issuing those shares on or about May 1, 1999. Prior to
the closing of the transactions contemplated by the Agreement, the Company
will obtain acknowledgment from The Waterstone Group that the Company shall
issue shares of New Series C Preferred Stock (rather than Existing Common
Stock) to The Waterstone Group based on the conversion ratio applicable to
the Recapitalization.
(d) (h) The record holders of the Company's Common Stock are set forth on
Attachment 3.2(e) attached hereto.
(i) The record holders of the Company's Series A Preferred Stock are set forth
on Attachment 3.2(f) attached hereto.
(j) The record holders of the Company's Series B Preferred Stock are set
forth on Attachment 3.2(g) attached hereto.
(k) The record holders of the Company's Series C Preferred Stock are set forth
on Attachment 3.2(h) attached hereto.
(l) The record holders of the Company's Series D Preferred Stock are set forth
on Attachment 3.2(i) attached hereto.
(m) The Company is party to the Existing Stockholders' Agreement, dated as of
March 29, 1995, as amended. The Existing Stockholders' Agreement will be
terminated in connection with the consummation of the transactions
contemplated by the Agreement.
Attachment 3.2
(a) The holders of options to purchase shares of the Company's Common Stock
under the 1995 Plan are as follows:
Xxxxxxxx, Xxxx X. 46,500
Xxxxx, Jr., Xxxx X. 6,500
Been, Xxxxx 17,000
Xxxxxx, Xxxxxxx X. 13,000
Black, Mackey G. 5,000
Xxxxx, Xxx 14,650
Xxxxx, Xxxx 9,000
Xxxxx, Xxxx 23,250
Xxxxxxxxxxx, Xxxx X. 16,500
Xxxxxxx, Xxxxxxx X. 24,500
Xxxxxxxxxxx, Xxxx 3,000
Xxxxxxx, Xxxxx X. 7,000
Xxxx, Xxxx 23,500
Xxxxxxx, Xxxx X. 10,000
Xxxxxxx, Xxxxxxx Seemel 5,800
Xxxxx, Xxxx X. 7,000
Xxx, Xxxx X. 4,500
Xxxxxxxxxx, Xxxxxxx X. 9,600
Xxxxx, X.X. 48,500
Xxxxx, Xxxxxxx 10,500
Xxxxxxx, Xxxxx X. 18,000
Gannes, Xxxxxx X. 16,000
Xxxxxxxxxx, Xxxx 19,500
Xxxxxx, Xxxx X. 7,000
Xxxxxxx, Xxxxx 5,300
Xxxxxxxxx, Xxxxxx 5,500
Xxxxxxx, Xxxxx 2,500
Xxxxxx, Xxxxxx 10,750
Xxxxxxxxx, Xxxx X. 3,000
Xxxxxxxxx, Xxxxxxx X. 5,500
Xxxxxxxxx, Xxxxxxx X. 6,000
Xxxxxxx, Xxxxxxx 9,200
Xxxxxxx, Xxxxxx X. 7,000
Irish, Xxxxxx 10,000
Xxxxxxx, Xxxxx 14,000
Xxxxxx, Xxxxxxx X. 8,000
Xxxxxxxx, Xxxxxxx X. 57,250
Xxxxx, Xxxx 5,600
Xxxx, Xxxx 8,125
Xxxxx, Xxxx Xxxxxx 17,750
Xxxxxxx, Xxxxxxxxxxx X. 8,000
Xxxxxxxxx, Xxxx 3,500
Xxxxx, Xxxxxxx X. 12,250
Xxxx, Xxxxxx X. 7,000
Xxxxxx, Xxxxxxxxxxx 3,750
Xxxx, Xxxxx X. 2,750
Xxxxxxx, Xxxxxxx 8,750
Xxxxxxx, Xxxxxx 2,000
XxXxxxxxxx, Xxxxx X. 24,500
XxXxxxx, Xxxx 3,300
Xxxxx, Xxxxxxxxx 3,800
Ottobrino, Natalie 3,800
Xxxxxx, Xxxxx X. 22,900
Xxxxxx, Xxxxx X. 4,500
Xxxxx, Xxxxxx 2,300
Xxxxxxx, Xxxx 6,500
Xxx, Xxxxxx X. 4,000
Xxxxxxxxx III, Xxxxxxx X. 400,000
Xxxxxxxx, Xxx X. 5,000
Xxxxx, Xxxx 13,000
Xxxxx, Xxxxxx X. 25,000
Xxxxx, Xxxxxx 8,000
Xxxxx, Xxxxxx 4,500
Xxxxxxxx, Xxxx X. 4,250
Xxxxxxx, Xxx 5,100
Xxxxxxxxx, Xxxxx 10,000
Xxxxxxxx, Xxxxx X. 14,250
Xxxx, Xxxxxx 5,000
True, Xxxx 3,400
Xxxxx, Xxx X. 5,900
Xxxxxxx, Xxxxxx Katie 6,000
Xxxx, Xxxxx (Xxxxxx) 9,500
Xxxxx, Xxxxx 6,750
Xxxxxxx, Xxxxx X. 35,583
Xxxxxx, Xxxxxxx X. 17,704
Xxxxxxx, Xxxxxxx 150,000
Xxxxxxx, Xxxxxxx 15,000
---------
TOTAL: 1,408,812
(b) The holders of options to purchase shares of the Company's Common Stock
which have been granted outside of any equity incentive plan of the Company
to certain employees of CTA Incorporated are as follows:
Xxxxxxxxxx, Xxxxxxx 800
Xxxxxx, Xxxxxx 600
Xxxxxxx, Xxxxx X. 400
Xxxxxxxx, Xxxxxxx X. 400
Xxxxxxx, Xxxx X. 700
Xxxxxxxx, Xxxx X. 200
Xxxxxxxx, Xxxx X. 900
Xxxx, Xxxxxx X. 200
Xxxxxx, Xxxxxx X. 300
Xxxxx, Xxxxxx X. 1,100
Xxxxxx, Xxxxxxxx 400
Xxxxxxx, Xxxxxxx X. 500
Xxxx, Jr., Xxxxxxxxx X. 700
Xxxxxxx, Xxxxxx X. 700
Xxxxxxx, Jr., Xxxx X. 700
Xxxxxxxxx, Xxxx 900
Xxxxxx, Xxxxx X. 1,500
Xxxxxxxx, Xxxxxxx X. 700
Xxxxxxx, Xxxx X. 300
Xxxxx, Xxxxx X. 700
Xxxxxxx, Xxxxxxxx X. 200
------
TOTAL: 12,900
(c) The holders of options to purchase shares of the Company's Series A
Preferred Stock under the WorldView Plan are as follows:
Xxxx, Xxxxxx 5,000
Xxxxxx, Xxxx 1,800
Xxxxx, Xxxxxxx 1,000
Xxxxxxxxx, Xxxxxx 10,000
------
TOTAL: 17,800
(a) (d) The Depository Trust Company ("DTC") is the record holder of the Units.
