SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
April 2, 2001
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EARTHWATCH INCORPORATED
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of Incorporation)
333-39202 31-1420852
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(Commission (IRS Employer
File Number) Identification No.)
1900 Pike Road, Longmont, Colorado 80501
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(Address of principal executive offices) (Zip code)
(303) 682-3800
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(Registrant's telephone number, including area code)
Item 5. Other Events.
On February 28, 2001, pursuant to an Offer to Purchase for Cash, we made an
offer to purchase all of our outstanding 13% Senior Discount Notes due 2007 and
12 1/2% Senior Notes due 2005 at their accreted value on the date of purchase
with the approximately $265 million of insurance proceeds relating to the loss
of our QuickBird 1 satellite in November 2000. The Offer expired on April 2,
2001, and we repurchased all outstanding 12 1/2% notes and $127.3 million in
principal amount at maturity of outstanding 13% notes on April 3, 2001.
In connection with the Offer, we entered into a Recapitalization Agreement
and Consent dated as of April 2, 2001, attached hereto as Exhibit 2.2, with
certain holders of our 13% notes. Pursuant to the Recapitalization Agreement,
certain of the holders of 13% notes agreed to refrain from tendering their notes
in the Offer, thus allowing us to have the use of the funds that would otherwise
be used to repurchase their notes.
On April 3, 2001, pursuant to the Recapitalization Agreement, we entered
into:
. a Notes Registration Rights Agreement, attached hereto as Exhibit
4.10, which provides certain registration rights to Morgan
Stanley & Co. and other holders of the 13% notes that purchase
notes from Morgan Stanley;
. a Series C Preferred Registration Rights Agreement, attached
hereto as Exhibit 4.11, which provides certain registration
rights with respect to shares of our common stock issuable upon
conversion of the shares Series C preferred stock to be issued
pursuant to the Recapitalization Agreement; and
. a Pledge Agreement, attached hereto as Exhibit 4.12, with The
Bank of New York, as trustee and as securities intermediary,
pursuant to which we agreed to pledge to the trustee, for the
benefit of the holders of the 13% notes, United States government
securities in an amount equal to the aggregate accreted value of
all outstanding 13% notes on August 1, 2001.
On April 16, 2001, pursuant to the Recapitalization Agreement, we entered
into the First Supplemental Indenture to the Indenture, attached hereto as
Exhibit 4.13, which governs our 13% notes and requires us, among other things,
to (a) obtain launch and in-orbit operations insurance in respect of our
anticipated QuickBird 2 satellite and (b) make an offer to repurchase the 13%
notes at their accreted value on the date of repurchase (I) in the event all of
the contemplated transactions are not completed by June 15, 2001 and to
consummate the offer to repurchase no later than August 1, 2001, and (II) within
30 days of receipt by the collateral trustee of any proceeds under the QuickBird
2 insurance policy and to consummate such offer to repurchase no later than 60
days after the commencement of the offer.
In the Recapitalization Agreement, we also agreed, that we would, among
other things, by no later than June 15, 2001:
. obtain at least $9 million of vendor financing from Ball
Aerospace & Technologies Corp.;
. amend our certificate of incorporation to (a) require that we
purchase, at each holder's option, that holder's shares of our
Series A and B preferred stock, if an insurable event occurs
under the QuickBird 2 insurance policy, (b) increase the number
of authorized shares of our common stock and each series of our
preferred stock, and (c) extend the time period by one year
during which holders of our preferred stock may convert their
shares into shares of our common stock;
. issue 10,843,297 additional shares of our Series C preferred
stock to the holders of 13% notes that signed the
Recapitalization Agreement;
. purchase QuickBird 2 insurance in an amount no less than $155
million; and
. pledge the QuickBird 2 insurance in favor of The Bank of New
York, as collateral agent for (a) the holders of the 13% notes
and for Ball Aerospace, and (b) the holders of our Series A
preferred stock and Series B preferred stock.
