EXHIBIT 2.2
EXECUTION COPY
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RECAPITALIZATION AGREEMENT AND CONSENT
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by and among
EARTHWATCH INCORPORATED
and
EACH OF THE PARTIES SET FORTH ON SCHEDULE 1 HERETO
Dated as of April 2, 2001
TABLE OF CONTENTS
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Page
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Article I DEFINITIONS..................................................................... 3
SECTION 1.1 Certain Defined Terms..................................................... 3
Article II RECAPITALIZATION TRANSACTIONS AND CONSENT....................................... 8
SECTION 2.1 Recapitalization Transactions and Consent................................. 8
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................... 11
SECTION 3.1 Incorporation and Authority of the Company................................ 11
SECTION 3.2 Capital Stock............................................................. 11
SECTION 3.3 Subsidiaries.............................................................. 12
SECTION 3.4 Stockholder Approvals Required............................................ 12
SECTION 3.5 No Conflict............................................................... 12
SECTION 3.6 Consents and Approvals.................................................... 13
SECTION 3.7 Financial Statements...................................................... 13
SECTION 3.8 Absence of Undisclosed Liabilities and Liens.............................. 13
SECTION 3.9 Absence of Certain Changes or Events...................................... 14
SECTION 3.10 Absence of Litigation..................................................... 14
SECTION 3.11 Compliance with Laws...................................................... 14
SECTION 3.12 Licenses and Permits...................................................... 14
SECTION 3.13 Sufficiency and Condition of Assets....................................... 15
SECTION 3.14 Real Property............................................................. 15
SECTION 3.15 Employee Benefit and Labor Matters........................................ 16
SECTION 3.16 Labor Matters............................................................. 18
SECTION 3.17 Taxes..................................................................... 18
SECTION 3.18 Environmental, Health and Safety.......................................... 19
SECTION 3.19 Intellectual Property..................................................... 20
SECTION 3.20 Material Contracts........................................................ 23
SECTION 3.21 No Solicitation; Exemption from Registration.............................. 24
SECTION 3.22 Insurance................................................................. 24
SECTION 3.23 Brokers................................................................... 25
SECTION 3.24 Indenture................................................................. 25
SECTION 3.25 Transactions with Affiliates.............................................. 25
Article IV REPRESENTATIONS AND WARRANTIES OF THE NOTEHOLDERS............................... 25
SECTION 4.1 Incorporation and Authority of the Noteholder............................. 25
SECTION 4.2 Investment Purpose........................................................ 25
SECTION 4.3 No Solicitation........................................................... 27
SECTION 4.4 Brokers................................................................... 27
Article V COVENANTS....................................................................... 27
SECTION 5.1 Charter Amendments........................................................ 27
SECTION 5.2 Issuance of New Series C Preferred Stock.................................. 28
SECTION 5.3 Vendor Financing.......................................................... 28
SECTION 5.4 Satellite Insurance....................................................... 28
SECTION 5.5 Consents; Reasonable Best Efforts......................................... 29
SECTION 5.6 Repurchase of Notes....................................................... 29
SECTION 5.7 Plan of Reorganization.................................................... 30
SECTION 5.8 Confidentiality........................................................... 30
SECTION 5.9 Security Documents........................................................ 30
Article VI INDEMNIFICATION................................................................. 30
SECTION 6.1 Survival of Representations and Warranties................................ 30
SECTION 6.2 Indemnification........................................................... 30
SECTION 6.3 Indemnification Procedures................................................ 31
Article VII TERMINATION AND WAIVER.......................................................... 31
SECTION 7.1 Termination............................................................... 31
SECTION 7.2 Effect of Termination..................................................... 32
SECTION 7.3 Waiver.................................................................... 32
Article VIII GENERAL PROVISIONS.............................................................. 32
SECTION 8.1 Expenses.................................................................. 32
SECTION 8.2 Survival.................................................................. 32
SECTION 8.3 Notices................................................................... 32
SECTION 8.4 Public Announcements...................................................... 33
SECTION 8.5 Headings.................................................................. 33
SECTION 8.6 Severability.............................................................. 33
SECTION 8.7 Entire Agreement.......................................................... 33
SECTION 8.8 Assignment................................................................ 33
SECTION 8.9 No Third Party Beneficiaries.............................................. 33
SECTION 8.10 Amendment................................................................. 33
SECTION 8.11 Governing Law............................................................. 33
SECTION 8.12 Counterparts.............................................................. 34
SECTION 8.13 Specific Performance...................................................... 34
EXHIBITS
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Exhibit A Terms of Vendor Financing
Exhibit B-1 Form of New Registration Rights Agreement
Exhibit B-2 Form of Series C Preferred Registration Rights Agreement
Exhibit C Form of Supplemental Indenture
Exhibit D Form of Pledge Agreement
Exhibit E-1 Form of Opinion to be delivered under Section 2.1(a)(ii)
Exhibit E-2 Form of Opinion to be delivered under Section 2.1(a)(iv)
Exhibit F Form of Intercreditor Acknowledgment
Exhibit G Form of Charter Amendments
Exhibit H-1 Form of Senior Pledge and Security Agreement
Exhibit H-2 Form of Junior Pledge and Security Agreement
Exhibit I-1 Form of Opinion to be delivered under Section 5.4 (New York
and Delaware law)
Exhibit I-2 Form of Opinion to be delivered under Section 5.4 (Colorado
law)
SCHEDULES
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Schedule 1 Noteholders
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Schedule 2 Disclosure Schedule
Schedule 3 Distribution Schedule for New Series C Preferred
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THIS RECAPITALIZATION AGREEMENT AND CONSENT (this "Agreement"), dated as of
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April 2, 2001, is made by and among EarthWatch Incorporated, a Delaware
corporation (the "Company") and each of the parties set forth in Schedule 1 to
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this Agreement (collectively, the "Noteholders").
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RECITALS
WHEREAS, on November 21, 2000, the Company announced the failure of
its QuickBird 1 remote sensing satellite ("QuickBird 1") to reach the proper
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orbit;
WHEREAS, as required under the terms of the Indenture, dated as of
July 12, 1999 (the "13% Notes Indenture"), between the Company and The Bank of
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New York (the "13% Notes Trustee"), for the Company's 13% Senior Discount Notes
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due 2007 (the "13% Notes") and the Amended and Restated Indenture, dated as of
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April 8, 1999 as supplemented by the Supplemental Indenture, dated as of July 7,
1999 (the "12 1/2% Notes Indenture"), between the Company and The Bank of New
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York, for the Company's 12 1/2% Senior Notes due 2005 (the "12 1/2% Notes"), the
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Company, pursuant to an Offer to Purchase for Cash dated February 28, 2001 (the
"Tender Offer") is making an offer to purchase all outstanding 13% Notes and 12
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1/2% Notes at their accreted value on the date of repurchase with the
approximately $265 million of proceeds from the insurance relating to the
QuickBird 1 launch. The Tender Offer is scheduled to expire on April 2, 2001
and all 13% Notes and 12 1/2% Notes validly tendered are expected to be
repurchased on April 3, 2001 (the "Tender Payment Date");
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WHEREAS, the Noteholders beneficially own the principal amount at
maturity of 13% Notes set forth opposite their name on Schedule 1 hereto;
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WHEREAS, in order to finance the future operations of the Company,
including the construction, launch and operation of the Company's QuickBird 2
remote sensing satellite ("QuickBird 2"), the Company has requested that the
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Noteholders refrain from tendering their 13% Notes in the Tender Offer and has
requested Ball Aerospace & Technologies Corp., a Delaware corporation (the
"Vendor"), to provide the Company with $9 million of financing for the
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construction and launch of QuickBird 2 on substantially the terms set forth on
Exhibit A hereto (the "Vendor Financing");
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WHEREAS, in consideration for the Noteholders' not tendering their 13%
Notes in the Tender Offer, the Company has agreed to effectuate the following
transactions (collectively, the "Transactions") on the terms and subject to the
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conditions set forth in this Agreement:
(A) Repurchase in the Tender Offer all outstanding 12 1/2%
Notes and all outstanding 13% Notes tendered in the Tender Offer;
(B) Amend the 13% Notes Indenture pursuant to a
Supplemental Indenture (as defined herein) to, among other things, require the
Company to (a) obtain launch and in-orbit operations insurance in respect of
QuickBird 2 and (b) make an offer to repurchase the 13% Notes at their accreted
value on the date of repurchase (i) in the event all elements of the
Transactions are not completed, upon the terms and conditions specified in this
Agreement, by June 15, 2001, and to consummate such offer to repurchase no later
than August
1, 2001 (the "Incomplete Transaction Purchase Date") and (ii) upon the
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occurrence of an insured event under the QuickBird 2 Insurance (as defined
herein), and to consummate such offer to repurchase no later than 60 days after
the commencement thereof;
(C) Pledge in favor of The Bank of New York, as collateral
agent for the holders of the 13% Notes, United States government securities
maturing no later than June 15, 2001, in an aggregate principal amount at least
equal to what the Accreted Value (as defined in the 13% Notes Indenture) will be
on the Incomplete Transaction Purchase Date for all 13% Notes outstanding after
completion of the Tender Offer, pursuant to a Pledge Agreement (as defined
herein);
(D) Obtain at least $9 million of Vendor Financing from the
Vendor;
(E) Amend the terms of the Series A Preferred Stock, Series
B Preferred Stock and Series C Preferred Stock (each as defined herein) (a) to
give holders of Series A Preferred Stock and Series B Preferred Stock the right
to sell to the Company, immediately following the consummation of an offer to
repurchase the Notes and the repayment of the Vendor Financing upon the
occurrence of an insured event under the QuickBird 2 Insurance, and for a period
of not less than 60 days, the Series A Preferred Stock and Series B Preferred
Stock held by them, at a purchase price equal to their liquidation preference
plus accrued and unpaid dividends thereon, to the extent of any proceeds under
the QuickBird 2 Insurance available to the Company for the repurchase thereof,
and (b) to extend the period during which the holders of Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock may convert those
shares into Common Stock (as defined herein) by one year, all as set forth in
the Charter Amendments (as defined herein);
(F) Issue Series C Preferred Stock in an amount equal to
12% of the Company's capital stock on a fully-diluted, as converted basis, to
the Noteholders on a pro-rata basis, based on the principal amount at maturity
of the 13% Notes to remain outstanding and held by each Noteholder as set forth
on Schedule 1;
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(G) Enter into a Registration Rights Agreement
substantially in the form attached hereto as Exhibit B-1 (the "Notes
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Registration Rights Agreement") providing certain registration rights to holders
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of the 13% Notes;
(H) Enter into the Series C Preferred Registration Rights
Agreement (as defined herein), to provide to the Noteholders and their direct
and indirect transferees registration rights with respect to shares of Common
Stock issuable upon conversion of the Series C Preferred Stock to be issued in
the Transactions;
(I) Purchase (by paying the initial deposit therefor),
simultaneously with or following the completion of all other elements of the
Transactions, QuickBird 2 Insurance in an amount no less than $155 million, it
being understood that the remaining insurance premiums are to be paid in
accordance with the payment schedule under the terms of the QuickBird 2
Insurance; and
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(J) Pledge the QuickBird 2 Insurance in favor of The Bank
of New York, as collateral agent for (i) the holders of the 13% Notes and for
the holder of the Vendor Financing, pursuant to a Senior Pledge and Security
Agreement (as defined herein) and (ii) the holders of the Series A Preferred
Stock and the Series B Preferred Stock, pursuant to a Junior Pledge and Security
Agreement (as defined herein);
WHEREAS, it is the intention of the parties hereto that the
Transactions qualify as a "recapitalization" within the meaning of Section
368(a) of the Code (as defined herein) for United States Federal income tax
purposes;
WHEREAS, the Noteholders have agreed to refrain from tendering in the
Tender Offer the aggregate principal amount at maturity of 13% Notes set forth
opposite their name in Schedule 1 hereto and to consent to amend the 13% Notes
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Indenture as set forth in the Supplemental Indenture, on the terms and subject
to the conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the Company and each of the
Noteholders hereby agree as follows:
ARTICLE I
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DEFINITIONS
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SECTION 1.1 Certain Defined Terms. As used in this Agreement, the
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following terms shall have the following meanings:
"Affiliate" means, with respect to any specified person, any other
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person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
person.
"Business" means the business of commercial remote sensing as
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conducted and as currently intended to be conducted by the Company and its
Subsidiaries.
"Business Day" means any day that is not a Saturday, a Sunday or other
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day on which banks are required or authorized by law to be closed in The City of
New York.
"Code" means the Internal Revenue Code of 1986, as amended through the
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date hereof.
"Common Stock" means the Common Stock, par value $.001 per share, of
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the Company.
"Communications Act" means the Communications Act of 1934, as amended.
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"Controlled Group Liability" means any and all liabilities (i) under
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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 provisions of
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foreign laws or regulations, other than such liabilities that arise solely out
of, or relate solely to, the Employee Benefit Plans.
"DGCL" means the Delaware General Corporation Law.
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"Disclosure Schedule" means the Disclosure Schedule attached hereto as
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Schedule 2, dated as of the date hereof, and forming a part of this Agreement.
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"Employee Benefit Plan" means any employee benefit plan, program,
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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 is a party, contributes or is obligated to contribute, whether or
not written, including, without limitation, any employee welfare benefit plan
within the meaning of Section 3(1) of ERISA (whether or not such plan is subject
to 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, restricted stock,
stock option, severance, employment, change of control or fringe benefit plan,
program or agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended and any regulations promulgated or proposed thereunder.
"ERISA Affiliate" means, with respect to any entity, trade or
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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.
"Existing Stock Option Plan" means, collectively, the following plans,
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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 1999 Equity Incentive Plan, 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 to this Agreement and not
granted under any such plan.
"FCC" means the Federal Communications Commission.
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"Governmental Authority" means any United States federal, State or
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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.
"Governmental Order" means any order, writ, judgment, injunction,
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decree, stipulation, determination or award entered by or with any Governmental
Authority.
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"Income Tax" or "Income Taxes" means any federal, state, local or
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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.
"Indebtedness" means (a) indebtedness for borrowed money, (b)
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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.
"IRS" means the Internal Revenue Service of the United States.
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"knowledge" means, with respect to any party, the actual knowledge of
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any officer or executive of such party.
"Leased Real Property" means the real property leased by the Company
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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, and all easements, licenses,
rights and appurtenances relating to the foregoing.
"Liabilities" means any and all debts, liabilities and obligations,
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whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable.
"Material Adverse Effect" means any change in, or effect on, the
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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.
"New Series C Preferred Stock" means the Series C Preferred Stock to
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be issued to the Noteholders as part of the Transactions.
"Owned Real Property" means the real property owned by the Company or
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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.
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"Permitted Encumbrances" means: (a) liens for Taxes and assessments
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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 material men'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.
"person" means any individual, partnership, firm, corporation, limited
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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.
"Preferred Stock" means the Series A Preferred Stock, the Series B
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Preferred Stock and the Series C Preferred Stock.
"QuickBird 2 Insurance" means launch and in-orbit operations insurance
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in respect of QuickBird 2 having the terms and provisions described in Section
4.10(b) of the Indenture, as to be amended by the Supplemental Indenture
(including, without limitation, terms naming the 13% Notes Trustee, as
collateral trustee under the Senior Pledge and Security Agreement on behalf of
the holders of the 13% Notes and the holders of the Vendor Financing, as sole
loss payee thereon) in an amount no less than $155,000,000, and being in form
and substance reasonably acceptable to the 13% Notes Trustee, as collateral
trustee. The terms of the QuickBird 2 Insurance shall be substantially the same
as the terms of the First QuickBird Launch Insurance (as defined in the 13%
Notes Indenture), except (i) for such differences as may be required due to the
differences in construction, launch or in-orbit operation between QuickBird 1
and QuickBird 2, (ii) that the QuickBird 2 Insurance shall only be required to
cover at least one year of operations after launch of QuickBird 2, (iii) as is
acceptable to the holders of a majority of the 13% Notes in their absolute
discretion and (iv) for such differences that do not adversely affect the
holders of 13% Notes.
"Real Property" means the Leased Real Property and the Owned Real
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Property.
"Recapitalization Agreement" means the Recapitalization Agreement,
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dated as of April 8, 1999, among the Company, Xxxxxx Xxxxxxx & Co. Incorporated
and the other parties thereto.
"Securities Act" means the Securities Act of 1933, as amended.
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"Series A Preferred Stock" means the 7% Cumulative Convertible
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Redeemable Preferred Stock due 2009, Series A, par value $.001 per share, of the
Company.
"Series B Preferred Stock" means the 7% Cumulative Convertible
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Redeemable Preferred Stock due 2009, Series B, par value $.001 per share, of the
Company.
"Series C Preferred Stock" means the 8.5% Cumulative Convertible
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Redeemable Preferred Stock due 2009, Series C, par value $.001 per share, of the
Company.
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"Subsidiary" of any person means another person, an amount of the
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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.
"Tax" or "Taxes" means any and all taxes, fees, assessments, levies,
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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 governmental 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.
"Tax Return" means any return, declaration, report, claim for refund,
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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.
"Taxing Authority" means any Governmental Authority having
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jurisdiction over the assessment, determination, collection or other imposition
of any Tax.
"2000 Balance Sheet" means the audited consolidated balance sheet of
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the Company and its Subsidiaries, including the related schedules and notes
thereto, as of December 31, 2000.
"2000 Balance Sheet Date" means December 31, 2000.
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"U.S. GAAP" means United States generally accepted accounting
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principles.
SECTION 1.2 Other Defined Terms. The following terms shall have the
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meanings defined for such terms in the sections set forth below:
Term: Section:
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Advisor 3.23
Agreement Preamble
Charter Amendments 5.1(b)
Company Preamble
Copyrights 3.19(a)(iii)
Confidential Information 5.8
Environmental Claims 3.18(b)
Environmental Law 3.18(b)
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Environmental Permits 3.18(a)
Existing Common Stock 3.2(a)
Existing Preferred Stock 3.2(a)
Financial Statements 3.7
Hazardous Materials 3.18(b)
Incomplete Transaction Purchase Date Recitals
Indemnified Party 6.2
Intellectual Property Assets 3.19(a)
Intercreditor Acknowledgment 2.1(b)(ii)
Junior Pledge and Security Agreement 5.4(b)
Losses 6.2
Material Contracts 3.20(b)
Notes Registration Rights Agreement Recitals
Noteholders Preamble
Patents 3.19(a)(ii)
PCBs 3.18(b)
Pledge Agreement 2.1(a)(i)(A)
Pledge and Security Agreement 5.4(b)
Qualified Plans 3.15(b)
QuickBird 1 Recitals
QuickBird 2 Recitals
Senior Pledge and Security Agreement 5.4(b)
Series C Preferred Registration Rights Agreement 2.1(a)(i)(B)
Supplemental Indenture 2.1(a)(ii)(A)
Tangible Property 3.14(d)
Tax Group 3.17
Tender Offer Recitals
Tender Payment Date Recitals
13% Notes Recitals
13% Notes Indenture Recitals
13% Notes Trustee Recitals
Trade Secrets 3.19(a)(iv)
Transactions Recitals
12 1/2% Notes Recitals
12 1/2% Notes Indenture Recitals
Vendor Recitals
Vendor Financing Recitals
ARTICLE II
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RECAPITALIZATION TRANSACTIONS AND CONSENT
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SECTION 2.1 Recapitalization Transactions and Consent.
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(a) Upon the terms and subject to the conditions of this Agreement,
the Company agrees to consummate the Transactions as follows:
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(i) on the Tender Payment Date, immediately following the
repurchase of the 12 1/2% Notes and the 13% Notes tendered in the
Tender Offer the Company shall:
(A) execute, and direct the 13% Notes Trustee, as collateral
agent, to execute, the Pledge Agreement, substantially in the form
attached hereto as Exhibit D (the "Pledge Agreement") and deliver,
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pledge and transfer to the 13% Notes Trustee, as collateral agent
under the Pledge Agreement for the holders of the 13% Notes, United
States government securities maturing not later than June 15, 2001, in
an amount equal to the aggregate Accreted Value of the 13% Notes that
remain outstanding after the consummation of the Tender Offer as of
August 1, 2001;
(B) execute, and direct the 13% Notes Trustee to execute, the
Notes Registration Rights Agreement, in the form attached hereto as
Exhibit B-1, and execute the Series C Preferred Registration Rights
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Agreement, in the form attached hereto as Exhibit B-2 (the "Series C
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Preferred Registration Rights Agreement"); and
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(C) deliver to each Noteholder an officer's certificate to the
effect that (i) the representations and warranties of the Company
contained in this Agreement are true and correct as of the date hereof
and as of the Tender Payment Date 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) and (ii) the covenants and
agreements contained in this Agreement to be complied with by the
Company at or prior to the Tender Payment Date shall have been
complied with.
(ii) on or prior to April 25, 2001, the Company shall:
(A) execute, and direct the 13% Notes Trustee to execute, the
Supplemental Indenture, substantially in the form attached hereto as
Exhibit C (the "Supplemental Indenture");
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(B) deliver to each Noteholder an opinion of Xxxxx & XxXxxxxx,
dated as of the date of execution of the Supplemental Indenture, in
the form attached hereto in Exhibit E-1; and
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(C) deliver to each Noteholder an officer's certificate to the
effect that (i) the representations and warranties of the Company
contained in this Agreement are true and correct as of the date hereof
and as of the date of the execution of the Supplemental Indenture 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) and
(ii) the covenants and
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agreements contained in this Agreement to be complied with by the
Company at or prior to April 25, 2001 shall have been complied with.
(iii) on or prior to June 15, 2001, the Company shall consummate
each of the Transactions other than the Transactions required to be
consummated pursuant to Section 2.1(a)(i) and (ii) above; and
(iv) immediately following the execution of this Agreement by
the parties hereto, the Company shall deliver to each Noteholder an
opinion of Xxxxx & XxXxxxxx, dated as of the date hereof,
substantially in the form attached hereto as Exhibit E-2.
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(b) Upon the terms and subject to the conditions of this Agreement:
(i) each Noteholder agrees not to tender in the Tender Offer
any of the 13% Notes set forth opposite such Noteholder's name on
Schedule 1 hereto, which such Noteholder represents are beneficially
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owned by such Noteholder;
(ii) each Noteholder hereby consents, with respect to the 13%
Notes owned by such Noteholder as set forth on Schedule 1 hereto (as
----------
to which such Noteholder represents it has the sole voting power), to
the amendments to the 13% Notes Indenture in the form of the
Supplemental Indenture and authorizes and directs the 13% Notes
Trustee to execute the Supplemental Indenture, the Pledge Agreement,
the Notes Registration Rights Agreement, each Pledge and Security
Agreement and the Intercreditor Acknowledgment substantially in the
form attached hereto as Exhibit F, and agrees to execute and deliver
---------
such other documents as may be reasonably required to effectuate the
Transactions (including, in connection with any consent solicitation,
the execution and delivery, prior to the expiration thereof, of any
consent required to amend the 13% Notes Indenture in the form of the
Supplemental Indenture); and
(iii) each Noteholder shall execute, following the execution
thereof by the Company, the Series C Preferred Registration Rights
Agreement.
(c) The obligations of each Noteholder under Section 2.1(b) are
subject to the delivery to such Noteholder of the opinion referred to in
Section 2.1(a)(iv).
(d) Section 2.1(a) notwithstanding, if upon the closing of the Tender
Offer (i) either the Noteholders own less than the aggregate principal
amount at maturity of 13% Notes as set forth on Schedule 1 hereto or any
----------
13% Notes, other than the 13% Notes held by the Noteholders remain
outstanding or (ii) any of the 12 1/2% Notes remain outstanding, the
Company shall not take any of the actions that it would otherwise be
required to take under Section 2.1(a); provided that in such event the
--------
Company shall still be required to make and consummate an Offer to Purchase
(as defined in the Indenture) all outstanding 13% Notes pursuant to and in
accordance with Section 5.6.
10
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to each Noteholder 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
transactions 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
approval of the Charter Amendments by the stockholders as 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 Noteholders) constitutes a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms. The Company has made available to each Noteholder
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. The Company has issued and
has outstanding (a) 213,696 shares of common stock, par value $.001 per
share (100,000,000 shares authorized) (the "Existing Common Stock"); (b)
---------------------
8,051,273 shares of Series A Preferred Stock (10,000,000 shares
authorized); (c) 8,051,273 shares of Series B Preferred Stock (10,000,000
shares authorized); and (d) 25,022,561 shares of Series C Preferred Stock
(25,000,000 shares authorized) (together with the series of preferred stock
referred to in (b) through (c) 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. Except as set forth in Section 3.2 of the Disclosure
Schedule, there are no voting trusts, stockholders' agreements, proxies or
other agreements or
11
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 C Preferred Stock which are being issued
to the Noteholders in the Transactions, when issued and delivered in
accordance with the terms hereof (and in consideration for the Noteholders'
not tendering their 13% Notes in the Tender Offer and the Vendor's entering
into the Vendor Financing), will have been duly and validly authorized and
will be fully paid and nonassessable and will not have been issued in
violation of any preemptive rights.
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 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 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
as of the date of this Agreement. Set forth in Section 3.4(a) of the
Disclosure Schedule is, as of such date, the correct proportion of such
holders by series of Existing Preferred Stock whose approval is required to
effect the Charter Amendments.
(b) Set forth in Section 3.2 of the Disclosure Schedule is a correct
and complete list of holders of the Existing Common Stock as of the date of
this Agreement. Set forth in Section 3.4(b) of the Disclosure Schedule is,
as of such date, the correct proportion of such holders whose approval is
required to effect the Charter Amendments.
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,
12
injunction, decree, determination or award or threaten any governmental
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 Pledge Agreement and the Pledge and Security Agreements,
result in the creation of any lien or other encumbrance on any of the assets or
properties of the Company or any of its Subsidiaries pursuant to, any note,
bond, mortgage, indenture (other than the 12 1/2% Notes Indenture), contract,
agreement (other than Section 5.18 of the Recapitalization 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. The Company will, prior to the issuance of the
New Series C Preferred Stock to the Noteholders pursuant to Section 5.2(a),
obtain a waiver from Section 5.18 of the Recapitalization Agreement with respect
to the negotiation, execution, delivery and performance of this Agreement and
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) for the consent of the
Noteholders to approve the Supplemental Indenture, (b) as described in Section
3.6 of the Disclosure Schedule 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
---------------------------------
Noteholder true, correct and complete copies of the audited consolidated balance
sheets of the Company and its Subsidiaries as of December 31, 2000 and December
31, 1999 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 2000 Balance Sheet, or (ii) incurred since the 2000 Balance Sheet Date
in the ordinary course of business consistent with past practice and
disclosed in Section 3.8 of the Disclosure Schedule.
13
(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 2000
-------------------------------------------------
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.
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.
(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. 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 2, 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
14
any material license, permit, certificate or other authorization relating to 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, 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) The Company and its Subsidiaries have good, valid, marketable and
insurable title in fee simple to all 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) 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 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,
15
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.
SECTION 3.15 Employee Benefit and Labor Matters.
------------------------------------------------
(a) The Company has made available to the Noteholders a true, correct
and complete copy of 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. Except as
specifically provided in the foregoing documents delivered to the
Noteholders, 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.
(b) The Internal Revenue Service has issued a favorable determination
letter with respect to each Employee Benefit Plan that is intended to be a
"qualified plan" within the meaning of Section 401 (a) of the Code
("Qualified Plans") 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).
(c) 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(1) of ERISA is either (i) funded through an insurance
company contract and is not a "welfare benefit fund" within the meaning of
Section 419 of the Code or (ii) unfunded.
(d) 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 and is now 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 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.
16
(e) No Employee Benefit Plan is subject to Title IV or Section 302 of
ERISA or Section 412 or 4971 of the Code.
(f) There never existed and does not now exist any Controlled Group
Liability that would be a liability of the Company. 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.
(g) 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.
(h) 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.
(i) 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.
(j) 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 circumstances
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, beneficiary or dependent in an
Employee Benefit Plan.
(k) The Company, its Subsidiaries and each member of their respective
business enterprise has complied with the Worker Adjustment and Retraining
Notification Act.
17
(l) 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 and are in good standing with
applicable regulatory authorities, (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.
(m) 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. Neither the Company nor any Subsidiary
--------------------------
is a party to a collective bargaining or union agreement. 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. 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 Tender Payment Date for taxable periods ending on
or before the Tender Payment Date by, or with respect to any activities of, or
property owned by, the Company, its Subsidiaries, and 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 timely filed in
---------
accordance with all applicable laws, such Tax Returns are true, correct 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, are sufficient to cover all Taxes as of the Tender Payment
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 is
18
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 alleging
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:
19
(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 date of this
Agreement, relating to, regulating or imposing liability or standards
of conduct concerning pollution or protection of the 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 radio active 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 date of this Agreement.
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,
20
used, or licensed by the Company or any of its Subsidiaries as
licensee or licensor.
(b) Agreements. There are no outstanding and, to the Company's
----------
knowledge, no threatened disputes or disagreements with respect to any
material contract 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.
(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) 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 date of this Agreement.
(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.
21
(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) 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 date of this Agreement.
(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.
(f) Copyrights.
----------
(i) 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.
22
(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 this
Agreement.
(iii) To the Company's knowledge, no Copyright is in fringed 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 in fringe 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.
SECTION 3.20 Material Contracts.
-------------------------------
(a) 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.
23
(b) For purposes of this Agreement, the term "Material Contracts"
------------------
means the following 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.
(c) There are no material agreements required to be filed with the
Securities and Exchange Commission that have not been so filed.
SECTION 3.21 No Solicitation; Exemption from Registration.
---------------------------------------------------------
(a) The Company has not and will not solicit any offer for, or offer
or sell any securities subject to the Transactions by any form of general
solicitation or general advertising (as those terms are used in Regulation
D under the Securities Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and Rule 506
thereunder.
24
(b) Assuming that the representation made by each Noteholder in
Section 4.3 is and will remain true and correct in all material respects,
the issuance of New Series C Preferred Stock to the Noteholders, the
issuance of Common Stock upon conversion of the New Series C Preferred
Stock, the execution and delivery of the Supplemental Indenture, the Vendor
Financing, the execution and delivery of the Pledge Agreement and each
Pledge and Security Agreement and the pledges of collateral required to be
made thereunder, and the amendment of the Amended and Restated Certificate
of Incorporation of the Company in the form of the Charter Amendments,
individually and in the aggregate, shall be exempt from registration under
the Securities Act, including the rules and regulations promulgated
thereunder.
SECTION 3.22 Insurance. Except as set forth in Section 3.22 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 3.23 Brokers. Except for MS (as financial advisor to the
--------------------
Company, 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 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 3.24 Indenture. As of the date hereof, there exists no
----------------------
"Default" or "Event of Default" under and as defined in the 13% Notes Indenture
or the 12 1/2% Notes Indenture.
SECTION 3.25 Transactions with Affiliates. Except as set forth in
-----------------------------------------
Section 3.25 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, 1998.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF THE NOTEHOLDERS
-------------------------------------------------
Each Noteholder, individually and on its own behalf and not on behalf
of any other Noteholder, represents and warrants to the Company and each other
Noteholder as follows:
SECTION 4.1 Incorporation and Authority of the Noteholder. Such
---------------------------------------------------------
Noteholder 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 Noteholder, the
25
performance by such Noteholder of its obligations hereunder and the consummation
by such Noteholder of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of such Noteholder.
This Agreement has been duly executed and delivered by such Noteholder, and
(assuming due authorization, execution and delivery by the Company and the other
parties hereto other than such Noteholder) constitutes a legal, valid and
binding obligation of such Noteholder enforceable against such Noteholder in
accordance with its terms.
SECTION 4.2 Investment Purpose.
------------------------------
(a) Such Noteholder is acquiring the New Series C Preferred Stock for
its own account solely for the purpose of investment and not with a view
to, or for offer or sale in connection with, any distribution thereof in
violation of the Securities Act.
(b) Such Noteholder has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of its investment in the Company as contemplated by this Agreement, and is
able to bear the economic risk of such investment for an indefinite period
of time. Such Noteholder has been furnished access to such information and
documents as it has requested and has been afforded an opportunity to ask
questions of and receive answers from representatives of the Company
concerning the terms and conditions of this Agreement and the Transactions.
Without limiting any of the representations or warranties made by the
Company in Article III hereof, such Noteholder understands that the Company
reasonably anticipates that the opinion of its independent auditors with
respect to the Company's audited financial statements for the year ended
December 31, 2000 will include a "going concern" qualification because of
the uncertainty in connection with the Company's ability to successfully
negotiate financing to fund its future operations, launch, insure and
operate QuickBird 2, and to produce and market digital imagery in
commercial quantities.
(c) Such Noteholder understands that the New Series C Preferred Stock
has not been registered under the Securities Act, and that such Noteholder
may have to hold the New Series C Preferred Stock, and bear the economic
risk of such investment, indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or exempt from registration.
Such Noteholder agrees that it will not offer, sell, transfer or dispose of
the New Series C Preferred Stock except (i) pursuant to an effective
registration statement under the Securities Act and any applicable state
securities laws or (ii) pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act and
such applicable state securities laws. Such Noteholder understands that,
until such time as the New Series C Preferred Stock are registered under
the Securities Act, the certificates representing New Series C Preferred
Stock will bear a legend stamped, typed or otherwise legibly placed on the
face or reverse side thereof substantially in the form set forth below:
NOTICE IS HEREBY GIVEN THAT THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY XXXXX XX XXX
00
XXXXXX XXXXXX OR ANY NON-U.S. JURISDICTION. THE SECURITIES CANNOT BE
OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT (I)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AMENDMENT THERETO
UNDER SUCH ACT AND ANY APPLICABLE LAWS OR (II) PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH OTHER APPLICABLE LAWS. THE SALE,
TRANSFER OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE AND CERTAIN OTHER RIGHTS AND OBLIGATIONS OF THE HOLDER OF
THIS CERTIFICATE ARE ALSO SUBJECT TO ARTICLE V OF THE STOCKHOLDERS'
AGREEMENT, DATED AS OF APRIL 8, 1999, BY AND AMONG EARTHWATCH
INCORPORATED (THE "COMPANY") AND THE OTHER PARTIES THERETO, AS AMENDED
FROM TIME TO TIME (COPIES OF WHICH ARE AVAILABLE FOR REVIEW AT THE
PRINCIPAL OFFICE OF THE COMPANY), AND THE COMPANY RESERVES THE RIGHT
TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL ALL TERMS AND
CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER AS SET
FORTH IN ARTICLE V OF SUCH AGREEMENT.
(d) Such Noteholder is an institutional "accredited investor" as that
term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
SECTION 4.3 No Solicitation. Such Noteholder has not and will not
----------------------------
solicit any offer for, or offer or sell any securities subject to the
Transactions by any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act and Rule 506 thereunder.
SECTION 4.4 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 Noteholder.
ARTICLE V
---------
COVENANTS
---------
SECTION 5.1 Charter Amendments. As soon as practicable following the
------------------------------
date of this Agreement, 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 (or
obtain the written consent in lieu thereof) of the holders of the Existing
Common Stock and the Existing Preferred Stock, any such
27
special 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 the Amended and Restated Certificate of Incorporation of the Company,
substantially in the form attached hereto as Exhibit G (the "Charter
--------- -------
Amendments"), 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 such Charter Amendments; (iii) use its reasonable
best efforts to solicit 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 such Charter Amendments; and (iv) as of or prior to the
time of the consummation of the other Transactions under Section 2(a)(ii),
file with the Secretary of State of the State of Delaware all documents,
and take any other action, reasonably necessary to effect such Charter
Amendments;
(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 effect the Charter Amendments, all to the extent
such approval is required by applicable law; (ii) recommend to holders of
shares of Existing Common Stock the approval of such Charter Amendments;
(iii) use its reasonable 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 such Charter Amendments; and (iv) as of or
prior to the time of the consummation of the other Transactions under
Section 2(a)(ii), file with the Secretary of State of the State of Delaware
all documents, and take any other action, reasonably necessary to effect
such Charter Amendments.
SECTION 5.2 Issuance of New Series C Preferred Stock.
----------------------------------------------------
(a) As of or prior to the time of the consummation of the other
Transactions under Section 2(a)(ii), the Company shall issue to each
Noteholder the number of shares of New Series C Preferred Stock set forth
opposite such Noteholder's name in Schedule 3 hereto.
(b) The Company hereby agrees that, prior to the issuance of the New
Series C Preferred Stock to the Noteholders pursuant to Section 5.2(a), it
will not issue to the Vendor or any of its Affiliates any shares of the
Company's capital stock.
28
SECTION 5.3 Vendor Financing. Promptly following the Tender Payment
----------------------------
Date, the Company shall use its best efforts to, as of or prior to the time of
the consummation of the other Transactions under Section 2(a)(iii), enter into
the Vendor Financing.
SECTION 5.4 Satellite Insurance.
-------------------------------
(a) The Company shall use its reasonable best efforts to obtain (by
paying the initial deposit therefor) the QuickBird 2 Insurance; provided
--------
that the Company shall not be required to pay such deposit for such
QuickBird 2 Insurance until the consummation of the other Transactions
under Section 2(a)(ii), but in no event later than by June 15, 2001. The
Company shall pay, or shall cause to be paid, all remaining premiums for
the QuickBird 2 Insurance in accordance with the payment schedule under the
terms of the QuickBird 2 Insurance.
(b) Promptly following the purchase of QuickBird 2 Insurance pursuant
to Section 5.4(a), the Company shall (i) execute, and direct the 13% Notes
Trustee, as collateral agent, to execute, (x) the Senior Pledge and
Security Agreement, substantially in the form attached hereto as Exhibit H-
---------
1 (the "Senior Pledge and Security Agreement") and deliver, pledge and
- ------------------------------------
transfer to the 13% Notes Trustee, as collateral agent under the Senior
Pledge and Security Agreement for the holders of the 13% Notes and the
holder of the Vendor Financing, on a pro rata basis, the QuickBird 2
Insurance and (y) the Subordinated Pledge and Security Agreement,
substantially in the form attached hereto as Exhibit H-2 (the "Junior
----------- ------
Pledge and Security Agreement" and, together with the Senior Pledge and
-----------------------------
Security Agreement, the "Pledge and Security Agreements") and pledge to the
------------------------------
13% Notes Trustee, as collateral agent under the Junior Pledge and Security
Agreement for the holders of the Series A Preferred Stock and the Series B
Preferred Stock, the QuickBird 2 Insurance, (ii) execute, and cause the
Vendor to execute, the Intercreditor Acknowledgment, and (iii) deliver to
the 13% Notes Trustee, as collateral trustee under the Pledge and Security
Agreements, (x) an opinion of Xxxxx & XxXxxxxx, dated as of the date of the
Pledge and Security Agreements, substantially in the form of Exhibit I-1
-----------
hereto and (y) an of counsel reasonably satisfactory to the 13% Notes
Trustee, as collateral trustee, dated as of the date of the Pledge and
Security Agreements, substantially in the form of Exhibit I-2 hereto.
-----------
SECTION 5.5 Consents; Reasonable Best Efforts.
---------------------------------------------
(a) Each of the Company and each Noteholder, individually and on its
own behalf and not on behalf of any other Noteholder, agrees to cooperate
in obtaining any consents and approvals which may be required in connection
with the transactions contemplated by this Agreement.
(b) Each of the Company and each Noteholder, individually and on its
own behalf and not on behalf of any other Noteholder, 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
(including, on the part of each Noteholder, to vote all shares of Existing
Common Stock and Existing Preferred Stock, if any, held by such Noteholder,
in favor of the Charter Amendments), to consummate and make effective the
29
Transactions contemplated by this Agreement as promptly as practicable
after the date hereof.
(c) The Company and each Noteholder agree to cooperate to effectuate
the intent of this Agreement to the extent that any 12 1/2% Notes or any
13% Notes (other than the 13% Notes owned by the Noteholders as set forth
on Schedule 1 hereto) remain outstanding after the completion of the Tender
----------
Offer.
SECTION 5.6 Repurchase of Notes. If (i) any action required to be
-------------------------------
taken by the Company pursuant to Section 2.1(a)(i) is not so taken by the close
of business on April 4, 2001, or (ii) the 13% Notes Indenture shall fail to be
amended by the Supplemental Indenture or the opinion or certificate required to
be delivered by Section 2.1(a)(ii)(A) and (B), respectively, are not so
delivered by the close of business on April 25, 2001, or (iii) the Company fails
to obtain a waiver from Section 5.18 of the Recapitalization Agreement with
respect to the negotiation, execution, delivery and performance of this
Agreement and the Transactions, in any such case the Company shall commence on
the next such Business Day, and consummate within 20 Business Days from the date
of commencement, an Offer to Purchase (as such term is defined in the Indenture)
all of the 13% Notes. The purchase price for the 13% Notes in connection with
such Offer to Purchase shall be equal to 100% of the Accreted Value of such 13%
Notes as of the date of purchase of the 13% Notes.
SECTION 5.7 Plan of Reorganization. It is the intention of the
----------------------------------
parties that the transactions contemplated hereby, including the amendment of
the 13% Notes and the issuance of New Series C Preferred Stock to the
Noteholders, qualify as a recapitalization within the meaning of Section
368(a)(1)(E) of the Code and that this Agreement represents a "plan of
reorganization" within the meaning of section 1.368-2(g) of the Treasury
Regulations. The parties further agree to treat these transactions as a
recapitalization for U.S. tax purposes.
SECTION 5.8 Confidentiality. Each Noteholder understands that the
---------------------------
information provided by the Company pursuant to this Agreement may contain non-
public information and agrees to keep this Agreement, the Transactions and all
such information (the "Confidential Information") confidential until the earlier
of (i) the date of filing of this Agreement with the Securities and Exchange
Commission and (ii) the consummation of the Tender Offer; provided that the
Noteholders' obligation with respect to Confidential Information shall not apply
(i) to the extent compelled by applicable law or order issued by any
administrative, governmental, regulatory, or judicial authority or committee
with competent jurisdiction or pursuant to an inquiry by a self-regulatory body
or securities exchange having jurisdiction over such Noteholder or (ii) with
respect to the disclosure of any Confidential Information by such Noteholder to
any person that has agreed in writing to keep such Confidential Information
confidential on substantially the same terms as set forth in this Section 5.8.
SECTION 5.9 Security Documents. The Noteholders acknowledge and
------------------------------
agree that, upon the closing of the Tender Offer and execution and delivery of
the Pledge Agreement and the delivery of the collateral thereunder, the security
interests created pursuant to the Pledge Agreement, dated as of July 12, 1999,
among the Company and The Bank of New York, as collateral trustee and securities
intermediary, and the Amended and Restated Collateral Pledge
30
and Security Agreement, dated as of July 12, 1999, between the Company and The
Bank of New York, as collateral trustee, shall be released and discharged.
ARTICLE VI
----------
INDEMNIFICATION
---------------
SECTION 6.1 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 remain in
full force and effect for a period of three years after the date of this
Agreement; provided 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.
SECTION 6.2 Indemnification. The Company agrees to indemnify each
---------------------------
Noteholder and its Affiliates, and their officers, directors, employees,
members, agents, successors and assigns (as used in this Section 6.2, each an
"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 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 6.1 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 6.1, regardless of
whether the subject matter of such claim or action shall have occurred before or
after such date.
SECTION 6.3 Indemnification Procedures. An Indemnified Party shall
--------------------------------------
give the Company prompt written notice of any claim, assertion, event or
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 Company 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 Company 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 Company 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 Company in the defense or
settlement thereof, and the Company shall reimburse the Indemnified Party for
all its reasonable out-of-pocket expenses in connection therewith. If the
Company 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
31
liability unless the Company consents in writing prior to such payment or unless
the Company 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 Company
is entered against the Indemnified Party for such liability. No settlement in
respect of any third party claim may be effected by the Company 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 Company shall fail to undertake any
such defense, the Indemnified Party shall have the right to undertake the
defense or settlement thereof, at the Company's expense. If the Indemnified
Party assumes the defense of any such claim or proceeding pursuant to this
Section 6.3 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 Company prompt written notice thereof, and the
Company shall have the right to participate in the settlement or assume or
reassume the defense of such claim or proceeding.
ARTICLE VII
-----------
TERMINATION AND WAIVER
----------------------
SECTION 7.1 Termination. This Agreement may be terminated at any
-----------------------
time (a) by the mutual written consent of each of the Company and each of the
Noteholders or (b) by the Company if the Tender Offer is terminated without any
13% Notes or 12 1/2% Notes being purchased thereunder.
SECTION 7.2 Effect of Termination. In the event of termination of
---------------------------------
this Agreement as provided in Section 7.1, 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 7.2 and Article VIII shall survive
termination of this Agreement and (b) that nothing herein shall relieve either
party from liability for any willful breach hereof.
SECTION 7.3 Waiver. The Company, on the one hand, or the Noteholders
------------------
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 VIII
------------
GENERAL PROVISIONS
------------------
SECTION 8.1 Expenses. Each party shall bear its own costs and
--------------------
expenses in connection with this Agreement and the Transactions contemplated
hereby.
SECTION 8.2 Survival. In addition to the survival periods set forth
--------------------
in Section 6.1, the covenants of the parties shall survive until such actions
shall have been taken or performed in accordance with their terms.