DTC holds the Units on behalf of the beneficial owners of the Units. To the
Company's knowledge, the record holder of the Units is as follows:
Record Holder Units Senior Notes Warrants
------------- ----- ------------ --------
DTC 50,000 $50,000,000 1,556,000
TOTAL: 50,000 $50,000,000 1,556,000
(a) (e) The record holders of the Company's Common Stock are as follows:
Xxxxxxx, Xxxxxxx X. 50,000
Xxxxxx, Xxxxx X. 10,000
Xxxxxx, Xxxxxxx X. 5,000
Xxxxx, Xxxx X. 5,000
Xxxxxxx, Xxxxxxx X. 7,550
Xxxxxx, Xxxxxx 1,000
The Wallerstein Revocable Family Trust,
Xxxxxx X. Xxxxxxxxxxx and Xxxxxxxx X.
Xxxxxxxxxxx, Trustees 3,500
Xxxxxxx, Xxxxxx 3,649
Xxxxxx, Xxxxxx 3,000
Xxxxxx, Xxxxx X. 1,083
Xxxxx, Xxxxxxx X. 28,594
Xxxxx, Xxxxxx X. 30,540
Xxxxxx, Xxxxxx 947
Ball Technologies Holdings Corp. 1
Xxxxx, Xxxxxxxx X. 2,640
Zuo, Ming 1,000
Xxxx, Xxxxxxx X. 10,632
Xxxxxxxx, Xxxxxx 1,000
Xxxxxxx, Xxxx X. 5,000
Xxxxxxxx, Xxxxx X. 4,983
Xxxxxxxxxxx, Xxxxxx X. 1,500
Xxxx, Xxxxx X. 1,200
Xxxxxxx, Xxxxxxxx X. 5,916
Xxxxxx, Xxxxxx X. 4,931
Xxxxxxx, H. Xxxx 6,597
Xxxxx, Xxxxx X. 500
Xxxxxxx, Xxxxxx 202
Xxxxxxx, Xxxxxx X. 7,583
Xxxxxxxx, Xxxx X. 1,000
-------
TOTAL: 204,548
(f) The record holders of the Company's Series A Preferred Stock are as
follows:
Xxxxxx, Xxxxxxx X. 5,000
Xxxxxxxx, Xxxxxx 150,000
Xxxx, Xxxxx X. 5,000
Xxxxxxx, Xxxxxx X. 83,334
Xxxxxxxxxxx, Xxxxx 3,000
Kawin, Xxxxxxx X. 8,334
Xxx, Man Shek 83,333
Xxxxxxxx, Xxxxx 10,000
Xxxxxx, Xxxx 6,400
Xxxxx, Xxxxxxxx X. 2,500
Xxxxxxx, Xxxxxx X. 10,000
Xxxxxx, Xxxxxx 10,000
Xxxxxxx, Xxxxxx, Xxxxxxx, Xxxxxx & Xxxxxxx,
Xxxx as Joint Tenants 85,000
Xxxxx, Xxxxx 83,333
Hitachi, Ltd. 3,000,000
Matsumoto, Sumitaka 3,000
Kurosaki, Morio 3,000
Okachi, Tomio 3,000
Sasaki, Shinichi 3,000
Xxxxxx, Xxxxxxxxx and Xxxxxxx, Xxxxxx X., as
Trustees of the Xxxxxxxxx X. Xxxxxxx Irrevocable
Gift Trust dated November 20, 1992 193,676
Xxxxxxx, Xxxxxxxxx X. 34,000
Xxxxxxx, Xxxxxxx X. 3,000
Xxxxxx, Xxxxxx & Xxxxxx, Xxxxx XX TEN 130,000
Xxx, Xxxxxx 5,000
Xxxxxx, Xxxxxxx X. 460,938
Xxxxxx, Xxxxx Xxxx 39,063
Xxxxxx, Xxxxxxx 157,000
Xxxxxxx, Xxx 7,500
Xxx, Xxxx 7,500
XxXxxxx, Xxxx 33,093
Park, Xxx-Xxxx 53,000
Xxxxxxxxx, Xxxxx 7,000
Alta V Limited Partnership 791,650
Customs House Partners 8,350
Xxxxxxxx, Xxxxxxx X. 35,000
Xxxxxxxx, Xxxxxx X. 160,000
Technology Venture Investors IV 650,000
CTA Incorporated 509,374
Wirtenson, X. Xxxxxxx and Xxxxxxxxx, Xxxxx X.,
as Trustees of the WIRTENSON FAMILY TRUST
UTD 4/12/95 3,500
Telespazio, S.p.A. 750,000
Transcorp c/f Xxxxxx X. Xxxxxxx 10,000
Xxxxxxx, Xxxxxx X. as Trustee for the
Xxxxxx X. Xxxxxxx Living Trust UTD 9/23/91 354,025
Xxxxxx, Xxxxxxx X. 43,832
Xxxxxxxxxx, Xxxxx X. 189,450
Xxxxx, Xxxxxxx X. & Xxxxx, Xxxxxx X. 41,667
Xxxxxxx, Xxxxxxx 3,750
Xxxxxxx, Xxxx Xxxxx & Xxxxxxx, Xxxxxx X. 10,000
Xxxxx, Xxxxxx X. 1,125,057
The Wallerstein Family Revocable Trust, Xxxxxx X.