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We cannot assure you that the contemplated transactions will be completed.
If we do not, among other things, consummate the transactions required to be
consummated by April 25, 2001 or June 15, 2001, we must commence on the next
business day and complete within 20 business days thereafter an offer to
purchase all of the then-outstanding 13% notes for a purchase price equal to
their accreted value as of the date of purchase.
The foregoing description is qualified in its entirety by the terms and
conditions of the Recapitalization Agreement, the Notes Registration Rights
Agreement, the Series C Preferred Registration Rights Agreement and the Pledge
Agreement, in each case including the exhibits and schedules thereto, each of
which agreements is filed as an exhibit to this Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit No. Description
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2.2 Recapitalization Agreement and Consent dated as of
April 2, 2001 by and among EarthWatch Incorporated,
Morgan Stanley & Co. Incorporated, Post Balanced Fund,
Post High Yield LP, Post Total Return Fund, Opportunity
Fund, Dickstein & Co., L.P., Dickstein International
Limited, Hitachi Software Engineering Co., Ltd., Sun
America High Income Fund and Sun America Series Trust
High Yield Portfolio.
4.10 Notes Registration Rights Agreement dated as of April
3, 2001 by and among EarthWatch Incorporated, The Bank
of New York and Morgan Stanley & Co. Incorporated.
4.11 Series C Preferred Registration Rights Agreement dated
as of April 3, 2001 by and among EarthWatch
Incorporated, Morgan Stanley & Co. Incorporated, Post
Balanced Fund, Post High Yield LP, Post Total Return
Fund, Opportunity Fund, Dickstein & Co., L.P.,
Dickstein International Limited, Sun America High
Income Fund, Sun America Series Trust High Yield
Portfolio, Hitachi Software Engineering Co., Ltd. and
Ball Technologies Holdings Corp.
4.12 Pledge Agreement dated as of April 3, 2001 by and among
EarthWatch Incorporated, The Bank of New York, as
trustee, and The Bank of New York, as securities
intermediary.
4.13 First Supplemental Indenture to the Indenture dated as
of April 16, 2001 by and between EarthWatch
Incorporated and The Bank of New York, as trustee.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EARTHWATCH INCORPORATED
Dated:April 20, 2001 By: /s/ Henry E. Dubois
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Henry E. Dubois
Chief Operating Officer,
Chief Financial Officer,
Executive Vice President
(Principal Financial and Accounting Officer)
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EXHIBIT INDEX
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Exhibit No. Description
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2.2 Recapitalization Agreement and Consent dated as of
April 2, 2001 by and among EarthWatch Incorporated,
Morgan Stanley & Co. Incorporated, Post Balanced Fund,
Post High Yield LP, Post Total Return Fund, Opportunity
Fund, Dickstein & Co., L.P., Dickstein International
Limited, Hitachi Software Engineering Co., Ltd., Sun
America High Income Fund and Sun America Series Trust
High Yield Portfolio.
4.10 Notes Registration Rights Agreement dated as of April
3, 2001 by and among EarthWatch Incorporated, The Bank
of New York and Morgan Stanley & Co. Incorporated.
4.11 Series C Preferred Registration Rights Agreement dated
as of April 3, 2001 by and among EarthWatch
Incorporated, Morgan Stanley & Co. Incorporated, Post
Balanced Fund, Post High Yield LP, Post Total Return
Fund, Opportunity Fund, Dickstein & Co., L.P.,
Dickstein International Limited, Sun America High
Income Fund, Sun America Series Trust High Yield
Portfolio, Hitachi Software Engineering Co., Ltd. and
Ball Technologies Holdings Corp.
4.12 Pledge Agreement dated as of April 3, 2001 by and among
EarthWatch Incorporated, The Bank of New York, as
trustee, and The Bank of New York, as securities
intermediary.
4.13 First Supplemental Indenture to the Indenture dated as
of April 16, 2001 by and between EarthWatch
Incorporated and The Bank of New York, as trustee.
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