32
SECTION 8.3 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 certified mail (postage prepaid, return receipt requested) to
the respective 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
8.3):
(A) if to the Company:
EarthWatch Incorporated
0000 Xxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, III
(B) if to any Noteholder, to the address of such Noteholder on
Schedule 1 hereto
----------
SECTION 8.4 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 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
Noteholder.
SECTION 8.5 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 8.6 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 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 8.7 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 Noteholder with respect to the subject matter hereof.
SECTION 8.8 Assignment. This Agreement shall not be assigned without
----------------------
the express written consent of the Company and each Noteholder (which consent
may be granted or
33
withheld in the sole discretion of the Company or any Noteholder), except (i)
that no consent shall be required for any Noteholder to assign its rights and
delegate its duties hereunder, in whole or in part, to one or more of its
subsidiaries and (ii) that each Noteholder shall have the right to assign its
rights (but not its obligations) hereunder to any person.
SECTION 8.9 No Third Party Beneficiaries. 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 8.10 Amendment. This Agreement may not be amended or
-----------------------
modified except by an instrument in writing signed by the Company and each
Noteholder.
SECTION 8.11 Governing Law. This Agreement shall be governed by and
--------------------------
construed under the laws of the State of New York. 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 8.12 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 8.13 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 terns hereof.
34
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/ Xxxxx X. Xxxxxx
--------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Operating Officer/Chief
Financial Officer
XXXXXX XXXXXXX & CO. INCORPORATED
By: /s/ Xxxxxxx Xxxxxxx
---------------------
Name: Xxxxxxx Xxxxxxx
Title: Managing Director
POST BALANCED FUND
By: /s/ Xxxxxxxx X. Post
---------------------------------
Name: Xxxxxxxx X. Post
Title: President
POST HIGH YIELD LP
By: /s/ Xxxxxxxx X. Post
---------------------------------
Name: Xxxxxxxx X. Post
Title: President
POST TOTAL RETURN FUND
By: /s/ Xxxxxxxx X. Post
---------------------------------
Name: Xxxxxxxx X. Post
Title: President
OPPORTUNITY FUND
By: /s/ Xxxxxxxx X. Post
---------------------------------
Name: Xxxxxxxx X. Post
Title: President
XXXXXXXXX & CO., L.P.
By: Xxxxxxxxx Partners, L.P.
By: Xxxxxxxxx Partners Inc.
By: /s/ Xxxxxx Xxxx
-------------------------------
Name: Xxxxxx Xxxx
Title: Vice President
XXXXXXXXX INTERNATIONAL LTD
By: Xxxxxxxxx Partners Inc., as Agent
By: /s/ Xxxxxx Xxxx
-------------------------------
Name: Xxxxxx Xxxx
Title: Vice President
SUN AMERICA HIGH INCOME FUND
By: /s/ Xxxx X. Xxxxxx
--------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
Portfolio Manager
SUN AMERICA SERIES TRUST HIGH YIELD PORTFOLIO
By: /s/ Xxxx X. Xxxxxx
--------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
Portfolio Manager
HITACHI SOFTWARE ENGINEERING CO., LTD.
By: /s/ Xxxxxxxxx Xxxxxxx
-----------------------
Name: Xxxxxxxxx Xxxxxxx
Title: General Manager
Geospatial Information Division
EXHIBIT A
4/19/2001
EARTHWATCH VENDOR CREDIT FACILITY
SUMMARY OF TERMS AND CONDITIONS
I. PARTIES
BORROWER: EarthWatch, as borrower under the Vendor Finance Facility
(hereinafter, the "Company").
-------
VENDOR: Ball Aerospace & Technologies Corp., its affiliates or
assigns (in such capacity, the "Vendor").
------
II. CREDIT FACILiTY
DESCRIPTION: A senior secured term credit facility (the "Vendor Credit
-------------
Facility") for the purpose of providing vendor financing
--------
of Contract SE.1M.PRJ.0004.A for the construction and
delivery of the QuickBird 2 satellite ("Project
Contract:").
AMOUNT
OF FACILITY: An aggregate amount of $ 9 million drawn against the
payment schedule for Project Contract such that the
earliest outstanding payments earned, invoiced and due to
Vendor until an aggregate of $ 9 million has been drawn
are covered 100% by the vendor financing. In addition, the
amount of the facility will increase to cover accrued
interest for the period from the initial draw through the
launch of QuickBird 2 plus 6 months (this period is
defined as the Accrued Interest Period).
TERM: The Vendor Credit Facility will extend for 18 months
beyond QuickBird 2's launch.
VENDOR CREDIT
FACILITY PAYMENT
SCHEDULE: The principal amount of the Vendor Credit Facility shall
be repaid in equal amounts over the period from seven (7)
months after the launch of QuickBird 2 through eighteen
(18) months after the launch of QuickBird 2. Attachment 1
sets forth this payment schedule.
PURPOSE: To support the construction of QuickBird 2 under the
Project Contract.
III. CERTAIN BORROWING AND PAYMENT TERMS
INTEREST RATE: Drawings under the Vendor Credit Facility will bear
interest at an annual rate equal 11%. Interest during the
period Accrued Interest Period shall be calculated monthly
on the basis of a 365-day year and actual days elapsed and
will be added to the principal amount to be paid out in
accordance with the Vendor Credit Facility repayment
schedule. Interest during the expected repayment period
shall be payable monthly on the basis of a 365-day year
and actual days elapsed.
EarthWatch PROPRIETARY
1
INTEREST
PAYMENTS: Interest on the Vendor Credit Facility shall be accrued
during the Accrued Interest Period. The accrued interest
will be added to the outstanding principal balance and
will be paid according to Vendor Credit Facility Payment
Schedule. Interest for the time after the Accrued Interest
Period will be calculated on the amount outstanding
monthly in arrears commencing on the last day of the month
following the date of the successful launch of QuickBird 2
by 184 days and paid according to the payment schedule
shown in Attachment 1.
EQUITY: The Ball Technologies Holdings Corp or it's affiliates
shall receive Company's Series C Preferred Stock in an
amount equal to 1% of the Company's capital stock on a
fully diluted basis, after taking into account the
expected recapitalization of the Company upon the closing
as defined herein with the rights provided under the
Series C Preferred Registration Rights Agreement upon
execution by Vendor.
CLOSING: The execution and delivery of all definitive Credit
Documentation.
OPTIONAL
PREPAYMENTS
AND COMMITMENT
REDUCTIONS: The Vendor Credit Facility may be prepaid by the Company
in whole or in part and commitments may be reduced
permanently by the Company at any time. Prepayment and
commitment reductions by the Company will reduce the
amount available under the facility accordingly.
MANDATORY
PREPAYMENTS: Standard for similar financings and including termination
of Project Contract, receipt of insurance proceeds due to
the loss or failure of the Satellite, failure to launch
before termination of the Pre-Launch Period and failure of
in-orbit commencement of commercial service within 6
months after launch of the Satellite.
IV. SECURITY
SECURITY
DOCUMENTATION: The Vendor Credit Facility shall be secured by the
Collateral (as described below) currently per the supply
agreement between the parties and upon execution pursuant
to the security documentation (the "Security
--------
Documentation") on terms and conditions acceptable to the
-------------
Vendor, to be executed and delivered as part of the
definitive Credit Documentation. Security granted in the
Collateral shall be valid and enforceable, perfected (to
the extent possible under applicable law), first priority
security interests, subject to pari passu sharing on a pro
---- ----- ---
rata basis, as described below.
----
COLLATERAL: The credit facility is secured with two types of
collateral. First, by the proceeds of the launch and on-
orbit operating insurance policy in an amount not less
than $155 million covering operations for a period of one
year which will be subject to pari passu sharing on a pro
rata basis with the 13% Note Holders not tendering their
debt for payment. The secured proceeds shall be limited to
an amount equaling the amount due under the credit
facility. In addition, the facility will be secured on a
first priority basis by the Deliverables provided under
Project Contract and the proceeds thereof as defined by
Section 9-306 (1) of the Uniform Commercial Code, subject
to the express understanding that the proceeds of the
launch and on-orbit operating insurance shall be shared
pari
EarthWatch PROPRIETARY
2
passu on a pro rata basis with the 13% Note Holders not
tendering their debt for payment:
INTERCREDITOR
AGREEMENT: It is expected the Vendor and the 13% Note Holders will
enter into intercreditor documents confirming the above
rights with regard to the security positions of Vendor and
the 13% Note Holders.
V. OTHER MATTERS
The representations, warranties, covenants, events of
default and other terms and conditions outlined herein
will be documented in the Definitive "Credit
------
Documentation").
-------------
REPRESENTATIONS
AND
WARRANTIES: Standard for similar financings
INCREASED COSTS/
CHANGE OF
CIRCUMSTANCES: The Definitive Credit Documentation will contain customary
provisions protecting the Vendor in the event of
unavailability of funding, illegality, increased costs,
capital adequacy charges and funding losses, and will
provide for withholding tax gross-up, and general
indemnification of the Vendor (and its assignees and
participants) by the Company.
ASSIGNMENTS AND
PARTICIPATIONS: The Vendor shall be permitted to assign all or part of and
sell participations in the Vendor Credit Facility and
commitments.
INDEMNIFI-
CATION: The Vendor (and its affiliates and officers, directors,
employees, advisors, agents and assigns) will have no
liability for, and will be indemnified and held harmless
against, any loss, liability, cost or expense incurred in
respect of the financing contemplated hereby or the use or
the proposed use of proceeds thereof (except to the extent
resulting from the gross negligence or willful misconduct
of the indemnified party).
GOVERNING LAW
AND FORUM: State of Colorado.
EarthWatch PROPRIETARY
3
Attachment 1 - Payment Schedule
----------------------------------------------------------------------------------------------------------
I. Period
Interest Payments Principal Payments
----------------------------------------------------------------------------------------------------------
From time of financing through Interest Accrued and added to None
Launch + 6 months outstanding balance
----------------------------------------------------------------------------------------------------------
Launch + 7 months until balance Interest paid currently on 1/12th of outstanding balance as
paid off outstanding balance of L+ 7 months, principal plus
accrued interest
----------------------------------------------------------------------------------------------------------
EarthWatch PROPRIETARY
4
EXHIBIT B-1
EXECUTION COPY
NOTES REGISTRATION RIGHTS AGREEMENT
Dated as of April 3, 2001
among
EARTHWATCH INCORPORATED,
THE BANK OF NEW YORK,
as Trustee,
and
XXXXXX XXXXXXX & CO. INCORPORATED
NOTES REGISTRATION RIGHTS AGREEMENT
This NOTES REGISTRATION RIGHTS AGREEMENT dated as of April 3, 2001
(the "Agreement"), is among EARTHWATCH INCORPORATED, a Delaware corporation (the
"Company"), THE BANK OF NEW YORK, as TRUSTEE (the "Trustee") under the
Indenture, dated as of July 12, 1999, as amended (the "Indenture") for the
Company's 13% Senior Discount Notes due 2007 (the "13% Notes") and XXXXXX
XXXXXXX & CO. INCORPORATED, a Delaware corporation ("MS&Co").
This Agreement is made pursuant to the Recapitalization Agreement and
Consent, dated as of April 2, 2001, among the Company and the other parties
thereto (the "Recapitalization Agreement"), pursuant to which certain holders
(the "Remaining Noteholders") of the Company's 13% Senior Discount Notes due
2007 (the "13% Notes") agreed not to tender their 13% Notes into the Company's
Offer to Purchase for Cash dated February 28, 2001 (the "Tender Offer"). In
order to induce the Remaining Noteholders to enter into the Recapitalization
Agreement, the Company has agreed to provide to the Remaining Noteholders and
their direct and indirect transferees the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to the closing of the
transactions contemplated by the Recapitalization Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time
--------
to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended
--------
from time to time.
"Closing Date" shall mean the Tender Payment Date as defined in the
------------
Recapitalization Agreement.
"Company" shall have the meaning set forth in the preamble and shall
-------
also include the Company's successors.
"Exchange Offer" shall mean the exchange offer by the Company of
--------------
Exchange Notes for Registrable Notes pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the 1933
---------------------------
Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
-------------------------------------
registration statement on Form S-4 (or, if applicable, on another appropriate
form) and all amendments and supplements to such registration statement, in each
case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Exchange Notes" shall mean notes issued by the Company under the
--------------
Indenture containing terms identical to the 13% Notes (except that the Exchange
Notes will not contain restrictions on transfer) and to be offered to Holders of
13% Notes in exchange for 13% Notes pursuant to the Exchange Offer.
"Holder" shall mean the Remaining Noteholders, for so long as they own
------
any Registrable Notes, and each of their successors, assigns and direct and
indirect transferees who become registered owners of Registrable Notes under the
Indenture; provided that for purposes of Sections 4 and 5 of this Agreement, the
term "Holder" shall include Participating Broker-Dealers (as defined in Section
4(a)).
"Majority Holders" shall mean the Holders of a majority of the
----------------
aggregate principal amount at maturity of outstanding Registrable Notes;
provided that whenever the consent or approval of Holders of a specified
percentage of Registrable Notes is required hereunder, Registrable Notes held by
the Company or any of its affiliates (as such term is defined in Rule 405 under
the 0000 Xxx) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage or amount.
"Person" shall mean an individual, partnership, limited liability
------
company, corporation, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Notes covered by a Shelf Registration Statement, and by all other
amendments and supplements to such prospectus, and in each case including all
material incorporated by reference therein.
"Registrable Notes" shall mean any 13% Notes outstanding that bear the
-----------------
Private Placement Legend (as defined in the Indenture); provided, however, that
the 13% Notes shall cease to be Registrable Notes (i) when a Registration
Statement with respect to such 13% Notes shall have been declared effective
under the 1933 Act and such 13% Notes shall have been disposed of pursuant to
such Registration Statement, (ii) when such 13% Notes have been sold to the
public pursuant to Rule 144(k) (or any similar provision then in force, but not
Rule 144A) under the 1933 Act or (iii) when such 13% Notes shall have ceased to
be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
---------------------
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or blue
sky laws (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any of the
Exchange Notes or Registrable Notes), (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing,
2
printing and distributing any Registration Statement, any Prospectus, any
amendments or supplements thereto, any underwriting agreements, securities sales
agreements and other documents relating to the performance of and compliance
with this Agreement, (iv) all rating agency fees, (v) all fees and disbursements
relating to the qualification of the Indenture under applicable securities laws,
(vi) the fees and disbursements of the Trustee and its counsel, (vii) the fees
and disbursements of counsel for the Company and, in the case of a Shelf
Registration Statement, the fees and disbursements of one counsel for the
Holders (which counsel shall be selected by the Majority Holders) and (viii) the
fees and disbursements of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters required
by or incident to such performance and compliance, but excluding fees and
expenses of counsel to the underwriters (other than fees and expenses set forth
in clause (ii) above) or the Holders and underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of Registrable
Notes by a Holder.
"Registration Statement" shall mean any registration statement of the
----------------------
Company that covers any of the Exchange Notes or Registrable Notes pursuant to
the provisions of this Agreement and all amendments and supplements to any such
Registration Statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
---
"Shelf Registration" shall mean a registration effected pursuant to
------------------
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
----------------------------
statement of the Company pursuant to the provisions of Section 2(b) of this
Agreement which covers all of the Registrable Notes (but no other securities
unless approved by the Holders whose Registrable Notes are covered by such Shelf
Registration Statement) on an appropriate form under Rule 415 under the 1933
Act, or any similar rule that may be adopted by the SEC, and all amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the 13% Notes under
-------
the Indenture.
"Underwriter" shall have the meaning set forth in Section 3 hereof.
-----------
"Underwritten Registration" or "Underwritten Offering" shall mean a
------------------------- ---------------------
registration in which Registrable Notes are sold to an Underwriter for
reoffering to the public.
2. Registration Under the 1933 Act.
(a) To the extent not prohibited by any applicable law or applicable
interpretation of the Staff of the SEC, the Company shall use its best efforts
to cause to be filed an Exchange Offer Registration Statement covering the offer
by the Company to the Holders to exchange all of the Registrable Notes for
Exchange Notes and to have such Registration
3
Statement remain effective until the closing of the Exchange Offer. The Company
shall commence the Exchange Offer promptly after the Exchange Offer Registration
Statement has been declared effective by the SEC and use its best efforts to
have the Exchange Offer consummated not later than 60 days after such effective
date. The Company shall commence the Exchange Offer by mailing the related
exchange offer Prospectus and accompanying documents to each Holder stating, in
addition to such other disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Notes validly
tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a period of
at least 20 business days from the date such notice is mailed) (the
"Exchange Dates");
(iii) that any Registrable Note not tendered will remain outstanding
and continue to accrete in value until July 15, 2002 and thereafter will
accrue interest, but will not retain any rights under this Registration
Rights Agreement;
(iv) that Holders electing to have a Registrable Note exchanged
pursuant to the Exchange Offer will be required to surrender such
Registrable Note, together with the enclosed letters of transmittal, to the
institution and at the address (located in the Borough of Manhattan, The
City of New York) specified in the notice prior to the close of business on
the last Exchange Date; and
(v) that Holders will be entitled to withdraw their election, not
later than the close of business on the last Exchange Date, by sending to
the institution and at the address (located in the Borough of Manhattan,
The City of New York) specified in the notice a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount at maturity of Registrable Notes delivered for exchange and a
statement that such Holder is withdrawing his election to have such 13%
Notes exchanged.
As soon as practicable after the last Exchange Date, the Company
shall:
(i) accept for exchange Registrable Notes or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Notes or portions thereof so accepted for
exchange by the Company and issue, and cause the Trustee to promptly
authenticate and mail to each Holder, an Exchange Note equal in principal
amount at maturity to the principal amount at maturity of the Registrable
Notes surrendered by such Holder.
The Company shall use its best efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the 1933
Act, the 1934 Act and other applicable laws and regulations in connection with
the Exchange Offer. The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer does not violate applicable law or any
applicable interpretation of the Staff of the SEC. The Company shall inform
MS&Co. of the names and addresses of the Holders to whom the Exchange Offer is
made, and MS&Co. shall
4
have the right, subject to applicable law, to contact such Holders and otherwise
facilitate the tender of Registrable Notes in the Exchange Offer.
(b) In the event that (i) the Company determines that the Exchange
Offer Registration provided for in Section 2(a) above is not available or may
not be consummated as soon as practicable after the last Exchange Date because
it would violate applicable law or the applicable interpretations of the Staff
of the SEC, (ii) the Exchange Offer is not for any other reason consummated by
October 15, 2001 or (iii) the Exchange Offer has been completed and in the
opinion of counsel for MS&Co. a Registration Statement must be filed and a
Prospectus must be delivered by MS&Co. in connection with any offering or sale
of Registrable Notes, the Company shall use its best efforts to cause to be
filed as soon as practicable after such determination, date or notice of such
opinion of counsel is given to the Company, as the case may be, a Shelf
Registration Statement providing for the sale by the Holders of all of the
Registrable Notes and to have such Shelf Registration Statement declared
effective by the SEC. In the event the Company is required to file a Shelf
Registration Statement solely as a result of the matters referred to in clause
(iii) of the preceding sentence, the Company shall use its best efforts to file
and have declared effective by the SEC both an Exchange Offer Registration
Statement pursuant to Section 2(a) with respect to all Registrable Notes and a
Shelf Registration Statement (which may be a combined Registration Statement
with the Exchange Offer Registration Statement) with respect to offers and sales
of Registrable Notes held by MS&Co. after completion of the Exchange Offer. The
Company agrees to use its best efforts to keep the Shelf Registration Statement
continuously effective until the expiration of the period referred to in Rule
144(k) with respect to the Registrable Notes or such shorter period that will
terminate when all of the Registrable Notes covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement. The
Company further agrees to supplement or amend the Shelf Registration Statement
if required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration Statement or
by the 1933 Act or by any other rules and regulations thereunder for shelf
registration or if reasonably requested by a Holder with respect to information
relating to such Holder, and to use its best efforts to cause any such amendment
to become effective and such Shelf Registration Statement to become usable as
soon as thereafter practicable. The Company agrees to furnish to the Holders of
Registrable Notes copies of any such supplement or amendment promptly after its
being used or filed with the SEC.
(c) The Company shall pay all Registration Expenses in connection
with the registration pursuant to Section 2(a) or Section 2(b). Each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Notes pursuant
to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC; provided, however, that, if, after it has been declared effective, the
offering of Registrable Notes pursuant to a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not to have become effective during the period of such
interference until the offering of Registrable Notes pursuant to such
Registration Statement may legally resume. In
5
the event the Exchange Offer is not consummated and the Shelf Registration
Statement is not declared effective on or prior to October 15, 2001, the Company
shall pay liquidated damages to the Holders of the Registrable Notes (in
addition to the accrual of interest (or original issue discount) otherwise due
on the 13% Notes), at a rate of 0.5% per annum semi-annually, with accrual
commencing October 15, 2001, and payment commencing January 15, 2002, until the
Exchange Offer is consummated or the Shelf Registration Statement is declared
effective by the SEC.
(e) Without limiting the remedies available to the Holders of
Registrable Notes and MS&Co., the Company acknowledges that any failure by the
Company to comply with its obligations under Section 2(a) and Section 2(b)
hereof may result in material irreparable injury to the Holders of Registrable
Notes and MS&Co. for which there is no adequate remedy at law, that it will not
be possible to measure damages for such injuries precisely and that, in the
event of any such failure, any such Holder or MS&Co. may obtain such relief as
may be required to specifically enforce the Company's obligations under Section
2(a) and Section 2(b) hereof.
3. Registration Procedures.
In connection with the obligations of the Company with respect to the
Registration Statements pursuant to Section 2(a) and Section 2(b) hereof, the
Company shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by
the Company and (y) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Notes by the selling Holders
thereof and (z) shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith, and use its best efforts to
cause such Registration Statement to become effective and remain effective
in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period and cause each
Prospectus to be supplemented by any required prospectus supplement and, as
so supplemented, to be filed pursuant to Rule 424 under the 1933 Act; to
keep each Prospectus current during the period described under Section 4(3)
and Rule 174 under the 1933 Act, if any, that is applicable to transactions
by brokers or dealers with respect to the Registrable Notes or Exchange
Notes;
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Notes, to counsel for MS&Co., to counsel for the Holders and to
each Underwriter of an Underwritten Offering of Registrable Notes, if any,
without charge, as many copies of each Prospectus, including each
preliminary Prospectus, and any amendment or supplement thereto and such
other documents as such Holder or Underwriter may reasonably request, in
order to facilitate the public sale or other disposition of the Registrable
Notes; and the Company consents to the use of such Prospectus and any
amendment or supplement thereto in accordance with applicable law by each
of the
6
selling Holders of Registrable Notes and any such Underwriters in
connection with the offering and sale of the Registrable Notes covered by
and in the manner described in such Prospectus or any amendment or
supplement thereto in accordance with applicable law;
(d) use its best efforts to register or qualify the Registrable Notes
under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Notes covered by a Registration
Statement shall reasonably request in writing by the time the applicable
Registration Statement is declared effective by the SEC, to cooperate with
such Holders in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. and do any and all other
acts and things which may be reasonably necessary or advisable to enable
such Holder to consummate the disposition in each such jurisdiction of such
Registrable Notes owned by such Holder; provided, however, that the Company
shall not be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (ii) file any general
consent to service of process or (iii) subject itself to taxation in any
such jurisdiction if it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Notes, counsel for the Holders and counsel for MS&Co. promptly
and, if requested by any such Holder or counsel, confirm such advice in
writing (i) when a Registration Statement has become effective and when any
post-effective amendment thereto has been filed and becomes effective, (ii)
of any request by the SEC or any state securities authority for amendments
and supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iv) if,
between the effective date of a Registration Statement and the closing of
any sale of Registrable Notes covered thereby, the representations and
warranties of the Company contained in any underwriting agreement,
securities sales agreement or other similar agreement, if any, relating to
the offering cease to be true and correct in all material respects or if
the Company receives any notification with respect to the suspension of the
qualification of the Registrable Notes for sale in any jurisdiction or the
initiation of any proceeding for such purpose, (v) of the happening of any
event during the period a Shelf Registration Statement is effective which
makes any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which requires the making of
any changes in such Registration Statement or Prospectus in order to make
the statements therein not misleading and (vi) of any determination by the
Company that a post-effective amendment to a Registration Statement would
be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment and provide immediate notice to each Holder of the
withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Notes, without charge, at least one conformed copy of each
Registration Statement and
7
any post-effective amendment thereto (without documents incorporated
therein by reference or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Notes to facilitate the timely preparation and
delivery of certificates representing Registrable Notes to be sold and not
bearing any restrictive legends and enable such Registrable Notes to be in
such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders may reasonably request at
least one business day prior to the closing of any sale of Registrable
Notes;
(i) in the case of a Shelf Registration, upon the occurrence of any
event contemplated by Section 3(e)(v) hereof, use its best efforts to
prepare and file with the SEC a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes,
such Prospectus will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Company agrees to notify the Holders to suspend use of the Prospectus as
promptly as practicable after the occurrence of such an event, and the
Holders hereby agree to suspend use of the Prospectus until the Company has
amended or supplemented the Prospectus to correct such misstatement or
omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of such
document to MS&Co. and its counsel (and, in the case of a Shelf
Registration Statement, the Holders and their counsel) and make such of the
representatives of the Company as shall be reasonably requested by MS&Co.
or its counsel (and, in the case of a Shelf Registration Statement, the
Holders or their counsel) available for discussion of such document, and
shall not at any time file or make any amendment to the Registration
Statement, any Prospectus or any amendment of or supplement to a
Registration Statement or a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus, of
which MS&Co. and its counsel (and, in the case of a Shelf Registration
Statement, the Holders and their counsel) shall not have previously been
advised and furnished a copy or to which MS&Co. or its counsel (and, in the
case of a Shelf Registration Statement, the Holders or their counsel) shall
object;
(k) obtain a CUSIP number for all Exchange Notes or Registrable
Notes, as the case may be, not later than the effective date of a
Registration Statement, to the extent an existing CUSIP number is not
already available for such Exchange Notes or Registrable Notes;
(l) to the extent required, cause the Indenture to be qualified under
the Trust Indenture Act of 1939, as amended (the "TIA"), in connection with
the registration of the Exchange Notes or Registrable Notes, as the case
may be, cooperate with the Trustee and
8
the Holders to effect such changes to the Indenture as may be required for
the Indenture to be so qualified in accordance with the terms of the TIA
and execute, and use its best efforts to cause the Trustee to execute, all
documents as may be required to effect such changes and all other forms and
documents required to be filed with the SEC to enable the Indenture to be
so qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for
inspection by a representative of the Holders of the Registrable Notes, any
Underwriter participating in any disposition pursuant to such Shelf
Registration Statement, and attorneys and accountants designated by the
Holders, at reasonable times and in a reasonable manner, all financial and
other records, pertinent documents and properties of the Company, and cause
the respective officers, directors and employees of the Company to supply
all information reasonably requested by any such representative,
Underwriter, attorney or accountant in connection with a Shelf Registration
Statement;
(n) in the case of a Shelf Registration, use its best efforts to
cause all Registrable Notes to be listed on any securities exchange or any
automated quotation system on which similar securities issued by the
Company are then listed if requested by the Majority Holders, to the extent
such Registrable Notes satisfy applicable listing requirements;
(o) use its best efforts to cause the Exchange Notes to continue to
be rated by two nationally recognized statistical rating organizations (as
such term is defined in Rule 436(g)(2) under the 1933 Act), if the
Registrable Notes have been rated;
(p) if reasonably requested by any Holder of Registrable Notes
covered by a Registration Statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information with
respect to such Holder as such Holder reasonably requests to be included
therein and (ii) make all required filings of such Prospectus supplement or
such post-effective amendment as soon as the Company has received
notification of the matters to be incorporated in such filing; and
(q) in the case of a Shelf Registration, enter into such customary
agreements and take all such other actions in connection therewith
(including those requested by the Holders of a majority of the Registrable
Notes being sold) in order to expedite or facilitate the disposition of
such Registrable Notes including, but not limited to, an Underwritten
Offering and in such connection, (i) to the extent possible, make such
representations and warranties to the Holders and any Underwriters of such
Registrable Notes with respect to the business of the Company and its
subsidiaries, the Registration Statement, Prospectus and documents
incorporated by reference or deemed incorporated by reference, if any, in
each case, in form, substance and scope as are customarily made by issuers
to underwriters in underwritten offerings and confirm the same if and when
requested, (ii) obtain opinions of counsel to the Company (which counsel
and opinions, in form, scope and substance, shall be reasonably
satisfactory to the Holders and such Underwriters and their respective
counsel) addressed to each selling Holder and Underwriter of Registrable
Notes, covering the matters customarily covered in opinions requested in
underwritten offerings, (iii) obtain "cold comfort" letters from the
9
independent certified public accountants of the Company (and, if necessary,
any other certified public accountant of any subsidiary of the Company, or
of any business acquired by the Company for which financial statements and
financial data are or are required to be included in the Registration
Statement) addressed to each selling Holder and Underwriter of Registrable
Notes, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
underwritten offerings, and (iv) deliver such documents and certificates as
may be reasonably requested by the Holders of a majority in principal
amount of the Registrable Notes being sold or the Underwriters, and which
are customarily delivered in underwritten offerings, to evidence the
continued validity of the representations and warranties of the Company
made pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in an underwriting agreement.
In the case of a Shelf Registration Statement, the Company may require
each Holder of Registrable Notes to furnish to the Company such information
regarding the Holder and the proposed distribution by such Holder of such
Registrable Notes as the Company may from time to time reasonably request in
writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 3(e)(v) hereof, such Holder will forthwith
discontinue disposition of Registrable Notes pursuant to a Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(i) hereof, and, if so directed by
the Company, such Holder will deliver to the Company (at its expense) all copies
in its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Notes current at the
time of receipt of such notice. If the Company shall give any such notice to
suspend the disposition of Registrable Notes pursuant to a Registration
Statement, the Company shall extend the period during which the Registration
Statement shall be maintained effective pursuant to this Agreement by the number
of days during the period from and including the date of the giving of such
notice to and including the date when the Holders shall have received copies of
the supplemented or amended Prospectus necessary to resume such dispositions.
The Company may give any such notice only twice during any 365 day period and
any such suspensions may not exceed 30 days for each suspension and there may
not be more than two suspensions in effect during any 365 day period.
The Holders of Registrable Notes covered by a Shelf Registration
Statement who desire to do so may sell such Registrable Notes in an Underwritten
Offering. In any such Underwritten Offering, the investment banker or
investment bankers and manager or managers (the "Underwriters") that will
administer the offering will be selected by the Majority Holders of the
Registrable Notes included in such offering.
4. Participation of Broker-Dealers in Exchange Offer.
--------------------------------------------------
(a) The Staff of the SEC has taken the position that any broker-
dealer that receives Exchange Notes for its own account in the Exchange Offer in
exchange for 13% Notes that were acquired by such broker-dealer as a result of
market-making or other trading activities (a "Participating Broker-Dealer"), may
be deemed to be an "underwriter" within the meaning of
10
the 1933 Act and must deliver a prospectus meeting the requirements of the 1933
Act in connection with any resale of such Exchange Notes.
The Company understands that it is the Staff's position that if the
Prospectus contained in the Exchange Offer Registration Statement includes a
plan of distribution containing a statement to the above effect and the means by
which Participating Broker-Dealers may resell the Exchange Notes, without naming
the Participating Broker-Dealers or specifying the amount of Exchange Notes
owned by them, such Prospectus may be delivered by Participating Broker-Dealers
to satisfy their prospectus delivery obligation under the 1933 Act in connection
with resales of Exchange Notes for their own accounts, so long as the Prospectus
otherwise meets the requirements of the 1933 Act.
(b) In light of the above, notwithstanding the other provisions of
this Agreement, the Company agrees that the provisions of this Agreement as they
relate to a Shelf Registration shall also apply to an Exchange Offer
Registration to the extent, and with such reasonable modifications thereto as
may be, reasonably requested by MS&Co. or by one or more Participating Broker-
Dealers, in each case as provided in clause (ii) below, in order to expedite or
facilitate the disposition of any Exchange Notes by Participating Broker-Dealers
consistent with the positions of the Staff recited in Section 4(a) above;
provided that:
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as would
otherwise be contemplated by Section 3(i), for a period exceeding 180 days
after the last Exchange Date (as such period may be extended pursuant to
the penultimate paragraph of Section 3 of this Agreement) and Participating
Broker-Dealers shall not be authorized by the Company to deliver and shall
not deliver such Prospectus after such period in connection with the
resales contemplated by this Section 4; and
(ii) the application of the Shelf Registration procedures set forth in
Section 3 of this Agreement to an Exchange Offer Registration, to the
extent not required by the positions of the Staff of the SEC or the 1933
Act and the rules and regulations thereunder, will be in conformity with
the reasonable request to the Company by MS&Co. or with the reasonable
request in writing to the Company by one or more broker-dealers who certify
to MS&Co. and the Company in writing that they anticipate that they will be
Participating Broker-Dealers; and provided further that, in connection with
such application of the Shelf Registration procedures set forth in Section
3 to an Exchange Offer Registration, the Company shall be obligated (x) to
deal only with one entity representing the Participating Broker-Dealers,
which shall be MS&Co. unless it elects not to act as such representative,
(y) to pay the fees and expenses of only one counsel representing the
Participating Broker-Dealers, which shall be counsel to MS&Co. unless such
counsel elects not to so act and (z) to cause to be delivered only one, if
any, "cold comfort" letter with respect to the Prospectus in the form
existing on the last Exchange Date and with respect to each subsequent
amendment or supplement, if any, effected during the period specified in
clause (i) above.
(c) MS&Co. shall have no liability to the Company or any Holder with
respect to any request that it may make pursuant to Section 4(b) above.
11
5. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless MS&Co., each
Holder of Registrable Notes and each Person, if any, who controls MS&Co. or any
Holder of Registrable Notes within the meaning of either Section 15 of the 1933
Act or Section 20 of the 1934 Act, or is under common control with, or is
controlled by, MS&Co. or any Holder, from and against all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred by MS&Co., any Holder or any such controlling or
affiliated Person in connection with defending or investigating any such action
or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement (or any amendment thereto)
pursuant to which Exchange Notes or Registrable Notes were registered under the
1933 Act, including all documents incorporated therein by reference, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to MS&Co. or any Holder of Registrable
Notes furnished to the Company in writing by MS&Co. or any selling Holder
expressly for use therein. In connection with any Underwritten Offering
permitted by Section 3, the Company will also indemnify the Underwriters, if
any, selling brokers, dealers and similar securities industry professionals
participating in the distribution, their officers and directors and each Person
who controls such Persons (within the meaning of the 1933 Act and the 0000 Xxx)
to the same extent as provided above with respect to the indemnification of the
Holders, if requested in connection with any Registration Statement.
(b) Each Holder of Registrable Notes agrees, severally and not
jointly, to indemnify and hold harmless the Company, MS&Co. and the other
selling Holders, and each of their respective directors, officers who sign the
Registration Statement and each Person, if any, who controls the Company, MS&Co.
and any other selling Holder within the meaning of either Section 15 of the 1933
Act or Section 20 of the 1934 Act to the same extent as the foregoing indemnity
from the Company to MS&Co. and the Holders of Registrable Notes, but only with
reference to information relating to such Holder furnished to the Company in
writing by such Holder expressly for use in any Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any Person in respect of which indemnity may be
sought pursuant to either paragraph (a) or paragraph (b) above, such Person (the
"indemnified party") shall promptly notify the Person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such
12
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties and that all such fees and expenses
shall be reimbursed as they are incurred. In such case involving MS&Co. and
Persons who control MS&Co., such firm shall be designated in writing by MS&Co.
In such case involving the Holders and such Persons who control Holders, such
firm shall be designated in writing by the Majority Holders. In all other cases,
such firm shall be designated by the Company. The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent but, if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party for such fees and expenses of
counsel in accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which such indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a) or paragraph
(b) of this Section 5 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and Holders of Registrable Notes, on the other hand,
from the Recapitalization Agreement or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the Holders
of Registrable Notes on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company and the Holders shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Holders and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Holders' respective obligations to contribute
13
pursuant to this Section 5(d) are several in proportion to the respective
principal amount of Registrable Notes of such Holder that were registered
pursuant to a Registration Statement.
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 5, no Holder shall be required to indemnify or contribute any amount in
excess of the amount by which the total price at which Registrable Notes were
sold by such Holder exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 5 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this Section 5
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
MS&Co., any Holder of Registrable Notes or any Person controlling MS&Co. or any
Holder, or by or on behalf of the Company, its officers or directors or any
Person controlling the Company, (iii) acceptance of any of the Exchange Notes
and (iv) any sale of Registrable Notes pursuant to a Shelf Registration
Statement.
The Company agrees to indemnify the Trustee in accordance with Section
7.7 of the Indenture in connection with the Trustee's acceptance and
administration of this Agreement.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered into, and
--------------------------
on or after the date of this Agreement will not enter into, any agreement which
is inconsistent with the rights granted to the Holders of Registrable Notes in
this Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Notes affected by such amendment, modification, supplement, waiver
or consent; provided, however, that no amendment, modification, supplement,
waiver or consent to any departure from the provisions of Section 5 hereof shall
be effective as against any Holder of Registrable Notes unless consented to in
writing by such Holder.
14
(c) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder of Registrable Notes, initially at the address set forth for
such Holder in the Recapitalization Agreement; and (ii) if to the Company,
initially at the Company's address set forth in the Recapitalization Agreement,
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 6(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Notes in
violation of the terms of the Indenture. If any transferee of any Holder shall
acquire Registrable Notes, in any manner, whether by operation of law or
otherwise, such Registrable Notes shall be held subject to all of the terms of
this Agreement, and by taking and holding such Registrable Notes such Person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof. Neither MS&Co. nor the Trustee shall have any
liability or obligation to the Company with respect to any failure by any Holder
(or, with respect to MS&Co., any other Holder) to comply with, or any breach by
any Holder (or, with respect to MS&Co., any other Holder) of, any of the
obligations of such Holder under this Agreement.
(e) Third Party Beneficiary. The Holders and MS&Co. shall be third
-----------------------
party beneficiaries to the agreements made hereunder between the Company, on the
one hand, and the Trustee, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
15
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(i) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(j) Market-Making.
-------------
(i) The Company hereby agrees after the consummation of an
Exchange Offer or the effectiveness of a Shelf Registration Statement
and for so long as the 13% Notes are outstanding, if, in the judgment
of MS&Co., it or any of its affiliates (as such term is defined in the
rules and regulations under the 0000 Xxx) is required to deliver a
prospectus in connection with sales of, or market-making activities
with respect to, such securities, (A) to periodically amend the
applicable registration statement so that the information contained
therein complies with the requirements of Xxxxxxx 00(x) xx xxx 0000
Xxx, (X) within 45 days following the end of the Company's most recent
fiscal quarter, other than the last fiscal quarter of any fiscal year,
to file a supplement to the prospectus included in the applicable
registration statement which sets forth the financial results of the
Company for the previous quarter, (C) within 90 days following the end
of the Company's most recent fiscal year, to file an amendment to the
applicable registration statement which sets forth the financial
results of the Company for the previous year, (D) to amend the
applicable registration statement or supplement, the related
prospectus or the documents incorporated therein when necessary to
reflect any material changes in the information provided therein so
that the registration statement and the prospectus will not contain
any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of
the circumstances existing as of the date the prospectus is so
delivered, not misleading and (E) to provide MS&Co. with copies of
each such amendment or supplement as MS&Co. may request.
(ii) The Company hereby agrees that notwithstanding clause (i)
above, (A) prior to filing any post-effective amendment to any
registration statement or to supplementing any related prospectus, to
furnish to MS&Co. and its counsel, copies of all such documents
proposed to be amended, filed or supplemented, and (B) it will not
issue any post-effective amendment to a registration statement or any
supplement to a prospectus to which MS&Co. or its counsel shall
object.
(iii) The Company hereby agrees that it will notify MS&Co. and
its counsel and (if requested by any such person) confirm such advice
16
in writing, (A) when any prospectus supplement or amendment or post-
effective amendment has been filed, and, with respect to any post-
effective amendment, when the same has become effective, (B) of any
request by the SEC for any post-effective amendment or supplement to a
registration statement, any supplement or amendment to a prospectus or
for additional information, (C) the issuance by the SEC of any stop
order suspending the effectiveness of a registration statement or the
initiation of any proceedings for that purpose, (D) of the receipt by
it of any notification with respect to the suspension of the
qualification of the 13% Notes for sale in any jurisdiction or the
initiation or threatening of any proceedings for such purpose and (E)
of the happening of any event which makes any statement made in a
registration statement, a prospectus or any amendment or supplement
thereto untrue or which requires the making of any change in the
registration statement, a prospectus or any amendment or supplement
thereto, in order to make the statements therein not misleading.
(iv) The Company hereby agrees that it consents to the use of any
prospectus referred to in this paragraph (j) or any amendment or
supplement thereto by MS&Co. and its affiliates in connection with the
offering and sale of the 13% Notes; provided that upon receipt of any
--------
notice from the Company of the happening of any event of the kind
described in clause (iii)(E) of this paragraph (j), MS&Co. and its
affiliates will forthwith discontinue disposition of such 13% Notes
pursuant to any such prospectus until MS&Co. and its affiliates
receive copies of a supplemented or amended prospectus referred to in
this paragraph (j); any such suspensions may not exceed 60 days in any
365-day period; any notices to MS&Co. pursuant to this clause (v)
shall be sent to Xxxxxx Xxxxxxx & Co. Incorporated, 0000 Xxxxxxxx, Xxx
Xxxx, XX, 00000, Attention: Xxxxxxx Xxxxxxx, facsimile number: (212)
761-0392, with copies to the Law Division, Attention: Xxxxx
Xxxxxxx/Xxxxx XxXxxxxx, facsimile number (000) 000-0000, and shall be
deemed to have been duly given or made only upon receipt.
(v) In connection with the effectiveness of the Shelf
Registration Statement or any amendment thereto or supplemental
prospectus, in each case including any Form 10-K or Form 10-Q that is
incorporated by reference in such Shelf Registration Statement
required by this paragraph (j), if requested by MS&Co., it will cause
to be provided to MS&Co. a "cold comfort" letter from the Company's
independent public accountants (covering matters customarily covered
in "cold comfort" letters delivered in underwritten offerings) and
such documents and certificates as may be reasonably requested by
MS&Co. In addition, in connection with the effectiveness of the Shelf
Registration Statement or any amendment thereto, or in connection with
the filing of any Form 10-K that is incorporated by reference in such
Shelf Registration Statement required by this paragraph (j), if
requested by MS&Co., the Company will
17
cause to be provided to MS&Co. an opinion of counsel (covering matters
customarily covered in opinions delivered in underwritten offerings).
(vi) The Company hereby agrees that it will comply with the
provisions of this paragraph (j) at its own expense and will reimburse
MS&Co. for its expenses associated with this paragraph (j) (including
reasonable fees of counsel).
(vii) The Company hereby expressly acknowledges that the
indemnification and contribution provisions of Section 5 of this
Agreement shall be specifically applicable and relate to each
registration statement, prospectus, amendment or supplement referred
to in this paragraph (j) except with respect to losses, claims or
liabilities resulting from the delivery of any prospectus to the
extent that it is established that such prospectus was delivered by
MS&Co. after it received notice to discontinue using it in accordance
with clause (iv) of this paragraph (j).
18
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EARTHWATCH INCORPORATED
By
____________________________
Name:
Title:
Agreed, as of the date first above written:
THE BANK OF NEW YORK, as Trustee
By __________________________________________
Name:
Title:
XXXXXX XXXXXXX & CO. INCORPORATED
By __________________________________________
Name:
Title:
19
EXHIBIT B-2
EXECUTION COPY
SERIES C PREFERRED REGISTRATION RIGHTS AGREEMENT
among
EARTHWATCH INCORPORATED,
EACH OF THE PARTIES SET FORTH ON SCHEDULE 1 HERETO
and
BALL TECHNOLOGIES HOLDINGS CORP.
Dated as of April 3, 2001
SERIES C PREFERRED REGISTRATION RIGHTS AGREEMENT
This SERIES C PREFERRED REGISTRATION RIGHTS AGREEMENT dated as of
April 3, 2001 (this "Agreement"), is among EarthWatch Incorporated, a Delaware
corporation (the "Company"), each of the parties set forth on Schedule 1 hereto
(collectively, the "Noteholders") and Ball Technologies Holdings Corp., a
Colorado corporation ("Ball" and, together with the Noteholders, the "Recap
Parties").
This Agreement is made pursuant to the terms of a Recapitalization
Agreement and Consent, dated as of April 2, 2000, among the Company and the
Noteholders (the "Recapitalization Agreement"), pursuant to which the Company
has agreed to issue to the Noteholders, and pursuant to terms of a vendor
financing arrangement (the "Vendor Financing Arrangement") between the Company
and Ball under which the Company has agreed to issue to Ball, shares (the
"Preferred Shares") of the Company's 8.5% Cumulative Convertible Redeemable
Preferred Stock due 2009, Series C, par value $.001 per share (the "Series C
Preferred Stock") representing in the aggregate approximately 13% of the
Company's outstanding capital stock on a fully diluted basis and to provide to
the Recap Parties and to their direct and indirect transferees the registration
rights with respect to the shares of Common Stock (as defined herein) issuable
upon conversion of the Preferred Shares (the "Conversion Shares"). Capitalized
terms used in this Agreement but not defined shall have the meanings ascribed to
such terms in the Stockholders Agreement (as defined herein).