Xxxxxxxxxxx and Xxxxxxxx X. Xxxxxxxxxxx, Trustees 55,084
The Xxxxx X. Xxxx Trust, U/A DTD 2/16/94,
Xxxxx X. Xxxx, Trustee 16,667
The Xxxxxx Xxxx Xxxxxxxx and Xxxxx X. Xxxxxxxxx
Revocable Living Trust 10,000
Ball Technologies Holdings Corp. 9,875,000
Xxxxx, Xxxxx X. 17,916
Trust Company of America FBO Xxxxxx Xxxxx 20,000
----------
TOTAL: 19,368,326
(g) The record holders of the Company's Series B Preferred Stock are as follows:
XxxXxxxxx, Xxxxxxxxx & Associates, Ltd. 200,000
Datron/Transco Inc. 111,300
-------
TOTAL: 311,300
(h) DTC is the record holder of 6,875,000 shares of the Company's Series C
Preferred Stock. DTC holds such shares of Series C Preferred Stock on
behalf of the beneficial owners of such shares of Series C Preferred Stock.
DTC, however, is not the record holder of 125,000 shares of Series C
Preferred Stock held by EYE Fund (care of Xxxxxxx Xxxxx & Associates). To
the Company's knowledge, the record holders of the Series C Preferred Stock
are as follows:
Record Holder Shares
------------- ------
DTC 6,875,000
Xxxxxxx Xxxxx & Associates 125,000
---------
TOTAL: 7,000,000
(i) The record holders of the Company's Series D Preferred Stock are as
follows:
Export Development Corporation 400,000
Nuova Telespazio S.p.A. 600,000
---------
TOTAL: 1,000,000
Section 3.3
Subsidiaries
The Company has interests in the following subsidiaries:
Issued and
Outstanding The
Jurisdiction Authorized Shares of Company's
Entity Type of of Capital Capital Current
Entity Incorporation Stock Stock Ownership
----------------------------------------------------------------------------------------------------------------------
EarthWatch Satellite Corporation Delaware 10 shares of 10 shares of 100%
Corporation Common Common
Stock Stock
----------------------------------------------------------------------------------------------------------------------
EarthWatch-Mississippi Corporation Mississippi None None 100%
Operations Incorporated
----------------------------------------------------------------------------------------------------------------------
Section 3.4
Stockholder and Bondholder Approvals Required
(a) Reference is made to the disclosure set forth in Section 3.2(i)-(l) which
is incorporated herein by reference.
The following approvals are required from the holders of Existing Preferred
Stock in order to amend and restate in its entirety the Company's
Certificate of Incorporation:
(i) the affirmative vote of the holders of a majority of the outstanding
shares of Series A Preferred Stock, voting separately as a class;
(ii) the unanimous approval of the holders of the Series B Preferred Stock,
consisting of Datron/Transco, Inc. and XxxXxxxxx Xxxxxxxxx &
Associates, Ltd. ("MDA");
(iii) the vote of the holders of 66 2/3% of the outstanding shares of
Series C Preferred Stock, voting separately as a class;
(iv) the affirmative vote of the holders of a majority of the outstanding
shares of Series D Preferred Stock, voting separately as a class,
which requires the approval of Nuova Telespazio S.p.A.; and
(v) the affirmative vote of the holders of a majority of the Existing
Common Stock, Series A Preferred Stock, Series B Preferred Stock and
Series D Preferred Stock, voting together as a class.
(b) Reference is made to the disclosure set forth in Section 3.2(a)-(d) and
(f)-(h) which is incorporated herein by reference.
The following approvals are required from the holders of Existing Common
Stock in order to amend and restate in its entirety the Company's
Certificate of Incorporation:
(i) the affirmative vote of the holders of a majority of the outstanding
shares of Existing Common Stock, voting separately as a class; and
(ii) the affirmative vote of the holders of a majority of the Existing
Common Stock, Series A Preferred Stock, Series B Preferred Stock and
Series D Preferred Stock, voting together as a class.
(c) Reference is made to the disclosure set forth in Section 3.2(e) which is
incorporated herein by reference.
The consent of each holder of the Senior Notes is required to approve the
transactions contemplated by the Agreement, consisting of Capital Research,
AIM Advisors, Inc., Gem Capital, Manulife Financial and Regal Asset
Management Corp.
(d) The Existing Stockholders' Agreement must be terminated in order to
consummate the transactions contemplated by the Agreement. This requires
the approval of (i) each party to the Existing Stockholders' Agreement who
holds at least five percent (5%) of the Company's voting stock (consisting
of Ball Technologies Holdings Corp., Hitachi Ltd., Nuova Telespazio S.p.A.
and Xxxxxx X. Xxxxx) and (ii) a majority of the outstanding shares of
capital stock of the Company held by the WorldView Stockholders (as defined
in the Existing Stockholders' Agreement).
Section 3.5
No Conflict
(a) The Company must obtain the approvals set forth in Section 3.4 in order to
consummate the transactions contemplated by the Agreement.
(b) The Company must obtain the consent of Xxxxx Land Limited Liability Company
pursuant to the terms of the Lease Agreement, dated March 15, 1995, in
order to consummate the transactions contemplated by the Agreement.
(c) Any waiting period under the HSR Act applicable to the transactions
contemplated by the Agreement must expire or terminate.
Section 3.6
Consents and Approvals
(a) The Company must obtain written consent to the transfer of control of the
Company's FCC Licenses as further set forth in Section 5.9 of the
Agreement.
(b) Reference is made to the disclosure set forth in Section 3.12(b) which is
incorporated herein by reference.
Section 3.8
Absence of Undisclosed Liabilities and Liens
(a) As of the date of the most recently published internal financial
statements, dated as of February 28, 1999, the Company had the following
Liabilities:
Liabilities
Current liabilities:
Accounts payable $ 4,296,853
Accounts payable to related parties 1,233,104
Accrued expenses 374,983
Accrued interest 3,528,093
Current portion of long-term debt 234,370
Current portion of long-term debt to related parties -
-----------
Total current liabilities 9,667,403
Long-term debt, gross of unamortized discount 50,199,694
-----------
Total liabilities $59,867,097
===========
(b) No exceptions.
Section 3.9
Absence of Certain Changes or Events
Since the 1998 Balance Sheet Date, the Company has undertaken the following
actions:
(a) The Company regularly files Tax Returns for payroll and sales and use
taxes, either monthly or quarterly, as required.
A number of jurisdictions require the annual filing of property tax
returns, which are expected to be filed in accordance with their respective
due dates.
The annual franchise tax reports for the Company and EarthWatch Satellite
Corporation were filed and paid as required prior to March 1, 1999.
Federal and several state income tax returns are due to be filed or
extended by either March 15, 1999 or April 15, 1999, depending on the
jurisdiction. The Company has made or plans to make such filings as
required.
(b) The Board of Directors of the Company has approved bonuses in the aggregate
amount of up to $196,000 for the Company's employees payable after the
consummation of the transactions contemplated by the Agreement. Such
payments are not a material change in the overall compensation structure of
the Company.
Section 3.10
Absence of Litigation
On June 9, 1998, Orbital Sciences Corporation ("OSC") filed a demand for
arbitration with the American Arbitration Association regarding payment under
the terms of the EarlyBird contract entered into by the predecessors of the
parties. On October 14, 1998, the parties entered into a settlement agreement
that included a provision to suspend arbitration until the obligations of the
parties were fulfilled, which obligations were fulfilled on March 5, 1999. The
Company is waiting for formal acknowledgement from the American Arbitration
Association that the arbitration proceedings have been closed.
Section 3.11
Compliance with Laws
No exceptions.
Section 3.12
Licenses and Permits
(a) Reference is made to the disclosure set forth in Section 3.6(a) which is
incorporated herein by reference.
(b) In addition to the FCC Licenses, the Company has a license from the
National Oceanic and Atmospheric Administration ("NOAA") which is necessary
to operate the Business as currently conducted. On March 11, 1999, the NOAA
consented to an amendment to such license required in connection with the
transactions contemplated by the Agreement.
(c) During the normal operation of the Company, various licenses and approvals
may be required from the Office of Defense Trade Controls ("ODTC") of the
U.S. Department of State and possibly the Bureau of Export Control. Such
license applications and requests for approvals will be submitted as the
need is identified. The export of remote sensing satellites and related
technical data is covered by the International Traffic in Arms Regulations
promulgated by the ODTC. Currently, the Company has applications for export
licenses pending before the ODTC for specific identified needs. The Company
has not received various approvals for all Technical Assistance Agreements
("TAA") that will be needed for completion of the Company's systems and the
launch of the QuickBird 1 satellite from Russia. Additionally, the terms of
the launch insurance contract that the Company will enter into with an
underwriter to be identified will require a TAA. The Company has retained
outside counsel to provide specific advice and representation in this area.
(d) Reference is made to the disclosure set forth in Section 3.18(c) which is
incorporated herein by reference.
Section 3.13
Sufficiency and Condition of Assets
(b) Reference is made to the disclosure set forth in Section 3.6(a) which is
incorporated herein by reference.
(c) Under the Internal Revenue Code of 1986, as amended (the "Code"), the
utilization by the Company of its net operating loss ("NOL") and tax credit
carryforwards against future taxable income will be limited if the Company
is treated as having experienced an "ownership change" as defined in the
Code. The Company believes that the Recapitalization will cause the Company
to experience an ownership change. As a result, the future utilization of
the Company's NOLs and tax credit carryforwards will be limited to an
annual amount equal to (A) the product of (i) the value of the corporation
immediately before the ownership change multiplied by (ii) the long-term
tax exempt rate (as announced each month by the Treasury Department and
which was 4.78% for ownership changes occurring in April 1999) on the date
of the ownership change (the "Section 382 Limitation"), plus (B) any unused
portion of the Section 382 Limitation from prior years.
Section 3.14
Real Property
(a) The Company does not have any Owned Real Property.
(b) The Company maintains the following Leased Property:
------------------------------------------------------------------------
Type of Location Lease Term Lessor
Property -------- ---------- ------
--------
------------------------------------------------------------------------
Offices 0000 Xxxx Xxxx March 15, 0000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxx through March 1, 2000 Limited Liability
Company
-------------------------------------------------------------------------
Offices 6940 Xxxx Center December 8, 0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 000 through December 7, Associates
Xxxxxxxxxx, 0000, as amended
California
-------------------------------------------------------------------------
Land Fairbanks, Alaska August 9, 0000 Xxxxx X.
through July 8, 2000 Xxxxxxxxx
-------------------------------------------------------------------------
In addition, the Company subleases the following property:
-------------------------------------------------------------------------
Type of Location Lease Term Lessee
Property -------- ---------- ------
--------
-------------------------------------------------------------------------
Offices 6940 Xxxx Center October 8, 0000 Xxx Xxxxxxxxxxxxxx
Xxxxxxx, Xxxxx 000 through December 7, Corporation
Pleasanton, 2000, as amended
California
-------------------------------------------------------------------------
Reference is made to the disclosure set forth in Section 3.5(b) which is
incorporated herein by reference.
In February 1996, the Company entered into an agreement that is similar to
a lease in some respects. The Company contracted with Tromso Satellite
Station ("TSS") for the establishment of an EarlyBird ground station in
Tromso, Norway. The Agreement provides for the provision of a parcel of
land by TSS upon which EarthWatch shall have the right to construct, erect
and maintain an antenna site and certain auxiliary equipment for such
ground station. The contract was amended to reflect a change to QuickBird
capability. The contract term is the life of the QuickBird satellites.
(c) No exceptions.
(d) No exceptions.
Section 3.15
Employee Benefit and Labor Matters
(a) The Company provides the following benefits for its employees:
(1) Medical/Dental/Vision Plan
(2) Cafeteria Plan (IRS (S)125 Flexible Spending Plan)
(3) Short Tenn Disability Program
(4) Long Term Disability Program
(5) Life lnsurance
(6) Paid Time Off
(7) EarthWatch Incorporated 401(k) Profit Sharing Plan
(8) Employee Assistance Program
(9) Tuition Reimbursement Program
(c) The Company only maintains one "qualified plan" within the meaning of
Section 401 (a) of the Code which is the EarthWatch Incorporated 401(k)
Profit Sharing Plan.
(d) The Company's Medical/Dental/Vision Plan is partially self-funded with an
insurance company contract for amounts claimed over certain specified
levels.