Pursuant to the terms of the Stockholders Agreement, the Company
granted certain registration rights to holders of its Series A Preferred Stock,
Series B Preferred Stock (each as defined therein) and Series C Preferred Stock.
The Company has agreed to extend to the Recap Parties and to their direct and
indirect transferees the same registration rights with respect to the Conversion
Shares as those that apply to Other Holders with respect to Registrable
Securities under such Stockholders Agreement. Following the Issuance Date, the
Company intends to seek the consent of such other parties to the Stockholders
Agreement as are required to consent thereunder to an amendment that would,
among other things, make the holders of the Preferred Shares parties to the
Stockholders Agreement solely with respect to Articles V and VII thereof and to
extend to them the rights granted to the Recap Parties under this Agreement (the
"Amendment"). Until the Amendment becomes effective, holders of the Preferred
Shares shall have the rights granted hereunder; upon the effectiveness of such
amendment, such holders shall become parties to, and be bound by, Articles V and
VII of the Stockholders Agreement and their separate registration rights
hereunder shall terminate.
In consideration of the foregoing and of the mutual agreements
contained herein, in the Recapitalization Agreement and under the terms of the
Vendor Financing Arrangement, the Company and the Recap Parties hereby agree as
follows:
1. Definitions.
-----------
As used in this Agreement, the following capitalized terms shall have
the following meanings:
"Amendment" has the meaning specified in the preamble to this
Agreement.
"Board" means the board of directors of the Company from time to time.
"Common Stock" means the Common Stock, par value $.001 per share, of
the Company or shares of any class or classes resulting from any
reclassification or reclassifications thereof.
"Company" has the meaning specified in the preamble to this Agreement.
"Conversion Shares" has the meaning specified in the preamble to this
Agreement.
"Demand Registration" has the meaning specified in the Stockholders
Agreement.
"Expiration Date" means the later of (i) June 15, 2003 or (ii) the
second anniversary of the Issuance Date.
"Holders" means the Recap Parties, for so long as they own any
Preferred Shares or Conversion Shares, and each of their successors, permitted
assigns and direct and indirect permitted transferees who become holders of
Preferred Shares or Conversion Shares.
"Initial Public Offering" means the consummation of the first sale by
the Company, or by one or more Stockholders, of shares of Common Stock for cash
in an underwritten public offering registered under the Securities Act.
"Issuance Date" means the date of issuance of the Preferred Shares to
the Recap Parties.
"Other Holders" has the meaning specified in the Stockholders
Agreement.
"Preferred Shares" has the meaning specified in the recitals to this
Agreement.
"Recapitalization Agreement" has the meaning specified in the recitals
to this Agreement.
"Registration Statement" means the registration statement or similar
document prepared in compliance with the Securities Act in accordance with
Section 2 hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Series C Preferred Stock" has the meaning specified in the recitals
to this Agreement.
"Stockholders Agreement" means that certain stockholders' agreement
dated as of April 8, 1999, 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.,
ITT Industries, Inc. and certain other persons, a copy of which is attached
hereto as Annex A.
2
2. Registration Rights Prior to Amendment.
Prior to the effectiveness of the Amendment:
(a) The Holders shall have all the registration rights, including all
the ancillary rights related thereto, as granted to the Other Holders in
Article V of the Stockholders Agreement (and the Conversion Shares shall be
deemed to be "Registrable Securities" under the Stockholders Agreement),
subject to the rights of the Company, as provided in subsection (c) hereof;
and
(b) The rights granted to Holders under subsection 2(a) above shall
include all those rights, obligations and liabilities that are provided in
Article V of the Stockholders' Agreement and, without limiting the scope of
the applicability of Article V, the rights, obligations and liabilities
that apply to Holders shall specifically include:
(i) the right to request a Demand Registration after 180 days
have passed following an Initial Public Offering;
(ii) Piggyback Registration rights, as that term is defined in
the Stockholders Agreement; and
(iii) the provisions contained in Article V of the Stockholders
Agreement which provide for indemnification by the Company or by the
Holders in certain circumstances, payment of registration expenses and
certain registration procedures.
(c) The Company shall have the right to refuse a Demand Registration
where the number of Conversion Shares that are proposed to be registered,
combined with that number of Registrable Securities held by Other Holders
to which a concurrent Demand Registration relates, is less than 10% of the
Fully-Diluted Shares.
(d) Notwithstanding the foregoing, if the Company shall furnish to
each Holder of Preferred Shares who makes a Demand Registration a
certificate signed by an officer of the Company stating that, in the
reasonable good faith judgment of the Board, it would not be in the best
interests of the Company and its stockholders for such registration to be
effected (because the Company is engaging in or intends to engage in an
acquisition, divestiture or other material transaction or due to other
extraordinary events relating to the Company, but, in any case, not
including for purposes of the Company avoiding its obligations hereunder),
then the Company shall have the right to defer such registration for a
period of not more than 90 days after receipt of the request of the
Demanding Stockholder; provided, however, that (i) the Company shall not be
entitled to defer its obligation to effect a registration for an aggregate
of more than 180 days within any 365-day period and (ii) the Company shall
make and communicate to the selling Holder its determination in respect of
a registration within 15 days of the Company's receipt of a notice of a
Demand Registration from a Holder in respect of such registration or, to
the extent reasonably practicable, promptly after becoming aware of such
transaction.
3
3. Registration Rights Following the Amendment.
Upon the effectiveness of the Amendment:
(a) The Holders shall become parties to the Stockholders Agreement
solely with respect to Articles V and VII thereof, shall become Other
Holders thereunder with all of the rights, benefits and obligations
applicable to Other Holders under Articles V and VII thereof and the
Conversion Shares shall become "Registrable Securities" under the
Stockholders Agreement.
(b) With respect to the Preferred Shares and the Conversion Shares,
the Holders shall not become parties to any other articles of the
Stockholders Agreement, nor shall they have any of the rights, benefits on
obligations under any portion of the Stockholders Agreement other than
Articles V and VII; provided, however, that the Amendment may provide that
Holders may become parties to the Stockholders Agreement for such other
purposes and with respect to such other provisions as shall be agreed upon
by the Company, each Holder and the requisite number of persons party to
the Stockholders Agreement.
(c) The Holders' separate registration rights under Section 2 of this
Agreement shall terminate.
4. Transfer Restrictions.
Until such time as the Preferred Shares are registered under the
Securities Act, the certificates representing Preferred Shares will bear a
legend stamped, typed or otherwise legibly placed on the face or reverse side
thereof substantially in the form set forth below:
NOTICE IS HEREBY GIVEN THAT THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
NON-U.S. JURISDICTION. THE SECURITIES CANNOT BE OFFERED, SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR AMENDMENT THERETO UNDER SUCH ACT AND ANY APPLICABLE LAWS OR
(II) PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH OTHER APPLICABLE LAWS. THE
SALE, TRANSFER OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE AND CERTAIN OTHER RIGHTS AND OBLIGATIONS OF THE HOLDER OF THIS
CERTIFICATE ARE ALSO SUBJECT TO ARTICLE V OF THE STOCKHOLDERS' AGREEMENT,
DATED AS OF APRIL 8, 1999, BY AND AMONG EARTHWATCH INCORPORATED (THE
"COMPANY") AND THE OTHER PARTIES THERETO, AS AMENDED FROM TIME TO TIME
(COPIES OF WHICH ARE AVAILABLE FOR REVIEW AT THE PRINCIPAL OFFICE OF THE
COMPANY), AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH
SECURITIES UNTIL ALL TERMS AND CONDITIONS HAVE BEEN FULFILLED
4
WITH RESPECT TO SUCH TRANSFER AS SET FORTH IN ARTICLE V OF SUCH AGREEMENT.
5. Blue Sky.
The Company shall use its reasonable best efforts to register or
qualify the Preferred Shares proposed to be sold or issued pursuant to a
registration effected by preparing and filing a registration statement under all
applicable securities or "blue sky" laws of all jurisdictions in the United
States in which any Holder of Preferred Shares may or may be deemed to purchase
Preferred Shares and shall use its reasonable best efforts to maintain such
registration or qualification through the Expiration Date; provided, however,
that the Company shall not be required to (i) qualify as a foreign corporation
or as a broker or a dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Section 5, (ii) file any general
consent to service of process or (iii) subject itself to taxation in any
jurisdiction if it is not otherwise so subject.
6. Accuracy of Disclosure.
The Company (and its successors) represents and warrants to each
Holder (and beneficial owner of Preferred Shares) and agrees for the benefit of
each Holder (and beneficial owner of Preferred Shares) that any registration
statement prepared in compliance with the Securities Act and the documents
incorporated by reference therein will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein not misleading and the prospectus delivered to such Holder and the
documents incorporated by reference therein will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
7. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents to the Recap
--------------------------
Parties, and each Recap Party represents to the Company and the other Recap
Parties, that it has not entered into, and agrees that on or after the date of
this Agreement it will not enter into, any agreement which is inconsistent with
the rights granted to the Holders of Preferred Shares in this Agreement or
otherwise conflicts with the provisions hereof. The Company represents that the
rights granted to the Holders hereunder do not in any way conflict with and are
not inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under the Stockholders Agreement or any other
agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company shall have obtained the written consent of
Holders representing at least a majority of the Preferred Shares affected by
such amendment, modification, supplement, waiver or consent; provided that any
amendment, modification or supplement to this Agreement which, in the good faith
opinion of the Board (and evidenced by a resolution of such board), does not
adversely affect any Holder, shall not be subject to such requirement for
written consent.
5
(c) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery:
(i) if to a Holder, initially at the address set forth for such
Holder in the Recapitalization Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section 7(c) (or, if no address is so set forth or given, at the most
current address given by such Holder as reflected in the register for the
Preferred Shares); and
(ii) if to the Company, initially at the Company's address set forth
in the Recapitalization Agreement, and thereafter at such other address,
notice of which is given in accordance with the provisions of this Section
7(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
(d) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation, subsequent Holders; provided that
nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Preferred Shares in violation of the terms of the
Recapitalization Agreement. If any transferee of any Holder shall acquire
Preferred Shares, in any manner, whether by operation of law or otherwise, such
Preferred Shares shall be held subject to all of the terms of this Agreement,
and by taking and holding such Preferred Shares such person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement and such person shall be entitled to
receive the benefits hereof.
(e) Purchases and Sales of Preferred Shares. The Company shall not,
----------------------------------------
and shall use its best efforts to cause its affiliates (as defined in Rule 405
under the Securities Act) not to, purchase and then resell or otherwise transfer
any Preferred Shares other than Preferred Shares acquired and cancelled.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
6
(i) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(j) Further Assurances. The Company and each Holder of Preferred
------------------
Shares agree to execute any instruments necessary to give effect to the
provisions of this Agreement.
7
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EARTHWATCH INCORPORATED
By __________________________________
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer,
President and Director
8
Agreed, as of the date first above written:
XXXXXX XXXXXXX & CO. INCORPORATED
By: _________________________________
Name:
Title:
9
Agreed, as of the date first above written:
POST BALANCED FUND
By: ______________________________________
Name:
Title:
POST HIGH YIELD LP
By: ______________________________________
Name:
Title:
POST TOTAL RETURN FUND
By: ______________________________________
Name:
Title:
OPPORTUNITY FUND
By: ______________________________________
Name:
Title:
10
Agreed, as of the date first above written:
XXXXXXXXX & CO., L.P.
By: ______________________________________
Name:
Title:
XXXXXXXXX INTERNATIONAL LTD.
By: ______________________________________
Name:
Title:
11
Agreed, as of the date first above written:
SUN AMERICA HIGH INCOME FUND
By: ______________________________________
Name:
Title:
SUN AMERICA SERIES TRUST HIGH YIELD
PORTFOLIO
By: ______________________________________
Name:
Title:
12
Agreed, as of the date first above written:
HITACHI SOFTWARE ENGINEERING CO., LTD.
By: ______________________________________
Name:
Title:
13
Agreed, as of the date first above written:
BALL TECHNOLOGIES HOLDINGS CORP.
By: ______________________________________
Name:
Title:
14
ANNEX A
STOCKHOLDERS AGREEMENT
Filed as Exhibit 4.1 to Amendment No. 1 to EarthWatch Incorporated's
Registration Statement on Form S-4 (File No. 333-39202) and incorporated herein
by reference.
15
SCHEDULE 1
NOTEHOLDERS
Xxxxxx Xxxxxxx & Co. Incorporated
Post Balanced Fund
Post High Yield LP
Post Total Return Fund
Opportunity Fund
Xxxxxxxxx & Co., X.X.
Xxxxxxxxx International LTD
Sun America High Income Fund
Sun America Series Trust High Yield Portfolio
Hitachi Software Engineering Co., Ltd.
16
EXHIBIT C
EARTHWATCH INCORPORATED
___________________
FIRST SUPPLEMENTAL INDENTURE TO THE
INDENTURE
Dated as of April [__], 2001
___________________
THE BANK OF NEW YORK,
Trustee
___________________
13% Senior Discount Notes due 2007
This First Supplemental Indenture (the "Supplemental Indenture"),
dated as of April [__], 2001, between EarthWatch Incorporated, a corporation
organized under the laws of the State of Delaware, and The Bank of New York, as
Trustee (the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, pursuant to the Indenture, dated as of July 12, 1999, between
the Company and the Trustee (the "Indenture"), the Company issued $199,000,000
principal amount at maturity of 13% Senior Discount Notes Due 2007 (the
"Notes");
WHEREAS, on February 28, 2001, the Company, pursuant to an Offer to
Purchase for Cash dated February 28, 2001, launched an Offer to Purchase (as
defined in the Indenture) up to all of the Notes (the "Tender Offer");
WHEREAS, in order to finance the future operations of the Company, on
April 2, 2001, the Company entered into a Recapitalization Agreement and Consent
(the "Agreement") with certain holders of the Notes (the "Remaining Holders"),
under which the Company agreed to enter into certain transactions in order to
induce the Remaining Holders to not tender their Notes in the Tender Offer,
including amending the Indenture as provided in this Supplemental Indenture (the
"Amendments") after consummation of the Tender Offer and the Remaining Holders
agreed to the Amendments;
WHEREAS, the Company purchased all of the Notes tendered in the Tender
Offer;
WHEREAS, the Remaining Holders hold 100% of the outstanding Notes;
WHEREAS, all things necessary to make this Supplemental Indenture a
valid supplement to the Indenture according to the terms of this Supplemental
Indenture and the Indenture have been done;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Company and the Trustee mutually covenant and agree as follows:
ARTICLE ONE
DEFINED TERMS
Section 1.1. Defined Terms. All capitalized terms used herein
-------------
without definition shall have the meaning ascribed thereto in the Indenture,
except as amended hereby. The words "herein," "hereof" and "hereby" and other
words of similar import used in this Supplemental Indenture refer to this
Supplemental Indenture as a whole and not to any particular section of the
Supplemental Indenture.
ARTICLE TWO
AMENDMENT
Section 2.1. Definitions. The following definitions in Section 1.01
-----------
of the Indenture are hereby amended as follows:
(a) The definition of "Collateral" in Section 1.01 of the Indenture
is hereby deleted in its entirety and replaced with the following:
""Collateral" means, (i) with respect to the Pledge Agreement, the
----------
Government Securities and the other collateral described in the Pledge
Agreement and (ii) with respect to the Pledge and Security Agreement, the
QuickBird 2 Launch Insurance and the other collateral described in the
Pledge and Security Agreement."
(b) The definition of "Collateral Trustee" in Section 1.01 of the
Indenture is hereby deleted in its entirety and replaced with the following:
""Collateral Trustee" means, (i) with respect to the Pledge Agreement,
------------------
the Trustee or any successor or substitute collateral trustee for the
Collateral under the Pledge Agreement acting as such for itself and the
Holders of the Notes and (ii) with respect to the Pledge and Security
Agreement, the Trustee or any successor or substitute collateral trustee
for the Collateral under the Pledge and Security Agreement acting as such
for itself, the Holders of the Notes and the holder(s) of the Vendor
Financing."
(c) The definition of "First QuickBird Launch Insurance" in Section
1.01 of the Indenture is hereby deleted in its entirety.
(d) The definition of "Insurance Proceeds Payment Amount" in Section
1.01 of the Indenture is hereby deleted in its entirety and replaced with the
following:
""Insurance Proceeds Payment Amount" means the amount of proceeds, if
---------------------------------
any, under the QuickBird 2 Launch Insurance received by the Collateral
Trustee under the Pledge and Security Agreement."
(e) The proviso in clause (xxiii) of the definition of "Permitted
Liens" in Section 1.01 of the Indenture is hereby deleted in its entirety and
replaced with the following:
"provided, however, that notwithstanding any of the foregoing or
otherwise, Permitted Liens shall not include any Liens on the QuickBird 2
Satellite or the QuickBird 2 Launch Insurance except (1) in the case of
Liens on the QuickBird 2 Launch Insurance, Liens thereon in favor of the
Collateral Trustee under the Pledge and Security Agreement or otherwise
securing the Notes or the Vendor Financing, and Liens in favor of the
collateral trustee under the Junior Pledge and Security Agreement for the
benefit of the holders of the Series A Preferred Stock and Series B
Preferred Stock, provided such Liens shall be junior to the Liens in favor
of the Collateral Trustee under the Pledge and Security Agreement and (2)
with respect to the QuickBird 2 Satellite, (A) Liens described in clause
(ii) of this definition, (B) until the attachment of risk under the
QuickBird 2 Launch Insurance, the retention or reservation of title to the
QuickBird 2 Satellite by Ball Aerospace & Technologies Corp. under the
terms of the Vendor Financing, (C) following the attachment of risk under
the QuickBird 2 Launch Insurance, Liens to secure up to $9,000,000
principal amount (plus accrued interest thereon) of Vendor Financing and
(D)
2
Liens in the proceeds (as defined in Section 9-306(1) of the New York
Uniform Commercial Code) from the disposition of the QuickBird 2 Satellite,
other than proceeds under the QuickBird 2 Launch Insurance, to secure up to
$9,000,000 million principal amount (plus accrued interest) of Vendor
Financing."
(f) The definition of "Registration Rights Agreement" is hereby
deleted in its entirety and replaced with the following:
""Registration Rights Agreement" means either (i) the Registration
-----------------------------
Rights Agreement, dated July 12, 1999, between the Company and Xxxxxx
Xxxxxxx & Co. Incorporated and certain permitted assigns specified therein
or (ii) the Notes Registration Rights Agreement dated as of April 3, 2001,
among the Company, the Trustee and Xxxxxx Xxxxxxx & Co. Incorporated, as
applicable."
(g) The definition of "Security Documents" in Section 1.01 of the
Indenture is hereby deleted in its entirety and replaced with the following:
""Security Documents" means the Pledge Agreement and the Pledge and
------------------
Security Agreement."
(h) The definition of "12 1/2% Notes" in Section 1.01 of the
Indenture is hereby deleted in its entirety.
Section 2.2. New Defined Terms. The Indenture is hereby amended by
-----------------
adding the following defined terms to Section 1.01 of the Indenture thereto in
the appropriate alphabetical order:
""Charter Amendments" means the amendment of the Company's Certificate
------------------
of Incorporation, substantially in the form attached to the
Recapitalization Agreement as Exhibit G."
""Junior Pledge and Security Agreement" means the Junior Pledge and
------------------------------------
Security Agreement to be entered into between the Company and the Trustee,
as collateral trustee, pursuant to Section 5.4(b) of the Recapitalization
Agreement, substantially in the Form of Exhibit H-2 to the Recapitalization
Agreement.
""Pledge Agreement" means the Pledge Agreement, dated as of April 3,
----------------
2001, among the Company, the Collateral Trustee and The Bank of New York,
as securities intermediary, under which the Company will pledge to the
Collateral Trustee certain Government Securities and/or cash to secure
payment in respect of the Company's obligation to repurchase the Notes
pursuant to Section 4.17."
""Pledge and Security Agreement" means the Senior Pledge and Security
-----------------------------
Agreement to be entered into by the Company in favor of the Collateral
Trustee pursuant to Section 5.4(b) of the Recapitalization Agreement,
substantially in the form of Exhibit H-1 attached to the Recapitalization
Agreement, under which the Company will pledge to the Collateral Trustee
the QuickBird 2 Launch Insurance for the benefit of the Holders of the
Notes and the holder(s) of the Vendor Financing."
3
""QuickBird 2 Launch Insurance" means launch and in-orbit operations
----------------------------
insurance in respect of the QuickBird 2 Satellite, having the terms and
provisions described in Section 4.10(b) and being in form and substance
satisfactory to the Collateral Trustee under the Pledge and Security
Agreement."
""QuickBird 2 Satellite" means the QuickBird 2 spacecraft manufactured
---------------------
pursuant to the contract dated June 9, 1998, as amended from time to time,
between Ball Aerospace & Technologies Corp. and the Company, for QuickBird
Spacecraft number SE.1M.PRJ.0004.A."
""Recapitalization Agreement" means the Recapitalization Agreement and
---------------------------
Consent, dated as of April 2, 2001, among the Company, Xxxxxx Xxxxxxx & Co.
Incorporated and the other parties thereto."
""Vendor Financing" means the financing to be provided by Ball
----------------
Technologies & Aerospace Corp. to the Company in a principal amount not
less than $9,000,000, for the construction and launch of the QuickBird 2
Satellite on substantially the terms set forth on Exhibit A to the
Recapitalization Agreement."
Section 2.3. Amendment to Section 4.3. Section 4.3 of the Indenture
------------------------
is hereby amended by adding the following new clause (viii) at the end of the
second paragraph thereof:
"or (viii) the repurchase of shares of Series A Preferred Stock or
Series B Preferred Stock with any Insurance Proceeds Payment Amount,
provided the Company has previously repurchased all Notes required to be
repurchased and repaid the Vendor Financing with the Insurance Proceeds
Payment Amount, in each case as required pursuant to Section 4.12."
Section 2.4. Amendment to Section 4.4. Section 4.4 of the Indenture
------------------------
is hereby amended by deleting the last sentence thereof in its entirety and
replacing it with the following:
"The Company shall not, and shall not permit any Subsidiary to,
create, incur, assume or suffer to exist any Lien on the QuickBird 2
Satellite or the QuickBird 2 Launch Insurance except (i) in the case of the
QuickBird 2 Launch Insurance, Liens thereon in favor of the Collateral
Trustee under the Pledge and Security Agreement or otherwise securing the
Notes or the Vendor Financing and Liens thereon in favor of the collateral
trustee under the Junior Pledge and Security Agreement for the benefit of
the holders of the Series A Preferred Stock and Series B Preferred Stock,
provided such Liens are junior to the Liens in favor of the Collateral
Trustee under the Pledge and Security Agreement and (ii) with respect to
the QuickBird 2 Satellite, (A) Liens described in clause (ii) of the
definition of Permitted Liens, (B) until the attachment of risk under the
QuickBird 2 Launch Insurance, the retention or reservation of title to the
QuickBird 2 Satellite by Ball Aerospace & Technologies Corp. under the
terms of the Vendor Financing, (C) following the attachment of risk under
the QuickBird 2 Launch Insurance, Liens to secure up to $9,000,000
principal amount (plus accrued interest thereon) of Vendor Financing and
(D) Liens in the proceeds (as defined in Section 9-306(1) of the New York
Uniform Commercial Code) from the disposition of the QuickBird 2 Satellite,
4
other than proceeds under the QuickBird 2 Launch Insurance, to secure up to
$9,000,000 million principal amount (plus accrued interest) of Vendor
Financing."
Section 2.5. Amendment to Section 4.5. Section 4.5 of the Indenture
------------------------
is hereby amended by deleting the term "First QuickBird Satellite" in the last
paragraph of Section 4.5 of the Indenture and replacing it with the term
"QuickBird 2 Satellite."
Section 2.6. Amendment to Section 4.10. Section 4.10 of the
-------------------------
Indenture is hereby amended by:
(a) deleting the term "First QuickBird Satellite" in the first and
second sentence thereof and, in each case, replacing it with the term "QuickBird
2 Satellite;" and
(b) deleting clause (b) in its entirety and replacing it with the
following:
"(b) Special Provisions Relating to QuickBird 2 Satellite.
Notwithstanding the generality of Section 4.10(a), with respect to the
intentional ignition of the launch vehicle for, and any operation following
such ignition of, the QuickBird 2 Satellite, the provisions of this Section
4.10(b) shall apply. The Company shall use its best efforts to obtain (by
paying the initial deposit therefor), no later than June 15, 2001, and upon
obtainment shall maintain in full force and effect, launch insurance with
respect to the QuickBird 2 Satellite, for a period which the Company deems
reasonable by comparison with other companies in a similar industry but in
no event for a period less than one year commencing on the date of
intentional ignition of the launch vehicle; the Company shall pay the
remaining insurance premiums in accordance with the payment schedule under
the terms of the QuickBird 2 Launch Insurance. The insurance policy
required to be obtained pursuant to this Section 4.10(b) shall have
substantially the same terms as the launch and in-orbit operations
insurance with respect to the First QuickBird Satellite, except (i) for
such differences in terms as may be required due to the differences in
construction, launch or in-orbit operations between the First QuickBird
Satellite and the QuickBird 2 Satellite, (ii) that the QuickBird 2 Launch
Insurance shall only be required to cover one year of operations after
launch for the QuickBird 2 Satellite, (iii) as is acceptable to the Holders
of a majority of the Notes in their absolute discretion and (iv) for such
differences that do not adversely affect the Holders. Such insurance shall
name the Collateral Trustee under the Pledge and Security Agreement as sole
loss payee thereof and must be in an amount of at least $155,000,000;
provided that in the event premiums are not at any time fully paid for in
respect of such launch insurance solely by reason of the fact that premiums
previously paid have been returned by the relevant insurance companies, the
Company shall not thereby be in default of its obligations under this
sentence, provided that all such returned premiums have been distributed to
the Collateral Trustee under the Pledge and Security Agreement in
accordance with the provisions of the Pledge and Security Agreement and any
amounts subsequently made available to the Company by the Collateral
Trustee in accordance with the Pledge and Security Agreement are
immediately used for the purchase of launch insurance complying with this
sentence. Except as is acceptable to the Holders of a majority of the
Notes in their absolute discretion, the insurance policy required to be
obtained pursuant to this Section 4.10(b) shall provide that if 66% or more
of a satellite's capacity is lost, the
5
full amount of insurance shall become due and payable, and that if a
satellite is able to maintain more than 34% but less than 85% of its
capacity, a portion of such insurance based on the lost capacity shall
become due and payable.
The QuickBird 2 Launch Insurance shall name the Collateral Trustee
under the Pledge and Security Agreement as the sole loss payee thereon, and
the entire Insurance Proceeds Payment Amount, if any, shall be paid
directly to the Collateral Trustee for application (i) first to the Notes
and up to $9,000,000 principal amount of Vendor Financing, on a pro rata
basis, in accordance with the provisions of the Pledge and Security
Agreement and (ii) second to the collateral trustee under the Junior Pledge
and Security Agreement for the benefit of the Series A Preferred Stock and
Series B Preferred Stock in accordance with the provisions of the Junior
Pledge and Security Agreement. In the event that, notwithstanding the fact
that the Collateral Trustee under the Pledge and Security Agreement shall
be the sole loss payee with respect to the QuickBird 2 Launch Insurance,
the Company or any Subsidiary at any time shall receive any proceeds
relating to the QuickBird 2 Launch Insurance from the relevant insurance
company or from any source other than the Collateral Trustee in accordance
with the Pledge and Security Agreement, the Company shall cause such
proceeds to be held in trust for the benefit of the Collateral Trustee
under the Pledge and Security Agreement and immediately turned over to the
Collateral Trustee under the Pledge and Security Agreement in the same form
received with appropriate endorsements."
Section 2.7. Amendment to Section 4.11. Section 4.11 of the
-------------------------
Indenture is hereby amended by deleting the term "First QuickBird Satellite" in
clause (ii) of Section 4.11 of the Indenture and replacing it with the term
"QuickBird 2 Satellite."
Section 2.8. Amendment to Section 4.12. Section 4.12 of the
-------------------------
Indenture is hereby amended by deleting Section 4.12 of the Indenture in its
entirety and replacing it with the following:
"Section 4.12. Repurchase of Notes upon an Insurance Proceeds
----------------------------------------------
Payment. The Company shall, within 30 days of receipt by the Collateral
Trustee under the Pledge and Security Agreement of any proceeds under the
QuickBird 2 Launch Insurance, commence (and consummate within 60 days
thereafter) an Offer to Purchase the Notes then outstanding and offer to
repay the Vendor Financing, including any interest accrued and payable
thereon, on a pro rata basis, in an aggregate amount equal to the Insurance
Proceeds Payment Amount not previously subject to an Offer to Purchase or
repayment of the Vendor Financing under this Section 4.12; provided that
the aggregate principal amount of Vendor Financing that may be repaid with
any Insurance Proceeds Payment Amount shall not exceed $9,000,000. The
purchase price for the Notes in connection with any such Offer to Purchase
shall be equal to 100% of the Accreted Value thereof on the Payment Date,
plus accrued and unpaid interest, if any, to such Payment Date, and the
purchase price for the Vendor Financing to be so repaid shall be equal to
the principal amount thereof plus accrued interest thereon. If the sum of
the aggregate purchase price of the Notes tendered in connection with such
Offer to Purchase and the amount of Vendor Financing repaid pursuant to the
first sentence of this Section 4.12 is less than the Insurance Proceeds
Payment Amount, the remaining insurance proceeds shall be paid
6
over to the collateral trustee under the Junior Pledge and Security
Agreement, to the extent required under the Junior Pledge and Security
Agreement, and otherwise to the Company, or as the Company may direct."
Section 2.9. Amendment to Section 4.17. Section 4.17 of the
-------------------------
Indenture is hereby amended by deleting Section 4.17 of the Indenture in its
entirety and replacing it with the following:
"Section 4.17. Repurchase of Notes upon Failure to Meet Certain
------------------------------------------------
Conditions. If, as of the close of business on June 15, 2001, (i) the
----------
Company has not obtained QuickBird 2 Launch Insurance as required by
Section 4.10(b), or (ii) the Charter Amendments shall have not been
approved and be in full force and effect, or (iii) the Company has not
obtained the Vendor Financing, or (iv) the Company has not issued the
shares of Series C Preferred Stock as required under Section 5.2 of the
Recapitalization Agreement, or (v) the Company has not complied with all of
its obligations under Section 5.4(b) under the Recapitalization Agreement,
then the Company shall commence and consummate on or prior to August 1,
2001, an Offer to Purchase the Notes. The purchase price for the Notes in
connection with such Offer to Purchase shall be equal to 100% of the
Accreted Value of the Notes as of the Payment Date."
Section 2.10. Amendments to Section 6.1. Section 6.1 of the
-------------------------
Indenture is hereby amended by:
(a) deleting clause (c) in its entirety and replacing it with the
following:
"(c) the failure to make or consummate an Offer to Purchase in
accordance with Sections 4.7, 4.12 or 4.17 hereof;"
(b) deleting clause (III) of clause (e) in its entirety and
replacing it with the following:
"(III) with respect to any Indebtedness under the Vendor Financing,
there shall occur any default in the performance or observance of any term,
condition, covenant or agreement contained therein or in any agreement
relating thereto, or any other event specified in any such Indebtedness or
agreement, if the effect thereof is to cause, or permit the holder of
holders of such Indebtedness (or any trustee or other representative of any
such holder(s)) to cause, such Indebtedness to become due prior to its
Stated Maturity;"
(c) deleting clause (i) in its entirety and replacing it with the
following:
"(i) with respect to the QuickBird 2 Satellite, there shall occur
(1) the loss of more than 5% of such satellite's capacity or (2) any other
event that permits or requires the payment of proceeds of the QuickBird 2
Launch Insurance by an insurance company thereunder and, in either such
case, such proceeds are not paid over to the Collateral Trustee within 90
days of demand being made under the applicable QuickBird 2 Launch Insurance
policy."
7
(d) adding the following new clause (j):
"the Collateral Trustee under the Pledge Agreement does not have at
all times a first priority perfected security interest in the Collateral
under the Pledge Agreement, or the Collateral Trustee under the Pledge and
Security Agreement does not have at all times a first priority perfected
security interest in the Collateral under the Pledge and Security
Agreement."
Section 2.11. Amendment to Section 9.1. Section 9.1 of the Indenture
------------------------
is hereby amended by deleting the parenthetical in clause (b) of Section 9.1 in
its entirety and replacing it with the following:
"(including amendments, modifications and supplements for the purpose
of securing up to $9,000,000 principal amount of Vendor Financing with the
Collateral under the Pledge and Security Agreement)"
Section 2.12. Amendments to Section 9.2. Section 9.2 of the
-------------------------
Indenture is hereby amended by:
(a) deleting the period at the end of clause (viii) of the second
paragraph of Section 9.1 and replacing it with the following:
"; or"
(b) adding the following new clause (ix) at the end of the second
paragraph of Section 9.1:
"(ix) alter the obligation of the Company to purchase the Notes under
Section 4.12 or 4.17 or waive any default in the performance thereof."
Section 2.13. Amendment to Section 10.1. The Indenture is hereby
-------------------------
amended by deleting clause (a) of Section 10.1 in its entirety and replacing it
with the following:
"(a) The Company shall enter into the Pledge Agreement and, promptly
following the obtainment of QuickBird 2 Insurance, into the Pledge and
Security Agreement and comply with the respective terms and provisions
thereof. The purpose of the Pledge Agreement is to provide the Trustee with
an interest in the Government Securities described in the Pledge Agreement
and any and all proceeds thereof. It is the intent that the interest of
the Trustee (through the Collateral Trustee under the Pledge Agreement) in
such Government Securities not be less than the aggregate Accreted Value on
August 1, 2001 for all Notes outstanding on the date hereof. The purpose
of the Pledge and Security Agreement is to provide the Trustee with an
interest in the QuickBird 2 Launch Insurance and any and all proceeds
thereof which will be shared, pro rata, with the interest therein of the
holder(s) of up to $9,000,000 principal amount of Vendor Financing. The
Trustee and the Collateral Trustee under the Pledge and Security Agreement
are authorized to enter into such modifications, amendments and supplements
to the Pledge and Security Agreement for the purpose of effectively
securing up to
8
$9,000,000 principal amount of Vendor Financing on a pro rata basis with
the Notes as provided in this Section 10.1."
ARTICLE THREE
MISCELLANEOUS
Section 3.1. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE
-------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
Section 3.2. Severability Clause. In case any provision in this
-------------------
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 3.3. Entire Agreement. This Supplemental Indenture is
----------------
intended by the parties to be a final expression of their agreement in respect
of the subject matter contained herein and, together with the Indenture, as
amended hereby, supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
Section 3.4. Ratification; Supplemental Indentures Part of Indenture.
-------------------------------------------------------
Except as expressly amended hereby, the Indenture is in all respects ratified
and confirmed and all the terms, conditions and provisions thereof shall remain
in full force and effect. This Supplemental Indenture shall form a part of the
Indenture for all purposes, and every Holder heretofore or hereafter
authenticated and delivered shall be bound hereby. The Trustee makes no
representation or warranty as to the validity or sufficiency of this
Supplemental Indenture.
Section 3.5. Effectiveness. This Supplemental Indenture shall become
-------------
effective upon due execution.
Section 3.6. Counterparts. The parties may sign any number of copies
------------
of this Supplemental Indenture. Each signed copy shall be an original, but all
of them together represent the same agreement.
Section 3.7. Headings. The headings of the Articles and Sections of
--------
this Supplemental Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof and shall in no way modify or
restrict any of the terms and provisions hereof.
9
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
EARTHWATCH INCORPORATED
By: ______________________________
Name:
Title:
THE BANK OF NEW YORK
By: ______________________________
Name:
Title:
10
EXHIBIT D
PLEDGE AGREEMENT
Dated as of April 3, 2001
Among
-----
EARTHWATCH INCORPORATED
as pledgor
-- -------
THE BANK OF NEW YORK
as trustee
-- -------
and
THE BANK OF NEW YORK
as securities intermediary
-- ---------- ------------
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "Agreement") is made and entered into as
of April 3, 2001 by EARTHWATCH INCORPORATED, a Delaware corporation (the
"Pledgor"), THE BANK OF NEW YORK, a New York banking corporation, having an
office at 000 Xxxxxxx Xxxxxx, Xxxxx 21 West, New York, New York 10286, as
trustee (the "Trustee") for the benefit of the holders from time to time (the
"Holders") of the 13% Notes (as defined herein) issued by the Pledgor under the
13% Notes Indenture (as defined below) and THE BANK OF NEW YORK, as securities
intermediary (the "EarthWatch Securities Intermediary").
W I T N E S S E T H
WHEREAS, the Pledgor has issued 13% Senior Discount Notes due 2007
(the "13% Notes") pursuant to the terms of the Indenture, dated as of July 12,
1999 (as supplemented by the Supplemental Indenture (as defined in the
Recapitalization Agreement referred to below) and as further amended, amended
and restated, supplemented or otherwise modified from time to time, the "13%
Notes Indenture"), between the Pledgor and The Bank of New York, as trustee for
the Holders;
WHEREAS, on February 28, 2001, the Pledgor, pursuant to an Offer to
Purchase for Cash dated February 28, 2001, launched an Offer to Purchase (as
defined in the 13% Notes Indenture) for up to all of the 13% Notes (the "Tender
Offer").
WHEREAS, in order to finance the future operations of the Pledgor, on
April 2, 2001 the Pledgor entered into the Recapitalization Agreement (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Recapitalization Agreement") with certain holders of the 13% Notes
(the "Remaining Holders"), under which the Pledgor agreed to enter into certain
transactions in order to induce the Remaining Holders to not tender their 13%
Notes in the Tender Offer, all as more particularly described therein;
WHEREAS, the Pledgor has purchased all of the Notes tendered in the
Tender Offer;
WHEREAS, the Remaining Holders hold 100% of the outstanding 13% Notes;
WHEREAS, the Pledgor has agreed to (i) purchase or cause to be
purchased United States Treasury securities in an amount at maturity equal to
the aggregate Accreted Value as of August 1, 2001 of the 13% Notes that remain
outstanding immediately following the consummation of the Tender Offer and with
an initial maturity not later than June 15, 2001 and (ii) place such securities
(or cause them to be placed) in an account maintained by the Trustee with the
EarthWatch Securities Intermediary for the benefit of Holders; and
WHEREAS, the Pledgor has agreed to (i) pledge to the Trustee for the
benefit of the Trustee and for the ratable benefit of the Holders a security
interest in such securities and related collateral and (ii) execute and deliver
this Agreement in order to secure the payment and performance by the Pledgor of
the Obligations (as defined below);
WHEREAS, the Trustee has security entitlements with respect to all
financial assets credited from time to time to the Pledgor's account, Account
No. 103278 (the "Pledge Account II") with the EarthWatch Securities
Intermediary, at its office at 000 Xxxxxxx Xxxxxx, Xxxxx 21 West, New York, New
York 10286, as trustee for the benefit of the Holders; and
WHEREAS, capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the 13% Notes Indenture
and the Recapitalization Agreement; provided, however, that if such a term is
defined in both such documents, the definition contained in the Recapitalization
Agreement shall govern. Unless otherwise defined herein or in either such
document, terms used in Articles 8 or 9 of the Uniform Commercial Code as in
effect from time to time in the State of New York (the "UCC") (including,
without limitation, "financial asset", "securities account", "securities
entitlement", "securities intermediary" and "entitlement order") and/or the
Federal Book Entry Regulations (as defined herein) are used herein as they are
defined in the UCC and/or the Federal Book Entry Regulations, as applicable. The
"Federal Book Entry Regulations" means (a) the federal regulations contained in
Subpart B ("Treasury/Reserve Automated Debt Entry System (TRADES)") governing
book-entry securities consisting of United States Treasury bonds, notes and
bills and Subpart D ("Additional Provisions") of 31 C.F.R. Part 357, 31 C.F.R.
(S)357.2, (S)357.10 through (S)357.14 and (S)357.41 through (S)357.44 and (b) to
the extent substantially identical to the federal regulations referred to in
clause (a) above (as in effect from time to time), the federal regulations
governing other book-entry securities.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the Pledgor hereby agrees with the Trustee, for the benefit of the
Trustee and for the ratable benefit of the Holders, as follows:
SECTION 1. Pledge and Grant of Security Interest. As security for
-------------------------------------
the prompt and complete payment and performance when due of the Obligations (as
defined below), the Pledgor hereby pledges and grants to the Trustee for its
benefit and for the ratable benefit of the Holders, a continuing first priority
security interest in and to all of the Pledgor's right, title and interest in,
to and under the following (collectively, the "Pledged Collateral"): (a) the
Pledge Account II, (b) all financial assets credited to the Pledge Account II
from time to time, including, without limitation, the United States Treasury
securities identified by CUSIP Number in Exhibit A to this Agreement, and any
financial assets purchased after the date hereof and credited to the Pledge
Account II, including, without limitation, any United States Treasury securities
acquired pursuant to Section 10(f) (such financial assets, the "Pledged
Securities"), (c) any and all security entitlements of the Pledgor with respect
to the Pledged Securities, (d) all dividends, interest, cash, instruments or
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the foregoing, and (e) all
proceeds of any and all of the Pledged Collateral (including, without
limitation, proceeds that constitute property of the types described in clauses
(a) through (d) of this Section 1) and, to the extent not otherwise included,
cash.
SECTION 2. Security for Obligations. This Agreement secures the
------------------------
prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of all obligations of the Pledgor now or
hereafter existing under the 13% Notes Indenture and all obligations of the
Pledgor to the Holders under Section 5.6 of the
2
Recapitalization Agreement, whether direct or indirect, absolute or contingent,
and whether for principal, reimbursement obligations, interest, fees, premiums,
penalties, indemnifications, contract causes of action, costs, expenses or
otherwise (all such obligations, the "Obligations").
SECTION 3. Delivery of Pledged Securities; Pledge Account II;
--------------------------------------------------
Interest. (a) The Pledged Securities shall be pledged and transferred to the
--------
Trustee and the Trustee shall become the holder of a security entitlement to the
Pledged Securities through action by the EarthWatch Securities Intermediary, as
confirmed (in writing or electronically or otherwise in accordance with standard
industry practice) to the Trustee by the EarthWatch Securities Intermediary (i)
indicating by book-entry that the Pledged Securities and all security
entitlements with respect thereto have been credited to the Pledge Account II,
or (ii) acquiring the Pledged Securities or a security entitlement for the
Trustee and accepting the same for credit to the Pledge Account II.
(b) Prior to or concurrently with the execution and delivery hereof
and prior to the transfer to the Trustee of the Pledged Securities (or
acquisition by the Trustee of any security entitlement with respect thereto) as
provided in subsection (a) of this Section 3, the Trustee shall establish with
the EarthWatch Securities Intermediary the Pledge Account II on the books of the
EarthWatch Securities Intermediary as a securities account segregated from all
other custodial or collateral accounts, such Pledge Account II to be maintained
at the offices of the EarthWatch Securities Intermediary at The Bank of New
York, and the EarthWatch Securities Intermediary shall maintain a securities
account at the Federal Reserve Bank of New York ("FRBNY"). Upon transfer of the
Pledged Securities to the EarthWatch Securities Intermediary (or the EarthWatch
Securities Intermediary's acquisition of the security entitlements with respect
thereto), as confirmed to the EarthWatch Securities Intermediary by FRBNY or
another securities intermediary, the EarthWatch Securities Intermediary shall
make appropriate book entries indicating that the Pledged Securities and/or such
security entitlements have been credited to the Trustee and the Pledge Account
II. Subject to the other terms and conditions of this Agreement, all funds or
other property held by the Trustee pursuant to this Agreement shall be held in
the Pledge Account II (except as expressly provided in Section 10) subject to
the exclusive dominion and control (including "control" as defined in (S) 9-
115(1)(e) of the UCC) of the Trustee and exclusively for the benefit of the
Trustee and for the ratable benefit of the Holders and segregated from all other
funds or other property otherwise held by the Trustee.
(c) The Trustee shall, in accordance with all applicable laws, have
sole dominion and control (including "control" as defined in UCC (S) 9-
115(1)(e)) over the Pledge Account II, and it shall be a term and condition of
the Pledge Account II and the Pledgor irrevocably instructs the Trustee,
notwithstanding any other term or condition to the contrary in any other
agreement, that no Pledged Collateral shall be released to or for the account
of, or withdrawn by or for the account of, the Pledgor or any other Person
except as expressly provided in this Agreement.
(d) The Trustee shall, in accordance with and subject to all
applicable laws, be the sole entitlement holder of, and have the sole power to
originate entitlement orders with respect to, the Pledge Account II and all
assets and properties carried in the Pledge Account II, and it shall be a term
and condition of the Pledge Account II that the Trustee shall have the right to
issue such entitlement orders with respect to the Pledge Account II and all
assets and
3
properties from time to time carried in the Pledge Account II without
the consent of the Pledgor or any other Person, and that no Pledged Collateral
shall be released to or for the account of, or withdrawn by or for the account
of, the Pledgor or any other Person except as expressly provided in this
Agreement.