(i) Reference is made to the disclosure set forth in Section 3.9(b) which is
incorporated herein by reference.
The consummation of the transactions contemplated by this Agreement will
result in the acceleration of the payment of all consulting fees to Dr.
Xxxxxxx Xxxxxxx, the Company's former Chief Executive Officer, due under
the Separation, Release and Consulting Agreement, dated January 1, 1998.
This amount will be computed using net present value at the time of closing
and is approximately $100,000.
Section 3.16
Labor Matters
No exceptions.
Section 3.17
Taxes
(a) State income tax returns for the 1997 calendar year have not yet been filed
by the Company for Alaska, California, Colorado, Louisiana, Maryland,
Mississippi and Virginia. Although no penalties have been accrued in the
financial statements, these amounts are expected to be immaterial due to
the net operating losses generated for tax purposes during this calendar
year.
(b) The Company was notified of payroll tax penalties for the 1995 calendar
year for both the Company and its predecessor, WorldView, in May 1998. The
Company has been working to resolve this matter with its payroll processing
agent, ADP, since that time and recently received a refund from the
Internal Revenue Service for this tax year for the Company. To date, the
Company has not received communication from the Internal Revenue Service
related to the disposition of the WorldView matter but believes that this
has been settled.
(c) ADP, the Company's payroll processing agent, maintains a power of attorney
in handling payroll taxation matters. This power of attorney is limited
solely to this activity.
(d) Reference is made to the disclosure set forth in Section 3.9(a) which is
incorporated herein by reference.
Section 3.18
Environmental, Health and Safety
(a) The Company maintains an above ground fuel storage tank at the Fairbanks,
Alaska ground station in accordance with environmental laws, although, due
to proximity, is not able to ensure compliance on a 24 hour basis.
(b) The Company maintains a small electronics laboratory at its headquarters in
Longmont, Colorado. The laboratory has on-hand quantities of regulated
substances (in most cases, de minimis quantities) such as small cans and
vials of cleaning solvents, lead (in electrical components and solder),
various other regulated materials and small amounts of hydrochloric acid.
There are also cylinders of liquid nitrogen in the lab. These materials are
used in the development of the satellites. The Company follows normal
industry practices, and to the best of the Company's knowledge, it is in
material compliance with all applicable environmental laws.
(c) The Company will fuel the QuickBird 1 satellite with hydrazine. To date,
such fueling has only been performed in Russia. The Company will ship the
hydrazine to Russia. The Company will acquire the appropriate licenses
including a Department of Transportation waiver. These licenses have not
been applied for at this time.
Section 3.19
Intellectual Property
(b) The following constitutes a list of the material contracts relating to the
Intellectual Property Assets to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound:
(1) Contracts Related to QuickBird Satellite - The Company has entered
into contracts with Ball Aerospace & Technologies Corporation, a
subsidiary of Ball Corporation and an affiliate of the Company ("Ball
Aerospace"), Xxxxxxx Kodak Company ("Kodak") and Fokker Space B.V.
("Fokker") to provide the QuickBird spacecraft. Provision of the
spacecraft will involve the use of the vendor's intellectual property.
In all cases, the contracts either provide full title to the Company
or contain a license allowing for the use of the intellectual property
for the life of the satellite.
(2) Contracts Related to QuickBird Ground System - EarthWatch has entered
into contracts with Storm Control Systems, Inc., the ITT Systems
division of ITT Industries, Inc., Interlink Group Corporation
("Interlink") and assorted smaller vendors. These contracts either
provide full title to EarthWatch or contain a license allowing for the
use of the intellectual property for the life of either the ground
system or the QuickBird satellite series.
(3) Contracts Related to EarlyBird Satellites - EarthWatch has entered
into contracts with CTA Incorporated, Spacetec Incorporated and
assorted smaller vendors to provide the EarlyBird spacecraft.
Provision of the spacecraft will involve the use of the vendor's
intellectual property. In all cases, the contracts either provide full
title to EarthWatch or contain a license allowing for the use of the
intellectual property for the life of the EarlyBird satellites.
(4) Contracts Related to EarlyBird Ground System - EarthWatch has entered
into contracts with CTA Incorporated, Datron/Transco, Inc., GTE
Government Systems Corporation and assorted smaller vendors for the
delivery of the EarlyBird ground system. These contracts either
provide full title to EarthWatch or contain a license allowing for the
use of the intellectual property for the life of either the ground
system or the EarlyBird satellite series.
(5) Software License with Ball Aerospace - Ball Aerospace and EarthWatch
have entered into a license agreement to allow EarthWatch the use of
certain Ball Aerospace software and intellectual property for the life
of the QuickBird satellites.
(6) MDA Work-Around Plan - On September 2, 1998, EarthWatch and MDA, a
stockholder of the Company, entered into an agreement to address the
loss of EarlyBird 1 in relationship to the Supply Contract between the
parties. In consideration of a waiver of the MDA right of first
refusal to ground system work
scopes, EarthWatch provided a license to the information necessary to
provide QuickBird ready ground stations.
(7) OSC License for Software and Hardware Documentation - EarthWatch and
OSC entered into two license agreements in August 1997 for the use of
EarlyBird Software Source Code and Hardware documentation. This
license is in effect until the EarlyBird satellite ends its life or
the program is terminated.
(8) Consultant Agreements - WorldView issued a number of contracts that
restricted the rights of the Company in pre-existing intellectual
property. In some instances, these contracts stated that the U.S.
Government held patent rights to inventions created by the
consultants. To the best of the Company's knowledge, these agreements
did not result in any patentable inventions, and these restrictions do
not in any material manner restrict the Company's ability to conduct
business. These consultants are no longer engaged by the Company.
(c) The following proprietary information and inventions agreements with
current and former employees of the Company limit the rights to or
ownership of the Company's Intellectual Property Assets. To the best of the
Company's knowledge, these agreements do not in any material manner
restrict the Company's ability to conduct its Business.
(1) Proprietary information and inventions agreement with Xxxxxx Xxxx
identifies an item of pre-existing intellectual property to which
EarthWatch has no rights. Such item is a headlight leveling system.
(2) Proprietary information and inventions agreement with Xxxxx Xxxx
identifies two (2) items of pre-existing intellectual property to
which EarthWatch has no rights. Such items are a design tool for GPS
relative positioning and a filtering technique for real-time GPS
Signal processing.