(e) All Pledged Collateral shall be retained in the Pledge Account II
pending disbursement pursuant to the terms hereof.
(f) Concurrently with the execution and delivery of this Agreement the
Trustee and the EarthWatch Securities Intermediary shall deliver to the Pledgor
and the Pledgor shall forward to the Remaining Holders a duly executed
certificate, in the form of Exhibit B hereto, of an officer of the Trustee,
confirming the Trustee's establishment and maintenance of the Pledge Account II
and its receipt and holding of the Pledged Securities or a security entitlement
thereto and the crediting of the Pledged Securities or such security entitlement
to the Pledge Account II, all in accordance with this Agreement.
(g) Concurrently with the execution and delivery of this Agreement,
the Pledgor shall deliver to the Trustee acknowledgment copies or stamped
receipt copies of proper financing statements, duly filed under the UCC of the
State of New York, the State of Colorado and the State of Delaware, covering the
Pledged Collateral described in this Agreement.
SECTION 4. Representations and Warranties. The Pledgor hereby
------------------------------
represents and warrants that, as of the date hereof:
(a) The execution and delivery by the Pledgor of, and the performance
by the Pledgor of its obligations under, this Agreement will not contravene
any provision of applicable law or statute or the organizational documents
of the Pledgor or any material agreement or other material instrument
binding upon the Pledgor or any of its subsidiaries or any judgment, order
or decree of any governmental body, agency or court having jurisdiction
over the Pledgor or any of its subsidiaries, or result in the creation or
imposition of any Lien on any assets of the Pledgor, except for the
security interests granted under this Agreement; no consent, approval,
authorization or order of, or qualification with, or other action by, any
governmental or regulatory body or agency or any third party is required
(i) for the execution, delivery or performance by the Pledgor of this
Agreement, (ii) for the grant by the Pledgor of the security interest
granted hereby, for the pledge by the Pledgor of the Pledged Collateral
pursuant to this Agreement, (iii) for the perfection and maintenance of the
pledge and security interest created hereby (including the first-priority
nature of such pledge and security interest), assuming compliance by the
EarthWatch Securities Intermediary with all obligations contained in this
Agreement or (iv) except for any such consents, approvals, authorizations
or orders required to be obtained by the Trustee (or the Holders) for
reasons other than the consummation of the transactions contemplated by the
Recapitalization Agreement, for the exercise by the Trustee of the rights
provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement.
(b) Immediately before depositing the Pledged Securities into the
Pledge Account II, the Pledgor is the legal and beneficial owner of the
Pledged Collateral free
4
and clear of any Lien or claims of any person or entity (except for the
security interests granted under this Agreement). No financing statement or
other instrument similar in effect covering the Pledgor's interest in the
Pledged Securities is on file in any public office, other than any
financing statements filed pursuant to this Agreement.
(c) This Agreement has been duly authorized, validly executed and
delivered by the Pledgor and assuming the due authorization, execution and
delivery thereof by the Trustee and the EarthWatch Securities Intermediary,
constitutes a valid and binding agreement of the Pledgor, enforceable
against the Pledgor in accordance with its terms, except as (i) the
enforceability hereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, preference, reorganization, moratorium or similar laws now or
hereafter in effect relating to or affecting creditors' rights or remedies
generally, (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability, (iii) the exculpation
provisions and rights to indemnification hereunder may be limited by public
policy considerations and (iv) the waiver of rights and defenses contained
in Section 11(b), Section 15.11 and Section 15.15 hereof may be limited by
applicable law.
(d) Upon the transfer to the Trustee of the Pledged Securities and the
acquisition by the Trustee of a security entitlement thereto in accordance
with Section 3, and the compliance by the EarthWatch Securities
Intermediary with the provisions of this Agreement, the pledge of and grant
of a security interest in the Pledged Collateral securing the payment of
the Obligations for the benefit of the Trustee and the Holders will
constitute a valid first priority perfected security interest in such
Pledged Collateral, enforceable as such against all creditors of the
Pledgor (and any persons purporting to purchase any of the Pledged
Collateral from the Pledgor) and all filings and actions (other than the
transfer to the Trustee of the Pledged Securities) necessary or desirable
to perfect and protect such security interest have been duly taken.
(e) There are no legal or governmental proceedings pending or, to the
best of the Pledgor's knowledge, threatened to which the Pledgor or any of
its subsidiaries is a party or to which any of the properties of the
Pledgor or any such subsidiary is subject that would materially adversely
affect the power or ability of the Pledgor to perform its obligations under
this Agreement or to consummate the transactions contemplated hereby.
(f) The pledge of the Pledged Collateral pursuant to this Agreement is
not prohibited by law or governmental regulation (including, without
limitation, Regulations T, U and X of the Board of Governors of the Federal
Reserve System) applicable to the Pledgor.
(g) No Event of Default (as defined herein) exists.
(h) The chief place of business and chief executive office of the
Pledgor are located at 0000 Xxxx Xxxx, Xxxxxxxx, XX 00000, and the Pledgor
keeps its records concerning the Pledged Collateral at such location.
5
SECTION 5. Further Assurances. (a) The Pledgor agrees that it will
------------------
from time to time execute and deliver or cause to be executed and delivered, or
use its reasonable best efforts to procure, all assignments, instruments and
other documents, all in form and substance reasonably satisfactory to the
Trustee, and take any other actions that are necessary or desirable, to perfect,
continue the perfection of, or protect the first priority nature of the
Trustee's security interest in and to the Pledged Collateral, to protect the
Pledged Collateral against the rights, claims, or interests of third persons
(other than any such rights, claims or interests created by or arising through
the Trustee), to enable the Trustee to enforce its rights and remedies
hereunder, or to give effect to the purposes of this Agreement.
(b) The Pledgor hereby agrees to file one or more financing or
continuation statements, and amendments thereto, relating to all or any part of
the Pledged Collateral and provide proof to the Trustee of such filing. A
photocopy or other reproduction of this Agreement or any financing statement
covering the Pledged Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.
(c) The Pledgor will promptly pay all reasonable costs incurred in
connection with any of the foregoing.
SECTION 6. Covenants. The Pledgor covenants and agrees with the
---------
Trustee and the Holders that from and after the date of this Agreement until the
payment in full in cash of the Obligations:
(a) that (i) it will not (and will not purport to) sell or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Pledged Collateral or its beneficial interest therein, and (ii) it will not
create or permit to exist any Lien or other adverse interest in or with
respect to its beneficial interest in any of the Pledged Collateral (except
for the security interests granted under this Agreement) and at all times
will be the sole beneficial owner of the Pledged Collateral;
(b) that it will not (i) enter into any agreement or understanding
that restricts or inhibits or purports to restrict or inhibit the Trustee's
rights or remedies hereunder, including, without limitation, the Trustee's
right to sell or otherwise dispose of the Pledged Collateral or (ii) fail
to pay or discharge any tax, assessment or levy of any nature with respect
to its beneficial interest in the Pledged Collateral not later than five
days prior to the date of any proposed sale under any judgment, writ or
warrant of attachment with respect to such beneficial interest; and
(c) that it will keep its chief place of business, chief executive
office and the place where it keeps its records concerning the Pledged
Collateral at the location therefor specified in Section 4(h), or upon 30
days' prior written notice to the Trustee, at such other locations in a
jurisdiction where all actions required by Section 5 have been taken with
respect to the Collateral.
SECTION 7. Power of Attorney. Upon the occurrence of a failure to
-----------------
pay an Obligation when due and payable or upon the occurrence of a default
hereunder, the Pledgor hereby appoints and constitutes the Trustee as the
Pledgor's attorney-in-fact, with full authority
6
in the place and stead of the Pledgor and in the name of the Pledgor or
otherwise, from time to time in the Trustee's discretion, to take any action and
to execute any instrument that the Trustee may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, the
following powers: (a) collection of proceeds of any Pledged Collateral; (b)
conveyance of any item of Pledged Collateral to any purchaser thereof; (c)
giving of any notices or recording of any Liens under Section 5 hereof; and (d)
paying or discharging taxes or Liens levied or placed upon the Pledged
Collateral and paying the premiums under the QuickBird 2 Insurance, the legality
or validity thereof and the amounts necessary to pay or discharge the same to be
determined by the Trustee in its sole reasonable discretion, and such payments
made by the Trustee to become part of the Obligations of the Pledgor to the
Trustee, due and payable immediately upon demand. The Trustee's authority under
this Section 7 shall include, without limitation, the authority to endorse and
negotiate any checks or instruments representing proceeds of Pledged Collateral
in the name of the Pledgor, execute and give receipt for any certificate of
ownership or any document constituting Pledged Collateral, transfer title to any
item of Pledged Collateral, sign the Pledgor's name on all financing statements
(to the extent permitted by applicable law) or any other documents deemed
necessary or appropriate by the Trustee to preserve, protect or perfect the
security interest in the Pledged Collateral and to file the same, prepare, file
and sign the Pledgor's name on any notice of Lien, and to take any other actions
arising from or incident to the powers granted to the Trustee in this Agreement.
This power of attorney is coupled with an interest and is irrevocable by the
Pledgor. Notwithstanding anything to the contrary stated herein, the Trustee has
no duty or obligation to exercise any of the powers stated in this Section 7.
SECTION 8. No Assumption of Duties; Reasonable Care. The rights and
----------------------------------------
powers granted to the Trustee hereunder are being granted in order to preserve
and protect the security interest of the Trustee and the Holders in and to the
Pledged Collateral granted hereby and shall not be interpreted to, and shall not
impose any duties on the Trustee in connection therewith other than those
expressly provided herein or imposed under applicable law. Except as provided
by applicable law, the Trustee shall be deemed to have exercised reasonable care
in the custody and preservation of the Pledged Collateral in its possession if
the Pledged Collateral is accorded treatment substantially equal to that which
the Trustee accords similar property held by the Trustee for similar accounts,
it being understood that the Trustee in its capacity as such shall not have any
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities or other matters relative to any Pledged
Collateral, whether or not the Trustee has or is deemed to have knowledge of
such matters or (b) investing or reinvesting any of the Pledged Collateral or
any loss on any investment; provided, however, that nothing contained in this
Agreement shall relieve the Trustee of any responsibilities as a securities
intermediary under applicable law. The Trustee shall be entitled to all of the
benefits, privileges and immunities accorded to it under the 13% Notes
Indenture.
SECTION 9. Indemnity. The Pledgor shall indemnify, hold harmless and
---------
defend the Trustee and the EarthWatch Securities Intermediary and its directors,
officers, agents and employees from and against any and all claims, actions,
obligations, liabilities and expenses, including reasonable defense costs,
reasonable investigative fees and costs and reasonable legal fees and expenses
and damages arising from the Trustee's performance as Trustee under this
Agreement or the EarthWatch Securities Intermediary's performance under this
Agreement, except to the extent that such claim, action, obligation, liability
or expense is directly attributable
to the gross negligence or willful misconduct of such indemnified person. This
indemnification shall survive the termination of this Agreement.
SECTION 10. Release of Collateral. (a) Failure to Amend the 13%
--------------------- ------------------------
Notes Indenture. If on or before the close of business on April 25, 2001:
---------------
(i) the 13% Notes Indenture shall not have been amended by the
Supplemental Indenture;
(ii) the Pledgor shall have commenced an Offer to Purchase the 13%
Notes in accordance with Section 5.6 of the Recapitalization Agreement;
(iii) no Event of Default shall have occurred and shall be
continuing; and
(iv) the Pledgor shall have delivered to the Trustee an Officer's
Certificate in form and substance satisfactory to the Trustee certifying
(x) that no Event of Default has occurred and is then continuing and (y)
the aggregate purchase price payable by the Pledgor to the holders of 13%
Notes validly tendered in such Offer to Purchase and (z) the date on which
such purchase price is payable to such Holders,
then the Trustee shall on such stated purchase date release from the
Pledge Account II and pay to the Paying Agent under the 13% Notes Indenture
(free from any Lien hereunder) for further payment to the Holders an amount
equal to the lesser of (A) such purchase price and (B) the aggregate balance in
the Pledge Account II at that time. On consummation of the Offer to Purchase,
after all 13% Notes validly tendered have been repurchased by the Pledgor, the
Trustee shall release from the Pledge Account II and pay to the Pledgor (free
from any Lien hereunder) the balance of any proceeds then remaining in the
Pledge Account II.
(b) Satisfactory Fulfillment of Conditions. If on or before the
--------------------------------------
close of business on June 15, 2001:
(i) the Charter Amendments shall have been approved and shall be in
full force and effect;
(ii) the Pledgor shall have issued the shares of Series C Preferred
Stock as set forth under Section 5.2 of the Recapitalization Agreement and,
prior to such issuance, shall have obtained the waiver required to be
obtained by the last sentence of Section 3.5 of the Recapitalization
Agreement;
(iii) the Pledgor shall have obtained the Vendor Financing;
(iv) the Pledgor shall have, or contemporaneously with the payment of
the initial deposit therefor pursuant to Section 10(c) below, will have,
purchased (by paying the initial deposit therefor) the QuickBird 2
Insurance and the terms of such insurance shall comply with the
requirements set forth in Section 4.10(b) of the 13% Notes Indenture (as
amended by the Supplemental Indenture);
8
(v) the Pledgor shall have satisfied the obligations set forth in
Section 5.4(b) of the Recapitalization Agreement;
(vi) no Event of Default shall have occurred and shall be continuing;
and
(vi) the Pledgor shall have delivered to the Trustee an Officer's
Certificate in form and substance satisfactory to the Trustee certifying
(w) that the conditions set forth in clauses (i) through (v) above have
been satisfied, (x) that no Event of Default has occurred and is then
continuing, (y) the aggregate amount of the insurance premiums payable in
respect of the purchase of the QuickBird 2 Insurance prior to the launch of
QuickBird 2 (the "Pre-Launch Insurance Premiums") and (z) a payment
schedule (the "Payment Schedule") setting forth the scheduled payment dates
and installment amounts for the payment of the Pre-Launch Insurance
Premiums in full,
then the Pledgor may, by written notice to the Trustee, (A) instruct
the Trustee to sell and liquidate all of the Pledged Securities on the next
Business Day following the receipt of such written notice (such next following
Business Day, the "Determination Date") and deposit the proceeds from such sale
to the Pledge Account II, and (B) direct the Trustee to release from the Pledge
Account II and pay to the Pledgor (free from any Lien hereunder) on the
Determination Date an amount equal to the excess (the "Excess") of the aggregate
balance in the Pledge Account II on the Determination Date over such amount of
principal necessary to pay the Pre-Launch Insurance Premiums in full in
accordance with the Payment Schedule. The proceeds from the sale and
liquidation of the Pledged Securities shall not be reinvested in additional
United States Treasury securities pursuant to Section 10(f) until the payment
pursuant to clause (B) above has been made.
(c) Payment of Pre-Launch Insurance Premiums. The Trustee shall, on
----------------------------------------
or after receipt of the Officer's Certificate described in Section 10(b)(vi), on
each payment date referred to in the Payment Schedule, release from the Pledge
Account II and pay to the insurance companies providing the QuickBird 2
Insurance designated by the Pledgor (free from any Lien hereunder), the amount
of the installment or installments due on such payment date as set forth in the
Payment Schedule.
(d) Unsatisfactory Fulfillment of Conditions; Offer to Purchase. If:
-----------------------------------------------------------
(i) the Pledgor fails to satisfy any condition set forth in Sections
10(b)(i) through Section 10(b)(v) on or before the close of business on
June 15, 2001;
(ii) the Pledgor commences an Offer to Purchase the 13% Notes in
accordance with Section 4.17 of the 13% Notes Indenture (as amended by the
Supplemental Indenture) or Section 5.6(iii) of the Recapitalization
Agreement;
(iii) no Event of Default shall have occurred and shall be
continuing; and
(iv) the Pledgor has delivered to the Trustee an Officer's
Certificate in form and substance satisfactory to the Trustee certifying
(x) that no Event of Default has occurred and is then continuing and (y)
the aggregate purchase price payable by the
9
Pledgor to the holders of 13% Notes validly tendered in such Offer to
Purchase and (z) the date on which such purchase price is payable to such
Holders,
then the Trustee shall on such stated purchase date release from the
Pledge Account II and pay to the Paying Agent under the 13% Notes Indenture
(free from any Lien hereunder) for further payment to the Holders an amount
equal to the lesser of (A) such purchase price and (B) the aggregate balance in
the Pledge Account II at that time. On consummation of the Offer to Purchase,
after all 13% Notes validly tendered have been repurchased by the Pledgor, the
Trustee shall release from the Pledge Account II and pay to the Pledgor (free
from any Lien hereunder) the balance of any proceeds then remaining in the
Pledge Account II.
(e) Procedures. The Trustee shall liquidate Pledged Collateral in the
----------
Pledge Account II (pursuant to written instructions of the Pledgor) in order to
make any payment pursuant to this Section 10 unless there are sufficient funds
in the Pledge Account II to make such payment. Upon the making of any payment
by the Trustee pursuant to and in accordance with the provisions of this Section
10, the security interest created by this Agreement in the proceeds of such
payment shall be released and shall automatically terminate and be of no further
force and effect. The Trustee shall take all actions necessary to release the
security interest created by this Agreement in the proceeds of such payment in
order to enable the Trustee to make such payment.
(f) Reinvestment of Proceeds. Immediately following the sale and
------------------------
liquidation of the Pledged Securities pursuant to Section 10(b)(A) and payment
to the Pledgor of the Excess pursuant to Section 10(b)(B), the Pledgor shall
direct the Trustee to invest the proceeds remaining in the Pledge Account in
United States Treasury securities which shall constitute Pledged Securities for
the purposes of this Agreement, provided, however, that such United States
Treasury securities shall be in amounts and with maturities that match the
amounts of and payment dates for the installments of the Pre-Launch Insurance
Premiums, as set forth in the Payment Schedule.
SECTION 11. Remedies Upon Event of Default. If any Event of Default
------------------------------
under the 13% Notes Indenture or default hereunder (any such Event of Default or
default being referred to in this Agreement as an "Event of Default") shall have
occurred and be continuing:
(a) The Trustee and the Holders shall have, in addition to all other
rights given by law or by this Agreement, the 13% Note Indenture or the
Recapitalization Agreement, all of the rights and remedies with respect to
the Pledged Collateral of a secured party under the UCC. In addition, with
respect to any Pledged Collateral that shall then be in or shall thereafter
come into the possession or custody of the Trustee, the Trustee may sell or
cause the same to be sold at any broker's board or at public or private
sale, in one or more sales or lots, at such price or prices as the Trustee
may deem best, for cash or on credit or for future delivery, without
assumption of any credit risk. The purchaser of any or all Pledged
Collateral so sold shall thereafter hold the same absolutely, free from any
claim, encumbrance or right of any kind whatsoever created by or through
the Pledgor. If after enforcement of the pledge and security interest
created hereby, in the reasonable judgment of the Trustee, there is a
threat that the Pledged Collateral will decline speedily in value, or if
the Pledged Collateral is or becomes of a
10
type sold on a recognized market, the Trustee will give the Pledgor
reasonable notice of the time and place of any public sale thereof, or of
the time after which any private sale or other intended disposition is to
be made. To the extent permitted by applicable law, any sale of the Pledged
Collateral conducted in conformity with reasonable commercial practices of
banks, insurance companies, commercial finance companies, or other
financial institutions disposing of property similar to the Pledged
Collateral shall be deemed to be commercially reasonable. Any requirements
of reasonable notice shall be met if such notice is mailed to the Pledgor
as provided in Section 15.1 hereof at least 10 days before the time of the
sale or disposition. The Trustee or any Holder may, in its own name or in
the name of a designee or nominee, buy any of the Pledged Collateral at any
public sale and, if permitted by applicable law, at any private sale. All
expenses (including court costs and reasonable attorneys' fees, expenses
and disbursements) of, or incident to, the enforcement of any of the
provisions hereof shall be recoverable from the proceeds of the sale or
other disposition of the Pledged Collateral.
(b) The Pledgor further agrees to use its reasonable best efforts to
do or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Pledged Collateral pursuant to
this Section 11 valid and binding and in compliance with any and all other
applicable requirements of law. The Pledgor further agrees that a breach
of any of the covenants contained in this Section 11 will cause irreparable
injury to the Trustee and the Holders, that the Trustee and the Holders
have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 11
shall be specifically enforceable against the Pledgor, and the Pledgor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no Event
of Default under the 13% Notes Indenture has occurred.
(c) The Trustee may, without notice to the Pledgor except as required
by law and at any time or from time to time, charge, set-off and otherwise
apply all or any part of the Obligations against the Pledge Account II or
any part thereof.
(d) Any cash held by or on behalf of the Trustee and all cash proceeds
received by or on behalf of the Trustee in respect of any sale of,
collection from, or other realization upon all or any part of the Pledged
Collateral shall be held by the Trustee as collateral for, and/or then or
at any time thereafter applied (after payment of any amounts payable to the
Trustee pursuant to the last sentence of Section 9, Section 11(a) and
Section 12) in whole or in part by the Trustee for itself and the ratable
benefit of the Holders against, all or any part of the Obligations in such
order as the Trustee shall elect consistent with the 13% Notes Indenture
and this Agreement. Any surplus of such cash or cash proceeds held by the
Trustee and remaining after payment in full of all of the Obligations in
cash shall be paid over to the Pledgor or to whomsoever may be lawfully
entitled to receive such surplus, upon receipt of written instructions from
the Pledgor.
SECTION 12. Expenses. The Pledgor shall upon demand pay to the
--------
Trustee the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees, expenses and disbursements of its counsel,
experts and agents retained by the Trustee that the Trustee may incur in
connection with (a) the review, negotiation and administration of this
11
Agreement (as more specifically described in Exhibit C hereto), (b) the custody
or preservation of, or the sale of, collection from, or other realization upon,
any of the Pledged Collateral, (c) the exercise or enforcement of any of the
rights of the Trustee and the Holders hereunder or (d) the failure by the
Pledgor to perform or observe any of the provisions hereof.
SECTION 13. Security Interest Absolute. All rights of the Trustee
--------------------------
and the Holders and security interests hereunder, and all obligations of the
Pledgor hereunder, shall be absolute and unconditional irrespective of:
(a) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations;
(b) any taking, exchange, surrender, release or non-perfection of any
other collateral or any taking, release or amendment or waiver from any
guaranty for all or any of the Obligations;
(c) any change, restructuring or termination of the corporate
structure or the existence of the Pledgor or any of its subsidiaries; or
(d) to the extent permitted by applicable law, any other circumstance
which might otherwise constitute a defense available to, or a discharge of,
the Pledgor in respect of the Obligations or of this Agreement.
SECTION 14. EarthWatch Securities Intermediary's Representations,
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Warranties and Covenants. The EarthWatch Securities Intermediary represents and
------------------------
warrants that it is as of the date hereof, and it agrees that for so long as it
maintains the Pledge Account II and acts as securities intermediary pursuant to
this Agreement it shall be a "securities intermediary" (as defined in the UCC
and in 31 C.F.R. (S)357.2) and shall be eligible to maintain, and does maintain,
a Participant's Securities Account (as defined in 31 C.F.R. (S)357.2) in the
name of the EarthWatch Securities Intermediary with the FRBNY (a "FRBNY Member
Securities Account"). In furtherance of the foregoing, the EarthWatch
Securities Intermediary hereby:
(a) represents and warrants that it is a corporation that in the
ordinary course of its business maintains Securities Accounts for others
and is acting in that capacity hereunder and with respect to the Pledge
Account II;
(b) represents and warrants that it maintains the FRBNY Member
Securities Account with the FRBNY and that the United Stated Treasury
securities constituting the Pledged Securities transferred to the
EarthWatch Securities Intermediary pursuant to Section 3(b) have been
credited to the FRBNY Member Securities Account;
(c) agrees that the Pledge Account II shall be an account to which
financial assets may be credited, and the EarthWatch Securities
Intermediary undertakes to treat the Trustee as the sole person entitled to
exercise rights that comprise (and entitled to the benefits of) such
financial assets, and entitled to exercise the rights of an entitlement
holder and control in the manner contemplated by the UCC, further agrees
that it has identified (and will continue to identify) the Trustee in the
records of the EarthWatch Securities Intermediary as the sole person having
a securities entitlement against the
12
EarthWatch Securities Intermediary with respect to the Pledge Account II
and all assets, property and items from time to time carried in or credited
to the Pledge Account II;
(d) hereby represents that it has not granted, and covenants that so
long as it acts as EarthWatch Securities Intermediary hereunder it shall
not grant, control (including without limitation, "control" as defined in
UCC (S) 9 -115(1)(e)) over or with respect to any Pledged Collateral
credited to the Pledge Account II from time to time to any other Person
other than the Trustee;
(e) covenants that in its capacity as EarthWatch Securities
Intermediary hereunder and with respect to the Pledge Account II, it shall
not take any action inconsistent with, and represents and covenants that it
is not and so long as this Agreement remains in effect will not become
party to any agreement, the terms of which are inconsistent with the
provisions of this Agreement;
(f) to the maximum extent permitted by applicable law, all assets,
property and items from time to time credited to the Pledge Account II
shall constitute financial assets under Article 8 of the UCC, and the
EarthWatch Securities Intermediary shall treat all such assets, property
and items as financial assets;
(g) agrees to comply with entitlement orders and other directions
concerning the Pledge Account II originated by, and only by, the Trustee;
(h) agrees that the EarthWatch Securities Intermediary is and shall
remain the sole Person having dominion and control over the Pledge Account
II;
(i) agrees, with the other parties to this Agreement, so long as it
serves as EarthWatch Securities Intermediary pursuant to this Agreement, to
maintain the Pledge Account II as a securities account and maintain
appropriate books and records in respect thereof in accordance with its
usual procedures and subject to the terms of this Agreement; and
(j) agrees, with the other parties to this Agreement, that the
EarthWatch Securities Intermediary's jurisdiction, for purposes of UCC (S)
8-110(e) and 31 C.F.R. 357.11(b) as it pertains to this Agreement, the
Pledge Account II and security entitlements relating thereto, shall be the
State of New York.
SECTION 15. Miscellaneous Provisions.
Section 15.1. Notices. Any notice or communication given hereunder
-------
shall be sufficiently given if in writing and delivered in person or mailed by
first class mail, commercial courier service or telecopier communication,
addressed as follows:
if to the Pledgor:
EarthWatch Incorporated
0000 Xxxx Xxxx
Xxxxxxxx, XX 00000
13
Telecopier: 000-000-0000
Attention: Chief Executive Officer
with a copy to:
Xxxxx & XxXxxxxx
2300 Xxxxxxxx Xxxx Center
0000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Telecopier: 000-000-0000
Attention: Xxxx X. Xxxxxx
if to the Trustee:
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxxxx 00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
Attention: Corporate Trust Trustee Administration
Section 15.2. No Adverse Interpretation of Other Agreements. This
---------------------------------------------
Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor or any subsidiary thereof. No such pledge, security or
debt agreement (other than the 13% Notes Indenture and the Recapitalization
Agreement) may be used to interpret this Agreement.
Section 15.3 Severability. The provisions of this Agreement are
------------
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
Section 15.4. Headings. The headings in this Agreement have been
--------
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 15.5. Counterpart Originals. This Agreement may be signed in
---------------------
two or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same agreement.
Section 15.6. Benefits of Agreement. Nothing in this Agreement,
---------------------
express or implied, shall give to any person, other than the parties hereto and
their successors hereunder, and the Holders, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 15.7. Amendments, Waivers and Consents. Any amendment or
--------------------------------
waiver of any provision of this Agreement and any consent to any departure by
the Pledgor from any provision of this Agreement shall be effective only if made
or duly given in compliance with all
14
of the terms and provisions of the 13% Note Indenture, and neither the Trustee
nor any Holder shall be deemed, by any act, delay, indulgence, omission or
otherwise, to have waived any right or remedy hereunder or to have acquiesced in
any Default or Event of Default (as defined in the herein) or in any breach of
any of the terms and conditions hereof. Consistent with the foregoing, this
Agreement may be amended, its provisions may be waived and departures from its
provisions may be consented to by action of the Pledgor and the Trustee, and (if
applicable) the Holders, as provided in the 13% Note Indenture. Failure of the
Trustee or any Holder to exercise, or delay in exercising, any right, power or
privilege hereunder shall not preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the Trustee or
any Holder of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy that the Trustee or such Holder would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
Section 15.8. Interpretation of Agreement. Acceptance of or
---------------------------
acquiescence in a course of performance rendered under this Agreement shall not
be relevant to determine the meaning of this Agreement even though the accepting
or acquiescing party had knowledge of the nature of the performance and
opportunity for objection.
Section 15.9. Continuing Security Interest; Termination. (a) This
-----------------------------------------
Agreement shall create a continuing security interest in and to the Pledged
Collateral and shall, unless otherwise provided in this Agreement, remain in
full force and effect until the payment in full in cash of the Obligations or
release and termination of the security interests created hereby pursuant to
Section 10. This Agreement shall be binding upon the Pledgor, its transferees,
successors and assigns, and shall inure, together with the rights and remedies
of the Trustee hereunder, to the benefit of the Trustee, the Holders and their
respective successors, transferees and assigns.
(b) Unless the security interests created hereby are released and
terminated pursuant to Section 10, this Agreement (other than the Pledgor's
obligations under Sections 9 and 12) shall terminate upon the payment in full in
cash of the Obligations. At such time, the Trustee shall reassign and redeliver
to the Pledgor all of the Pledged Collateral hereunder that has not been sold,
disposed of, retained or applied by the Trustee in accordance with the terms of
this Agreement and take all actions that are necessary to release the security
interest created by this Agreement in and to the Pledged Collateral, including
the execution and delivery of all termination statements necessary to terminate
any financing or continuation statements filed with respect to the Pledged
Collateral. Such reassignment and redelivery shall be without warranty by or
recourse to the Trustee in its capacity as such, except as to the absence of any
Liens on the Pledged Collateral created by or arising through the Trustee, and
shall be at the reasonable expense of the Pledgor.
Section 15.10. Survival of Representations and Covenants. All
-----------------------------------------
representations, warranties and covenants of the Pledgor contained herein shall
survive the execution and delivery of this Agreement, and shall terminate only
upon the termination of this Agreement.
Section 15.11. Waivers. The Pledgor waives presentment and demand
-------
for payment of any of the Obligations, protest and notice of dishonor or default
with respect to any
15
of the Obligations, and all other notices to which the Pledgor might otherwise
be entitled, except as otherwise expressly provided herein.
Section 15.12. Authority of the Trustee. (a) The Trustee shall have
------------------------
the right to exercise all powers hereunder that are specifically granted to the
Trustee by the terms hereof, together with such powers as are reasonably
incidental hereto. The Trustee may perform any of its duties hereunder or in
connection with the Pledged Collateral by or through agents or employees and
shall be entitled to retain counsel and to act in reliance upon the advice of
counsel concerning all such matters. Except as otherwise expressly provided in
this Agreement, neither the Trustee nor any director, officer, employee,
attorney or agent of the Trustee shall be liable to the Pledgor for any action
taken or omitted to be taken by the Trustee, in its capacity as Trustee,
hereunder, except for its own gross negligence or willful misconduct, and the
Trustee shall not be responsible for the validity, effectiveness or sufficiency
hereof or of any document or security furnished pursuant hereto. The Trustee
and its directors, officers, employees, attorneys and agents may conclusively
rely on any communication, instrument or document believed by it or them to be
genuine and correct and to have been signed or sent by the proper person or
persons.
(b) The Pledgor acknowledges that the rights and responsibilities of
the Trustee under this Agreement with respect to any action taken by the Trustee
or the exercise or non-exercise by the Trustee of any option, right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Trustee and the Holders, be governed
by the 13% Note Indenture and by such other agreements with respect thereto as
may exist from time to time among them, but, as between the Trustee and the
Pledgor, the Trustee shall be conclusively presumed to be acting as agent for
the Holders with full and valid authority so to act or refrain from acting, and
the Pledgor shall not be obligated or entitled to make any inquiry respecting
such authority.
(c) Each of the Trustee and the EarthWatch Securities Intermediary
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement, and no implied covenants or obligations shall be read
into this Agreement against the Trustee or the EarthWatch Securities
Intermediary.
(d) No provision of this Agreement shall require the Trustee or the
EarthWatch Securities Intermediary to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights and powers.
(e) The Trustee and the EarthWatch Securities Intermediary may consult
with counsel of its selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(f) The Trustee and the EarthWatch Securities Intermediary may execute
any of the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the Trustee and the EarthWatch
Securities Intermediary shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
16
Section 15.13. Final Expression. This Agreement, together with the
----------------
13% Note Indenture, the Recapitalization Agreement and any other agreement
executed in connection herewith, is intended by the parties as a final
expression of this Agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof.
Section 15.14. Rights of Holders. No Holder shall have any
-----------------
independent rights hereunder other than those rights granted to individual
Holders pursuant to Section 5.7 of the 13% Note Indenture; provided that nothing
in this subsection shall limit any rights granted to the Trustee under the 13%
Notes or the 13% Note Indenture.
Section 15.15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
----------------------------------------------------
JURY TRIAL; WAIVER OF DAMAGES. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND
-----------------------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. ANY DISPUTE
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO, THE RELATIONSHIP
ESTABLISHED BETWEEN THE PLEDGOR, THE TRUSTEE AND THE HOLDERS IN CONNECTION WITH
THIS AGREEMENT AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK. NOTWITHSTANDING THE FOREGOING, THE MATTERS IDENTIFIED IN 31 C.F.R. PART
357, 61 FED. REG. 43626 (AUG. 23, 1996) SHALL BE GOVERNED SOLELY BY THE LAWS
SPECIFIED THEREIN.
(b) THE PLEDGOR AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY AS
TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER, HAVE THE RIGHT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE PLEDGOR OR THE
PLEDGED COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH
(AND HAVING PERSONAL OR IN REM JURISDICTION OVER THE PLEDGOR OR THE PLEDGED
COLLATERAL, AS THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH PLEDGED
COLLATERAL, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE TRUSTEE. THE PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SET
OFFS OR CROSSCLAIMS IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH
PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE,
EXCEPT FOR SUCH COUNTERCLAIMS, SET OFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN
ANY SUCH PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE PLEDGOR
WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN THE CITY
OF NEW YORK ONCE THE TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(c) THE PLEDGOR AGREES THAT NEITHER ANY HOLDER NOR (EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT OR THE INDENTURES) THE TRUSTEE IN ITS
CAPACITY AS TRUSTEE SHALL HAVE ANY LIABILITY TO THE PLEDGOR (WHETHER ARISING IN
TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE PLEDGOR IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY
17
WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED
BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A
COURT THAT IS BINDING ON THE TRUSTEE OR SUCH HOLDER, AS THE CASE MAY BE, THAT
SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE TRUSTEE OR
SUCH HOLDERS, AS THE CASE MAY BE, CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.
(d) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR WAIVES THE
POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE OR ANY HOLDER IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO ENFORCE ANY JUDGMENT OR
OTHER COURT ORDER PERTAINING TO THIS AGREEMENT OR ANY RELATED AGREEMENT OR
DOCUMENT ENTERED IN FAVOR OF THE TRUSTEE OR ANY HOLDER, OR TO ENFORCE BY
SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION, THIS AGREEMENT OR ANY RELATED AGREEMENT OR DOCUMENT BETWEEN THE
PLEDGOR ON THE ONE HAND AND THE TRUSTEE AND/OR THE HOLDERS ON THE OTHER HAND.
18
IN WITNESS WHEREOF, the Pledgor, the Trustee and the EarthWatch
Securities Intermediary have each caused this Agreement to be duly executed and
delivered as of the date first above written.
EARTHWATCH INCORPORATED
(as Pledgor)
By: ______________________________________
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer,
President and Director
THE BANK OF NEW YORK
(as Trustee)
By: ______________________________________
Name:
Title:
THE BANK OF NEW YORK
(as EarthWatch Securities Intermediary)
By: ______________________________________
Name:
Title:
19
EXHIBIT A
PLEDGED SECURITIES
Description of Security CUSIP Number Final Maturity Original Principal Amount Cost at Closing
--------------------------------------------------------------------------------------------------------------------------------
United States Treasury Note 0000000X0 5/31/01 $ 31,534,000 $32,156,341.69
--------------------------------------------------------------------------------------------------------------------------------
United States Treasury Note 0000000X0 4/30/01 $ 27,106,000 $27,701,493.62
--------------------------------------------------------------------------------------------------------------------------------
United States Fidelity Treasury Note Not applicable No maturity $3,737,761.21 $ 3,737,761.21
--------------------------------------------------------------------------------------------------------------------------------
EXHIBIT B
CERTIFICATE
Pursuant to Section 3(f) of the Pledge Agreement (the "Agreement")
dated as of April 3, 2001 between EarthWatch Incorporated (the "Pledgor") and
The Bank of New York, as trustee (the "Trustee") for the Holders, and The Bank
of New York, as securities intermediary (the "EarthWatch Securities
Intermediary"), the undersigned officer of the Trustee, on behalf of the
Trustee, and the undersigned officer of the EarthWatch Securities Intermediary,
on behalf of the EarthWatch Securities Intermediary, make the following
certifications to the Pledgor and the Holders of the 13% Notes on the date of
this Certificate. Capitalized terms used and not defined in this Certificate
have the meanings set forth or referred to in the Agreement.
1. Substantially contemporaneously with the execution and delivery of
this Certificate, the Trustee has established with the EarthWatch Securities
Intermediary, as securities intermediary, the Pledge Account II. The EarthWatch
Securities Intermediary has acquired a security entitlement to the United States
Treasury securities identified in Annex 1 to this Certificate (the "Pledged
Securities") from the FRBNY and holds a security entitlement with respect
thereto in the FRBNY's security account. The EarthWatch Securities Intermediary
has made appropriate book entries in its records establishing that the Pledged
Securities and the Trustee's securities entitlement with respect thereto have
been credited to and are held in the Pledge Account II.
2. The Trustee has established and maintained and will maintain the
Pledge Account II and all securities entitlements and other positions carried in
the Pledge Account II solely in its capacity as Trustee and has not asserted and
will not assert any claim to or interest in the Pledge Account II or any such
securities entitlements or other positions except in such capacity.
3. The Trustee and the EarthWatch Securities Intermediary have
acquired their security entitlements to the Pledged Securities for value and
without notice of any adverse claim thereto. Without limiting the generality of
the foregoing, the Pledged Securities are not and the EarthWatch Securities
Intermediary's and the Trustee's security entitlements to the Pledged Securities
are not, to their knowledge, subject to any Lien granted by either of them in
favor of any securities intermediary (including, without limitation, NFSC or the
FRBNY) through which the Trustee derives its security entitlement to the Pledged
Securities.
4. Neither the EarthWatch Securities Intermediary nor the Trustee has
caused or permitted the Pledged Securities or any security entitlement thereto
to become subject to any Lien created by or arising through either of the
Trustee or the EarthWatch Securities Intermediary.
IN WITNESS WHEREOF, the undersigned officers have executed this
Certificate on behalf of the Trustee, and on behalf of the EarthWatch Securities
Intermediary, respectively, this 3rd day of April, 2001.
THE BANK OF NEW YORK
(as Trustee)
By: __________________________________________
Name:
Title:
THE BANK OF NEW YORK
(as EarthWatch Securities Intermediary)
By: __________________________________________
Name:
Name:
Title:
2
EXHIBIT C
Trustee's Expenses
For administration: $5,000 per annum, payable annually in advance, together
with reasonable fees, expenses and disbursements of counsel, experts and agents
retained by the Trustee, as more specifically set forth in Section 12.
EXHIBIT E-1
B&M DRAFT DATED APRIL 1, 2001
April 3, 2001
Xxxxxx Xxxxxxx & Co. Incorporated
Post Balance Fund
Post High Yield LP
Post Total Return Fund
Opportunity Fund
Xxxxxxxxx & Co. X.X.
Xxxxxxxxx International LTD.
Sun America High Income Fund
Sun America Series Trust High Yield Portfolio
Hitachi Software Engineering Co., Ltd.
Re: EarthWatch Incorporated
Ladies and Gentlemen:
This firm has acted as counsel for EarthWatch Incorporated, a Delaware
corporation (the "Company"), in connection with certain financing and related
transactions pursuant to that certain Recapitalization Agreement and Consent
dated as of April 2, 2001 and executed by the Company and you (the "Agreement").
This opinion is being rendered pursuant to Section 2.1(a)(ii)(B) of the
Agreement. Unless otherwise defined herein, each term used herein that is
defined in the Agreement has the meaning given such term in the Agreement.
In reaching the opinions set forth herein, this firm has reviewed:
(a) the Agreement,
(b) the Pledge Agreement dated as of April ___, 2001 and executed by the
Company and the Bank of New York, as Collateral Agent and as
Securities Intermediary (the "Pledge Agreement"),
(c) the Supplemental Indenture between the Company and The Bank of New
York, as Trustee dated April __, 2001,
(d) the Notes Registration Rights Agreement among the Company, The Bank of
New York, as Trustee and Xxxxxx Xxxxxxx & Co. Incorporated dated April
__, 2001, (items (a) through (d), inclusive, sometimes referred to
herein as the "Transaction Documents"),
(e) the Amended and Restated Certificate of Incorporation of the Company
(the "Certificate of Incorporation"),
(f) the bylaws of the Company (the "Bylaws"), and
except as set forth below, such other agreements, certificates of public
officials and officers of the Company, records, documents, and matters of law
that this firm deemed relevant.
Based on and subject to the foregoing and subject further to the
assumptions, exceptions, and qualifications hereinafter stated, this firm
expresses the following opinions:
1. The Company is incorporated, validly existing and in good standing
under the laws of the State of Delaware.
2. The Company is duly qualified to do business and is in good standing as
a foreign corporation in the states of Colorado and Alaska.
3. The Company has the corporate power and the corporate authority to
execute, deliver, and perform its obligations under each of the Transaction
Documents.
4. The execution, delivery, and performance by the Company of its
obligations under each of the Transaction Documents have been duly authorized
by all necessary corporate action on the part of the Company.
5. Each of the Transaction Documents has been duly executed and delivered
by the Company and each constitutes the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
6. The execution, delivery, and performance by the Company of its
obligations under each of the Transaction Documents do not violate, contravene,
or cause a default under the Certificate of Incorporation or Bylaws, any federal
law of the United States of America (other than communications laws, as to which
we express no opinion), the laws of the State of New York, the General
Corporation Law of the State of Delaware, any judgment, decree, or order of any
court or any other agency of government known to this firm that is applicable to
the Company or its property, or, except with respect to such consents as may be
described in Sections 3.5 and 3.6 of the Agreement and of the Disclosure
Schedule attached thereto, any material agreement included as an exhibit to any
of the Company's filings with the Securities and Exchange Commission or the
Delta II Launch Services Agreement between the Company and Delta Launch
Services, Inc.
7. No consent, approval, authorization, or other action by, or filing
with, any governmental authority of the United States of America is required for
the Company to consummate the Transactions except for such as have been duly
obtained or made, other than (i) any such as may be required pursuant to U.S.
federal communications laws, including such filings as may be required with
respect to the Federal Communications Commission and the National Oceanic and
Atmospheric Administration, (ii) such filings as may be required by the
securities or blue sky laws of the various states, (iii) the filing of a Form D
pursuant to Regulation D promulgated under the Securities Act of 1933, as
amended and (iv) the filing of the Certificate of Amendment to Amended and
Restated Certificate of Incorporation with the Secretary of State of Delaware
subsequent to obtaining all necessary stockholder approval.
2
8. The Pledge Agreement is effective to create, in favor of the 13%
Trustee, a valid first security interest in all right, title and interest of the
Company, in, to and under the Pledged Securities.
9. Upon the execution and delivery of the Pledge Agreement and the
certificate in the form of Exhibit B attached thereto, all action will have been
taken to make effective the security interest referred to in paragraph 8 above,
and such security interest will be perfected under the New York Code by virtue
of having obtained "control" pursuant to Section 8-106(d) of the New York Code.
10. To the knowledge of this firm, there is no action, suit, or proceeding
that is pending or threatened against or affecting the Company in any court or
before any governmental authority, arbitration board, or tribunal that involves
any of the transactions contemplated by the Transaction Documents or that would
be required to be described in the Company's Form 10-K for the year ended
December 31, 2000.
The opinions expressed above are subject to the following assumptions,
exceptions, and qualifications:
(a) This firm has assumed that (i) all representations and warranties
contained in all documents reviewed by this firm is true and correct, (ii) all
signatures on all documents reviewed by this firm are genuine, (iii) all
documents submitted to this firm as originals are true and complete, (iv) all
documents submitted as copies are true and complete copies of the originals
thereof, (v) all parties to the Transaction Documents other than the Company
(the "Other Parties") have all power and authority to execute, deliver, and
perform their obligations under the Agreement, that the Transaction Documents
have been duly and validly authorized, executed, and delivered by each of the
Other Parties, and that each of the Transaction Documents is the valid and
binding obligation of each of the Other Parties who is a party thereto,
enforceable against such Other Party in accordance with its terms, (vi) each
natural person signing any document reviewed by this firm had the legal capacity
to do so, (vii) each person signing in a representative capacity any document
reviewed by this firm had authority to sign in such capacity, and (viii) the
laws of any jurisdiction other than New York that govern any of the documents
reviewed by this firm do not modify the terms that appear in any such document.