(3) Proprietary information and inventions agreement with Xxxx Xxxxxxxxxx
identifies seven (7) items of pre-existing intellectual property to
which EarthWatch has no rights. Such items are an optical/electrical
method for fratpicide elimination, spacecraft 1750 processor
implementation, spacecraft command decoder implementation, TDD modem
implementation, circuit-safe continuity design, computer controlled
data router and listening system controller and conductivity probe
reader for steam drive power plants.
(4) Proprietary information and inventions agreement with Xxxxxxx Xxxxx
identifies an item of pre-existing intellectual property relating to
an unmanned airborne vehicle to which EarthWatch has no rights.
(5) Proprietary information and inventions agreement with Xxxxxxx X. Xxxxx
identifies an item of pre-existing intellectual property to which
EarthWatch has no rights. Such item is a microprocessor controlled
telescope drive electronics.
(6) Proprietary information and inventions agreement with Xxxxxxx X.
Xxxxxxxxx identifies an item of pre-existing intellectual property to
which EarthWatch has no rights. Such item is a baseline correlation
routine for registration of multi-spectral push-broom images.
(7) Proprietary information and inventions agreement with Xxx X. Xxxxx
identifies two (2) items of pre-existing intellectual property to
which EarthWatch has no rights. Such items are an on-orbit propagator
which models atmospheric drag, J2 effect and lunar perturbations and
software and notes relating to diabetes management and blood glucose
prediction and tracking/trending.
(8) Proprietary information and inventions agreement with Xxxxxx X. Xxxxxx
references a California statute which restricts the effect of
intellectual property assignment provisions. The restriction requires
that assigned intellectual property should relate to the employer's
business or result from work performed by the employee for the
employer.
(9) Proprietary information and inventions agreement with former employees
routinely identify pre-existing intellectual property to which the
Company did not receive title or rights. However, title to all
Intellectual Property Assets developed in the course of the scope of
employment of such former employees vested in the Company.
(d) The Company does not own any Patents. EarthWatch has received rights to use
applicable Patents owned by its vendors under contract terms as noted in
subsection (b) above.
(e) The following constitutes all Marks claimed by EarthWatch:
(1) The phrase "DigitalGlobe" is a U.S. registered trademark of
EarthWatch.
(2) The Globe Design representing the DigitalGlobe is a U.S. registered
trademark of EarthWatch.
(3) The phrase "Your Planet On Line" is a U.S. registered trademark of
EarthWatch.
(4) The phrase "Seconds On Orbit" is a trademark that EarthWatch is now
using.
(5) The name "EarthWatch" is not a U.S. registered trademark of
EarthWatch. Such name is currently in use by at least two (2) other
companies.
(f) The following constitutes a list of the Company's Copyrights:
(1) EarthWatch has claimed a common law copyright on delivered third party
data products for the EarthWatch value added effort.
(2) EarthWatch has claimed a common law copyright on delivered data
products when EarthWatch owns the products. This includes the Front
Range Data.
(3) EarthWatch will claim a common law copyright on its satellite derived
data products as they are received and developed.
Section 3.20
Material Contracts
(a) The following constitute Material Contracts:
(1) Ball Aerospace Contract - In June 1998, the Company and Ball
Aerospace, a related party, entered into a fixed price contract for
construction of the Company's initial QuickBird satellite with an
option for a second unit. The contract as currently amended schedules
the satellite as ready to ship on November 31, 1999. The total of the
contract is currently valued at $33,795,000. The Company plans to
enter into a contract for the supply of QuickBird 2 with Ball
Aerospace shortly after the execution of the Recapitalization
Agreement. In the event that the Company enters into a contract for
the manufacture and delivery of QuickBird 2, the Company will also
enter into additional contracts with vendors as necessary to support
the satellite.
(2) Ball Aerospace Engineering Services Contract - In March 1996, the
Company and Ball Aerospace entered into a labor hour contract for the
provision of engineering services in support of the various tasks
associated with the spacecraft as identified and authorized by the
Company. This contract is currently in full force and effect.
(3) Scientific and Technological Center Contract - In July 1997, the
Company and Scientific and Technological Center entered into a
contract whereby Scientific and Technological Center will provide a
launch and associated services for the EarlyBird 2 satellite launch.
The Company can initiate termination of this contract without any
liability beyond the amounts already paid. If work is authorized under
this contract, it could exceed $1,000,000 in the 12-month period.
(4) MDA Work-Around Plan - Reference is made to the disclosure set forth
in Section 3.19(b)(6) which is incorporated herein by reference. The
MDA Work-Around Plan revised schedule and purchase obligations of
EarthWatch. EarthWatch has issued Call-Up 21, which has a total fixed
price of Canadian dollars of $5,492,212, for the development and
delivery of selected product segment core components.
(5) Kodak Agreement - During October 1996, the Company and Kodak entered
into an Agreement for the EarthWatch QuickBird Sensor Subsystem. Under
this agreement, Kodak will provide the necessary resources for the
definition, design, production, integration, test and verification of
one Sensor Subsystem and critical parts required for a second Sensor
Subsystem. In December 1998, the Company exercised the option for the
second subsystem. This increased the total contract value to
$26,900,000.
(6) Fokker Contract - In September 1997, the Company signed an agreement
with Fokker for two (2) solar array assemblies in connection with the
QuickBird satellite program. The fixed price for this contract is
$7,651,000. Payments are due either upon completion of each milestone
outlined in the contract or may be deferred, at the
option of the Company, until the delivery of QuickBird 2. Deferred
milestone payments will bear interest until payments are received. The
Company has sold the first assembly to Ball Aerospace and paid Fokker
$3,746,578. The Company is currently negotiating with Fokker for a
third solar array with an anticipated cost not to exceed $4,000,000.
(7) ITT Industries, Inc., ITT Systems Contract - In December 1998, the
Company entered into contracts with the ITT Systems division of ITT
Industries, Inc. for system engineering and other efforts associated
with the scheduling and tasking module of the QuickBird satellite and
the development of a satellite simulator. The current value of these
contracts as amended is approximately $1,043,000.