(b) The opinions expressed above are limited to the laws of the State of
New York, the General Corporation Law of the State of Delaware, and the federal
laws (other than communications laws, as to which we express no opinion) of the
United States of America. You should be aware that this firm is not admitted to
the practice of law in the State of Delaware and the opinion herein as to the
General Corporation Law of the State of Delaware is based solely upon an
unofficial compilation thereof.
(c) The opinions expressed above are subject to (i) laws relating to
bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, rearrangement, liquidation, conservatorship, moratorium,
impairment of capital and other laws affecting the enforcement of creditors'
rights or the collection of debtors' obligations generally, (ii) principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law), (iii) standards of commercial reasonableness and good faith
and (iv) public policy.
3
(d) This firm expresses no opinion with respect to (i) the enforceability
of provisions in the Transaction Documents relating to delay or omission of
enforcement of rights or remedies, or waivers of defenses or other nonwaivable
benefits bestowed by operation of law; (ii) the enforceability of the
indemnification provisions in any Transaction Document to the extent they
purport to relate to liabilities resulting from or based upon negligence or any
violation of federal or state securities or blue sky laws; or (iii) the right of
any person or entity to institute or maintain any action in any court or upon
matters respecting the jurisdiction of any court.
(e) In rendering the opinion set forth in Paragraphs 1 and 2 above, this
firm has relied solely on the certificate(s) of authorities in the State of
Delaware that this firm received in response to this firm's request dated April
___, 2001 for confirmation of the existence and good standing of the Company in
such state and the certificates this firm received from the other states listed
in Paragraph 2 above that this firm received in response to this firm's request
dated April ___, 2001 for confirmation of the qualification and good standing of
the Company in such states, copies of which certificates have been furnished to
you.
(f) Whenever an opinion herein is qualified by "known to this firm," "to
the knowledge of this firm," or similar phrase, this firm has relied
exclusively, without independent investigation, on one or more certificates from
one or more officers of the Company with respect to the matters set forth in
such opinion. This firm has made no independent investigation as to the
accuracy or completeness of any of the information contained in such
certificate(s). However, in the course of rendering the legal services
described in the introductory paragraph of this letter, no facts or
circumstances have come to the attention of those attorneys in this firm who
rendered such legal services that gave this firm current actual knowledge that
any such information is incorrect in any material respect.
(g) We express no opinion, nor have we undertaken any investigation to
determine, whether the Company is insolvent, whether the Company will be
rendered insolvent by the transactions contemplated by the Agreement and the
Pledge Agreement, and after giving effect to such transactions, whether the
Company will be left with unreasonably small capital with which to engage in its
anticipated business and whether the Company will have intended to incur, or
will have believed it has incurred, debts beyond its ability to pay as such
debts mature.
(h) In rendering the opinions set forth in Paragraphs 8 and 9 above, we
have relied upon the representation and agreement of the EarthWatch Securities
Intermediary (as defined in the Pledge Agreement) set forth in the Pledge
Agreement that the EarthWatch Securities Intermediary is a "securities
intermediary" as defined in Section 8-102(14) of the New York Code and the
jurisdiction (within the meaning of Section 8-110(e) of the New York Code) of
the EarthWatch Securities Intermediary is the State of New York. We have
further assumed that the Pledge Account is a "securities account" within the
meaning of Section 8-501(a) of the New York Code and not a "deposit account"
within the meaning of Section 9-105(e) of the New York Code. We express no
opinion to the extent the Pledged Collateral (as defined in the Pledge
Agreement) consists of collateral of a type not subject to the New York Code.
We call to your attention that the security interest of the Trustee in proceeds
is limited to the extent set forth in Section 9-306 of the New York Code.
4
(i) We have not made nor undertaken to make any investigation of the state
of title to the Pledged Collateral. We have assumed, without investigation,
that the descriptions of the Pledged Collateral contained in the Pledge
Agreement are accurate and sufficient to enable a subsequent purchaser or
mortgagee to identify such Pledged Collateral. With respect to our opinions in
paragraphs 8 and 9, we have assumed, without investigation, that the Company has
rights in the Pledged Collateral in which it purports to create a security
interest under the Pledge Agreement within the meaning of Section 9.203(1)(c) of
the New York Code, and our opinions expressed below are expressed only to the
extent the Company has such rights. We express no opinion with respect to the
existence or nature of such rights.
(j) We express no opinion with respect to the priority of the security
interest of the Trustee in the Pledged Collateral against any of the following:
(a) pursuant to Section 9-301(1) of the New York Code, a lien creditor who
attached or levied prior to the perfection of the security interest of the
Trustee, (b) pursuant to Section 9-301(4) of the New York Code, a lien creditor
with respect to future advances, (c) pursuant to Section 9-312(6) of the New
York Code, another secured party with a prior perfected security interest in
other property of the Company to the extent that the Pledged Collateral is
proceeds of such other property, and (d) pursuant to Section 9-312(7) of the New
York Code, another secured creditor to the extent that provision limits the
priority afforded future advances. We note that pursuant to Section 9-115 of
the New York Code, the security interest in the Pledged Collateral in favor of
the Trustee will be subordinated to any security interest in such Pledged
Collateral now or hereafter granted by the Company in favor of the Company's own
"securities intermediary" and will be of equal priority with any other secured
party who has or obtains control of such Pledged Collateral within the meaning
of Section 8-106 of the New York Code.
Without the prior written consent of this firm, this opinion may not be
relied upon by any person or entity other than you, quoted in whole or in part
or otherwise referred to in any report or document, or furnished to any other
person or entity (other than your legal counsel and employees).
This firm disclaims any duty to advise you regarding any changes in, or to
otherwise communicate with you with respect to, the matters addressed herein.
Very truly yours,
XXXXX & XxXXXXXX
By: _______________________________________
5
EXHIBIT X-0
Xxxxx 0, 0000
Xxxxxx Xxxxxxx & Co. Incorporated
Post Balance Fund
Post High Yield LP
Post Total Return Fund
Opportunity Fund
Xxxxxxxxx & Co. X.X.
Xxxxxxxxx International LTD.
Sun America High Income Fund
Sun America Series Trust High Yield Portfolio
Hitachi Software Engineering Co., Ltd.
Re: EarthWatch Incorporated
Ladies and Gentlemen:
This firm has acted as counsel for EarthWatch Incorporated, a Delaware
corporation (the "Company"), in connection with certain financing and related
transactions pursuant to that certain Recapitalization Agreement and Consent
dated as of April 2, 2001 and executed by the Company and you (the "Agreement").
This opinion is being rendered pursuant to Section 2.1(a)(iv) of the Agreement.
Unless otherwise defined herein, each term used herein that is defined in the
Agreement has the meaning given such term in the Agreement.
In reaching the opinions set forth herein, this firm has reviewed:
(a) the Agreement,
(b) the Amended and Restated Certificate of Incorporation of the Company
(the "Certificate of Incorporation"),
(c) the bylaws of the Company (the "Bylaws"), and
except as set forth below, such other agreements, certificates of public
officials and officers of the Company, records, documents, and matters of law
that this firm deemed relevant.
Based on and subject to the foregoing and subject further to the
assumptions, exceptions, and qualifications hereinafter stated, this firm
expresses the following opinions:
1. The Company is incorporated, validly existing and in good standing
under the laws of the State of Delaware.
2. The Company is duly qualified to do business and is in good standing as
a foreign corporation in the states of Colorado and Alaska.
3. The Company has the corporate power and the corporate authority to
execute, deliver, and perform its obligations under the Agreement.
4. The execution, delivery, and performance by the Company of its
obligations under the Agreement have been duly authorized by all necessary
corporate action on the part of the Company.
5. The Agreement has been duly executed and delivered by the Company and
constitutes the valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
6. The execution, delivery, and performance by the Company of its
obligations under the Agreement do not violate, contravene or cause a default
under the Certificate of Incorporation or Bylaws, any federal law of the United
States of America (other than communications laws, as to which we express no
opinion), the laws of the State of New York, the General Corporation Law of the
State of Delaware, any judgment, decree, or order of any court or any other
agency of government known to this firm that is applicable to the Company or its
property, or, except with respect to such consents as may be described in
Sections 3.5 and 3.6 of the Agreement and of the Disclosure Schedule attached
thereto, any material agreement included as an exhibit to any of the Company's
filings with the Securities and Exchange Commission or the Delta II Launch
Services Agreement between the Company and Delta Launch Services, Inc.
7. No consent, approval, authorization, or other action by, or filing
with, any governmental authority of the United States of America is required for
the Company to consummate the Transactions except for such as have been duly
obtained or made, other than (i) any such as may be required pursuant to U.S.
federal communications laws, including such filings as may be required with
respect to the Federal Communications Commission and the National Oceanic and
Atmospheric Administration, (ii) such filings as may be required by the
securities or blue sky laws of the various states, (iii) the filing of a Form D
pursuant to Regulation D promulgated under the Securities Act of 1933, as
amended and (iv) the filing of the Certificate of Amendment to Amended and
Restated Certificate of Incorporation with the Secretary of State of Delaware
subsequent to obtaining all necessary stockholder approval.
8. To the knowledge of this firm, there is no action, suit, or proceeding
that is pending or threatened against or affecting the Company in any court or
before any governmental authority, arbitration board, or tribunal that involves
any of the transactions contemplated by the Agreement or that would be required
to be described in the Company's Form 10-K for the year ended December 31, 2000.
9. Based upon the representations, warranties and agreements of the
Company and of the Noteholders in the Agreement, (i) none of the (x) execution
of the Supplemental Indenture, (y) the execution of the Pledge Agreement, or (z)
the pledge of the Collateral pursuant to the Pledge Agreement will require
registration under the Securities Act of 1933, as amended ("Securities Act"),
and (ii) in connection with the offer, sale and delivery of (y) the Series C
Preferred Stock pursuant to the terms of the Agreement, or (z) the Common Stock
issuable upon conversion of the Series C Preferred Stock pursuant to the terms
of the Certificate of
2
Amendment to Amended and Restated Certificate of Incorporation, it is not
necessary to register the Series C Preferred Stock or underlying Common Stock
under the Securities Act, it being understood that no opinion is expressed as to
any subsequent resale of any such security.
The opinions expressed above are subject to the following assumptions,
exceptions, and qualifications:
(a) This firm has assumed that (i) all representations and warranties
contained in all documents reviewed by this firm are true and correct, (ii) all
signatures on all documents reviewed by this firm are genuine, (iii) all
documents submitted to this firm as originals are true and complete, (iv) all
documents submitted as copies are true and complete copies of the originals
thereof, (v) all parties to the Agreement other than the Company (the "Other
Parties") have all power and authority to execute, deliver, and perform their
obligations under the Agreement, that the Agreement has been duly and validly
authorized, executed, and delivered by each of the Other Parties, and that the
Agreement is the valid and binding obligation of each of the Other Parties who
is a party thereto, enforceable against such Other Party in accordance with its
terms, (vi) each natural person signing any document reviewed by this firm had
the legal capacity to do so, (vii) each person signing in a representative
capacity any document reviewed by this firm had authority to sign in such
capacity, and (viii) the laws of any jurisdiction other than New York that
govern any of the documents reviewed by this firm do not modify the terms that
appear in any such document.
(b) The opinions expressed above are limited to the laws of the State of
New York, the General Corporation Law of the State of Delaware, and the federal
laws (other than communications laws, as to which we express no opinion) of the
United States of America. You should be aware that this firm is not admitted to
the practice of law in the State of Delaware and the opinion herein as to the
General Corporation Law of the State of Delaware is based solely upon an
unofficial compilation thereof.
(c) The opinions expressed above are subject to (i) laws relating to
bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, rearrangement, liquidation, conservatorship, moratorium,
impairment of capital and other laws affecting the enforcement of creditors'
rights or the collection of debtors' obligations generally, (ii) principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law), (iii) standards of commercial reasonableness and good faith
and (iv) public policy.
(d) This firm expresses no opinion with respect to (i) the enforceability
of provisions in the Agreement relating to delay or omission of enforcement of
rights or remedies, or waivers of defenses or other nonwaivable benefits
bestowed by operation of law; (ii) the enforceability of the indemnification
provisions in the Agreement to the extent they purport to relate to liabilities
resulting from or based upon negligence or any violation of federal or state
securities or blue sky laws; or (iii) the right of any person or entity to
institute or maintain any action in any court or upon matters respecting the
jurisdiction of any court.
(e) In rendering the opinion set forth in Paragraphs 1 and 2 above, this
firm has relied solely on the certificate(s) of authorities in the State of
Delaware that this firm received in response to this firm's request dated March
30, 2001 for confirmation of the existence and good
3
standing of the Company in such state, a copy of which certificate has been
furnished to you, and on telephone conferences held on April 2, 2001 between
representatives of this firm and representatives of the Alaska Department of
Community and Economic Development, Corporations Division, and the Colorado
Department of State, Division of Commercial Recordings, with respect to
confirmation of the qualification and good standing of the Company in such
states.
(f) Whenever an opinion herein is qualified by "known to this firm," "to
the knowledge of this firm," or similar phrase, this firm has relied
exclusively, without independent investigation, on one or more certificates from
one or more officers of the Company with respect to the matters set forth in
such opinion. This firm has made no independent investigation as to the
accuracy or completeness of any of the information contained in such
certificate(s). However, in the course of rendering the legal services
described in the introductory paragraph of this letter, no facts or
circumstances have come to the attention of those attorneys in this firm who
rendered such legal services that gave this firm current actual knowledge that
any such information is incorrect in any material respect.
(g) We express no opinion, nor have we undertaken any investigation to
determine, whether the Company is insolvent, whether the Company will be
rendered insolvent by the transactions contemplated by the Agreement, and after
giving effect to such transactions, whether the Company will be left with
unreasonably small capital with which to engage in its anticipated business and
whether the Company will have intended to incur, or will have believed it has
incurred, debts beyond its ability to pay as such debts mature.
(h) No opinion in Paragraph 8 is expressed with respect to any legal or
governmental proceedings before the National Oceanic and Atmospheric
Administration, the Federal Communications Commission or the Department of
State.
(i) We are not rendering any opinion or expressing any belief as to
compliance with any anti-fraud law, rule or regulation relating to securities,
or to the sale or issuance thereof.
Without the prior written consent of this firm, this opinion may not be
relied upon by any person or entity other than you, quoted in whole or in part
or otherwise referred to in any report or document, or furnished to any other
person or entity (other than your legal counsel and employees).
This firm disclaims any duty to advise you regarding any changes in, or to
otherwise communicate with you with respect to, the matters addressed herein.
Very truly yours,
XXXXX & XxXXXXXX
By: ____________________________
4
EXHIBIT F
INTERCREDITOR ACKNOWLEDGMENT
This INTERCREDITOR ACKNOWLEDGMENT (this "Agreement") is made as of
[_____], 2001, between Ball Aerospace & Technologies Corp., a Delaware
corporation, and The Bank of New York, a New York banking corporation, as
trustee under the Indenture, dated as of July 12, 1999, between EarthWatch
Incorporated (the "Company") and The Bank of New York, as trustee, as amended.
Reference is hereby made to the Recapitalization Agreement and
Consent, dated as of March 30, 2001, among the Company and the other parties
thereto identified in Schedule 1 thereto (the "Recapitalization Agreement").
In connection with the transactions contemplated by the
Recapitalization Agreement, and in connection with the agreement of Ball
Aerospace & Technologies Corp. ("Ball") to provide the Company with $9,000,000
principal amount of financing for the construction and launch of the Company's
QuickBird 2 satellite, Ball hereby directs The Bank of New York, as collateral
trustee, to enter into the Senior Pledge and Security Agreement in the form
attached as Exhibit H-1 to the Recapitalization Agreement (the "Senior
Collateral Pledge and Security Agreement").
Capitalized terms used in this paragraph but not otherwise defined
therein shall have the respective meanings assigned to them in the Senior
Collateral Pledge and Security Agreement. If any Secured Party shall obtain any
payment, by application of any right of set-off or otherwise, in excess of the
amount that it is entitled to receive under the Senior Collateral Pledge and
Security Agreement, such Secured Party shall hold such excess on trust for all
of the Secured Parties and shall forthwith pay and transfer to the Collateral
Agent the amount of such excess for application of such excess to the Secured
Obligations in accordance with the Section 8(d) of the Senior Collateral Pledge
and Security Agreement.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
This Agreement may be executed in counterparts which, taken together,
shall constitute an original.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BALL AEROSPACE & TECHNOLOGIES CORP.
By: __________________________________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By: __________________________________________
Name:
Title:
2
EXHIBIT G
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
EARTHWATCH INCORPORATED
(Pursuant to Section 242 of the General Corporation
Law of the State of Delaware)
Earthwatch Incorporated, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), hereby certifies:
FIRST, that the Board of Directors of the Corporation duly adopted
resolutions proposing and declaring advisable the following amendments to the
Amended and Restated Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation") in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware:
"RESOLVED that the Board of Directors of the Corporation deems and declares
advisable the following amendments to the Certificate of Incorporation:
1. To amend the first paragraph of Article IV to read in its entirety as
follows:
"The Corporation is authorized to issue a total of Two Hundred Twenty-
Four Million (224,000,000) shares, which shall consist of (i) One Hundred
and Fifty Million (150,000,000) shares of common stock, with a par value of
$0.001 per share ("Common Stock"), and (ii) Seventy-Four Million
(74,000,000) shares of preferred stock, with a par value of $0.001 per
share."
2. To amend Article IV, Section A, to read in its entirety as follows:
"Designation of Series and Number of Shares. Three series of Preferred
------------------------------------------
Stock are created hereby: (i) Twelve Million (12,000,000) shares of 7%
Cumulative Convertible Redeemable Preferred Stock Due 2009, Series A, par
value $0.001 per share (the "Series A Preferred Stock"); (ii) Twelve
------------------------
Million (12,000,000) shares of 7% Cumulative Convertible Redeemable
Preferred Stock Due 2009, Series B, par value $0.001 per share (the "Series
------
B Preferred Stock"); and (iii) Fifty Million (50,000,000) shares of 8.5%
-----------------
Cumulative Convertible Redeemable Preferred Stock Due 2009, Series C, par
value $0.001 per share (the "Series C Preferred Stock"). The shares of the
------------------------
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock may be referred to collectively as the "Preferred Stock." All Shares
---------------
of Preferred Stock shall be fully paid and nonassessable."
3. To amend Section 1 of Article IV, Section B, to read in its entirety
as follows:
"Designation. The series of preferred stock established hereby shall
-----------
be designated the "7% Cumulative Convertible Redeemable Preferred Stock due
2009, Series A" (and
shall be referred to herein as the "Series A Preferred Stock") and the
-------------------------
authorized number of shares of Series A Preferred Stock shall be Twelve
Million (12,000,000) shares."
4. To amend Section 5 of Article IV, Section B, to read in its entirety
as follows:
"Mandatory Redemption and Put Right.
(a) The Corporation shall redeem on March 31, 2009 (the "Redemption
----------
Date"), from any source of funds legally available therefor, all
----
outstanding shares of Series A Preferred Stock at a redemption price per
share equal to the then Liquidation Preference per share (the "Mandatory
---------
Redemption Price"), plus an amount in cash equal to all accumulated and
----------------
unpaid dividends per share (including an amount in cash equal to a prorated
dividend for any partial Dividend Period). The Corporation will not be
required to make sinking fund payments with respect to the Series A
Preferred Stock. The Series A Preferred Stock shall not be redeemable at
the option of the Corporation prior to the Redemption Date.
(b) If and to the extent that the Corporation or the Junior Collateral
Trustee receives from the Collateral Trustee any Available Proceeds, then
the Corporation shall (or shall cause the Junior Collateral Trustee to)
promptly mail a written notice to each Holder of shares of Series A
Preferred Stock, at the address for such Holder shown on the stock books of
the Corporation, stating the amount of such Available Proceeds received,
that such Holder's put rights under this subsection (b) have become
exercisable, and the Put Right Termination Date. Each such Holder shall
thereafter have the right on or prior to the Put Right Termination Date to
elect to sell to the Corporation, and the Corporation shall be obligated to
purchase, from any source of funds legally available therefor, up to all of
the shares of Series A Preferred Stock held by such Holder, subject to the
last sentence of this paragraph. The date of such purchase shall be the
next Business Day after the Put Right Termination Date. The purchase price
for all of such shares shall be equal to the aggregate liquidation
preference thereof, plus accrued and unpaid dividends thereon to the date
of purchase. If the aggregate purchase price for all shares of Series A
Preferred Stock and Series B Preferred stock to be purchased by the
Corporation pursuant to this Section 5 and pursuant to Section 5 of Article
IV, Section C, would otherwise be greater than the Available Proceeds, then
the number of shares of Series A Preferred Stock to be so purchased shall,
pro rata (based on the liquidation preference) with the amount of shares of
Series B Preferred Stock to be purchased pursuant to Section 5 of Article
IV, Section C, be reduced so that the aggregate purchase price of the
shares of Series A Preferred Stock and Series B Preferred Stock so
purchased does not exceed the Available Proceeds. Notwithstanding the
foregoing, this subsection (b) shall not become effective unless and until
each of the Transactions has been consummated or effectively waived.
(c) For purposes of this Section 5 and Section 5 of Article IV,
Section C, the following terms shall have the meanings set forth below:
"13% Notes" means the Corporation's 13% Senior Discount Notes due
---------
2007.
2
"Available Proceeds" means any and all proceeds received by the
------------------
Corporation or the Junior Collateral Trustee, as the case may be, from
the Collateral Trustee under the Launch Insurance, resulting from a
casualty (full or partial), whether on satellite launch or thereafter,
remaining after the Company has repurchased all 13% Notes required to
be repurchased and repaid any Vendor Financing then required to be
repaid.
"Collateral Trustee" means the trustee for the 13% Notes or any
------------------
successor or substitute collateral trustee for the collateral with
respect to the 13% Notes.
"Junior Collateral Trustee" means The Bank of New York, or any
------------------
successor or substitute collateral trustee under the Junior Collateral
Pledge and Security Agreement to be entered into between the
Corporation and The Bank of New York, as collateral trustee.
"Launch Insurance" means launch and in-orbit operations insurance
----------------
with respect to the Corporation's QuickBird 2 Satellite.
"Put Right Termination Date" means 5:00 p.m., Eastern Standard
--------------------------
Time, on the 60/th/ calendar day after the mailing of the required
notices under subsection (b) above or subsection 5(b) of Article IV,
Section C, as the case may be, to Holders of shares of Series A and
Series B Preferred Stock..
"QuickBird 2 Satellite" means the QuickBird 2 spacecraft
---------------------
manufactured pursuant to the contract SE.1M.PRJ.0004.A, dated June
1998, as amended from time to time, between Ball Aerospace &
Technologies Corp. and the Corporation, for QuickBird satellites 1 and
2.
"Transactions" has the meaning ascribed to such term in the
------------
Recapitalization Agreement dated April [2], 2001, by and among the
Corporation and each of the parties set forth in Schedule 1 thereto,
as it may be amended from time to time.
"Vendor Financing" means the financing to be provided by Ball
----------------
Technologies & Aerospace Corp. to the Corporation in a principal
amount not greater than $9,000,000, plus interest thereon, for the
construction and launch of the QuickBird 2 Satellite.
5. To amend Section 6(a) of Article IV, Section B, to read in its
entirety as follows :
"Optional Conversion. Except as set forth in Section 6(c) below, upon
-------------------
and following the earlier to occur of (i) receipt by the Corporation of the
FCC Approval and (ii) October 31, 1999 and until the fourth anniversary of
the earlier to occur of (i) and (ii), the Holder of each share of Series A
Preferred Stock shall have the right, at the option of such Holder, to
convert such shares into shares of Common Stock, on and subject to the
terms and conditions hereinafter set forth. Subject to the provisions for
adjustment
3
hereinafter set forth, each share of Series A Preferred Stock shall be
convertible into such number (calculated as to each conversion to the
nearest 1/100th of a share) of fully paid and nonassessable shares of
Common Stock as is obtained by dividing (i) the sum of the then Liquidation
Preference plus the amount of accumulated and unpaid dividends thereon,
including the amount of any Default Dividends and any dividends accumulated
thereon by (ii) the Conversion Price, both as in effect at the date any
share or shares of Series A Preferred Stock are surrendered for conversion.
The Series A Preferred Stock shall not be convertible prior to the earlier
to occur of (i) receipt by the Corporation of the FCC Approval and (ii)
October 31, 1999 or after the fourth anniversary of the earlier to occur of
(i) and (ii)."
6. To amend Section 6(c) of Article IV, Section B, to read in its
entirety as follows :
"Automatic Conversion. Upon and following the earlier to occur of (i)
--------------------
receipt by the Corporation of the FCC Approval and (ii) October 31, 1999
and until the fourth anniversary of the earlier to occur of (i) and (ii),
upon the earlier to occur of (1) an Initial Public Offering, the public
offering price of which is at least $35,000,000 in the aggregate and (2)
the listing of the Common Stock on the New York Stock Exchange, Inc. or the
American Stock Exchange, Inc, or the trading of the Common Stock on the
Nasdaq National Market ("NASDAQ"), if the Market Price (as hereinafter
------
defined) of the Common Stock shall on any day be at a level such that, if
all the outstanding shares of Series A Preferred Stock were converted into
the number of shares of Common Stock into which such Series A Preferred
Stock is convertible pursuant to this Section 6, and such shares of Common
Stock were then sold at the Market Price, the proceeds of such sale would
exceed by at least 20% the amount determined by multiplying the number of
outstanding shares of Series A Preferred Stock by the Conversion Price
(which amount shall be subject to equitable adjustment wherever there shall
occur a stock split, combination, reclassification or other similar event
involving the Series A Preferred Stock), then all outstanding shares of
Series A Preferred Stock shall be converted automatically into the number
of shares of Common Stock into which such shares are convertible pursuant
to this Section 6 as of immediately prior to the occurrence of such event,
without further action by the Holders and whether or not the certificates
representing such shares are surrendered to the Corporation or its Transfer
Agent for the Common Stock, provided that all declared and unpaid dividends
on such shares of Series A Preferred Stock shall first have been paid in
full. The "Market Price" of the Common Stock shall be the average of the
------------
reported last sales prices on an exchange or on NASDAQ for the Common Stock
on each of the twenty (20) preceding Trading Days on which a reported sale
of the Common Stock took place. The Series A Preferred Stock shall not be
automatically converted pursuant to this Section 6(c) prior to the earlier
to occur of (i) receipt by the Corporation of the FCC Approval and (ii)
October 31, 1999 or after the fourth anniversary of the earlier to occur of
(i) and (ii)."
7. To amend Section 7(d)(iii) of Article IV, Section B, to read in its
entirety as follows:
"except for the High Yield Financing outstanding as of April 2,
2001 and except for the Vendor Financing, the incurrence of any
4
indebtedness for borrowed money, the making of any guarantee of any
such indebtedness, the issuance or sale of any debt securities or the
prepayment or refinancing of any indebtedness for borrowing money, in
each case in excess of $10 million in the aggregate;"
8. To amend Section 1 of Article IV, Section C, to read in its entirety
as follows:
"Designation. The series of preferred stock established hereby
-----------
shall be designated the "7% Cumulative Convertible Redeemable
Preferred Stock due 2009, Series B" (and shall be referred to herein
as the "Series B Preferred Stock") and the authorized number of shares
------------------------
of Series B Preferred Stock shall be Twelve Million (12,000,000)
shares."
9. To amend Section 5 of Article IV, Section C, to read in its entirety
as follows:
"Mandatory Redemption and Put Right.
(a) The Corporation shall redeem on March 31, 2009 (the "Redemption
----------
Date"), from any source of funds legally available therefor, all
----
outstanding shares of Series B Preferred Stock at a redemption price per
share equal to the then Liquidation Preference per share (the "Mandatory
---------
Redemption Price"), plus an amount in cash equal to all accumulated and
----------------
unpaid dividends per share (including an amount in cash equal to a prorated
dividend for any partial Dividend Period). The Corporation will not be
required to make sinking fund payments with respect to the Series B
Preferred Stock. The Series B Preferred Stock shall not be redeemable at
the option of the Corporation prior to the Redemption Date.
(b) If and to the extent that the Corporation or the Junior Collateral
Trustee receives from the Collateral Trustee any Available Proceeds, then
the Corporation shall (or shall cause the Junior Collateral Trustee to)
promptly mail a written notice to each Holder of Series B Preferred Stock,
at the address for such Holder shown on the stock books of the Corporation,
stating the amount of such Available Proceeds received, that such Holder's
put rights under this subsection (b) have become exercisable, and the Put
Right Termination Date. Each such Holder shall thereafter have the right
on or prior to the Put Right Termination Date to elect to sell to the
Corporation, and the Corporation shall be obligated to purchase, from any
source of funds legally available therefor, up to all of the shares of
Series B Preferred Stock held by such Holder, subject to the last sentence
of this paragraph. The date of such purchase shall be the next Business Day
after the Put Right Termination Date. The purchase price for all of such
shares shall be equal to the aggregate liquidation preference thereof, plus
accrued and unpaid dividends thereon to the date of purchase. If the
aggregate purchase price for all shares of Series B Preferred Stock and
Series A Preferred stock to be purchased by the Corporation pursuant to
this Section 5 and pursuant to Section 5 of Article IV, Section B, would
otherwise be greater than the Available Proceeds, then the number of
shares of Series B Preferred Stock to be so purchased shall, pro rata
(based on the liquidation preference) with the amount of shares of Series A
Preferred Stock to be purchased pursuant to Section 5 of Article IV,
Section B, be reduced so that the aggregate purchase price of the shares of
5
Series B Preferred Stock and Series A Preferred Stock so purchased does not
exceed the Available Proceeds. Notwithstanding the foregoing, this
subsection (b) shall not become effective unless and until each of the
Transactions has been consummated or effectively waived.
(c) For purposes of this Section 5, terms defined in Section 5 of
Article IV, Section C, shall have the respective meanings set forth
therein."
10. To amend Section 6(a) of Article IV, Section C, to read in its
entirety as follows:
"Optional Conversion. Except as set forth in Section 6(c) below, upon
-------------------
and following the earlier to occur of (i) receipt by the Corporation of the
FCC Approval and (ii) October 31, 1999 and until the fourth anniversary of
the earlier to occur of (i) and (ii), the Holder of each share of Series B
Preferred Stock shall have the right, at the option of such Holder, to
convert such shares into shares of Common Stock, on and subject to the
terms and conditions hereinafter set forth. Subject to the provisions for
adjustment hereinafter set forth, each share of Series B Preferred Stock
shall be convertible into such number (calculated as to each conversion to
the nearest 1/100th of a share) of fully paid and nonassessable shares of
Common Stock as is obtained by dividing (i) the sum of the then Liquidation
Preference plus the amount of accumulated and unpaid dividends thereon,
including the amount of any Default Dividends and any dividends accumulated
thereon by (ii) the Conversion Price, both as in effect at the date any
share or shares of Series B Preferred Stock are surrendered for conversion.
The Series B Preferred Stock shall not be convertible prior to the earlier
to occur of (i) receipt by the Corporation of the FCC Approval and (ii)
October 31, 1999 or after the fourth anniversary of the earlier to occur of
(i) and (ii)."
11. To amend Section 6(c) of Article IV, Section C, to read in its
entirety as follows:
"Automatic Conversion. Upon and following the earlier to occur of (i)
--------------------
receipt by the Corporation of the FCC Approval and (ii) October 31, 1999
and until the fourth anniversary of the earlier to occur of (i) and (ii),
upon the earlier to occur of (1) an Initial Public Offering, the public
offering price of which is at least $35,000,000 in the aggregate and (2)
the listing of the Common Stock on the New York Stock Exchange, Inc. or the
American Stock Exchange, Inc. or the trading of the Common Stock on the
Nasdaq National Market ("NASDAQ"), if the Market Price (as hereinafter
------
defined) of the Common Stock shall on any day be at a level such that, if
all the outstanding shares of Series B Preferred Stock were converted into
the number of shares of Common Stock into which such Series B Preferred
Stock is convertible pursuant to this Section 6, and such shares of Common
Stock were then sold at the Market Price, the proceeds of such sale would
exceed by at least 20% the amount determined by multiplying the number of
outstanding shares of Series B Preferred Stock by the Conversion Price
(which amount shall be subject to equitable adjustment wherever there shall
occur a stock split, combination, reclassification or other similar event
involving the Series B Preferred Stock), then all outstanding shares of
Series B Preferred Stock shall be converted automatically into the number
of shares of Common Stock into which such shares are convertible pursuant
to this Section 6 as of immediately prior to the occurrence of such
6
event, without further action by the Holders and whether or not the
certificates representing such shares are surrendered to the Corporation or
its Transfer Agent for the Common Stock, provided that all declared and
unpaid dividends on such shares of Series B Preferred Stock shall first
have been paid in full. The "Market Price" of the Common Stock shall be the
------------
average of the reported last sales prices on an exchange or on NASDAQ for
the Common Stock on each of the twenty (20) preceding Trading Days an which
a reported sale of the Common Stock took place. The Series B Preferred
Stock shall not be automatically converted pursuant to this Section 6(c)
prior to the earlier to occur of (i) receipt by the Corporation of the FCC
Approval and (ii) October 31, 1999 or after the fourth anniversary of the
earlier to occur of (i) and (ii)."
12. To amend Section 7(d)(iii) of Article IV, Section C, to read in its
entirety as follows:
"except for the High Yield Financing outstanding as of April 2, 2001
and except for the Vendor Financing, the incurrence of any indebtedness for
borrowed money, the making of any guarantee of any such indebtedness, the
issuance or sale of any debt securities or the prepayment or refinancing of
any indebtedness for borrowing money, in each case in excess of $10 million
in the aggregate;"
13. To amend Section 1 of Article IV, Section D, to read in its entirety
as follows:
"Designation. The series of preferred stock established hereby shall
-----------
be designated the "8.5% Cumulative Convertible Redeemable Preferred Stock
due 2009, Series C" (and shall be referred to herein as the "Series C
--------
Preferred Stock") and the authorized number of shares of Series C Preferred
---------------
Stock shall be Fifty Million (50,000,000) shares."
14. To amend Section 6(a) of Article IV, Section D, to read in its
entirety as follows:
"Optional Conversion. Except as set forth in Section 6(c) below, upon
-------------------
and following the earlier to occur of (i) receipt by the Corporation of the
FCC Approval and (ii) October 31, 1999 and until the fourth anniversary of
the earlier to occur of (i) and (ii), the Holder of each share of Series C
Preferred Stock shall have the right, at the option of such Holder, to
convert such shares into shares of Common Stock, on and subject to the
terms and conditions hereinafter set forth. Subject to the provisions for
adjustment hereinafter set forth, each share of Series C Preferred Stock
Shall be convertible into such number (calculated as to each conversion to
the nearest 1/100th of a share) of fully paid and nonassessable shares of
Common Stock as is obtained by dividing (i) the sum of the then Liquidation
Preference plus the amount of accumulated and unpaid dividends thereon,
including the amount of any Default Dividends and any dividends accumulated
thereon by (ii) the Conversion Price, both as in effect at the date any
share or shares of Series C Preferred Stock are surrendered for conversion.
The Series C Preferred Stock shall not be convertible prior to the earlier
to occur of (i) receipt by the Corporation of the FCC Approval and (ii)
October 31, 1999 or after the fourth anniversary of the earlier to occur of
(i) and (ii)."
15. To amend Section 6(c) of Article IV, Section D, to read in its
entirety as follows:
7
"Automatic Conversion. Upon and following the earlier to occur of (i)
--------------------
receipt by the Corporation of the FCC Approval and (ii) October 31, 1999
and until the fourth anniversary of the earlier to occur of (i) and (ii),
upon the earlier to occur of (1) an Initial Public Offering, the public
offering price of which is at least $35,000,000 in the aggregate and (2)
the listing of the Common Stock on the New York Stock Exchange, Inc. or the
American Stock Exchange, Inc. or the trading of the Common Stock on the
Nasdaq National Market ("NASDAQ"), if the Market Price (as hereinafter
------
defined) of the Common Stock shall on any day be at a level such that, if
all the outstanding shares of Series C Preferred Stock were converted into
the number of shares of Common Stock into which such Series C Preferred
Stock is convertible pursuant to this Section 6, and such shares of Common
Stock were then sold at the Market Price, the proceeds of such sale would
exceed by at least 20% the amount determined by multiplying the number of
outstanding shares of Series C Preferred Stock by the Conversion Price
(which amount shall be subject to equitable adjustment wherever there shall
occur a stock split, combination, reclassification or other similar event
involving the Series C Preferred Stock), then all outstanding shares of
Series C Preferred Stock shall be converted automatically into the number
of shares of Common Stock into which such shares are convertible pursuant
to this Section 6 as of immediately prior to the occurrence of such event,
without further action by the Holders and whether or not the certificates
representing such shares are surrendered to the Corporation or its Transfer
Agent for the Common Stock, provided that all declared and unpaid dividends
on such shares of Series C Preferred Stock shall first have been paid in
full. The "Market Price" of the Common Stock shall be the average of the
------------
reported last sales prices on an exchange or on NASDAQ for the Common Stock
on each of the twenty (20) preceding Trading Days on which a reported sale
of the Common Stock took place. The Series C Preferred Stock shall not be
automatically converted pursuant to this Section 6(c) prior to the earlier
to occur of (i) receipt by the Corporation of the FCC Approval and (ii)
October 31, 1999 or after the fourth anniversary of the earlier to occur of
(i) and (ii)."
SECOND, that in lieu of a meeting and vote of stockholders, the
stockholders of the Corporation having not less than the minimum number of votes
necessary to authorize such action have given written consent to, and duly
adopted, said amendments in accordance with the provisions of Sections 228(a)
and 242 of the General Corporation Law of the State of Delaware, and written
notices to any non-consenting stockholders have been given in accordance with
Section 228(e) of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this ____
day of ______, 2001.
EARTHWATCH INCORPORATED
By: ______________________________________
Name: ______________________________________
Title: ______________________________________
8
EXHIBIT H-1
SENIOR COLLATERAL PLEDGE AND SECURITY AGREEMENT
Dated as of ____________, 2001
Between
-------
EARTHWATCH INCORPORATED
as grantor
----------
and
THE BANK OF NEW YORK
as collateral agent
-------------------
SENIOR COLLATERAL PLEDGE AND SECURITY AGREEMENT
SENIOR COLLATERAL PLEDGE AND SECURITY AGREEMENT, dated as of _____ __, 2001
(this "Agreement"), made by EarthWatch Incorporated (the "Company"), a Delaware
corporation having its principal office at 0000 Xxxx Xxxx, Xxxxxxxx Xxxxxxxx
00000, in favor of 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 (referred to herein as
the "Collateral Agent") for itself and for the ratable benefit of the 13%
Noteholders referred to below and the holders from time to time of the Vendor
Financing.
BACKGROUND
A. The Company has entered into the Recapitalization Agreement dated
as of April 2, 2001 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Recapitalization Agreement") among the Company,
Xxxxxx Xxxxxxx & Co., Incorporated, and the other parties thereto.
B. Pursuant to Section 5.4 of the Recapitalization Agreement, the
Company is required to cause the QuickBird 2 Insurance to be assigned, pledged
and transferred to the Collateral Agent as sole loss payee, as security for the
13% Notes Obligations and the Vendor Financing Obligations, in the case of the
Vendor Financing Obligations, in an amount up to the Vendor Financing Cap.
C. It is the intent of the parties that any distributions in respect
of the Collateral, including any distributions in respect of payments to the
Collateral Agent under the QuickBird 2 Insurance shall be distributed in
accordance with Section 8(d) hereof.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Company, the Company hereby covenants and agrees with, and
(in Section 4 below) represents and warrants to the Collateral Agent for the
benefit of the Secured Parties as follows:
Section 1. Defined Terms. Capitalized terms that are used herein and
-------------
not otherwise defined herein shall have the meanings ascribed to such terms in
the 13% Notes Indenture and the Recapitalization Agreement; provided, however,
-------- -------
that if such a term is defined in both such documents, the definition contained
in the Recapitalization Agreement shall govern. In addition to the terms
defined in the introductory and background paragraphs of this Agreement, the
following terms shall have the meanings indicated below:
"Collateral" means all of the following, whether now owned or
hereafter acquired:
(i) the QuickBird 2 Insurance;
(ii) all accounts, contract rights, instruments, investment property
and general intangibles in respect of the QuickBird 2 Insurance, including
without limitation any premiums, unearned premiums and premium refunds; and
(iii) to the extent not otherwise included, all Proceeds of each of
the foregoing and all accessions to, substitutions and replacements for,
and proceeds, issues, returns, rents, profits and products of, each of the
foregoing.
"Collateral Agent Expenses" means the costs and expenses incurred by
the Collateral Agent in connection with the sale or other disposition of the
Collateral and any and all other fees, expenses or other amounts payable to the
Collateral Agent and its agents pursuant to this Agreement, including, without
limitation, expenses of the Collateral Agent and its agents, including the fees
and expenses of its outside counsel and internal counsel, and all expenses,
liabilities and advances made or incurred by the Collateral Agent in connection
therewith or pursuant to Section 7 hereof and amounts payable pursuant to
Section 17 hereof.
"Event of Default" means an "Event of Default" under and as defined in
the 13% Notes Indenture, an event of default (howsoever described) under the
Vendor Financing Agreement or a default by the Company of any obligation under
this Agreement.
"Excess Proceeds Distributions" shall have the meaning ascribed to
such term in Section 8(d) hereof.
"Filing Offices" means (i) the Secretary of State of Delaware and (ii)
the Secretary of State of Colorado.
"Officer" means, with respect to the Company, (i) the Chairman of the
Board, the Chief Executive Officer, the President or any other Director of the
Company or (ii) the Chief Financial Officer, the Treasurer or any Assistant
Treasurer, the Company Secretary or any Company Assistant Secretary.
"Officers' Certificate" means a certificate signed by one Officer
listed in clause (i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof; provided, however, that any such certificate may
-------- -------
be signed by any two of the Officers listed in clause (i) of the definition
thereof in lieu of being signed by one Officer listed in clause (i) of the
definition thereof and one Officer listed in clause (ii) of the definition
thereof.
"Opinions of Counsel" means written opinions substantially in the
forms set forth in Exhibits I-1 and I-2 to the Recapitalization Agreement.
"Permitted Insurance Modification" means the following particular
specified amendments and modifications to the QuickBird 2 Insurance:
(a) amendments and modifications to cure any ambiguity, defect or
inconsistency in the QuickBird 2 Insurance or to increase the rights and
benefits in favor of the Collateral Agent in respect of the QuickBird 2
Insurance; provided that such amendments or modifications shall not,
-------------
directly or indirectly, adversely affect the interests of the Collateral
Agent or any other Secured Party in any material respect:
(b) amendments and modifications to the launch schedule set forth in
the declarations section of the QuickBird 2 Insurance; and
2
(c) amendments and modifications in the "Definitions" section of the
QuickBird 2 Insurance which only amend or modify the definitions of the
specific defined terms set forth on Schedule II attached hereto or
substantially equivalent defined terms in the QuickBird 2 Insurance.
"Permitted Lien" means the Liens created under or evidenced by the
Second Priority Pledge Agreement.
"Proceeds" means "proceeds," as such term is defined in Section 9-
306(1) of the UCC, and, in any event, shall include, without limitation, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Company or the Collateral Agent from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatsoever) made or due and
payable to the Company from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any Person acting under color of
governmental authority), and (iii) any and all other amounts from time to time
paid or payable in respect of any of the Collateral.
"Proceeds Distributions" shall have the meaning ascribed to such term
in Section 8(d) hereof.
"QuickBird 2 Insurance" means the insurance policy or policies
relating to the Company's "QuickBird 2" satellite, in substantially the form or
forms attached as Exhibit A hereto, as such policy or policies may from time to
time be amended, modified, supplemented or replaced.
"Returned Insurance Premiums" shall have the meaning ascribed to such
term in Section 8(g) hereof.
"Second Priority Pledge Agreement" means the Collateral Pledge and
Security Agreement dated as of the date hereof made by the Company in favor of
The Bank of New York, as collateral agent for the holders of the Series A
Preferred Stock and the Series B Preferred Stock in the form attached hereto as
Exhibit B hereto.
"Secured Obligations" means, collectively, the 13% Notes Obligations
and the Vendor Financing Obligations.
"Secured Parties" means the Collateral Agent, the 13% Notes Trustee,
the 13% Noteholders and any holder from time to time of the Vendor Financing.
"Termination Date" means the latest scheduled date of termination of
any insurance policy with respect to the QuickBird 2 Insurance; provided that
-------- ----
there has been no event of loss under the QuickBird 2 Insurance or other event
causing payment under the QuickBird 2 Insurance.
"13% Noteholders" means the holders from time to time of the 13%
Notes.
3
"13% Notes Indenture" means the Indenture, dated as of July 12, 1999,
between the Company and The Bank of New York, as trustee for the 13%
Noteholders, as supplemented by the Supplemental Indenture and as further
amended, amended and restated, supplemented or otherwise modified from time to
time.
"13% Notes Obligations" means the 13% Notes and all other obligations
under and in respect of the 13% Notes Indenture, whether for principal, premium,
interest, fees or otherwise.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, however, in the event
-------- -------
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Collateral Agent's security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
"Vendor Financing Agreement" means any agreement governing the terms
of the Vendor Financing, as such agreement may be amended, amended and restated,
supplemented or otherwise modified from time to time.
"Vendor Financing Cap" means $9,000,000 in principal, and accrued
interest thereon.
"Vendor Financing Obligations" means all obligations under and in
respect of the Vendor Financing Agreement, whether for principal, premium,
interest, fees or otherwise, in an aggregate amount not exceeding the Vendor
Financing Cap.
"Vendor Financing Representative" means any representative for the
holders of the Vendor Financing, as notified in writing from time to time to the
Collateral Agent and the Company.
Section 2. Assignment and Grant of Security Interest. As collateral
-----------------------------------------
security for the full and prompt payment when due (whether at stated maturity,
by acceleration or otherwise) of, and the performance of, all of the Secured
Obligations, the Company hereby assigns, conveys, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, and hereby grants to the
Collateral Agent, for itself and the ratable benefit of the Secured Parties, a
continuing security interest in all of the Company's right, title and interest
in, to and under the Collateral. This Agreement secures the prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of all the Secured Obligations ratably.
Section 3. Rights of the Collateral Agent; Limitations on the
--------------------------------------------------
Collateral Agent's Secured Obligations. A. It is expressly agreed by the
--------------------------------------
Company that, anything herein to the contrary notwithstanding, the Company shall
remain liable under each of its contracts to observe and perform all the
conditions and obligations to be observed and performed by it thereunder and the
Company shall perform all of its duties and obligations thereunder, all in
4
accordance with and pursuant to the terms and provisions of each such contract.
Neither the Collateral Agent nor any other Secured Party shall have any
obligation or liability under any contract by reason of or arising out of this
Agreement or the granting of a security interest in any contract (including the
QuickBird 2 Insurance) to the Collateral Agent or the receipt by the Collateral
Agent or any other Secured Party of any payment relating to any such contract
pursuant hereto, nor shall the Collateral Agent nor any other Secured Party be
required or obligated in any manner to perform or fulfill any of the obligations
of the Company under or pursuant to any contract, or to make any payment, or to
make any inquiry as to the nature or the sufficiency of any payment received by
it or the sufficiency of any performance by any party under any contract, or to
present or file any claim, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
(b) The Company hereby authorizes the Collateral Agent to collect
directly from any Person any proceeds in respect of the Collateral, including,
without limitation, any payments under or in respect of the QuickBird 2
Insurance. In the event that the Company receives any amount or other proceeds
in respect of the QuickBird 2 Insurance or other Collateral from the relevant
insurance company or any other Person other than the Collateral Agent in
accordance with this Agreement, the Company shall cause such amounts to be held
in trust for the benefit of the Collateral Agent and immediately turned over to
the Collateral Agent in the same form received with appropriate endorsements.
Section 4. Representations and Warranties. The Company hereby
------------------------------
represents and warrants to the Collateral Agent, as of the date hereof, as
follows:
(a) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene any
provision of applicable law or statute or the organizational documents of the
Company or any material agreement or other material instrument binding upon the
Company or any of its subsidiaries or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
of its subsidiaries, or result in the creation or imposition of any Lien on any
assets of the Company, except for the security interests granted under this
Agreement; no consent, approval, authorization or order of, or qualification
with, or other action by, any governmental or regulatory body or agency or any
third party is required (i) for the execution, delivery or performance by the
Company of this Agreement, (ii) for the grant by the Company of the security
interest granted hereby, for the assignment and pledge by the Company of the
Collateral pursuant to this Agreement, (iii) for the perfection and maintenance
of the assignment, pledge and security interest created hereby (including the
first-priority nature of such assignment, pledge and security interest), or (iv)
except for any such consents, approvals, authorizations or orders required to be
obtained by the Collateral Agent (or the Secured Parties) for reasons other than
the consummation of the transactions contemplated by the Recapitalization
Agreement, for the exercise by the Collateral Agent of the rights provided for
in this Agreement or the remedies in respect of the Collateral pursuant to this
Agreement.
(b) This Agreement has been duly authorized, validly executed and
delivered by the Company and assuming the due authorization, execution and
delivery thereof by the Collateral Agent, constitutes a valid and binding
agreement of the Company, enforceable against
5
the Company in accordance with its terms, except as (i) the enforceability
hereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
preference, reorganization, moratorium or similar laws now or hereafter in
effect relating to or affecting creditors' rights or remedies generally, (ii)
the availability of equitable remedies may be limited by equitable principles of
general applicability, (iii) the exculpation provisions and rights to
indemnification hereunder may be limited by public policy considerations and
(iv) the waiver of rights and defenses contained in Section 8(c) or Section 11
may be limited by applicable law.
(c) There are no legal or governmental proceedings pending or, to the
best of the Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or any
such subsidiary is subject that would materially adversely affect the power or
ability of the Company to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby.
(d) The Company is the sole owner of each item of the Collateral in
which it purports to grant a security interest hereunder, having good title
thereto, free and clear of any and all Liens (other than the Permitted Lien),
except for the assignment, security interest and other rights granted pursuant
to this Agreement.
(e) To the Company's knowledge, no effective security agreement,
financing statement, equivalent security or lien instrument or continuation
statement covering all or any part of the Collateral is on file or of record in
any public office, except such as may have been filed by the Company in favor of
the Collateral Agent pursuant to this Agreement or pursuant to the collateral
agent under the Second Priority Pledge Agreement.
(f) The Company's place of business (or the chief executive office if
it has more than one place of business), the places where its records concerning
the Collateral are kept is set forth on Schedule I attached hereto.
(g) True and correct copies of the policies relating to the QuickBird
2 Insurance are attached as Exhibit A hereto, which policies include the
Collateral Agent as sole loss payee thereon and are in full force and effect.
(h) Upon the occurrence of (i) the execution and delivery of this
Agreement by the Collateral Agent and the Company, (ii) the procurement of the
QuickBird 2 Insurance in accordance with this Agreement, (iii) the filing of a
copy of this Agreement with the Filing Offices, (iv) the filing of a UCC
financing statement describing the Collateral with the Filing Offices, (v) the
delivery to the Collateral Agent of the original insurance policy in respect of
the QuickBird 2 Insurance, (vi) the notation of the Collateral Agent as sole
loss payee under the insurance policy in respect of the QuickBird 2 Insurance
and (vii) receipt by the Collateral Agent of a consent and acknowledgement by
each insurance company issuing the QuickBird 2 Insurance to the security
interest created hereby, such acknowledgement to be contained in the relevant
insurance policy or to be in the form of Exhibit C hereto (with such
modifications as the Collateral Agent agrees), the Collateral Agent shall have a
first priority, perfected security interest in the Collateral, free and clear of
any and all Liens.
6
Section 5. Covenants. The Company covenants and agrees with the
---------
Collateral Agent that from and after the date hereof and until the Secured
Obligations are fully and indefeasibly satisfied in cash or the Termination Date
otherwise occurs:
(a) Further Documentation; Pledge of Instruments. At any time and
--------------------------------------------
from time to time, at the sole expense of the Company, the Company will promptly
and duly execute and deliver any and all such further instruments and documents
and take such further action as may be necessary and desirable to obtain the
full benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, securing all consents and approvals necessary or
appropriate for the assignment of, or grant of a security interest in, the
QuickBird 2 Insurance (or any other contract constituting Collateral held by the
Company or in which the Company has any rights not heretofore assigned) to the
Collateral Agent, the execution and filing of any financing or continuation
statements under the UCC or any other required filings with respect to the
Liens, assignments and security interests granted hereby and the delivery to the
Collateral Agent of any Collateral constituting instruments or investment
securities under the UCC. Without limiting the foregoing, the Company will
perform all acts as may be necessary or desirable to create and maintain in
favor of the Collateral Agent a first priority perfected security interest in
the Collateral. To the extent permitted by applicable law, the Company
authorizes the Collateral Agent to sign any financing or continuation statement
instead of the Company.
(b) Limitation on Liens on Collateral. The Company will not create,
---------------------------------
permit or suffer to exist, and will defend the Collateral against and take such
other action as is necessary to remove, any Lien on the Collateral (other than
the Permitted Lien and the Lien in favor of the Collateral Agent created
hereby), and will defend the right, title and interest of the Collateral Agent
in and to any of the Company's rights in the Collateral and in and to the
Proceeds thereof constituting Collateral against the claims and demands of all
Persons whomsoever.
(c) Maintenance of Insurance. The Company shall comply in all
------------------------
respects with the insurance requirements set forth in Section 4.10 of the 13%
Notes Indenture. Without limiting the generality of the foregoing, the Company
shall take all actions necessary to continue the QuickBird 2 Insurance in full
force and effect (including payment of all premiums) and to cause the Collateral
Agent to be the sole loss payee on the QuickBird 2 Insurance.
(d) Limitations on Disposition. The Company will not sell, assign,
--------------------------
lease, transfer or otherwise dispose of any of the Collateral or any interest
therein to any Person other than the Collateral Agent.
(e) Notices. The Company will advise the Collateral Agent promptly in
-------
writing, in reasonable detail, (i) of any material Lien (other than the
Permitted Lien) or claim made or asserted against any of the Collateral, (ii) of
any material change in the composition of the Collateral, (iii) of any claim
under the QuickBird 2 Insurance or any event causing the payment of any sums
(including return of premium) in respect of the QuickBird 2 Insurance and (iv)
of the occurrence of any other event which could reasonably be expected to have
a material adverse effect on the aggregate value of the Collateral or in the
security interests created hereunder. The Company will promptly provide the
Collateral Agent with copies of any and all notices received from or provided to
any insurance company or agent in respect of the QuickBird 2 Insurance. Without
limiting the generality of the foregoing, the Company will promptly
7
provide the Collateral Agent, the 13% Notes Trustee and the Vendor Financing
Representative with any information regarding the QuickBird 2 Insurance as such
Person shall reasonably request.
(f) QuickBird 2 Insurance. The Company shall not permit any
---------------------
amendment, modification or termination of the QuickBird 2 Insurance, or any
settlement in respect of any claim thereunder, without the written consent of
the Collateral Agent. The Company shall comply with all terms and conditions of
the QuickBird 2 Insurance and will act promptly and diligently in the
enforcement of all rights, the protection of all benefits and the prosecution of
any claims under the QuickBird 2 Insurance. In respect of the QuickBird 2
Insurance, the Company shall not permit there to be (i) any loss payee, other
than the Collateral Agent or (ii) any insured party or additional insured party,
other than the Company. The Company shall not permit there to be any original
policy in respect of the QuickBird 2 Insurance other than any such original
which is delivered to the Collateral Agent.
(g) Continuous Perfection. The Company will not change its name,
---------------------
identity or corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith misleading within the
meaning of Section 9-402(7) of the UCC (or any other then applicable provision
of the UCC) unless the Company shall have given the Collateral Agent at least 60
days' prior written notice thereof and shall have taken all action (or made
arrangements to take such action substantially simultaneously with such change
if it is impossible to take such action in advance) necessary or reasonably
requested by the Collateral Agent to amend such financing statement or
continuation statement so that it is not misleading. The Company will not
change its place of incorporation, place of business or its chief executive
office (if it has more than one place of business) or remove its records from
any location, unless it gives the Collateral Agent at least 60 days' prior
written notice thereof and has taken such action as is necessary to cause the
security interest of the Collateral Agent in the Collateral to continue to be
perfected.
(h) Second Priority Pledge Agreement. The Company shall not agree to
--------------------------------
any material amendment, supplement or other modification to the terms of the
Second Priority Pledge Agreement (it being agreed that any amendment, supplement
or other modification to Section 2(b), Section 2(c) or Section 16 of the Second
Priority Pledge Agreement shall be a material amendment, supplement or
modification) without the prior written consent of the Collateral Agent.
Section 6. The Collateral Agent's Appointment as Attorney-in-Fact.
------------------------------------------------------
A. The Company hereby irrevocably constitutes and appoints the Collateral Agent
and any officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of the Company and in the name of the Company or in its own
name, from time to time in the Collateral Agent's discretion, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute and deliver any and all documents and instruments which the
Collateral Agent may deem necessary or desirable to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing, hereby
gives the Collateral Agent the power and right, but not the duty, on behalf of
the Company, without notice to or assent by the Company to do the following:
8
(i) to ask, demand, collect, receive and give acquittances and
receipts for any and all moneys due and to become due under any Collateral
and, in the name of the Company or in its own name or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Collateral and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Collateral Agent for the purpose of collecting any and all such moneys due
under any Collateral whenever payable and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Collateral Agent for the purpose of collecting
any and all such moneys due under any Collateral whenever payable;
(ii) to pay or discharge taxes, Liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral and
to pay any required insurance premiums and related costs and expenses; and
(iii) (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due, and to become due
thereunder, directly to the Collateral Agent or as the Collateral Agent
shall direct; (B) to receive payment of and receipt for any and all moneys,
claims and other amounts due, and to become due at any time, in respect of
or arising out of any Collateral; (C) to sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications and notices in
connection with accounts, general intangibles, instruments and other items
constituting or relating to the Collateral; (D) to commence and prosecute
any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof and to
enforce any other right in respect of any Collateral; (E) to defend any
suit, action or proceeding brought against the Company with respect to any
Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith, to give such
discharges or releases as the Collateral Agent may deem appropriate; and
(G) generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as
though the Collateral Agent were the absolute owner thereof for all
purposes, and to do, at the Collateral Agent's option and the Company's
expense, at any time, or from time to time, all acts and things which the
Collateral Agent reasonably deems necessary to protect, preserve or realize
upon the Collateral and the Collateral Agent's Lien therein, in order to
effect the intent of this Agreement, all as fully and effectively as the
Company might do.
(b) The Collateral Agent agrees that, except upon the occurrence and
during the continuance of any Event of Default or default hereunder, it will
forbear from exercising the power of attorney or any rights granted to the
Collateral Agent pursuant to this Section 6; provided that the Collateral Agent
--------
may, at the direction of the 13% Notes Trustee or the Vendor Financing
Representative, exercise any such power of attorney or other rights
notwithstanding the absence of an Event of Default or default hereunder if such
exercise is necessary or desirable for the grant to, or maintenance in favor of,
the Collateral Agent of the first priority security interest in the Collateral
intended by this Agreement. The Company hereby ratifies, to the extent
permitted by law, all that any said attorney shall lawfully do or cause to be
done by virtue hereof.
9
The power of attorney granted pursuant to this Section 6, being coupled with an
interest, shall be irrevocable until the Secured Obligations are indefeasibly
paid in full in cash.
(c) The powers conferred on the Collateral Agent hereunder are solely
to protect the Collateral Agent's interests in the Collateral and shall not
impose any duty or obligation upon it to exercise any such powers. The
Collateral Agent shall be accountable only for amounts that it actually receives
as a result of the exercise of such powers and neither it nor any of its
officers, directors, employees or agents shall be responsible to the Company for
any act or failure to act, except for its own gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction. The
Collateral Agent shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured it.
(d) The Company also authorizes the Collateral Agent, at any time and
from time to time, including, but not limited to, upon the occurrence and during
the continuance of an Event of Default, (i) to communicate in its own name with
any party to any contract constituting Collateral with regard to the assignment
of the right, title and interest of the Company in and under the Contracts
constituting Collateral hereunder and other matters relating thereto and (ii) to
execute, in connection with the sale or other realization provided for in
Section 8 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral. Nothing in this
agreement shall be construed to limit the power of the Collateral Agent at
anytime and from time to time to communicate with any insurance company or any
agent in respect of the QuickBird 2 Insurance or otherwise exercise any rights
or powers granted to it under the QuickBird 2 Insurance.
Section 7. Performance by the Collateral Agent of the Company's
----------------------------------------------------
Obligations. If the Company fails to perform or comply with any of its
-----------
agreements contained herein, and the Collateral Agent shall itself perform or
comply, or otherwise cause performance or compliance, with such agreement, the
expenses of the Collateral Agent incurred in connection with such performance or
compliance, together with interest thereon at the highest rate then in effect in
respect of the Secured Obligations, shall be payable by the Company to the
Collateral Agent on demand and shall constitute Secured Obligations secured
hereby.
Section 8. Remedies; Rights Upon an Event of Default; Allocation and
Payment of Proceeds Distributions; Special Provisions Regarding Return of
Premiums Under QuickBird 2 Insurance. A. If an Event of Default shall occur
and be continuing, the Collateral Agent may exercise, in addition to all other
rights and remedies granted to it in this Agreement and in any other instrument
or agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the UCC and other applicable law.
Without limiting the generality of the foregoing, the Company expressly agrees
that in any such event the Collateral Agent, without demand of performance or
other demand, advertisement or notice of any kind (except the notice specified
below of time and place of public or private sale) to or upon the Company or any
other Person (all and each of which demands, advertisements and/or notices are
hereby expressly waived to the maximum extent permitted by the UCC and other
applicable law), may forthwith collect, receive, appropriate and realize upon
the Collateral,
10
or any part thereof, and/or may forthwith sell, lease, assign, give an option or
options to purchase, or sell or otherwise dispose of and deliver said Collateral
(or contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange or broker's board or any of the
Collateral Agent's offices or elsewhere at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Collateral Agent shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of said Collateral so sold, free of any right or
equity of redemption, which equity of redemption the Company hereby releases
(subject as aforesaid). The Company further agrees, at the Collateral Agent's
request, to assemble the Collateral and make it available to the Collateral
Agent at places which the Collateral Agent shall reasonably select, whether at
the Company's premises or elsewhere. The Collateral Agent shall apply or hold
the net proceeds of any such collection, recovery receipt, appropriation,
realization or sale, as provided in Section 8(d) hereof, the Company remaining
liable for any deficiency remaining unpaid after such application, and only
after so paying over such net proceeds to the holders of Secured Obligations to
the extent provided in Section 8(d) and after the payment by the Collateral
Agent of any other amount required by any provision of law, including Section 9-
504(1)(c) of the UCC, need the Collateral Agent account for the surplus, if any,
to the Company. To the maximum extent permitted by applicable law, the Company
waives all claims, damages, and demands against the Collateral Agent arising out
of any repossession, retention or sale of the Collateral. The Company agrees
that the Collateral Agent need not give more than ten days' notice (which
notification shall be deemed given when delivered on an overnight basis, postage
prepaid, addressed to the Company at its address referred to in Section 12) of
the time and place of any public sale or of the time after which a private sale
may take place and that such notice is reasonable notification of such matters.
The Company shall remain liable for any deficiency if the proceeds of any sale
or disposition of the Collateral are insufficient to pay all amounts to which
the Collateral Agent is entitled, the Company also being liable for the fees and
disbursements of any attorneys employed by the Collateral Agent to collect such
deficiency.
(b) The Company also agrees to pay all costs of the Collateral Agent,
including, without limitation, fees and disbursements of Collateral Agent's
attorneys, incurred in connection with the enforcement of any of its rights and
remedies under this Agreement.
(c) The Company hereby waives presentment, demand, protest or any
notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Agreement or any Collateral.
(d) Subject to clause (g) below, any cash held or received by the
Collateral Agent as Collateral and all cash proceeds received by the Collateral
Agent in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral (including, without limitation, any payment in
respect of the QuickBird 2 Insurance) (collectively, "Proceeds Distributions"),
shall be applied, distributed or held by the Collateral Agent, whether or not
there then exists any Default or Event of Default, as follows:
First, Proceeds Distributions shall be applied to the payment of and
-----
reserve for Collateral Agent Expenses;
11
Second, Proceeds Distributions shall be applied equally and ratably to
------
those 13% Noteholders that accept an Offer to Purchase the 13% Notes in
accordance with Section 4.12 of the 13% Notes Indenture (as amended by the
Supplemental Indenture) and to the Vendor Financing Obligations in
accordance with the equivalent provision of the Vendor Financing Agreement;
provided however, that the aggregate amount of Proceeds Distributions
-------- -------
applied to the Vendor Financing Obligations shall not exceed the Vendor
Financing Cap;
Finally, after payment of the amounts set forth in First and Second
------- ----- ------
above then, if the Permitted Lien shall then be in existence, the
Collateral Agent shall hold any remaining Proceeds Distributions ("Excess
Proceeds Distributions") as collateral agent under the Second Priority
Pledge Agreement for the benefit of the holders of the Series A Preferred
Stock and the Series B Preferred Stock for application in accordance with
the provisions of the Second Priority Pledge Agreement, and, if the
Permitted Lien shall not then be in existence, the Collateral Agent shall
distribute any Excess Proceeds Distributions to the Company, or its
successors or assigns, or to whomsoever may be lawfully entitled to receive
the same as a court of competent jurisdiction may direct.
(e) [Reserved].
(f) Any distribution and payment to the Secured Parties in respect of
the 13% Notes Obligations and the Vendor Financing Obligations pursuant to
paragraph "Second" of clause (d) of this Section 8 shall be treated as a
------
prepayment, without premium, of the accreted value of, and accrued and unpaid
interest, if any, on, the 13% Notes Obligations and a prepayment of the
principal of, and accrued and unpaid interest, if any, on, the Vendor Financing
Obligations, as the case may be, to the extent of such distribution and payment
in respect thereof.
(g) Subject to the following sentence, in the event that the
Collateral Agent receives any Proceeds Distributions that constitute the return
of insurance premiums ("Returned Insurance Premiums") under the QuickBird 2
Insurance in accordance with the terms thereof, the Collateral Agent shall hold
all Returned Insurance Premiums for a period of 180 days following receipt
before distributing such amounts in accordance with clause (d) of this Section
8. In the event that the Company delivers an Officers' Certificate to the
Collateral Agent prior to the expiration of such 180 day period which (i) states
that such Returned Insurance Premiums shall be used directly for the payment of
premiums for QuickBird 2 Insurance complying in all respects with the provisions
of Section 4.10(b) of the 13% Notes Indenture and (ii) provides instructions for
the payment of such premiums directly to the insurer(s) or their agents, the
Collateral Agent shall promptly pay such Returned Insurance Premiums in
accordance with such payment instructions.
Section 9. Limitation on the Collateral Agent's Duty in Respect of
-------------------------------------------------------
Collateral. The Collateral Agent shall not have any duty as to any Collateral
----------
in its possession or control or in the possession or control of any agent or
nominee of it or any income thereon or as to the preservation of rights against
prior parties or any other rights pertaining thereto, except that the Collateral
Agent shall use reasonable care with respect to the Collateral in its possession
or under its control. In accordance with Section 9-207 of the UCC, the
Collateral Agent shall be deemed to have used reasonable care if it observes
substantially the same standard of care with respect to
12
the custody or preservation of the Collateral as it observes with respect to
similar assets owned by the Collateral Agent. Without limiting the generality of
the foregoing, the Collateral Agent shall not be under any obligation to take
any steps to preserve rights in the Collateral against any other parties, to
sell the same if it threatens to decline in value, or to exercise any rights
represented thereby (including rights with respect to calls, conversions,
exchanges, maturities, or tenders); provided, however, that the Collateral Agent
-------- -------
may, at its option, do so, and any and all reasonable expenses incurred in
connection therewith shall be for the account of the Company. Upon written
request of the Company, the Collateral Agent shall account for any moneys
received by it in respect of any foreclosure on or disposition of the Collateral
owned by the Company.
Section 10. Security Interest Absolute. All rights of the Collateral
--------------------------
Agent and security interests hereunder, and all obligations of the Company
hereunder, shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any provision of this
Agreement, the 13% Notes, the Vendor Financing Agreement or any other
agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or in any
other term of, or any increase in the amount of, all or any of the Secured
Obligations, or any other amendment, waiver or modification of any term of,
or any consent to any departure from any requirement of, this Agreement,
the 13% Notes, the Vendor Financing Agreement or any other agreement or
instrument relating thereto;
(iii) any exchange, release or non-perfection of any security
interest or lien on any other collateral, or any release or amendment or
waiver of any term of any guaranty of, or security for, or consent to
departure from any requirement of any guaranty or other credit support of
or for, all or any of the Secured Obligations; or
(iv) all suretyship defenses and any other circumstance which might
otherwise constitute a defense available to, or a discharge of, a borrower,
a pledgor or a surety.
Section 11. Choice of Law and Venue; Jury Trial Waiver. THE VALIDITY
------------------------------------------
OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE
RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. WHEREVER POSSIBLE, EACH
PROVISION OF THIS AGREEMENT SHALL BE INTERPRETED IN SUCH MANNER AS TO BE
EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AGREEMENT
SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE ONLY TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY AND WITHOUT
INVALIDATING THE REMAINING PROVISIONS OF THIS AGREEMENT; THE PARTIES AGREE THAT
ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE
TRIED AND LITIGATED
13
ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF
NEW YORK OR, AT THE SOLE OPTION OF THE COLLATERAL AGENT, IN ANY OTHER COURT IN
WHICH COLLATERAL AGENT SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH
HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. THE COMPANY AND
THE COLLATERAL AGENT WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
11. TO THE EXTENT PERMITTED BY LAW, THE COMPANY AND COLLATERAL AGENT EACH HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF ANY OF THE DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE COMPANY AND COLLATERAL
AGENT EACH REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
Section 12. Notices. All notices or demands by any party hereto to
-------
the other party and relating to this Agreement shall be sent by telecopy,
promptly confirmed in writing, or nationwide overnight delivery service (with
charges prepaid) and (i) if to the Collateral Agent, addressed to such address
set forth under the signature block for the Collateral Agent as set forth in
this Agreement, or at such other address as the Collateral Agent shall have
specified to the Company in writing and (ii) if to the Company, addressed to it
at 0000 Xxxx Xxxx, Xxxxxxxx, Xxxxxxxx, 00000, Telecopier No: 000-000-0000, or at
such other address as the Company shall have specified to the Collateral Agent
in writing; provided, however, that any such communication to the Company may
also, at the option of the Secured Party making the communication, be delivered
by any other means either to the Company at its address specified above or to
the Chairman of the Board, Chief Executive Officer, Chief Operating Officer,
President, Chief Financial Officer or Secretary of the Company.
Section 13. Amendments and Waivers in Writing.
(a) No amendment or waiver of any provision of this Agreement nor
consent to any departure by the Company therefrom shall in any event be
effective unless the same shall be in writing, and signed by the Collateral
Agent and the Company, and then any such waiver or consent shall only be
effective in the specific instance and for the specific purpose for which given.
(b) As provided in Section 5(f) of this Agreement, the Company shall
not permit any amendment, modification or termination of the QuickBird 2
Insurance without the written consent of the Collateral Agent. The Collateral
Agent shall consent to any proposed amendment or modification to the QuickBird 2
Insurance that constitutes a Permitted Insurance
14
Modification no later than ten days after delivery to the Collateral Agent of an
Officers' Certificate (i) stating that such amendment or modification
constitutes a Permitted Insurance Modification and (ii) stating that such
amendment or modification will not, directly or indirectly, have a material
adverse effect on the value of the Collateral, the rights and benefits of the
Company or the Collateral Agent under the QuickBird 2 Insurance, the Lien of the
Collateral Agent on the Collateral or the rights and benefits of the Collateral
Agent hereunder. The Company will concurrently deliver a copy of such Officers'
Certificate to the 13% Notes Trustee and the Vendor Financing Representative.
Section 14. No Waiver; Remedies.
(a) No failure on the part of the Collateral Agent or any Secured
Party to exercise, and no delay in exercising any right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative, may be exercised
singly or concurrently, and are not exclusive of any remedies provided by law or
any other agreement.
(b) Failure by the Collateral Agent or any other Secured Party at any
time or times hereafter to require strict performance by the Company or any
other Person of any of the provisions, warranties, terms or conditions contained
in this Agreement, the 13% Notes Indenture, the Vendor Financing Agreement or
any other agreements now or at any time or times hereafter executed by the
Company or any such other Person and delivered to the Collateral Agent or any
other Secured Party shall not waive, affect or diminish any right of the
Collateral Agent or any other Secured Party at any time or times hereafter to
demand strict performance thereof, and such right shall not be deemed to have
been modified or waived by any course of conduct or knowledge of the Collateral
Agent or any other Secured Party, or any agent, officer or employee of such
Secured Party.
Section 15. Counterparts; Facsimile Execution. This Agreement may be
---------------------------------
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
facsimile shall be equally as effective as delivery of a manually executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by facsimile also shall deliver a manually executed counterpart
of this Agreement but the failure to deliver a manually executed counterpart
shall not affect the validity, enforceability, and binding effect of this
Agreement.
Section 16. Successors and Assigns. This Agreement and all
----------------------
obligations of the Company hereunder shall be binding upon the legal
representatives, successors and assigns of the Company, and shall, together with
the rights and remedies of the Collateral Agent hereunder, inure to the benefit
of the Collateral Agent for the benefit of the Secured Parties, and their
respective successors and assigns, including any subsequent holder of any
Secured Obligations; provided, however, that the Company may not assign this
-------- -------
Agreement or any rights or duties hereunder without the Collateral Agent's prior
written consent.
15
Section 17. Compensation; Indemnification. The Company shall pay to
-----------------------------
the Collateral Agent the following compensation: (i) $3,500, as an acceptance
fee, payable upon execution hereof and (ii) $5,000 as an annual fee, first
payable upon execution of this Agreement, then on each anniversary thereof. The
reasonable compensation of the Collateral Agent shall not be limited by any law
on compensation of a trustee of an express trust. The Company shall reimburse
the Collateral Agent upon request for all reasonable out-of-pocket expenses and
advances incurred or made by the Collateral Agent. Without limiting the
generality of the foregoing, the Company shall pay, indemnify, hold harmless and
defend the Collateral Agent, the 13% Noteholders, the 13% Notes Trustee, the
holders of the Vendor Financing, the Vendor Financing Representative and their
respective directors, officers, agents and employees for, from and against any
and all claims, actions, costs, damages, obligations, liabilities and expenses,
including reasonable fees and disbursements of counsel and other advisors and
consultants (including any insurance advisors retained to review the QuickBird 2
Insurance, whether prior or subsequent to an Event of Default) retained by them,
arising from this Agreement, the 13% Notes Indenture, the Vendor Financing
Agreement and the Collateral Agent's acceptance of, or performance under, this
Agreement.
Section 18. Effectiveness. Except as provided in the following
-------------
sentence, this Agreement shall be binding and deemed effective when executed by
the Company and the Collateral Agent. The provisions of Section 4(g) shall
become effective upon the delivery to the Collateral Agent of the policy in
respect of the QuickBird 2 Insurance.
Section 19. Severability of Provisions. Each provision of this
--------------------------
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
Section 20. Integration. This Agreement reflects the entire
-----------
understanding of the parties with respect to the subject matter of the security
interest contemplated hereby for the benefit of the Secured Parties and this
Agreement shall not be contradicted or qualified by any other agreement, oral or
written, before the date hereof.
Section 21. Construction. Unless the context of this Agreement
------------
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, and the term "including" is not
limiting. The words "hereof," "herein," "hereby," "hereunder," and other
similar terms refer to this Agreement as a whole and not to any particular
provision of this Agreement.
Section 22. Section Titles. The Section titles contained in this
--------------
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Agreement.
Section 23. Exculpation. No Person in or connected to the Secured
-----------
Parties shall have any obligation or liability whatsoever under any governing
agreement relating to any of the Collateral, or for the obligations of the
Company, by reason of or arising out of this Agreement, nor shall any Person in
or connected to the Secured Parties be required or obligated in any manner to
perform or fulfill any of the obligations of the Company in connection with the
Collateral.
16
Section 24. Termination. This Agreement insofar as it relates to the
-----------
Company and the security interest created and continued hereby by the Company
shall terminate on the earlier to occur of (x) the date of payment in full of
the purchase price for all of the Notes tendered pursuant to all Offers to
Purchase made pursuant to Section 4.12 of the 13% Notes Indenture (as amended by
the Supplemental Indenture) following payment of all of the proceeds of the
QuickBird 2 Insurance to the Collateral Agent and termination of all of the
insurance policies relating to the QuickBird 2 Insurance and (y) the Termination
Date, at which time, at the Company's request and at the Company's cost and
expense, to be paid in advance on or prior to such date or such Termination
Date, the Collateral Agent shall execute and deliver to the Company all UCC
termination statements and similar documents and take such further action that
the Company shall reasonably request to evidence or more fully effect such
termination; provided, however, that the provisions of Section 17 and any other
-------- -------
requirement for reimbursement of expenses and indemnification with respect to
events occurring on or before the Termination Date shall continue in full force
and effect following such Termination Date and the occurrence of the Termination
Date shall not discharge or novate any rights accruing to the Collateral Agent
or any other Secured Party prior thereto.
[Remainder of page intentionally left blank]
--------------------------------------------
17
IN WITNESS WHEREOF, the Company and the Collateral Agent have duly
executed and delivered this Agreement on the date first above written.
EARTHWATCH INCORPORATED,
a Delaware corporation
By_________________________________
Name:
Title:
THE BANK OF NEW YORK, as Collateral Agent
By_________________________________
Name:
Title:
Address for notice:
000 Xxxxxxx Xxxxxx, Xxxxx 00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No: (000) 000-0000
Attention: Corporate Trust Trustee
Administration
18
SCHEDULE I
LOCATION OF RECORDS AND CERTAIN COLLATERAL
Tax Identification Number: 00-0000000
Place of
Business* and
Location of Records
EarthWatch Incorporated
0000 Xxxx Xxxx
Xxxxxxxx, XX 00000
The records in respect of the Collateral will be maintained in the safe
within the Accounting Department at the above location.
_______________
* Indicates chief executive officer if there is more than one place of
business.
SCHEDULE II
Amendments or modifications to the following definitions in the "Definitions"
section of the QuickBird 2 Insurance shall be Permitted Insurance Modifications.
Defined Term
------------
Intentional Ignition
Launch Services Agreement
Launch Services Contractor
Launch Vehicle
Satellite
Satellite Performance Specifications
Terminated Ignition
Underwriting Information
Partial Loss
Partial Loss Amount
Partial Loss Fraction
Projected Commercial Value
Achieved Commercial Value
Design Commercial Value
Design Lifetime
Remaining Lifetime
Bus Throughput
Instrument Output
Normalized Size
EXHIBIT C
ACKNOWLEDGEMENT
[Name and address of insurance company(ies)]
Attention: [_______________]
EarthWatch Incorporated
Reference is made to the "EarthWatch, Incorporated - QuickBird Launch
and In-Orbit Operations Insurance Policy" (Policy No. ____________) in respect
of the QuickBird 2 Satellite (the "QuickBird 2 Insurance") issued by you in
favor of EarthWatch Incorporated (the "Company").
We hereby give you notice that all of the Company's right, title and
interest in and to the QuickBird 2 Insurance, and all proceeds relating thereto,
have been assigned and pledged (such assignment and pledge, the "Senior
Collateral Pledge and Security") in favor of The Bank of New York, as collateral
agent (the "Senior Collateral Agent") for the holders of the Company's 13%
Senior Discount Notes due 2007 and any holders of the Vendor Financing (as
defined therein).
The Senior Collateral Agent is recorded as sole loss payee of the
QuickBird 2 Insurance.
Unless and until you have received written notification from the
Senior Collateral Agent instructing you that the Senior Collateral Pledge and
Security has terminated, you agree that you shall pay all amounts payable by you
under or in respect of the QuickBird 2 Insurance to the Senior Collateral Agent,
by deposit to such account as the Senior Collateral Account notifies you in
writing.
Please indicate your acknowledgement and agreement to the above by
signing where indicated below and returning this signed letter to [___________].
Very Truly Yours, Very Truly Yours,
THE BANK OF NEW YORK EARTHWATCH INCORPORATED
as Senior Collateral Agent
__________________________ ________________________
Name: Name:
Title: Title:
ACKNOWLEDGEMENT
We hereby acknowledge and agree to the above:
[Insurance company(ies)]
___________________________
Name:
Title:
2
EXHIBIT H-2
JUNIOR COLLATERAL PLEDGE AND SECURITY AGREEMENT
Dated as of _______________, 2001
Between
-------
EARTHWATCH INCORPORATED
as grantor
-- -------
and
THE BANK OF NEW YORK
as collateral agent
-- ---------- -----
JUNIOR COLLATERAL PLEDGE AND SECURITY AGREEMENT
JUNIOR COLLATERAL PLEDGE AND SECURITY AGREEMENT, dated as of ____ __,
2001 (this "Agreement"), made by EarthWatch Incorporated (the "Company"), a
Delaware corporation having its principal office at 0000 Xxxx Xxxx, Xxxxxxxx
Xxxxxxxx 00000, in favor of 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
(referred to herein as the "Collateral Agent") for itself and for the ratable
benefit of the Series A Preferred Stockholders and the Series B Preferred
Stockholders referred to below.
BACKGROUND
A. The Company has entered into the Recapitalization Agreement dated
as of April 2, 2001 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Recapitalization Agreement") among the Company,
Xxxxxx Xxxxxxx & Co., Incorporated, and the other parties thereto.
B. The Company has assigned, pledged and granted a security interest
in all of its right, title and interest in and to the QuickBird 2 Insurance in
favor of The Bank of New York, as collateral agent (the "First Priority Pledge
Collateral Agent") for the holders of the 13% Notes and the Vendor, pursuant to
a Collateral Pledge and Security Agreement dated as of the date hereof (the
"First Priority Pledge Agreement").
C. Pursuant to Section 5.4 of the Recapitalization Agreement, the
Company is required to cause the QuickBird 2 Insurance to be assigned, pledged
and transferred to the Collateral Agent, as security for the Series A Preferred
Stock Obligations and the Series B Preferred Stock Obligations.
D. The assignment, pledge and security interest granted hereunder is
to be junior to the assignment, pledge and security interests created under the
First Priority Pledge Agreement.
E. It is the intent of the parties that any distributions in respect
of the Collateral, including any distributions in respect of payments to the
Collateral Agent under the QuickBird 2 Insurance shall be distributed in
accordance with Section 8(d) hereof.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Company, the Company hereby covenants and agrees with, and
(in Section 4 below) represents and warrants to the Collateral Agent for the
benefit of the Secured Parties as follows:
Section 1. Defined Terms. Capitalized terms that are used herein and
-------------
not otherwise defined herein shall have the meanings ascribed to such terms in
the 13% Notes Indenture and the Recapitalization Agreement; provided, however,
that if such a term is defined in both such documents, the definition contained
in the Recapitalization Agreement shall govern. In addition to the terms
defined in the introductory and background paragraphs of this Agreement, the
following terms shall have the meanings indicated below:
"Collateral" means all of the following, whether now owned or
hereafter acquired:
(i) the QuickBird 2 Insurance;
(ii) all accounts, contract rights, instruments, investment property
and general intangibles in respect of the QuickBird 2 Insurance, including
without limitation any premiums, unearned premiums and premium refunds; and
(iii) to the extent not otherwise included, all Proceeds of each of
the foregoing and all accessions to, substitutions and replacements for,
and proceeds, issues, returns, rents, profits and products of, each of the
foregoing.
"Collateral Agent Expenses" means the costs and expenses incurred by
the Collateral Agent in connection with the sale or other disposition of the
Collateral and any and all other fees, expenses or other amounts payable to the
Collateral Agent and its agents pursuant to this Agreement, including, without
limitation, expenses of the Collateral Agent and its agents, including the fees
and expenses of its outside counsel and internal counsel, and all expenses,
liabilities and advances made or incurred by the Collateral Agent in connection
therewith or pursuant to Section 7 hereof and amounts payable pursuant to
Section 17 hereof.
"Event of Default" means a failure by the Company to comply with any
Series A Preferred Stock Obligation or Series B Preferred Stock Obligation or
any default by the Company of any obligation hereunder.
"Excess Proceeds Distributions" shall have the meaning ascribed to
such term in Section 8(d) hereof.
"Filing Offices" means (i) the Secretary of State of Delaware and (ii)
the Secretary of State of Colorado.
"First Priority Secured Obligations" means the "Secured Obligations"
under and as defined in the First Priority Pledge Agreement.
"Officer" means, with respect to the Company, (i) the Chairman of the
Board, the Chief Executive Officer, the President or any other Director of the
Company or (ii) the Chief Financial Officer, the Treasurer or any Assistant
Treasurer, the Company Secretary or any Company Assistant Secretary.
"Officers' Certificate" means a certificate signed by one Officer
listed in clause (i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof; provided, however, that any such certificate may
-------- -------
be signed by any two of the Officers listed in clause (i) of the definition
thereof in lieu of being signed by one Officer listed in clause (i) of the
definition thereof and one Officer listed in clause (ii) of the definition
thereof.
"Opinions of Counsel" means written opinions substantially in the
forms set forth in Exhibits I-1 and I-2 to the Recapitalization Agreement.
2
"Permitted Insurance Modification" means the following particular
specified amendments and modifications to the QuickBird 2 Insurance:
(a) amendments and modifications to cure any ambiguity, defect or
inconsistency in the QuickBird 2 Insurance or to increase the rights and
benefits in favor of the Collateral Agent in respect of the QuickBird 2
Insurance; provided that such amendments or modifications shall not,
-------------
directly or indirectly, adversely affect the interests of the Collateral
Agent or any other Secured Party in any material respect:
(b) amendments and modifications to the launch schedule set forth in
the declarations section of the QuickBird 2 Insurance; and
(c) amendments and modifications in the "Definitions" section of the
QuickBird 2 Insurance which only amend or modify the definitions of the
specific defined terms set forth on Schedule II attached hereto or
substantially equivalent defined terms in the QuickBird 2 Insurance.
"Permitted Lien" means the Liens created under or evidenced by, the
First Priority Pledge.
"Proceeds" means "proceeds," as such term is defined in Section 9-
306(1) of the UCC, and, in any event, shall include, without limitation, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Company or the Collateral Agent from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatsoever) made or due and
payable to the Company from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any Person acting under color of
governmental authority), and (iii) any and all other amounts from time to time
paid or payable in respect of any of the Collateral.
"Proceeds Distributions" shall have the meaning ascribed to such term
in Section 8(d) hereof.
"QuickBird 2 Insurance" means the insurance policy or policies
relating to the Company's "QuickBird 2" satellite, in substantially the form or
forms attached as Exhibit A hereto, as such policy or policies may from time to
time be amended, modified, supplemented or replaced.
"Returned Insurance Premiums" shall have the meaning ascribed to such
term in Section 8(g) hereof.
"Secured Obligations" means, collectively, the Series A Preferred
Stock Obligations and the Series B Preferred Stock Obligations.
"Secured Parties" means the Collateral Agent, the Series A Preferred
Stockholders and the Series B Preferred Stockholders.
3
"Series A Preferred Stockholders" means the holders from time to time
of the Series A Preferred Stock.
"Series A Preferred Stockholders' Representative" means any
representative for the Series A Preferred Stockholders, as notified in writing
from time to time to the Collateral Agent and the Company.
"Series B Preferred Stockholders" means the holders from time to time
of the Series B Preferred Stock.
"Series B Preferred Stockholders' Representative" means any
representative for the Series B Preferred Stockholders, as notified in writing
from time to time to the Collateral Agent and the Company.
"Series A Preferred Stock Obligations" means the obligations of the
Company under Article IV, Section B.5(b) of the Company's Certificate of
Incorporation.
"Series B Preferred Stock Obligations" means the obligations of the
Company under Article IV, Section C.5(b) of the Company's Certificate of
Incorporation.
"Termination Date" means the latest scheduled date of termination of
any insurance policy with respect to the QuickBird 2 Insurance; provided that
-------- ----
there has been no event of loss under the QuickBird 2 Insurance or other event
causing payment under the QuickBird 2 Insurance.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, however, in the event
-------- -------
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Collateral Agent's security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
Section 2. Assignment and Grant of Security Interest; Priority. (a)
---------------------------------------------------
As collateral security for the full and prompt payment when due (whether at
stated maturity, by acceleration or otherwise) of, and the performance of, all
of the Secured Obligations, the Company hereby assigns, conveys, mortgages,
pledges, hypothecates and transfers to the Collateral Agent, and hereby grants
to the Collateral Agent, for itself and the ratable benefit of the Secured
Parties, a continuing security interest in all of the Company's right, title and
interest in, to and under the Collateral. This Agreement secures the prompt and
complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of all the Secured Obligations ratably.
(b) The assignment, conveyance, mortgage, pledge, hypothecation,
transfer and security interests created hereby shall be junior to the
assignment, conveyance, mortgage, pledge, hypothecation, transfer and security
interests created pursuant to the First Priority Pledge
4
Agreement. Neither the Company nor the Collateral Agent shall take any action
inconsistent with this Section 2(b).