(8) Storm Control Systems, Inc. Contract - On July 16, 1998, the Company
signed an agreement with Storm Control Systems, Inc. for the
fabrication and delivery of a QuickBird command and control system.
The contract, as amended, has a total value to $1,818,402.
(9) United Start Corporation Contract - In July 1998, the Company has
signed an agreement with United Start Corporation ("United Start"),
whereby United Start would provide launch and associated services for
a QuickBird 1 satellite launch before November 30, 2001 at a total
price of $14,000,000. This contract is not effective until approved by
the United Start board of directors.
(10) Contract for QuickBird-2 Launch Provider - EarthWatch has received
proposals for a QuickBird-2 launch provider. Both EUROCKOT Launch
Services GMBH and Lockheed-Xxxxxx Commercial Launch Services, Inc.
have submitted proposals. The final amount is to be negotiated within
a range of a total value of $13 million to $25 million for based
on the proposals prior to any negotiations. Payment schedules will be
finalized during negotiations.
(11) Potential ITT Industries, Inc. Sensor Study Contract - Within the next
12 months, EarthWatch anticipates entering into a contract relating to
a study of a sensor to determine, among other things, the current
state of the art of sensor technology, the advantages and
disadvantages possessed by the various technologies, and the
feasibility of the various sensor technologies. The value of this
effort is unknown, but could exceed one million dollars in the next
twelve-month period.
(12) Potential Assured Space Access, Incorporated Contract - EarthWatch and
Assured Space Access, Incorporated ("ASA") have entered into
negotiations for the provision of pre-launch and launch support
services. It is likely that payments under any resulting contract
could exceed one million dollars in the next twelve-month period. This
will be a time and material contract with tasks assigned by EarthWatch
as a need is identified. EarthWatch is a stockholder in ASA.
(13) Potential Hitachi Ltd. Product Processor Contract - Hitachi Ltd., an
affiliate of the Company, has proposed to supply EarthWatch with a
complete QuickBird product
processor. As currently envisioned, the contract would not involve
payments in the next 12 months. However, the expected contract value
is four million dollars and could exceed payments of one million
dollars in the next 12 months through negotiations.
(14) Potential QuickBird Launch Insurance Contract - In Spring 1999,
EarthWatch will enter into negotiations with an, as yet, unidentified
underwriter for approximately $240 million of launch insurance. This
contract will entail payment of over one million dollars in the next
12 months.
(15) Customer and Order Management System (COMS) and EarthWatch Ordering
and Tasking Tool (EWOTT) Services Contract - In January 1999,
EarthWatch entered into a contract with Interlink for the design
requirements of the COMS. The contract has subsequently been modified
to include the EWOTT effort. Currently, the payments to Interlink will
not exceed one million dollars in the next 12 months. EarthWatch will
award a contract for the full development and delivery of the COMS and
EWOTT components. It is expected that such a contract will exceed one
million dollars of payments in the next 12 months whether Interlink or
another vendor is selected.
(16) Bundesstelle fur Fernmeldestatistik - In November 1997, the Company
entered into a contract with Bundesstelle fur Fernmeldestatistik
("BFST"), an agency of the German government, to provide the
capability to directly receive EarthWatch satellite imagery. Since
this contract involved both EarlyBird and QuickBird satellites, the
contract must be modified to reflect the loss of EarlyBird prior to
receiving the authorization to proceed. Discussions on the
modification will continue this spring.
(17) National Aeronautics and Space Administration - Earth Science
Enterprise Contract - In September 1998, the Company entered into a
contract with the National Aeronautics and Space Administration
("NASA") for the supply of Central America and Indonesian DEM and ORI
data sets. The contract is set up as delivery order contract with
various issued delivery orders specifying the particular data set
defined in original contract. Contract maximum value is $9,900,000. A
formal Delivery Order was received from NASA with a value of
$6,202,900. The data to be supplied is subcontracted though Intermap
Technologies Ltd.
(18) NASA - Cooperative Agreement - In November 1997 the Company entered in
a Cooperative Agreement with NASA to identify concepts, strategies and
processes for providing advanced remote sensing data to electric
utility, water management and property appraisal projects. The
agreement requires 76% co-funding contribution of the total value of
the effort, $428,502. Subcontractors include Tennessee Valley
Authority (TVA) and various data providers. Notice of this agreement
is included because of its hybrid nature.
(19) National Imagery and Mapping Agency - Commercial Imagery
Infrastructure/Data Buy - In December, 1998, the Company entered into
a contract
with the National Imagery and Mapping Agency ("NIMA") for the
development and/or enhancement of the Company's infrastructure to
facilitate delivery of metadata, imagery products and wideband imagery
data to NIMA, and to provide, upon receipt of a delivery order,
metadata, imagery, wideband imagery products. The current minimum
value of the contract is $2,203,000 with a maximum not to exceed
value of $100,000,000.
(20) Hitachi Ltd. Distribution Agreement - In 1995, the Company entered
into a distribution agreement with Hitachi Ltd., a stockholder of the
Company. This agreement assigned to Hitachi Ltd. exclusive territory
that includes much of Asia. The contract does not preclude the Company
from selling products in the area, but it does provide Hitachi Ltd.
with a royalty for such sales.
(21) Nuova Telespazio S.p.A. Distribution Agreement - In 1995, the Company
entered into a distribution agreement with Nuova Telespazio S.p.A., a
stockholder of the Company. This agreement assigned to Nuova
Telespazio S.p.A. exclusive territory that includes much of Europe and
parts of Africa. The contract does not preclude the Company from
selling products in the exclusive territory, but it does provide Nuova
Telespazio S.p.A. with a royalty for such sales.
(22) Leasetec Corporation Agreement - In March 1997, the Company and
Leasetec Corporation entered into an Agreement for Purchase and Sale -
Leaseback for the lease of specific computer equipment used in
processing imagery data. The lease provides for monthly payments of
$7,749 over a thirty six month period beginning March 1997 and ending
February 2000.
(23) Securus, Inc. Lease Agreement - In March 1997, the Company and
Securus, Inc. entered into a Lease Agreement for certain security
system equipment installed at the Company's facility in Longmont,
Colorado. The lease provides for monthly payments of $2,157 beginning
July 1997 and ending June 2002.
(24) Xxxxx & Associates, Inc. Agreements - In December 1998 and February
1999, the Company entered into two Cost Per Copy Rental Agreements for
certain copying equipment. The leases require monthly payments of
$1,400 and $1,290, respectively, for sixty months from inception of
the leases.
(25) AT&T Credit Corporation Agreement - In July 1996, the Company entered
into a Master Equipment Lease Agreement Schedule with AT&T Credit
Corporation for certain telecommunications equipment. The lease
requires monthly lease payments of $7,353 through June 2000.
(26) JLA Credit Corporation Agreements - The Company has entered into a
number of leases with JLA Credit Corporation for various office and
scientific equipment. These leases require a total monthly payment of
approximately $5,000 per month with varying expiration dates through
March 2001.
(27) USA Leasing, L.L.C. Agreement - In September 1996, the Company entered
into a Lease Agreement with USA Leasing, L.L.C. for certain computer
equipment. The lease requires the Company to pay $4,500 per month
through September 1999.
(28) Copelco Capital, Inc. Agreement - In November 1996, the Company and
Copelco Capital, Inc. entered into an agreement for certain computer
equipment. The lease requires a monthly payment of $2,980 through
November 1999.
(29) Alascom, Inc., dba AT&T Alascom Agreement - In September 1996, the
Company and Alascom, Inc. dba AT&T Alascom entered into a Master Lease
Agreement for certain communications equipment. The lease requires a
monthly payment of $5,717 including maintenance and repairs through
December 2001.
(30) Reference is made to the disclosure set forth in Section 3.19(b) which
is incorporated herein by reference.
(23) Reference is made to the disclosure set forth in Section 3.26 which is
incorporated herein by reference.
(24) Reference is made to the disclosure set forth in Section 3.2(e) which
is incorporated herein by reference.
Section 3.23
Insurance
The Company has had operational difficulties with TIG Insurance Company, its
carrier of workers' compensation insurance, related to invoicing which has
resulted in at least one (1) cancellation notice during this policy year, which
begins July 1, 1998 and ends June 30, 1999. Although it has been the intention
of the Company to maintain this policy in good standing, the carrier has not
been able to generate accurate invoices.
Section 3.24
Brokers
The Company has executed a financial advisory agreement with Xxxxxx Xxxxxxx &
Co., Incorporated. Such letter will be superseded by a newly executed Advisory
Agreement as further set forth in Section 2.2(f) of the Agreement (the "Advisory
Agreement").
Section 3.25
Senior Note Indenture
No exceptions.
Section 3.26
Transactions with Affiliates
(a) Reference is made to the disclosure set forth in Section 3.15(i) which is
incorporated herein by reference.
(b) Reference is made to the disclosure set forth in Section 3.20 which is
incorporated herein by reference.
(c) The Company has traditionally made arrangements with "strategic partners"
who have made independent investments in the Company or provided goods and
services in exchange for investment in the Company. Accordingly, the
Company currently has contracts with Ball Aerospace, Datron/Transco, Inc.
and MDA and is planning similar arrangements with ITT Industries, Inc. In
addition, two (2) of the Company's investors, Hitachi Ltd. and Nuova
Telespazio S.p.A., are contracted as Master International Distributors of
the Company's products.
(d) The Company and ASA have entered into negotiations for the provision of
pre-launch and launch support services. The Company is a stockholder of
ASA.
(e) Hitachi Ltd., a stockholder of the Company, has proposed to supply the
Company with a complete QuickBird product processor.
(f) Xxxxxx Xxxxxxx & Co., Incorporated, with whom the Company has an Advisory
Agreement, is also a stockholder of the Company. Reference is made to the
disclosure set forth in Section 3.24 which is incorporated herein by
reference.
(g) Xxxxxxxxx X. Xxxxxxx is a member of the Board of Directors of the Company.
He is also the Chairman of the Board of United Start (the Company's launch
provider) and the Chairman of the Board and Chief Executive Officer of ASA
(the Company's launch services provider). Xxxxxxxxx X. Xxxxxxx is a
stockholder of ASA. ASA is a stockholder in United Start.
Xxxxxx X. Xxxxxxx is the Company's interim Chief Financial Officer. He is
also a member of the Board of Directors, the President and the Chief
Executive Officer of United Start. Xx. Xxxxxxx is a stockholder, a member
of the Board of Directors, the President and the Chief Operating Officer of
ASA. ASA is a stockholder of United Start.
Xxxxxxx X. Xxxxxxxxx, III, the Company's President and Chief Executive
Officer, has agreed to join the Board of Directors of ASA and of United
Start.
Xxxxxx X. Xxxxx, the Company's Chief Technical Officer is a stockholder of
ASA. The Company is a stockholder of ASA, which is a stockholder of United
Start.
The Company is a stockholder of ASA. ASA is a stockholder of United Start.
(h) The Company has issued shares of capital stock and granted options to
certain Affiliates of the Company. Reference is made to Section 3.2 which
is incorporated herein by reference.
Section 5.1
Conduct of Business Prior to Closing
(a) (1) The Company is reviewing its distributor and reseller relationships
and contracts and may make changes in the structure of these
arrangements prior to the launch of QuickBird 1.
(b) (1) Reference is made to the disclosure set forth Section 3.2(g) which is
incorporated herein by reference.
(2) Reference is made to the disclosure set forth Section 3.9 which is
incorporated herein by reference.
(3) Reference is made to the disclosure set forth Section 3.17(a)-(b)
which is incorporated herein by reference.
(4) Reference is made to the disclosure set forth Section 3.20(a)(1), (2),
(6), (7), (9), (11), (12) and (13) which is incorporated herein by
reference.
(5) Reference is made to the disclosure set forth Section 3.26 which is
incorporated herein by reference.
(6) The Company plans to issue stock options to employees in the ordinary
course of business pursuant to the New Equity Plan.
(7) The Company is planning to effectuate a public offering or private
placement of debt securities within three (3) months from the date
hereof pursuant to the terms of the Advisory Agreement.
(8) Hitachi Ltd., a stockholder of the Company, has proposed to supply the
Company with a complete QuickBird product processor. The Company will
enter into such contract if the Company determines this proposal to be
advantageous to its Business. Such transaction would be in the
Company's ordinary course of business.