(c) Notwithstanding anything herein to the contrary:
(i) in the event that the Collateral Agent shall receive any proceeds
in respect of the Collateral (including, without limitation, any payment
under or in respect of the QuickBird 2 Insurance) (other than pursuant to
Section 8(d)Finally of the First Priority Pledge Agreement) before all of
-------
the First Priority Secured Obligations are indefeasibly paid in full in
cash, then and in such event the Collateral Agent shall forthwith pay over
and deliver to the First Priority Pledge Collateral Agent all of such
proceeds for application to the payment of the First Priority Secured
Obligations in accordance with the terms of the First Priority Pledge
Agreement; and
(ii) until the First Priority Secured Obligations are indefeasibly
paid in full in cash, the Collateral Agent shall not exercise any legal
remedy or take any action hereunder to exercise or enforce any assignment,
conveyance, mortgage, pledge, hypothecation, transfer or security interest
created by this Agreement.
Section 3. Rights of the Collateral Agent; Limitations on the
--------------------------------------------------
Collateral Agent's Secured Obligations. (a) It is expressly agreed by the
--------------------------------------
Company that, anything herein to the contrary notwithstanding, the Company shall
remain liable under each of its contracts to observe and perform all the
conditions and obligations to be observed and performed by it thereunder and the
Company shall perform all of its duties and obligations thereunder, all in
accordance with and pursuant to the terms and provisions of each such contract.
Neither the Collateral Agent nor any other Secured Party shall have any
obligation or liability under any contract by reason of or arising out of this
Agreement or the granting of a security interest in any contract (including the
QuickBird 2 Insurance) to the Collateral Agent or the receipt by the Collateral
Agent or any other Secured Party of any payment relating to any such contract
pursuant hereto, nor shall the Collateral Agent nor any other Secured Party be
required or obligated in any manner to perform or fulfill any of the obligations
of the Company under or pursuant to any contract, or to make any payment, or to
make any inquiry as to the nature or the sufficiency of any payment received by
it or the sufficiency of any performance by any party under any contract, or to
present or file any claim, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
(b) The Company hereby authorizes the Collateral Agent to collect
directly from any Person any proceeds in respect of the Collateral, including,
without limitation, any payments under or in respect of the QuickBird 2
Insurance. In the event that the Company receives any amount or other proceeds
in respect of the QuickBird 2 Insurance or other Collateral from the relevant
insurance company or any other Person other than the Collateral Agent in
accordance with this Agreement, the Company shall, subject to the terms of the
First Priority Pledge Agreement, cause such amounts to be held in trust for the
benefit of the Collateral Agent and immediately turned over to the Collateral
Agent in the same form received with appropriate endorsements.
5
Section 4. Representations and Warranties. The Company hereby
------------------------------
represents and warrants to the Collateral Agent, as of the date hereof, as
follows:
(a) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene any
provision of applicable law or statute or the organizational documents of the
Company or any material agreement or other material instrument binding upon the
Company or any of its subsidiaries or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
of its subsidiaries, or result in the creation or imposition of any Lien on any
assets of the Company, except for the security interests granted under this
Agreement; no consent, approval, authorization or order of, or qualification
with, or other action by, any governmental or regulatory body or agency or any
third party is required (i) for the execution, delivery or performance by the
Company of this Agreement, (ii) for the grant by the Company of the security
interest granted hereby, for the assignment and pledge by the Company of the
Collateral pursuant to this Agreement, (iii) for the perfection and maintenance
of the assignment, pledge and security interest created hereby, or (iv) except
for any such consents, approvals, authorizations or orders required to be
obtained by the Collateral Agent (or the Secured Parties) for reasons other than
the consummation of the transactions contemplated by the Recapitalization
Agreement, for the exercise by the Collateral Agent of the rights provided for
in this Agreement or the remedies in respect of the Collateral pursuant to this
Agreement.
(b) This Agreement has been duly authorized, validly executed and
delivered by the Company and assuming the due authorization, execution and
delivery thereof by the Collateral Agent, constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except as (i) the enforceability hereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, preference, reorganization, moratorium or
similar laws now or hereafter in effect relating to or affecting creditors'
rights or remedies generally, (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability, (iii) the exculpation
provisions and rights to indemnification hereunder may be limited by public
policy considerations and (iv) the waiver of rights and defenses contained in
Section 8(c) or Section 11 may be limited by applicable law.
(c) There are no legal or governmental proceedings pending or, to the
best of the Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or any
such subsidiary is subject that would materially adversely affect the power or
ability of the Company to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby.
(d) The Company is the sole owner of each item of the Collateral in
which it purports to grant a security interest hereunder, having good title
thereto, free and clear of any and all Liens, except for the Permitted Lien and
the assignment, security interest and other rights granted pursuant to this
Agreement.
(e) To the Company's knowledge, no effective security agreement,
financing statement, equivalent security or lien instrument or continuation
statement covering all or any part of the Collateral is on file or of record in
any public office, except such as may have been
6
filed by the Company in favor of the Collateral Agent pursuant to this Agreement
or in favor of the First Priority Pledge Collateral Agent pursuant to the First
Priority Pledge Agreement.
(f) The Company's place of business (or the chief executive office if
it has more than one place of business), the places where its records concerning
the Collateral are kept is set forth on Schedule I attached hereto.
(g) True and correct copies of the policies relating to the QuickBird
2 Insurance are attached as Exhibit A hereto, which policies are in full force
and effect.
(h) Upon the occurrence of (i) the execution and delivery of this
Agreement by the Collateral Agent and the Company, (ii) the procurement of the
QuickBird 2 Insurance in accordance with this Agreement, (iii) the filing of a
copy of this Agreement with the Filing Offices, (iv) the filing of a UCC
financing statement describing the Collateral with the Filing Offices, (v) the
delivery, in accordance with Section 5(a)(ii), to the Collateral Agent of the
original insurance policy in respect of the QuickBird 2 Insurance, (vi) the
notation, in accordance with Section 5(a)(ii), of the Collateral Agent as sole
loss payee under the insurance policy in respect of the QuickBird 2 Insurance
and (vii) receipt by the Collateral Agent of a consent and acknowledgement by
each insurance company issuing the QuickBird 2 Insurance to the security
interests created hereby, such consent and acknowledgment either to be contained
in the relevant insurance policy or to be in the form of Exhibit C hereto (with
such modifications as the Collateral Agent agrees), the Collateral Agent shall
have a first priority, perfected security interest in the Collateral, free and
clear of any and all Liens.
Section 5. Covenants. The Company covenants and agrees with the
---------
Collateral Agent that from and after the date hereof and until the Secured
Obligations are fully and indefeasibly satisfied in cash or the Termination Date
otherwise occurs:
(a) Further Documentation; Pledge of Instruments. (i) At any time
--------------------------------------------
and from time to time, at the sole expense of the Company, the Company will
promptly and duly execute and deliver any and all such further instruments and
documents and take such further action as may be necessary and desirable to
obtain the full benefits of this Agreement and of the rights and powers herein
granted, including, without limitation, securing all consents and approvals
necessary or appropriate for the assignment of, or grant of a security interest
in, the QuickBird 2 Insurance (or any other contract constituting Collateral
held by the Company or in which the Company has any rights not heretofore
assigned) to the Collateral Agent, the execution and filing of any financing or
continuation statements under the UCC or any other required filings with respect
to the Liens, assignments and security interests granted hereby and the delivery
to the Collateral Agent of any Collateral constituting instruments or investment
securities under the UCC. Without limiting the foregoing, the Company will
perform all acts as may be necessary or desirable to create and maintain in
favor of the Collateral Agent a security interest in the Collateral. To the
extent permitted by applicable law, the Company authorizes the Collateral Agent
to sign any financing or continuation statement instead of the Company.
(ii) Immediately following the earlier of termination of the First
Priority Pledge Agreement and indefeasible payment in full in cash of the First
Priority Secured Obligations (by application of collateral therefor or
otherwise), the Company shall (i) deliver to
7
the Collateral Agent the original insurance policy in respect of the QuickBird 2
Insurance and (ii) use its best efforts to cause the Collateral Agent to be
noted as sole loss payee under the insurance policy in respect of the QuickBird
2 Insurance.
(b) Limitation on Liens on Collateral. The Company will not create,
---------------------------------
permit or suffer to exist, and will defend the Collateral against and take such
other action as is necessary to remove, any Lien on the Collateral (other than
the Permitted Lien and the Lien in favor of the Collateral Agent created
hereby), and will defend the right, title and interest of the Collateral Agent
in and to any of the Company's rights in the Collateral and in and to the
Proceeds thereof constituting Collateral against the claims and demands of all
Persons whomsoever.
(c) Maintenance of Insurance. The Company shall take all actions
------------------------
necessary to continue the QuickBird 2 Insurance in full force and effect
(including payment of all premiums) and, after the earlier of termination of the
First Priority Pledge Agreement and indefeasible payment in full in cash of the
First Priority Secured Obligations, to cause the Collateral Agent to be the sole
loss payee on the QuickBird 2 Insurance.
(d) Limitations on Disposition. The Company will not sell, assign,
--------------------------
lease, transfer or otherwise dispose of any of the Collateral or any interest
therein to any Person other than the Collateral Agent and the First Priority
Collateral Agent under the terms of the First Priority Pledge Agreement.
(e) Notices. The Company will advise the Collateral Agent promptly in
-------
writing, in reasonable detail, (i) of any material Lien or claim made or
asserted against any of the Collateral (other than the Permitted Lien), (ii) of
any material change in the composition of the Collateral, (iii) of any claim
under the QuickBird 2 Insurance or any event causing the payment of any sums
(including return of premium) in respect of the QuickBird 2 Insurance and (iv)
of the occurrence of any other event which could reasonably be expected to have
a material adverse effect on the aggregate value of the Collateral or in the
security interests created hereunder. The Company will promptly provide the
Collateral Agent with copies of any and all notices received from or provided to
any insurance company or agent in respect of the QuickBird 2 Insurance. Without
limiting the generality of the foregoing, the Company will promptly provide the
Collateral Agent, the Series A Preferred Stockholders' Representative and the
Series B Preferred Stockholders' Representative with any information regarding
the QuickBird 2 Insurance as such Person shall reasonably request.
(f) QuickBird 2 Insurance. The Company shall not permit any
---------------------
amendment, modification or termination of the QuickBird 2 Insurance, or any
settlement in respect of any claim thereunder, without the written consent of
the Collateral Agent. The Company shall comply with all terms and conditions of
the QuickBird 2 Insurance and will act promptly and diligently in the
enforcement of all rights, the protection of all benefits and the prosecution of
any claims under the QuickBird 2 Insurance. In respect of the QuickBird 2
Insurance, the Company shall not permit there to be (i) any loss payee, other
than the First Priority Pledge Collateral Agent and, after the earlier of
termination of the First Priority Pledge Agreement and indefeasible payment in
full in cash of the First Priority Secured Obligations, the Collateral Agent or
(ii) any insured party or additional insured party, other than the Company. On
and after the earlier of termination of the First Priority Pledge Agreement and
indefeasible payment in full
8
in cash of the First Priority Secured Obligations, the Company shall not permit
there to be any original policy in respect of the QuickBird 2 Insurance other
than any such original which is delivered to the Collateral Agent.
(g) Continuous Perfection. The Company will not change its name,
---------------------
identity or corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith misleading within the
meaning of Section 9-402(7) of the UCC (or any other then applicable provision
of the UCC) unless the Company shall have given the Collateral Agent at least 60
days' prior written notice thereof and shall have taken all action (or made
arrangements to take such action substantially simultaneously with such change
if it is impossible to take such action in advance) necessary or reasonably
requested by the Collateral Agent to amend such financing statement or
continuation statement so that it is not misleading. The Company will not
change its place of incorporation, place of business or its chief executive
office (if it has more than one place of business) or remove its records from
any location, unless it gives the Collateral Agent at least 60 days' prior
written notice thereof and has taken such action as is necessary to cause the
security interest of the Collateral Agent in the Collateral to continue to be
perfected.
Section 6. The Collateral Agent's Appointment as Attorney-in-Fact.
------------------------------------------------------
(a) The Company hereby irrevocably constitutes and appoints the Collateral
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Company and in the name of the Company or in its own
name, from time to time in the Collateral Agent's discretion, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute and deliver any and all documents and instruments which the
Collateral Agent may deem necessary or desirable to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing, hereby
gives the Collateral Agent the power and right, but not the duty, on behalf of
the Company, without notice to or assent by the Company to do the following:
(i) to ask, demand, collect, receive and give acquittances and
receipts for any and all moneys due and to become due under any Collateral
and, in the name of the Company or in its own name or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Collateral and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Collateral Agent for the purpose of collecting any and all such moneys due
under any Collateral whenever payable and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Collateral Agent for the purpose of collecting
any and all such moneys due under any Collateral whenever payable;
(ii) to pay or discharge taxes, Liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral and
to pay any required insurance premiums and related costs and expenses; and
(iii) (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due, and to become due
thereunder, directly to the Collateral Agent or as the Collateral Agent
shall direct; (B) to receive payment of and
9
receipt for any and all moneys, claims and other amounts due, and to become
due at any time, in respect of or arising out of any Collateral; (C) to
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, general intangibles,
instruments and other items constituting or relating to the Collateral; (D)
to commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Collateral or
any part thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought against
the Company with respect to any Collateral; (F) to settle, compromise or
adjust any suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as the Collateral Agent may
deem appropriate; and (G) generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Collateral Agent were the absolute owner
thereof for all purposes, and to do, at the Collateral Agent's option and
the Company's expense, at any time, or from time to time, all acts and
things which the Collateral Agent reasonably deems necessary to protect,
preserve or realize upon the Collateral and the Collateral Agent's Lien
therein, in order to effect the intent of this Agreement, all as fully and
effectively as the Company might do.
(b) The Collateral Agent agrees that, except upon the occurrence and
during the continuance of any Event of Default or default hereunder, it will
forbear from exercising the power of attorney or any rights granted to the
Collateral Agent pursuant to this Section 6; provided that the Collateral Agent
--------
shall, at the direction of the Series A Preferred Stockholders' Representative
or the Series B Preferred Stockholders' Representative, exercise any such power
of attorney or other rights notwithstanding the absence of an Event of Default
or default hereunder if such exercise is necessary or desirable for the grant
to, or maintenance in favor of, the Collateral Agent of the first priority
security interest in the Collateral intended by this Agreement. The Company
hereby ratifies, to the extent permitted by law, all that any said attorney
shall lawfully do or cause to be done by virtue hereof. The power of attorney
granted pursuant to this Section 6, being coupled with an interest, shall be
irrevocable until the Secured Obligations are indefeasibly paid in full in cash.
(c) The powers conferred on the Collateral Agent hereunder are solely
to protect the Collateral Agent's interests in the Collateral and shall not
impose any duty or obligation upon it to exercise any such powers. The
Collateral Agent shall be accountable only for amounts that it actually receives
as a result of the exercise of such powers and neither it nor any of its
officers, directors, employees or agents shall be responsible to the Company for
any act or failure to act, except for its own gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction. The
Collateral Agent shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured it.
(d) The Company also authorizes the Collateral Agent, at any time
after the earlier of termination of the First Priority Pledge Agreement and
indefeasible payment in full in cash of the First Priority Secured Obligations
and from time to time thereafter, including, but not
10
limited to, upon the occurrence and during the continuance of an Event of
Default, (i) to communicate in its own name with any party to any contract
constituting Collateral with regard to the assignment of the right, title and
interest of the Company in and under the Contracts constituting Collateral
hereunder and other matters relating thereto and (ii) to execute, in connection
with the sale or other realization provided for in Section 8 hereof, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral. Nothing in this agreement shall be construed to limit
the power of the Collateral Agent at any time after the earlier of termination
of the First Priority Pledge Agreement and indefeasible payment in full in cash
of the First Priority Secured Obligations and from time to time thereafter to
communicate with any insurance company or any agent in respect of the QuickBird
2 Insurance or otherwise exercise any rights or powers granted to it under the
QuickBird 2 Insurance.
Section 7. Performance by the Collateral Agent of the Company's
----------------------------------------------------
Obligations. If the Company fails to perform or comply with any of its
-----------
agreements contained herein, and the Collateral Agent shall itself perform or
comply, or otherwise cause performance or compliance, with such agreement, the
expenses of the Collateral Agent incurred in connection with such performance or
compliance, together with interest thereon at the highest rate then in effect in
respect of the Secured Obligations, shall be payable by the Company to the
Collateral Agent on demand and shall constitute Secured Obligations secured
hereby.
Section 8. Remedies; Rights Upon an Event of Default; Allocation and
Payment of Proceeds Distributions; Special Provisions Regarding Return of
Premiums Under QuickBird 2 Insurance. . Subject to Section 2(c)(ii), if an
Event of Default shall occur and be continuing, the Collateral Agent may
exercise, in addition to all other rights and remedies granted to it in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Secured Obligations, all rights and remedies of a secured party
under the UCC and other applicable law. Without limiting the generality of the
foregoing, the Company expressly agrees that in any such event the Collateral
Agent, without demand of performance or other demand, advertisement or notice of
any kind (except the notice specified below of time and place of public or
private sale) to or upon the Company or any other Person (all and each of which
demands, advertisements and/or notices are hereby expressly waived to the
maximum extent permitted by the UCC and other applicable law), may forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange or broker's board or any of the
Collateral Agent's offices or elsewhere at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Collateral Agent shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of said Collateral so sold, free of any right or
equity of redemption, which equity of redemption the Company hereby releases
(subject as aforesaid). The Company further agrees on and after the earlier of
termination of the First Priority Pledge Agreement and indefeasible payment in
full in cash of the First Priority Secured Obligations, at the Collateral
Agent's request, to assemble the Collateral and make it available to the
Collateral Agent at places which the Collateral Agent shall reasonably select,
whether at the Company's premises or elsewhere. The Collateral Agent shall
apply or hold the net proceeds of any such collection, recovery
11
receipt, appropriation, realization or sale, as provided in Section 8(d) hereof,
the Company remaining liable for any deficiency remaining unpaid after such
application, and only after so paying over such net proceeds to the holders of
Secured Obligations to the extent provided in Section 8(d) and after the payment
by the Collateral Agent of any other amount required by any provision of law,
including Section 9-504(1)(c) of the UCC, need the Collateral Agent account for
the surplus, if any, to the Company. To the maximum extent permitted by
applicable law, the Company waives all claims, damages, and demands against the
Collateral Agent arising out of any repossession, retention or sale of the
Collateral. The Company agrees that the Collateral Agent need not give more than
ten days' notice (which notification shall be deemed given when delivered on an
overnight basis, postage prepaid, addressed to the Company at its address
referred to in Section 12) of the time and place of any public sale or of the
time after which a private sale may take place and that such notice is
reasonable notification of such matters. The Company shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which the Collateral Agent is entitled, the
Company also being liable for the fees and disbursements of any attorneys
employed by the Collateral Agent to collect such deficiency.
(b) The Company also agrees to pay all costs of the Collateral Agent,
including, without limitation, fees and disbursements of Collateral Agent's
attorneys, incurred in connection with the enforcement of any of its rights and
remedies under this Agreement.
(c) The Company hereby waives presentment, demand, protest or any
notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Agreement or any Collateral.
(d) Subject to Section 2(c)(i) and clause (f) below, any cash held or
received by the Collateral Agent as Collateral and all cash proceeds received by
the Collateral Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral (including, without
limitation, any payment in respect of the QuickBird 2 Insurance) (collectively,
"Proceeds Distributions"), shall be applied, distributed or held by the
----------------------
Collateral Agent, whether or not there then exists any Default or Event of
Default, as follows:
First, Proceeds Distributions shall be applied to the payment of and
-----
reserve for Collateral Agent Expenses;
Second, Proceeds Distributions shall be reserved for the benefit of
------
the appropriate Secured Party to be applied equally and ratably to the
Series A Preferred Stock Obligations and the Series B Preferred Stock
Obligations;
Finally, after reserving an amount sufficient for the payment and
-------
reserve in full in cash of all of the Secured Obligations as set forth
above in paragraph "First" and "Second" of clause (d) of this Section 8,
any remaining Proceeds Distributions ("Excess" Proceeds Distributions")
shall be distributed by the Collateral Agent to the Company, or its
successors or assigns, or to whomsoever may be lawfully entitled to receive
the same as a court of competent jurisdiction may direct.
12
(e) It is the intent, as a matter of timing and accommodation only,
that any Excess Proceeds Distributions shall be distributed to the Company or
otherwise in accordance with paragraph "Finally" of clause (d) of Section 8
above substantially concurrently with the setting aside or reserve of Proceeds
Distribution sufficient for the payment of the Secured Obligations as provided
in paragraphs "First" and "Second" of such clause (d); provided that nothing
-------- ----
shall diminish the prior and senior interest of the Secured Creditors in the
Collateral and the Proceeds Distributions to the extent of the Secured
Obligations as contemplated herein. In the event that the Secured Obligations
are not or have not been paid in full as contemplated by clause (d) of Section 8
above, notwithstanding the distribution of Proceeds Distributions to the
Company, the Company agrees to promptly return or cause the return of such
Proceeds Distributions to the Collateral Agent to the extent necessary to so
fully provide for the Secured Obligations as contemplated herein.
(f) Subject to Section 2(c)(i) and the following sentence, in the
event that the Collateral Agent receives any Proceeds Distributions that
constitute the return of insurance premiums ("Returned Insurance Premiums")
under the QuickBird 2 Insurance in accordance with the terms thereof, the
Collateral Agent shall hold all Returned Insurance Premiums for a period of 180
days following receipt before distributing such amounts in accordance with
clause (d) of this Section 8. In the event that the Company delivers an
Officers' Certificate to the Collateral Agent prior to the expiration of such
180 day period which (i) states that such Returned Insurance Premiums shall be
used directly for the payment of premiums for QuickBird 2 Insurance complying in
all respects with the provisions of Section 4.10(b) of the 13% Notes Indenture
and (ii) provides instructions for the payment of such premiums directly to the
insurer(s) or their agents, the Collateral Agent shall promptly pay such
Returned Insurance Premiums in accordance with such payment instructions.
Section 9. Limitation on the Collateral Agent's Duty in Respect of
-------------------------------------------------------
Collateral. The Collateral Agent shall not have any duty as to any Collateral
----------
in its possession or control or in the possession or control of any agent or
nominee of it or any income thereon or as to the preservation of rights against
prior parties or any other rights pertaining thereto, except that the Collateral
Agent shall use reasonable care with respect to the Collateral in its possession
or under its control. In accordance with Section 9-207 of the UCC, the
Collateral Agent shall be deemed to have used reasonable care if it observes
substantially the same standard of care with respect to the custody or
preservation of the Collateral as it observes with respect to similar assets
owned by the Collateral Agent. Without limiting the generality of the
foregoing, the Collateral Agent shall not be under any obligation to take any
steps to preserve rights in the Collateral against any other parties, to sell
the same if it threatens to decline in value, or to exercise any rights
represented thereby (including rights with respect to calls, conversions,
exchanges, maturities, or tenders); provided, however, that the Collateral Agent
-------- -------
may, at its option, do so, and any and all reasonable expenses incurred in
connection therewith shall be for the account of the Company. Upon written
request of the Company, the Collateral Agent shall account for any moneys
received by it in respect of any foreclosure on or disposition of the Collateral
owned by the Company.
Section 10. Security Interest Absolute. All rights of the Collateral
--------------------------
Agent and security interests hereunder, and all obligations of the Company
hereunder, shall be absolute and unconditional irrespective of:
13
(i) any lack of validity or enforceability of any provision of this
Agreement, or any other agreement, certificate or instrument relating to
the Series A Preferred Stock Obligations or the Series B Preferred Stock
Obligations;
(ii) any change in the time, manner or place of payment of, or in any
other term of, or any increase in the amount of, all or any of the Secured
Obligations, or any other amendment, waiver or modification of any term of,
or any consent to any departure from any requirement of, this Agreement or
any other agreement, certificate or instrument relating to the Series A
Preferred Stock Obligations or the Series B Preferred Stock Obligations;
(iii) any exchange, release or non-perfection of any security
interest or lien on any other collateral, or any release or amendment or
waiver of any term of any guaranty of, or security for, or consent to
departure from any requirement of any guaranty or other credit support of
or for, all or any of the Secured Obligations; or
(iv) all suretyship defenses and any other circumstance which might
otherwise constitute a defense available to, or a discharge of, a borrower,
a pledgor or a surety.
Section 11. Choice of Law and Venue; Jury Trial Waiver. THE VALIDITY
------------------------------------------
OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE
RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. WHEREVER POSSIBLE, EACH
PROVISION OF THIS AGREEMENT SHALL BE INTERPRETED IN SUCH MANNER AS TO BE
EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AGREEMENT
SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE ONLY TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY AND WITHOUT
INVALIDATING THE REMAINING PROVISIONS OF THIS AGREEMENT; THE PARTIES AGREE THAT
ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE
TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY
OF NEW YORK, STATE OF NEW YORK OR, AT THE SOLE OPTION OF THE COLLATERAL AGENT,
IN ANY OTHER COURT IN WHICH COLLATERAL AGENT SHALL INITIATE LEGAL OR EQUITABLE
PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN
CONTROVERSY. THE COMPANY AND THE COLLATERAL AGENT WAIVE, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 11. TO THE EXTENT PERMITTED BY LAW, THE
COMPANY AND COLLATERAL AGENT EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS,
14
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY
CLAIMS. THE COMPANY AND COLLATERAL AGENT EACH REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Section 12. Notices. All notices or demands by any party hereto to
-------
the other party and relating to this Agreement shall be sent by telecopy,
promptly confirmed in writing, or nationwide overnight delivery service (with
charges prepaid) and (i) if to the Collateral Agent, addressed to such address
set forth under the signature block for the Collateral Agent as set forth in
this Agreement, or at such other address as the Collateral Agent shall have
specified to the Company in writing and (ii) if to the Company, addressed to it
at 0000 Xxxx Xxxx, Xxxxxxxx, Xxxxxxxx, 00000, Telecopier No: 000-000-0000, or at
such other address as the Company shall have specified to the Collateral Agent
in writing; provided, however, that any such communication to the Company may
also, at the option of the Secured Party making the communication, be delivered
by any other means either to the Company at its address specified above or to
the Chairman of the Board, Chief Executive Officer, Chief Operating Officer,
President, Chief Financial Officer or Secretary of the Company.
Section 13. Amendments and Waivers in Writing.
---------------------------------
(a) No amendment or waiver of any provision of this Agreement nor
consent to any departure by the Company therefrom shall in any event be
effective unless the same shall be in writing, and signed by the Collateral
Agent and the Company, and then any such waiver or consent shall only be
effective in the specific instance and for the specific purpose for which given.
(b) As provided in Section 5(f) of this Agreement, the Company shall
not permit any amendment, modification or termination of the QuickBird 2
Insurance without the written consent of the Collateral Agent. The Collateral
Agent shall consent to any proposed amendment or modification to the QuickBird 2
Insurance that constitutes a Permitted Insurance Modification no later than ten
days after delivery to the Collateral Agent of an Officers' Certificate (i)
stating that such amendment or modification constitutes a Permitted Insurance
Modification and (ii) stating that such amendment or modification will not,
directly or indirectly, have a material adverse effect on the value of the
Collateral, the rights and benefits of the Company or the Collateral Agent under
the QuickBird 2 Insurance, the Lien of the Collateral Agent on the Collateral or
the rights and benefits of the Collateral Agent hereunder. The Company will
concurrently deliver a copy of such Officer's Certificate to the Series A
Preferred Stockholders' Representative and the Series B Preferred Stockholders'
Representative.
Section 14. No Waiver; Remedies.
-------------------
(a) No failure on the part of the Collateral Agent or any Secured
Party to exercise, and no delay in exercising any right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise
15
thereof or the exercise of any other right. The remedies herein provided are
cumulative, may be exercised singly or concurrently, and are not exclusive of
any remedies provided by law or any other agreement.
(b) Failure by the Collateral Agent or any other Secured Party at any
time or times hereafter to require strict performance by the Company or any
other Person of any of the provisions, warranties, terms or conditions contained
in this Agreement, any agreement, certificate or instrument relating to the
Series A Preferred Stock Obligations or the Series B Preferred Stock Obligations
or any other agreements now or at any time or times hereafter executed by the
Company or any such other Person and delivered to the Collateral Agent or any
other Secured Party shall not waive, affect or diminish any right of the
Collateral Agent or any other Secured Party at any time or times hereafter to
demand strict performance thereof, and such right shall not be deemed to have
been modified or waived by any course of conduct or knowledge of the Collateral
Agent or any other Secured Party, or any agent, officer or employee of such
Secured Party.
Section 15. Counterparts; Facsimile Execution. This Agreement may be
---------------------------------
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
facsimile shall be equally as effective as delivery of a manually executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by facsimile also shall deliver a manually executed counterpart
of this Agreement but the failure to deliver a manually executed counterpart
shall not affect the validity, enforceability, and binding effect of this
Agreement.
Section 16. Successors and Assigns. This Agreement and all
----------------------
obligations of the Company hereunder shall be binding upon the legal
representatives, successors and assigns of the Company, and shall, together with
the rights and remedies of the Collateral Agent hereunder, inure to the benefit
of the Collateral Agent for the benefit of the Secured Parties, and their
respective successors and assigns, including any subsequent holder of any
Secured Obligations; provided, however, that the Company may not assign this
-------- -------
Agreement or any rights or duties hereunder without the Collateral Agent's prior
written consent. The First Priority Pledge Collateral Agent shall be an express
third party beneficiary of Section 2(b), Section 2(c) and this Section 16.
Section 17. Compensation; Indemnification. The Company shall pay to
-----------------------------
the Collateral Agent the following compensation: (i) $3,500, as an acceptance
fee, payable upon execution hereof and (ii) $5,000 as an annual fee, first
payable upon execution of this Agreement, then on each anniversary thereof. The
reasonable compensation of the Collateral Agent shall not be limited by any law
on compensation of a trustee of an express trust. The Company shall reimburse
the Collateral Agent upon request for all reasonable out-of-pocket expenses and
advances incurred or made by the Collateral Agent. Without limiting the
generality of the foregoing, the Company shall pay, indemnify, hold harmless and
defend the Collateral Agent, the Series A Preferred Stockholders, the Series B
Preferred Stockholders, the Series A Preferred Stockholders' Representative, the
Series B Preferred Stockholders' Representative and their respective directors,
officers, agents and employees for, from and
16
against any and all claims, actions, costs, damages, obligations, liabilities
and expenses, including reasonable fees and disbursements of counsel and other
advisors and consultants (including any insurance advisors retained to review
the QuickBird 2 Insurance, whether prior or subsequent to an Event of Default)
retained by them, arising from this Agreement and the Collateral Agent's
acceptance of, or performance under, this Agreement.
Section 18. Effectiveness. Except as provided in the following
-------------
sentence, this Agreement shall be binding and deemed effective when executed by
the Company and the Collateral Agent.
Section 19. Severability of Provisions. Each provision of this
--------------------------
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
Section 20. Integration. This Agreement reflects the entire
-----------
understanding of the parties with respect to the subject matter of the security
interest contemplated hereby for the benefit of the Secured Parties and this
Agreement shall not be contradicted or qualified by any other agreement, oral or
written, before the date hereof.
Section 21. Construction. Unless the context of this Agreement
------------
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, and the term "including" is not
limiting. The words "hereof," "herein," "hereby," "hereunder," and other
similar terms refer to this Agreement as a whole and not to any particular
provision of this Agreement.
Section 22. Section Titles. The Section titles contained in this
--------------
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Agreement.
Section 23. Exculpation. No Person in or connected to the Secured
-----------
Parties shall have any obligation or liability whatsoever under any governing
agreement relating to any of the Collateral, or for the obligations of the
Company, by reason of or arising out of this Agreement, nor shall any Person in
or connected to the Secured Parties be required or obligated in any manner to
perform or fulfill any of the obligations of the Company in connection with the
Collateral.
Section 24. Termination. This Agreement insofar as it relates to the
-----------
Company and the security interest created and continued hereby by the Company
shall terminate on the Termination Date, at which time, at the request of the
Company and at the Company's cost and expense, to be paid in advance on or prior
to the Termination Date, the Collateral Agent shall execute and deliver to the
Company all UCC termination statements and similar documents and take such
further action that the Company shall reasonably request to evidence or more
fully effect such termination; provided, however, that the provisions of Section
-------- -------
17 and any other requirement for reimbursement of expenses and indemnification
with respect to events occurring on or before the Termination Date shall
continue in full force and effect following such Termination Date and the
occurrence of the Termination Date shall not discharge or novate any rights
accruing to the Collateral Agent or any other Secured Party prior thereto.
17
[Remainder of page intentionally left blank]
18
IN WITNESS WHEREOF, the Company and the Collateral Agent have duly
executed and delivered this Agreement on the date first above written.
EARTHWATCH INCORPORATED,
a Delaware corporation
By_________________________________
Name:
Title:
THE BANK OF NEW YORK, as Collateral Agent
By_________________________________
Name:
Title:
Address for notice:
000 Xxxxxxx Xxxxxx, Xxxxx 00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No: (000) 000-0000
Attention: Corporate Trust Trustee
Administration
19
SCHEDULE I
LOCATION OF RECORDS AND CERTAIN COLLATERAL
Tax Identification Number: 00-0000000
Place of
Business* and
Location of Records
EarthWatch Incorporated
0000 Xxxx Xxxx
Xxxxxxxx, XX 00000
The records in respect of the Collateral will be maintained in the safe
within the Accounting Department at the above location.
______________
* Indicates chief executive officer if there is more than one place of
business.
SCHEDULE II
Amendments or modifications to the following definitions in the "Definitions"
section of the QuickBird 2 Insurance shall be Permitted Insurance Modifications.
Defined Term
------------
Intentional Ignition
Launch Services Agreement
Launch Services Contractor
Launch Vehicle
Satellite
Satellite Performance Specifications
Terminated Ignition
Underwriting Information
Partial Loss
Partial Loss Amount
Partial Loss Fraction
Projected Commercial Value
Achieved Commercial Value
Design Commercial Value
Design Lifetime
Remaining Lifetime
Bus Throughput
Instrument Output
Normalized Size
EXHIBIT C
ACKNOWLEDGEMENT
[Name and address of insurance company(ies)]
Attention: [_______________]
EarthWatch Incorporated
Reference is made to the "EarthWatch, Incorporated - QuickBird Launch
and In-Orbit Operations Insurance Policy" (Policy No. ____________) in respect
of the QuickBird 2 Satellite (the "QuickBird 2 Insurance") issued by you in
favor of EarthWatch Incorporated (the "Company").
We hereby give you notice that all of the Company's right, title and
interest in and to the QuickBird 2 Insurance, and all proceeds relating thereto,
have been assigned and pledged (such assignment and pledge, the "Junior
Collateral Pledge and Security") in favor of The Bank of New York, as collateral
agent (the "Junior Collateral Agent") for the holders of the Company's Series A
Preferred Stock and Series B Preferred Stock.
The Junior Collateral Pledge and Security is junior to the assignment
and pledge (such assignment and pledge, the ("Senior Collateral Pledge and
Security") of the Company's right, title and interest in and to the QuickBird 2
Insurance in favor of The Bank of New York, as collateral agent (the "Senior
Collateral Agent") for the holders of the Company's 13% Senior Discount Notes
due 2007 and the holder of the Vendor Financing (as defined therein).
On and after the date you receive notice from the Senior Collateral
Agent that the Senior Collateral Pledge and Security has terminated then, unless
and until you have received written notification from the Junior Collateral
Agent instructing you that the Junior Collateral Pledge and Security has
terminated, you agree that you shall pay all amounts payable by you under or in
respect of the QuickBird 2 Insurance to the Junior Collateral Agent, by deposit
to such account as the Junior Collateral Account notifies you in writing.
Please indicate your acknowledgement and agreement to the above by
signing where indicated below and returning this signed letter to
[______________].
Very Truly Yours, Very Truly Yours,
THE BANK OF NEW YORK EARTHWATCH INCORPORATED
as Junior Collateral Agent
__________________________________ ___________________________________
Name: Name:
Title: Title:
ACKNOWLEDGEMENT
We hereby acknowledge and agree to the above:
[Insurance company(ies)]
___________________________
Name:
Title:
2
EXHIBIT I-1
B&M DRAFT DATED APRIL 1, 2001
____, 2001
Xxxxxx Xxxxxxx & Co. Incorporated
Post Balance Fund
Post High Yield LP
Post Total Return Fund
Opportunity Fund
Xxxxxxxxx & Co. X.X.
Xxxxxxxxx International LTD.
Sun America High Income Fund
Sun America Series Trust High Yield Portfolio
Hitachi Software Engineering Co., Ltd.
Re: EarthWatch Incorporated
Ladies and Gentlemen:
This firm has acted as counsel for EarthWatch Incorporated, a Delaware
corporation (the "Company"), in connection with certain financing and related
transactions pursuant to that certain Recapitalization Agreement and Consent
dated as of April 2, 2001 and executed by the Company and you (the "Agreement").
This opinion is being rendered pursuant to Section 5.4(b)(iii)(x) of the
Agreement. Unless otherwise defined herein, each term used herein that is
defined in the Agreement has the meaning given such term in the Agreement.
In reaching the opinions set forth herein, this firm has reviewed:
(a) the Agreement,
(b) the Senior Pledge and Security Agreement by the Company in favor of
The Bank of New York, as Collateral Agent, dated ______, 2001,
(c) the Junior Pledge and Security Agreement by the Company in favor of
The Bank of New York, as Pledge Agent, dated _____, 2001,
(d) the Series C Registration Rights Agreement Amendment (items (a)
through (d), inclusive, referred to herein as the "Transaction
Documents"), dated _____, 2001,
(e) the Amended and Restated Certificate of Incorporation of the Company,
as amended on _______, 2001 (the "Certificate of Incorporation"),
(f) the bylaws of the Company (the "Bylaws"), and
except as set forth below, such other agreements, certificates of public
officials and officers of the Company, records, documents, and matters of law
that this firm deemed relevant.
Based on and subject to the foregoing and subject further to the
assumptions, exceptions, and qualifications hereinafter stated, this firm
expresses the following opinions:
1. The Company is incorporated, validly existing and in good standing
under the laws of the State of Delaware.
2. The Company is duly qualified to do business and is in good standing as
a foreign corporation in the states of Colorado and Alaska.
3. The Company has the corporate power and the corporate authority to
execute, deliver, and perform its obligations under each Transaction Document.
4. The execution, delivery, and performance by the Company of its
obligations under each Transaction Document have been duly authorized by all
necessary corporate action on the part of the Company.
5. Each of the Transaction Documents executed by the Company has been duly
executed and delivered by the Company and constitutes the valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms.
6. The execution, delivery, and performance by the Company of its
obligations under each of the Transaction Documents do not violate, contravene,
or cause a default under the Certificate of Incorporation or Bylaws, any federal
law of the United States of America (other than communications laws, as to which
we express no opinion), the laws of the State of New York, the General
Corporation Law of the State of Delaware, any judgment, decree, or order of any
court or any other agency of government known to this firm that is applicable to
the Company or its property, or any material agreement included as an exhibit to
any of the Company's filings with the Securities and Exchange Commission or the
Delta II Launch Services Agreement between the Company and Delta Launch
Services, Inc.
7. No consent, approval, authorization, or other action by, or filing
with, any governmental authority of the United States of America is required for
the Company to consummate the Transactions except for such as have been duly
obtained or made, other than (i) any such as may be required pursuant to U.S.
federal communications laws, including such filings as may be required with
respect to the Federal Communications Commission and the National Oceanic and
Atmospheric Administration, (ii) such filings as may be required by the
securities or blue sky laws of the various states, and (iii) the filing of a
Form D pursuant to Regulation D promulgated under the Securities Act of 1933, as
amended.
8. The shares of New Series C Preferred Stock to be issued pursuant to
Section 2.1 of the Agreement are duly authorized and, when such shares have been
delivered for the consideration contemplated by the Agreement, will be validly
issued, fully paid, and nonassessable and free of any preemptive rights created
by the Articles of Incorporation or Bylaws of the Company or any Material
Agreement.
9. The shares of Common Stock issuable upon conversion of the shares of
New Series C Preferred Stock to be issued pursuant to Section 2.1 of the
Agreement are duly
2
authorized and reserved for issuance and, when such shares have been issued
pursuant to the terms of the Certificate of Incorporation, will be validly
issued, fully paid, and nonassessable.
10. To the knowledge of this firm, there is no action, suit, or proceeding
that is pending or threatened against or affecting the Company in any court or
before any governmental authority, arbitration board, or tribunal that involves
any of the transactions contemplated by the Transaction Documents or that would
be required to be described in the Company's Form 10-K for the year ended
December 31, 2000.
The opinions expressed above are subject to the following assumptions,
exceptions, and qualifications:
(a) This firm has assumed that (i) all representations and warranties
contained in all documents reviewed by this firm is true and correct, (ii) all
signatures on all documents reviewed by this firm are genuine, (iii) all
documents submitted to this firm as originals are true and complete, (iv) all
documents submitted as copies are true and complete copies of the originals
thereof, (v) all parties to the Transaction Documents other than the Company
(the "Other Parties") have all power and authority to execute, deliver, and
perform their obligations under the Transaction Documents, that the Transaction
Documents have been duly and validly authorized, executed, and delivered by each
of the Other Parties, and that each of the Transaction Documents is the valid
and binding obligation of each of the Other Parties who is a party thereto,
enforceable against such Other Party in accordance with its terms, (vi) each
natural person signing any document reviewed by this firm had the legal capacity
to do so, (vii) each person signing in a representative capacity any document
reviewed by this firm had authority to sign in such capacity, and (viii) the
laws of any jurisdiction other than New York that govern any of the documents
reviewed by this firm do not modify the terms that appear in any such document.
(b) The opinions expressed above are limited to the laws of the State of
New York, the General Corporation Law of the State of Delaware, and the federal
laws (other than communications laws, as to which we express no opinion) of the
United States of America. You should be aware that this firm is not admitted to
the practice of law in the State of Delaware and the opinion herein as to the
General Corporation Law of the State of Delaware is based solely upon an
unofficial compilation thereof.
(c) The opinions expressed above are subject to (i) laws relating to
bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, rearrangement, liquidation, conservatorship, moratorium,
impairment of capital and other laws affecting the enforcement of creditors'
rights or the collection of debtors' obligations generally, (ii) principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law), (iii) standards of commercial reasonableness and good faith
and (iv) public policy.
(d) This firm expresses no opinion with respect to (i) the enforceability
of provisions in the Transaction Documents relating to delay or omission of
enforcement of rights or remedies, or waivers of defenses or other nonwaivable
benefits bestowed by operation of law; (ii) the enforceability of the
indemnification provisions in any Transaction Document to the extent they
purport to relate to liabilities resulting from or based upon negligence or any
violation of federal
3
or state securities or blue sky laws; or (iii) the right of any person or entity
to institute or maintain any action in any court or upon matters respecting the
jurisdiction of any court.
(e) In rendering the opinion set forth in Paragraphs 1 and 2 above, this
firm has relied solely on the certificate(s) of authorities in the State of
Delaware that this firm received in response to this firm's request dated April
___, 2001 for confirmation of the existence and good standing of the Company in
such state and the certificates this firm received from the other states listed
in Paragraph 2 above that this firm received in response to this firm's request
dated April ___, 2001 for confirmation of the qualification and good standing of
the Company in such states, copies of which certificates have been furnished to
you.
(f) Whenever an opinion herein is qualified by "known to this firm," "to
the knowledge of this firm," or similar phrase, this firm has relied
exclusively, without independent investigation, on one or more certificates from
one or more officers of the Company with respect to the matters set forth in
such opinion. This firm has made no independent investigation as to the
accuracy or completeness of any of the information contained in such
certificate(s). However, in the course of rendering the legal services
described in the introductory paragraph of this letter, no facts or
circumstances have come to the attention of those attorneys in this firm who
rendered such legal services that gave this firm current actual knowledge that
any such information is incorrect in any material respect.
(g) We express no opinion, nor have we undertaken any investigation to
determine, whether the Company is insolvent, whether the Company will be
rendered insolvent by the transactions contemplated by the Transaction
Documents, and after giving effect to such transactions, whether the Company
will be left with unreasonably small capital with which to engage in its
anticipated business and whether the Company will have intended to incur, or
will have believed it has incurred, debts beyond its ability to pay as such
debts mature.
(h) We have not made nor undertaken to make any investigation of the state
of title to the Collateral, as defined in the Senior Pledge and Security
Agreement or the Junior Pledge and Security Agreement. We have assumed, without
investigation, that the descriptions of the Collateral contained in such
agreements are accurate and sufficient to enable a subsequent purchaser or
lienholder to identify such Collateral
(i) We express no opinion as to the relative priority of any security
interest, lien, charge or other encumbrance created by or under the Transaction
Documents, nor as to the effect of any such security interest on any rights or
interests, if any, of persons other than the Company.
Without the prior written consent of this firm, this opinion may not be
relied upon by any person or entity other than you, quoted in whole or in part
or otherwise referred to in any report or document, or furnished to any other
person or entity (other than your legal counsel and employees).
This firm disclaims any duty to advise you regarding any changes in, or to
otherwise communicate with you with respect to, the matters addressed herein.
Very truly yours,
4
XXXXX & XxXXXXXX
By: ____________________________
5
EXHIBIT I-2
Subject to Document Review
[Form of Holland & Xxxx LLP Opinion]
_________________, 2001
Xxxxxx Xxxxxxx & Co. Incorporated
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
and
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxxxx 00X
Xxx Xxxx, XX 00000
Re: [Collateral Pledge and Security Agreement (the "Security Agreement")
dated as of _________, 2001 made by EarthWatch Incorporated, a Delaware
corporation (the "Company"), in favor of The Bank of New York, a New York
banking corporation, in its capacity as collateral agent (the "Collateral
Agent") for itself and for the ratable benefit of the 13% Noteholders and
the holders from time to time of the Vendor Financing (as those terms are
defined therein)]
Ladies and Gentlemen:
We have acted as counsel for the Company in connection with the creation
and perfection of a security interest in the QuickBird 2 Insurance (as defined
in the Security Agreement) and the proceeds related thereto. Except as
otherwise defined herein, capitalized terms used herein have the respective
meanings given to them in the Security Agreement.
In connection with this opinion, we have examined copies of the following
executed documents:
1. The Security Agreement;
2. QuickBird 2 Insurance;
Xxxxxx Xxxxxxx & Co. Incorporated
The Bank of New York
___________, 2001
Page 2
3. Acknowledgement copies of the UCC-1 Financing Statements filed with the
Delaware Secretary of State and the Colorado Secretary of State naming the
Company as Debtor and the Collateral as Secured Party (the Financing
Statements"); and
4. Acknowledgement of the Issuer of the QuickBird 2 Insurance consenting
to the pledge of the QuickBird 2 Insurance to the Collateral Agent as collateral
security for payment and performance of the Secured Obligations (the
"Acknowledgement").
For purposes of this opinion, the Security Agreement, QuickBird 2 Insurance, and
the Acknowledgement shall be referred to as the "Documents."
In rendering this opinion, we have assumed that (i) the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as copies, and
the authenticity of the originals of such copies; (ii) the Documents were
executed and delivered by duly authorized officers of the parties thereto and
that the Documents constitute the valid and binding obligations of the parties
thereto, enforceable against such parties in accordance with their terms, (iii)
the Company has rights in the Collateral; (iv) under New York law, which governs
the Security Agreement, a security interest in the Collateral has been created
thereunder; and (v) with respect to the QuickBird 2 Insurance, (a) the
Collateral Agent shall remain the sole loss payee thereunder; (b) there shall
exist no other insureds, additional insureds, loss payees or additional loss
payees as to proceeds of any insurance covering the QuickBird 2 Satellite; (c)
the Collateral Agent has possession of the original QuickBird 2 Insurance; and
(d) the Company shall not have knowingly concealed or misrepresented any
material fact in connection with the QuickBird 2 Insurance or committed, or
attempted to commit, fraud on the issuer thereof.
Based upon the foregoing and subject to the assumptions, qualifications and
limitations set forth in this letter and the reasoned analysis of analogous case
law and statutes set forth below (there being no precedent directly on point),
it is our opinion that there is a reasonable basis to conclude that, in a
properly presented and decided case, a Colorado court, properly applying
Colorado law, should find that the Collateral Agent has a valid perfected pledge
of the QuickBird 2 Insurance and the proceeds thereof.
The Uniform Commercial Code as in effect in the State of Colorado (the
"UCC") does not apply to "interests in or claims in or under any policy of
insurance"/1/ and we have found no Colorado legal authority that clearly
indicates how a secured party may perfect a security interest in a commercial
casualty policy such as the QuickBird 2 Insurance. However, there is a body of
law developed in Colorado and in other states in contexts analogous to the one
that is the subject of this opinion where courts or legislatures have considered
the question of perfection in similar types of policies. The Tenth Circuit has
stated that in circumstances where the Uniform Commercial Code does not apply,
courts will look to other "existing statutes and pre-code case law [citation
omitted]; analogy to the UCC [citations omitted]; and reference to case law from
______________________
/1/ UCC Section 4-9-104(g).
Xxxxxx Xxxxxxx & Co. Incorporated
The Bank of New York
___________, 2001
Page 3
other jurisdictions." In re Xxxxxx Industries, Inc., 104 F. 3d 1241, 1246 (10th
Cir. 1997). Based on the foregoing, we will review certain relevant statutes
and cases and apply them by analogy to the QuickBird 2 Insurance.
Under Colorado case law, an insurance policy is considered a chose in
action. In re Xxxxxxxx'x Estate, 113 Colo. 141, 147, 154 P.2d 1008, 1010
(1945). At early common law choses in action were not assignable but choses in
action are now generally considered to be assignable under case law and statutes
that provide for the assignment of contracts for the payment of money except
where assignment is prohibited by contract or where the contract involves a
matter of personal trust. Xxxxxxx Chiropractic Centers, P.C. v. Progressive
Casualty Insurance Company, 874 P.2d 1049, 1052 (Colo. 1994), 3 Couch of
Insurance (S)(S)36:1 et seq., 43 Am Jur 2d (S)(S)789 et seq. However, the
majority view is that non-assignment clauses in insurance policies are not meant
to apply to assignments for security (based upon the argument that such
assignments do not change the risk for which insurance company contracted). See
3 Couch (S)37:42, 43 Am Jur (S)(S)801 et seq. but, see Xxxxxxx Chiropractic, 874
P.2d at 1055 (strictly construes non-assignment provisions under Colorado no-
fault auto insurance law).
Colorado courts have generally held that a debtor may assign an insurance
policy to a creditor. Xxxxxxx x. Xxxxxx, 4 Colo. 138, 140 (1878) ("The policy
was a writing obligatory for the payment of money, and may be assigned at law as
well as in equity.") No particular form of contract is required for assignment
of a chose in action as between an assignee and an assignor. Xxxxxxxxx x.
Xxxxxxxx, 45 Colo. 537, 540-41, 102 P. 1085, 1086 (1909). However, with regard
to the assignment of an insurance policy, compliance with the terms of the
policy is required. See Xxxxxxx v. New York Life Ins. Co., 56 Colo. 178, 182-84
(1913) (delivery of a policy and verbal assignment not sufficient to effect
assignment of a life insurance policy). Colorado will strictly enforce non-
assignment provisions. Xxxxxxx Chiropractic, 874 P.2d at 1052, Xxxxxxxxx, 92
Colo. at 542 (assignment of fire insurance policy without consent required by
policy renders policy null and void).
Generally, delivery of an insurance policy with no limitations is
sufficient to create a valid pledge in Colorado. See Xxxxxxx, 4 Colo. 138; In
the matter of Mile Hi Restaurant, 233 F. Supp. 936 (D. Colo. 1964); Xxxxxxx, 56
Colo. 178 (all discussing life insurance policies perfected by delivery); see
also Midland Life Ins. Co. v. First Nat. Bank of Las Animas et al., 92 Colo.
558, 22 P.2d 860 (1933) (insurer issued second policy on the life of an insured
after it had approved a prior assignment to a creditor, insured delivered new
policy to a second creditor; first creditor still had first policy; both
creditors had valid assignments). A contract pledging a chose in action need
not be recorded when the pledge property is delivered and held by creditor.
Colorado Nat'l Bank x. Xxxxxx, 80 F.2d 696, 699 (10th Cir. 1935). See also
Salem Trust Company v. Manufacturers' Finance Company, 000 X.X. 000, 194-96
(1924) (providing that priority to chose in action established by notice to
debtor but notice not required to perfect); but see In re Electronic Metal
Products, Inc., 916 F.2d 1502, 1505 (10th Cir. 1990) (explaining that filing
notice with the court required to perfect a lien in chose in action under
Colorado attorney lien statutes).
Xxxxxx Xxxxxxx & Co. Incorporated
The Bank of New York
___________, 2001
Page 4
There is little additional Colorado case law setting forth different
standards for the taking or perfection of a security interest in insurance
policies. However, in 1997, the Tenth Circuit Court of Appeals had an
opportunity to review the question of how a dispute regarding a security
interest in returned premiums would be determined under Oklahoma law. Xxxxxx,
104 F.3d 1241 The Oklahoma Uniform Commercial Code does not apply to security
interests in or under insurance policies. Id. at 1146. The court stated
"[W]here the U.C.C. is inapplicable, security interest disputes may be resolved
by reference to: existing statutes and pre-code case law, [citation omitted];
analogy to the U.C.C. [citations omitted]; and reference to case law from other
jurisdictions." Xxxxxx at 1246. The court found that the bank had perfected
against unearned premiums by filing notice under Oklahoma Uniform Commercial
Code, by filing as required by pre-code cases for chattel mortgages and,
alternatively, when it executed and/or had possession of the agreement for
financing the premiums. Id. at 1247. The bank had a valid security interest in
unearned premiums to the extent it loaned money to the debtor as a down payment
to purchase insurance. The holder of the competing security interest had also
loaned the debtor money to pay the premiums and had obtained an assignment of
any and all unearned premiums. (The court relied on the common law "principle
of first in time first in right to resolve competing security interests in the
same collateral.") Id.
The majority of courts in other circuits that have examined whether a
security interest in insurance policies and insurance premiums can be perfected,
when faced with Uniform Commercial Code provisions similar to Colorado's, have
also concluded that it is possible to establish a security interest in insurance
policies and premiums outside of Article 9; many such courts finding that
nothing more than the creation of the security interest is required to perfect
an interest in unearned premiums. See In re Xxxxx, 132 B.R. 31, 32 (Bankr. W.D.
Mo. 1991); In re Xxxxx, 167 B.R. 895, 897 (Bankr. E.D. Mo. 1994); In re Big
Squaw Mountain Corp., 122 B.R. 831, 336-38 (Bankr. D. Me. 1990) (valid pledge in
policy can be created by possession, perfection against premiums under common
law required possession of the evidence of the pledge itself, common law was
supplemented by statute permitting filing but filing was not required to perfect
interest in premiums).
The key concern that has been noted with regard to the perfection of a
security interest in insurance policies, as well as other types of collateral,
is that third parties should be given notice of any liens. More specifically,
many courts hold that notice to the insurance company is required in order to
compel the insurer to make payments under a policy to a secured lender. See
generally Hartford Fire Insurance Company v. Mutual Savings and Loan Company,
Incorporated, & C., 193 Va. 269, 68 S.E.2d 541 (1952) (notice to debtor
[insurance company] is essential to perfect title); Judah AMC & Jeep, Inc. v.
Old Republic Insurance Co., 000 X.X. 0x 212 (Iowa 1980) (UCC filing not
sufficient to give notice of interest to insurance company without loss payee
clause); Terra W. Corp x. Xxxxx and Co., 207 Neb. 28, 295 N.W.2d 693 (1980) (no
requirement for insurer to check for security interest before making payment to
insured). It is also instructive to note that certain jurisdictions, California
in particular, have adopted Uniform Commercial Code language that provides that
a security interest in an insurance policy can be perfected by delivering notice
to an insurer in writing.
Xxxxxx Xxxxxxx & Co. Incorporated
The Bank of New York
___________, 2001
Page 5
Other courts have held that it is necessary or appropriate to comply with
Uniform Commercial Code filing requirements to perfect against certain other
rights under issuance policies. See In re Xxx Xxxx Insurance Agency, Inc., 5
B.R. 207, 215 (Bankr. D.Mass. 1980) (expirations are general intangible, filing
required); Mass. Mutual Life Ins. Co. v. Central Penn National Bank et al., 372
F. Supp 1027, 1040-42 (X.X.Xx. 1974) (filing perfects security interest in
commission renewals).
We note that the QuickBird 2 Insurance provides that the Collateral Agent
is named as loss payee and that the Collateral Agent is entitled to any unearned
premiums that are to be returned. These are contract rights granted by the
insurer and the insurer may be estopped from asserting that such provisions are
invalid. See e.g. Xxxxxxxxx, 92 Colo. at 544-45; see also, Xxxxxx et al v.
Mutual Life Ins. Co. of New York, 114 Minn. 1, 14-19, 000 X.X. 000, 253-54
(1911) ("[I]t is well settled that the parties may stipulate the terms and
method of enforcement, and that agreements in this respect, not obnoxious to the
law, will control the rights of the parties;" stating that cancellation of a
life insurance policy for its cash surrender value, which was to be applied to a
debt with surplus to go to the debtor, was a remedy consistent with public
policy but if creditor is to retain surplus it may be a penalty and void the
pledge; and remanding case for hearing on valuation.)
Decisions in this area are usually made on the basis of an analysis of the
facts and circumstances of the particular case. A court's decision regarding
matters upon which we opine herein is based on the court's own analysis and
interpretation of the factual evidence before the court and of applicable legal
principles. Consequently, this opinion is not a prediction of what a particular
court (including any appellate court) reaching the issue on the merits would
hold but instead is our opinion as to the proper result to be reached by a
Colorado court applying existing legal rules to the facts properly found (and
consistent with the assumptions set forth herein) after appropriate briefing and
argument.
We express no opinion as to the title of the Company to any property or the
relative priority of any security interest, lien, charge or other encumbrance
created by or under the Security Agreement, nor as to the effect of any such
security interest on any rights or interests, if any, of persons other than the
Company.
The opinion expressed herein is limited solely to the laws of the State of
Colorado as currently in effect. We express no opinion as to any matter other
than expressly set forth above, and no other opinion is intended to be implied
or inferred herefrom. The opinion expressed herein is an opinion of legal
matters and not factual matters and not as a guaranty or warranty of the matters
discussed herein. Our opinion is given as of the date hereof, and we undertake
no obligation and hereby disclaim any obligation to advise you of any change in
law, facts, or circumstances, occurring after the date hereof pertaining to any
matter referred to herein.
Xxxxxx Xxxxxxx & Co. Incorporated
The Bank of New York
___________________, 2001
Page 6
This opinion is provided to the addressees for their benefit and their
respective successors and assigns, and is provided only in connection with this
transaction and may not be copied, shown to, or relied upon in any respect by
any other person or for any other purpose.
Very truly yours,
SCHEDULE 1
----------
NOTEHOLDERS
Noteholder's Name Address for Notices Principal Amount at Maturity of
13% Notes subject to this
Agreement
Xxxxxx Xxxxxxx & Co. Incorporated Xxxxxx Xxxxxxx & Co. Incorporated $44,650,000
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx
with a copy to:
Xxxxxx X. Xxxxxxxxx, Esq.
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Post Balanced Fund Post Balanced Fund $1,500,000
c/o MW Post Advisory Group
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxxxxx
Post High Yield LP Post High Yield LP $1,750,000
c/o MW Post Advisory Group
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxxxxx
Post Total Return Fund Post Total Return Fund $750,000
c/o MW Post Advisory Group
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxxxxx
Opportunity Fund Opportunity Fund $3,000,000
c/o MW Post Advisory Group
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxxxxx
Xxxxxxxxx & Co., X.X. Xxxxxxxxx & Co., L.P. $3,000,000
c/x Xxxxxxxxx Partners
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx XxXxxx
Xxxxx Xxxxxx
Xxxxxxxxx International LTD Xxxxxxxxx International LTD $1,000,000
c/x Xxxxxxxxx Partners
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx XxXxxx
Xxxxx Xxxxxx
Hitachi Software Engineering Co., Hitachi Software Engineering Co., Ltd. $13,000,000
Ltd. 0-00, Xxxx-xxx, Xxxx-xx
Xxxxxxxx, 000-0000
Xxxxx
Sun America High Income Fund Sun America Asset Management $1,000,000
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxx
Sun America Series Trust High Sun America Asset Management $2,000,000
Yield Portfolio 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxx
SCHEDULE 2
----------
DISCLOSURE SCHEDULE
RECAPITALIZATION AGREEMENT AND CONSENT
DISCLOSURE SCHEDULE
This Disclosure Schedule is delivered pursuant to the Recapitalization
Agreement and Consent, dated April 2, 2001, by and among EarthWatch
Incorporated, a Delaware corporation (the "Company"), and each of the other
-------
parties set forth on Schedule 1 thereto.
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.
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.2
CAPITAL STOCK
(a) There are outstanding options to purchase an aggregate of 3,163,636 shares
of the Company's Common Stock at an exercise price of $.25 per share
pursuant to the Company's 1999 Equity Incentive Plan (the "1999 Plan") as
of December 31, 2000. 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 1999 Plan is 9,784,563.
(b) There are outstanding options to purchase an aggregate of 2,709 shares of
the Company's Series C Stock at an exercise price of $3.80 per share
pursuant to the Company's 1996 Stock Option/Stock Issuance Plan (the "1996
Plan"). The options have been issued 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 237,461 shares of
the Company's Series C Preferred Stock at an exercise price of $3.80 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(c)
-----------------
attached hereto.
(d) There are outstanding options to purchase an aggregate of 7,853 shares of
the Company's Series C Preferred Stock at exercise prices ranging from $.05
per share to $.23 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(d) attached
hereto.
(e) On May 30, 1994, the Company issued a warrant to Odetics, Incorporated to
purchase 12,463 shares of the Company's Series C Preferred Stock at an
exercise price of $4.53 per share, as adjusted in the Recapitalization of
April 1999.
(f) The record holders of the Company's Common Stock are set forth on
Attachment 3.2(e) attached hereto.
-----------------
(g) The record holder of the Company's 7% Cumulative Convertible Redeemable
Preferred Series A Stock is set forth on Attachment 3.2(f) attached hereto.
-----------------
(h) The record holders of the Company's 7% Cumulative Convertible Redeemable
Preferred Series B Stock are set forth on Attachment 3.2(g) attached
-----------------
hereto.
(i) The record holders of the Company's 8 1/2% Cumulative Convertible
Redeemable Preferred Series C Stock are set forth on Attachment 3.2(h)
-----------------
attached hereto.
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Attachment 3.2(a)
The holders of options to purchase shares of the Company's Common Stock under
the 1999 Plan are as follows:
Xxxxx, Xxxx X. 5,920
Xxxxxx, Xxxx Xx. 7,500
Xxxxx, Xxxx 5,600
Xxxxxxxx, Xxxx X. 70,015
Arras, Xxxxxxx X. 12,200
Xxxxxxx, Xxxxx X. 3,180
Xxxxxx, Xxxxx X. 23,900
Xxxxx, Jr., Xxxx X. 4,734
Been, Xxxxx 33,027
Belmont, Xxxxxxx X. 3,279
Xxxxxx, Xxxxxxx X. 10,968
Xxxxxxxxx, Xxxx X. 13,700
Xxxxx, Xxxxxxx 11,941
Xxxxxx, Xxxxxxx X. 10,600
Xxxxx, Xxxxxxx X. 1,650
Xxxxxxx, Xxxxxx 28,422
Xxxxxx, Xxxxx X. 6,040
Xxxxx, Xxxx 7,956
Xxxx, Xxxxxxx X. 500
Xxxxxxx, Xxxxxxx X. 11,640
Xxxxxxxx, Xxxxxx X. 14,200
Childs, Xxxx X. 8,600
Xxxxxxx, Xxxxxxxx X. 1,430
Xxxxx, Xxxxxxx X. 7,000
Xxxxxxx, Xxxxxxx X. 8,600
Complex Sys Management, 6,500
Xxxxxxx, Xxxxxxx X. 27,501
Xxxxxxx, Xxxxxx X. 22,700
Xxxxxxxxxxx, Xxxx T 3,469
Xxxxxxxxxxxxxx, Xxxxx 8,700
Xxxxxxx, Xxxxx X. 6,829
Xxxx, Xxxxxxxxx Xxxx 13,860
Xxxxxxxx, Xxxxxxxx 9,600
Xxxxxxx, Xxxx X. 8,998
Xxxxxxx, Xxxxxxx Seemel 8,421
Xxxxxxxxxx, Xxxx 5,840
Xxxx, Xxxxxxx X. 6,280
Xxxxx, Xxxxxx X. 7,600
Deal, Xxxx X. 3,340
Xxxxxxxxx, Xxxxxxx X. 8,700
Xxxxxxxx, Xxxxxx X. 7,200
3
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Xxxxx, Xxxxx X. 8,220
Xxxxxx, Xxxxx X. 230,000
Xxxx, Xxxx X. 3,799
Xxxxx, Xxxx 15,129
Xxxxx, Xxxxxx X. 2,250
Xxx, Xxxx X. 7,654
Xxxxxxxxxx, Xxxxxxx X. 8,462
Xxxxxxxx, Xxxxxx X. 11,640
Xxxxxxx, Xxxxxxxx X. 6,260
Xxxxxxx, Xxxxx X. 23,916
Gannes, Xxxxxx X. 56,108
Xxxxxxxxxx, Xxxx 19,501
Xxxxxx, Xxxxxx 14,160
Xxxxxxx, Xxxxx L 2,574
Xxxxxxxxx, Xxxxx X. 6,400
Xxxxxxxxx, Xxxx X. 4,669
Xxxxxxx, Xxxxxxx 2,840
Xxxxxxxx, Xxxx X. 130,000
Xxxxx, Xxxx X. 5,200
Hay, Xxxxx X. 9,200
Xxxxxxxxx, Xxxxxxx X. 11,739
Xxxxx, Xxxxxx X. 3,938
Xxxxxxx, Xxxx X. 4,600
Xxxxxxx, Xxxxxxx X. 11,326
Xxxxxxx, Xxxxxx X. 9,329
Xxxxxxxxx, Xxxxx X. 3,100
Irish, Xxxxxx X. 15,698
Xxxxx, Xxxxxx 6,400
Xxxxxx, Xxxx X. 139,000
Xxxxxxx, Xxxxx 8,257
Xxxxxxxxx, Xxxx 24,375
Xxxxxxx, Xxxxx X. 90,000
Xxxxxxxx, Xxxxxxx X. 126,266
Xxxxxxx, Xxxxx X. 5,200
Xxxxx, Xxxx X 5,780
Xxxxxxxxx, Xxxxxxx 55,000
Xxxx, Xxxx 7,492
Xxxxxx, Xxxxxxx X. 6,900
Xxxxxxx, Xxxxxxxxxxx X. 7,018
Xxx, Xxxx X. 13,600
Xxxxxxx, Xxxxx X. 4,440
Xxxxx, Xxxxxxx X. 9,125
Xxxxxxx, Xxxxxxx X. 14,900
Xxxx, Xxxxxx X. 6,629
Little, Xxxxx X. 12,200
Xxxxxxxx, Xxxxx 5,600
4
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Xxxxx, Xxxxx X. 7,532
Xxxxxx, Xxxxx X. 4,340
Xxxxx, Xxxxxx X. 5,600
Xxxx, Xxxxx X. 3,582
Xxxxxx, Xxxxxx X. 5,400
Manchester, Xxxxxxx 5,540
Xxxxxxx, Xxxxx X. 10,780
Xxxxxxx, Xxxxxx 2,180
Xxxxxxxx, Xxxxx X. 3,680
Xxxxxx, Xxxx X. 7,240
XxXxxxxxxx, Xxxxx X. 22,450
XxXxxxxx, Xxxxxx X. 2,840
Xxxxxx, Xxxxxx X. 9,700
Xxxxxxx, Xxxxxxx 7,600
Xxxxx, Xxxxx X. 9,800
Xxxxx, Xxxxx X. 9,500
Xxxxx, Xxxx X. 9,500
Xxxxxx, Xxxxxx X. 4,220
Xxxxxxxxx, Xxxxx 9,280
X'Xxxxx, Xxxxx X. 2,680
Xxxxx, Xxx-Frode 6,400
Xxxx, Xxxxxxxxx 5,020
Xxxxxxxxx, Xxxxxxxx 3,013
Xxxxxx, Xxxxxx X. 8,640
Xxxxxx, Xxxxx X. 9,654
Price, Xxxxxx X. 2,496
Rage, Xxxxxxx X. 5,380
Xxxxx, Xxxxx X. 10,800
Xxxxxxx, Xxxx 8,034
Xxxxxxxx, Xxxxxx X. 11,000
Xxxxxx, Xxxxxx 8,100
Xxxxxxx, Xxxxxxx X. 6,260
Xxxxxxxxx III, Xxxxxxx X. 370,919
Xxxxxxxx, Xxx X. 9,249
Xxxxxxxxx, Xxxxx X. 11,600
Xxxxxxxx, Xxxx X. 9,800
Xxxxx, Xxxx 18,616
Xxxxx, Xxxxxx X. 538,595
Xxxxx, Xxxxxx 7,518
Xxxxx, Xxxxx 28,422
Xxxxxx, XxxxXxx 2,720
Xxxxxxxx, Xxxxx X. 10,500
Xxxxxxx, Xxxxxxxx 5,108
Xxxxxx, Xxxxx X. 5,140
Xxxxxxxxx, Xxxxx X. 14,998
Xxxxxxxx, Xxxxx 42,005
5
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Xxxxxxxx, Xxx X. 60,000
Xxxx, Xxxxxx 2,457
True, Xxxx 4,905
Xxxxx, Xxx X. 5,680
Xxxxx, Xxxxx X. 7,160
Xxxxx, Xxxxxxxx X. 4,880
Xxxxxxx, Xxxxxxx X. 2,970
Xxxxxxx, Xxxxx X. 7,600
Xxxx, Xxxxxxxx X. 4,300
Xxxxxxxx, Xxxxxx 28,422
Xxxxx, Xxxxxx X. X. 10,000
Xxxxxx, Xxxxx X. 6,320
Xxxxxxx, Xxxxxx Xxxxx 5,239
Xxxxxxxx, Xxxx X. 6,600
Xxxxxxxxxxx, Xxxxx X. 12,100
Xxxxxxxx, Xxxxx X. 3,420
Xxxxxx, Xxxxxx X. 4,940
Xxxx, Xxxxxxx 8,100
Xxxx, Xxxxxxx X. 12,800
Xxxxxx, Xxxxxx X. 2,375
Xxxx, Xxxxx (Xxxxxx) 7,903
Xxxx, Xxxxxxx 7,500
Xxxxxxx, Xxxxxx X. 500
Total 3,163,636
6
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Attachment 3.2(b)
The holders of options to purchase shares of the Company's Common Stock under
the 1996 Plan are as follows:
Xxxxxxxxxx, Xxxxxxx 168
Xxxxxx, Xxxxxx 126
Xxxxxxx, Xxxxx X. 84
Xxxxxxxx, Xxxxxxx X. 84
Xxxxxxx, Xxxx X. 147
Xxxxxxxx, Xxxx X. 42
Xxxxxxxx, Xxxx X. 189
Xxxx, Xxxxxx X. 42
Xxxxxx, Xxxxxx X. 63
Xxxxx, Xxxxxx X. 231
Xxxxxx, Xxxxxxxx 84
Xxxxxxx, Xxxxxxx X. 105
Xxxx, Jr., Xxxxxxxxx X. 147
Xxxxxxx, Xxxxxx X. 147
Xxxxxxx, Jr., Xxxx X. 147
Xxxxxxxxx, Xxxx 189
Xxxxxx, Xxxxx X. 315
Xxxxxxxx, Xxxxxxx X. 147
Xxxxxxx, Xxxx X. 63
Xxxxx, Xxxxx X. 147
Xxxxxxx, Xxxxxxxx X. 42
TOTAL: 2,709
7
Attachment 3.2(c)
The holders of options to purchase shares of the Company's Series C Stock under
the 1995 Plan are as follows:
Xxxxxxxx, Xxxx X. 9,775
Xxxxx, Jr., Xxxx X. 1,367
Been, Xxxxx 3,573
Xxxxxx, Xxxxxxx X. 2,733
Xxxxx, Xxxxxxx 3,080
Xxxxx, Xxxx 1,419
Xxxxxxx, Xxxxxxx X. 5,151
Xxxxxxxxxxx, Xxxx T 631
Xxxxxxx, Xxxxx X. 1,471
Xxxx, Xxxxxxxxx Xxxx 4,788
Xxxxxxx, Xxxx X. 2,102
Xxxxxxx, Xxxxxxx Seemel 1,219
Xxxxx, Xxxx 1,471
Xxx, Xxxx X. 946
Xxxxxxxxxx, Xxxxxxx X. 2,018
Xxxxxxx, Xxxxx X. 3,784
Gannes, Xxxxxx X. 3,363
Xxxxxxxxxx, Xxxx 4,099
Xxxxxxx, Xxxxx L 526
Xxxxxxxxx, Xxxx X. 631
Xxxxxxxxx, Xxxxxxx X. 1,261
Xxxxxxx, Xxxxxxx X. 1,934
Xxxxxxx, Xxxxxxx 31,530
Xxxxxxx, Xxxxxx X. 1,471
Irish, Xxxxxx X. 2,102
Xxxxxxx, Xxxxx 2,812
Xxxxxxxx, Xxxxxxx X. 12,034
Xxxx, Xxxx 1,708
Xxxxx, Xxxx Xxxxxx 3,627
Xxxxxxx, Xxxxxxxxxxx X. 1,682
Xxxxxxxxx, Xxxx 445
Xxxxx, Xxxxxxx X. 2,575
Xxxx, Xxxxxx X. 1,471
Xxxx, Xxxxx X. 578
Xxxxxxx, Xxxxxx 420
XxXxxxxxxx, Xxxxx X. 5,150
Xxxxxx, Xxxxx X. 946
Xxxxxxx, Xxxxxxx 3,153
Xxxxxxx, Xxxx 1,366
Xxxxxxxxx III, Xxxxxxx X. 84,081
8
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Xxxxxxxx, Xxx X. 1,051
Xxxxx, Xxxx 2,733
Xxxxx, Xxxxxx X. 5,255
Xxxxx, Xxxxxx 1,682
Xxxxxxx, Xxxxxxxx 1,072
Xxxxxxxxx, Xxxxx X. 2,102
Xxxxxxxx, Xxxxx 2,985
Xxxx, Xxxxxx 876
True, Xxxx 715
Xxxxx, Xxx X. 1,240
Xxxxxxx, Xxxxxx Katie 1,262
Xxxx, Xxxxx (Xxxxxx) 1,997
Total 237,461
9
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Attachment 3.2(d)
The holders of options to purchase shares of the Company's Series C Preferred
Stock under the 1994 Plan are as follows:
Xxxx, Xxxxxx 2,206
Xxxxxx, Xxxx 794
Xxxxx, Xxxxxx 441
Xxxxxxxxx, Xxxxxx 4,412
TOTAL 7,853
10
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Attachment 3.2(e)
The record holders of the Company's Common Stock are as follows:
Xxxxxx Xxxxxxx & Co., Incorporated 1
Xxxxxx X. Xxxxxxx as Trustee for the Xxxxxx X. Xxxxxxx Living Trust 25,000
Lushtak Family Living Trust DTD 8/9/99 125,000
Black, Mackey G. 798
Xxxxx, Xxxxx X. 3,981
Xxxxxx, Xxxxx X. 13,506
Xxxxx, Xxxx X. Xx. 1,700
Xxxxx, Xxxxxx X. 174
Xxxxxx, Xxxx X. Xx. 18,750
Xxxxxxx, Xxxxxxx 5,161
Xxxxx, Xxxxx X. 509
Xxxxxx, Xxxxxx X. 840
Xxxxx, Xxxxx X. or Xxxx Xxxxxx 1,000
Xxxxxx, Xxxxxxxxxxx 1,500
Xxxxxxx, Xxxxxx 1,950
XxXxxxx, Xxxx 13,826
TOTAL 213,696
11
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Attachment 3.2(f)
The record holders of the Company's Series A Preferred Stock are as follows:
ITT Industries, Inc. 8,051,273
TOTAL: 8,051,273
Attachment 3.2(g)
The record holders of the Company's Series B Preferred Stock are as follows:
Xxxxxx Xxxxxxx & Company Inc. 4,830,763
Bridgecabin & Co. 80,513
Xxxx & Co. 1,851,793
Movepass & Co. 322,051
Waterfish & Co. 966,153
TOTAL: 8,051,273
Attachment 3.2(h)
The record holders of the Company's Series C Preferred Stock are as follows:
Alta V Limited Partnership 403,783
Xxxxxxx, Xxx 3,825
Xxxxxxxx, Xxxx 243
Ball Technologies Holdings Corp. 4,436,846
Xxxxxxx, Xxxxx 3,961
Xxxxxxx, Xx Xxx 447
Xxxxxxx, Xxxxxx 1,041
Xxxxxx, Xxxxxxx 80,078
Black, Xxxxxx 299
Xxxxxxxx, Xxxxxx 000
Xxxxxxxx, Xxxxx 1,211
Xxxxxx, Xxx 243
Xxxxxx, Xxxxxxx 3,764
Xxxxxxx, Xxxxxx 2,461
Cede & Co. 14,947,919
Xxxxx, Xxxxx 42,504
Xxxxxxx, Xxxxxxxx 1,437
Xxxxxxx, Xxxxxxx 1,835
Xxxxxxx, Xxxx & Luther 5,100
Customs House Partners 4,258
12
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Datron/Transco Inc. 56,769
Xxxxxxx, H. Xxxx 1,602
Xxxxxxxxx Xxxxxx and Xxxxxx X. Xxxxxxx, as Trustees of the
Alelxander X. Xxxxxxx Irrevocable Gift Trust DTD 11/20/92 98,785
Export Development Corporation 204,021
Eye Fund 63,757
Xxxxxx, Xxxxxx 1,198
Xxxxxxxx, Xxxxxx 76,508
Xxxxxxx, Xxxxxx 49
Xxxxx, Xxxxx 9,259
Gannes, Xxxxxx X. & Xxxxx X. Xxxxxx as Trustees of the
Family 2000 Trust Gannes 66,306
Xxxxxx, Xxxxxxx 235,102
Xxxxxx, Xxxxx 19,924
Xxxxxxxx, Xxxxxxx 17,851
Xxxxxx, Xxxxxxx 22,356
Xxxxxx Xxxxxxxxx Revocable Living Trust 5,100
Xxxxxxxxxxx, Xxxxx 364
Xxxx, Xxxxx 2,549
Xxxxxxx, Xxxxxxx 12,151
Xxxxx, Xxxxxxx 6,949
Hitachi, Ltd. 530,158
Xxxxxxx, Xxxxxx 887
Xxxxxxx, Xxxxxx 42,504
Xxxxxxx, Xxxx 1,215
Xxxxxxxxxxx, Xxxxx 1,530
Xxxxx, Xxxxxxx 4,250
Xxxxxxx, Xxxxxxx 1,912
Kurosaki, Morio 1,530
Xxx, Man 42,504
Xxx, Xxxx 3,825
Xxxxxx, Xxxxxxxxxxx 300
Xxxx, Xxxxx 291
Xxxxxxxxx Xxxxxxx TTEE and Xxxx Xxxxxxx TTEE 17,341
Xxxxxxx, Xxxxxx and Xxxxxx Xxxxxxx & Xxxx Xxxxxxx as Joint
Tenants 43,354
XxxXxxxxx, Xxxxxxxxx & Associates, Ltd. 102,011
Xxxxxxxxxx, Xxxxx 96,629
Matsumoto , Sumitaka 1,530
XxXxxxx, Xxxx 16,879
Xxxxxxxx, Xxxxx 5,100
Okachi, Tomio 1,530
Orbital Sciences 259,807
Xxxxxx, Xxxxx 262
Park, Xxx-Xxxx 27,032
13
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Xxxxxx, Xxxx 3,264
Xxxxxx, Xxxxxx 230
Xxxxxxxx, Xxxxxx 81,608
Xxxxxxx, Xxxxxxx 1,530
Xxxxx Xxxx Trust, U/A DTD 2/16/94 8,500
Xxxxx, Xxxxxxxx 641
Sasaki, Shinichi 1,530
Xxxxxxxxx, Xxxxx 3,570
Xxxxx, Xxxxxxx & Xxxxxx 21,251
Xxxxx, Xxxx 1,215
Scott, Sidner 7,421
Xxxxx, Xxxxxx X. and Xxxxx Xxxx Xxxxx, or their Successors in 573,838
Trust Under the Xxxxxx and Xxxxx Xxxxx Living Trust DTD
3/19/00
Xxxx, Xxxxxxx 2,583
Xxxxx, Xxxxx 2,461
Xxxxx, Xxxxxxxx 1,274
Xxxxxx, Xxxxxx 728
Technology Venture Investors IV 331,534
TELESPAZIO S.P.A. 688,571
Xxxxxx, Xxxxxx 5,100
Xxxxxxxx, Xxxxx X. 10
Xxxxxx, Xxxxx 2,430
Xxxxxx Xxxxxxx as Trustee for the Xxxxxx X. Xxxxxxx 180,571
Transcorp C/f Xxxxxx X. Xxxxxxx 5,100
Trust Company of America FBO Xxxxxx Xxxxx 10,201
Wallerstein Family Revocable Trust Xxxxxx X. Xxxxxxxxxxx and 28,946
Xxxxxxxx X. Xxxxxxxxxxx, Trustees
Xxxxxxxx, Xxxxxx 2,461
Xxxxxxx, Xxxxxx 5,100
Xxxxxxx. Xxxxxx 1,842
G. Xxxxxxx Xxxxxxxxx and Xxxxx X. Xxxxxxxxx, as Trustees of 1,785
Wirtenson Family Trust UTD 4/12/95
Xxx, Xxxxxx 2,549
Zuo, Ming 243
Total 25,022,561
14
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.3
Subsidiaries
The Company has interests in the following subsidiaries:
---------------------------------------------------------------------------------------------------------------
Issued and The
Authorized Outstanding Company's
Type of Jurisdiction Capital Shares of Current
Entity Entity of Stock Capital Ownership
Incorporation Stock
---------------------------------------------------------------------------------------------------------------
EarthWatch Satellite Corporation Delaware 10 shares of 10 shares of 100%
Corporation Common Common
Stock Stock
---------------------------------------------------------------------------------------------------------------
EarthWatch-Mississippi Corporation Mississippi 100 shares of 100 shares of 100%
Operations Incorporated Common Common
Stock Stock
---------------------------------------------------------------------------------------------------------------
15
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.4
Stockholder Approvals Required
(a) Reference is made to the disclosure set forth in Section 3.2(g)-(i) which
is incorporated herein by reference.
The following approvals are required from the holders of the Existing
Preferred Stock in order to amend the Company's Certificate of
Incorporation:
(i) the majority vote of the Directors elected by the holders of the
outstanding shares of Series A Preferred Stock, and the majority vote of
the Directors elected by the holders of the outstanding shares of Series B
Preferred Stock.
(b) Reference is made to the disclosure set forth in Section 3.2(a)-(c) and
(f)-(i) which is incorporated herein by reference.
The following approvals are required from the holders of Existing Common
and Preferred Stock in order to amend the Company's Certificate of
Incorporation:
(i) on an "as converted to common stock" basis, the affirmative vote of the
holders of Existing Preferred and Common Stock.
16
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.5
No Conflict
(a) The Company must obtain the approvals set forth in Section 3.4 in order to
effectuate the Charter Amendments.
17
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.6
Consents and Approvals
The Company will not be able to effectuate the Charter Amendments until an
amendment to the Amended and Restated Certificate of Incorporation is filed with
the Secretary of the State of Delaware.
18
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.8
Absence of Undisclosed Liabilities and Liens
(a) No exceptions.
(b) No exceptions.
19
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.9
Absence of Certain Changes or Events
Since the 2000 Balance Sheet Date, the Company has undertaken the following
actions:
The Board of Directors of the Company has approved cash bonuses in the
aggregate amounts from $1,482,400 to $2,326,272 for the Company's employees
payable at the end of 2001. Such payments are not a material change in the
overall compensation structure of the Company.
20
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.10
Absence of Litigation
No exceptions.
21
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.11
Compliance with Laws
No exceptions.
22
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.12
Licenses and Permits
(a) The Company has a license from the National Oceanic and Atmospheric
Administration ("NOAA") which is necessary to operate the Business as
currently conducted. The transactions contemplated by the Agreement will
not require a modification to the NOAA license.
(b) The Company has a license from the Federal Communications Commission
("FCC") which is necessary to operate the Business as currently conducted.
The transactions contemplated by the Agreement will not require a
modification to the FCC license.
(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 Administration.
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 adminstered 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 the
discussion related to the launch insurance contract that the Company will
enter into with an underwriter to be identified. The Company has retained
outside counsel to provide specific advice and representation in this area.
(c) Reference is made to the disclosure set forth in Section 3.18(c) which is
incorporated herein by reference.
23
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.13
Sufficiency and Condition of Assets
No exceptions.
24
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
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 15,1995 through Xxxxx Land Limited
Longmont, Colorado February 28, 2002 as Liability Company
amended
-----------------------------------------------------------------------------------------------
Land Fairbanks, Alaska August 9, 1995 through Xxxxx X. Xxxxxxxxx
July 10, 2005
-----------------------------------------------------------------------------------------------
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.
25
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
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 Term Disability Program
(4) Long Term Disability Program
(5) Life Insurance
(6) Paid Time Off
(7) EarthWatch Incorporated 401(k) Profit Sharing Plan
(8) Employee Assistance Program
(9) Tuition Reimbursement Program
(b) 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.
(c) The Company's Medical/Dental/Vision Plan is partially self-funded with an
insurance company contract for amounts claimed over certain specified
levels.
(d) Reference is made to the disclosure set forth in Section 3.9which is
incorporated herein by reference.
26
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.16
Labor Matters
No exceptions.
27
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.17
Taxes
No exception.
28
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
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 2 satellite with hydrazine. The
Company will acquire the appropriate licenses for this fueling including a
Department of Transportation waiver. These licenses have not been applied
for at this time.
29
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
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. Operation 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. Additionally, 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.
(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 (which was purchased by Orbital
Sciences Corporation (OSC)), Spacetec Incorporated and assorted
smaller vendors to provide the EarlyBird spacecraft. Operation 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. 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 it life or the program is
terminated.
(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.
30
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
(5) QuickBird Information License- EarthWatch has provided licenses to use
the information necessary to provide QuickBird ready ground stations
to a number of ground station suppliers.
(6) 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 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.
(5) 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.
(6) 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 a on-orbit propagator
which models atmospheric drag, J2
31
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
effect and lunar perturbations and software and notes relating to
diabetes management and blood glucose prediction and
tracking/trending.
(7) 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. The Company was also granted rights certain
patents in the merger agreement of 1995 from Ball Corporation.
(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. U.S. registration has been applied for.
(5) The phrase "SOO" is an abbreviation of Second On Orbit and is a U.S.
registered trademark of EarthWatch.
(6) 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 including the
Millennium Mosaic.
(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.
32
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.20
Material Contracts
(a) Reference is made to the list of exhibits in the Company's Form S-1/A filed
February 14, 2001, with the Securities and Exchange Commission which is
incorporated herein by reference. Since the filing of the Company's Form
S-1/A, the following are Material Contracts 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) Delta Launch Services Contract - In February 2001, the Company signed
an agreement with Delta Launch Services, Inc. ("Delta"), whereby Delta
would provide launch and associated services for a QuickBird 2 launch
by October 15, 2001, at a total price of $41,500,000. This contract
was approved by the Board of Directors and became effective on March
15, 2001.
(2) Reference is made to the disclosure set forth in Section 3.19(b) which
is incorporated herein by reference.
(3) Reference is made to the disclosure set forth in Section 3.25 which is
incorporated herein by reference.
(c) Delta Launch Services Contract referred to in Schedule 3.20(a)(1) above.
33
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.21
Exemption from Registration
No Exception
34
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.22
Insurance
No Exceptions
35
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.23
Brokers
No Exceptions
36
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.24
Indenture
The Company was required to register the 12 1/2% notes. The SEC has not
declared the registration effective at this time.
37
Recapitalization Agreement and Consent
Disclosure Schedule
March 29, 2001
Section 3.25
Transactions with Affiliates
(a) Reference is made to the disclosure set forth in Section 3.19(d) which is
incorporated herein by reference.
(b) Reference is made to the disclosure set forth in Section 3.20(a) 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 ITT Industries, Ball Corporation,
Datron/Transco, Inc., MDA and 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) Hitachi Software Engineering Co., Ltd., a stockholder of the Company, has
proposed to supply the Company with a complete QuickBird product processor.
(e) Xxxxxx Xxxxxxx & Co., Incorporated, a stockholder of the Company, has been
engaged as the Company's financial adviser pursuant to an Advisory
Agreement dated April 5, 1999 between the Company and Xxxxxx Xxxxxxx & Co.
Incorporated.
(f) Xxxxxxxxx X. Xxxxxxx, an EarthWatch director, is a member of the Board of
Directors of the Company. He is also the Chairman of the Board of United
Start and the Chairman of the Board and Chief Executive Officer of ASA.
Xxxxxxxxx X. Xxxxxxx is a stockholder of ASA. The Company is a stockholder
of ASA.
Xxxxxx X. Xxxxx, an EarthWatch director and the Company's Chief Technical
Officer is a stockholder of ASA. The Company is a stockholder of ASA.
(g) 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.
38
SCHEDULE 3
----------
DISTRIBUTION SCHEDULE FOR SERIES C PREFERRED
Noteholder's Name Number of shares of New Series C
Preferred Stock to be issued
Xxxxxx Xxxxxxx & Co. Incorporated 6,757,198
Post Balanced Fund 227,005
Post High Yield LP 264,840
Post Total Return Fund 113,503
Opportunity Fund 454,011
Xxxxxxxxx & Co., L.P. 454,011
Xxxxxxxxx International LTD 151,337
Hitachi Software Engineering Co., Ltd. 1,967,381
Sun America High Income Fund 151,337
Sun America Series Trust High Yield Portfolio 302,674
