Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance
Sheet Arrangement
of a Registrant
Indenture
On
April 10, 2017, ORBCOMM Inc. (the Company) issued $250 million aggregate principal amount of 8.0% senior secured notes due 2024 (the Notes) in a private offering. The Notes were issued pursuant to an indenture,
dated as of April 10, 2017, among the Company, certain of its domestic subsidiaries party thereto (the Guarantors) and U.S. Bank National Association, as trustee and collateral agent (the Indenture). The Notes are
unconditionally guaranteed on a senior secured basis by the Guarantors, and the Notes are secured on a first priority basis by (i) pledges of capital stock of certain of the Companys and the Guarantors subsidiaries; and
(ii) substantially all of the other property and assets of the Company and the Guarantors, to the extent a first priority security interest is able to be granted or perfected therein, and subject, in all cases, to certain specified exceptions.
Optional Redemption
The Company
will have the option to redeem some or all of the Notes at any time on or after April 1, 2020, at redemption prices set forth in the Indenture plus accrued and unpaid interest, if any, to the date of redemption. The Company will also have the
option to redeem some or all of the Notes at any time before April 1, 2020 at a redemption price of 100% of the principal amount of the Notes to be redeemed, plus a make-whole premium and accrued and unpaid interest, if any, to the
date of redemption.
In addition, at any time before April 1, 2020, the Company may redeem up to 35% of the aggregate principal amount of the Notes
to be redeemed, plus accrued and unpaid interest, if any, to the date of redemption, with the proceeds from certain equity issuances.
Certain Covenants
The Indenture contains
covenants that, among other things, limit the Companys and its restricted subsidiaries ability to: (i) incur or guarantee additional indebtedness; (ii) pay dividends, make other distributions or repurchase or redeem capital
stock; (iii) prepay, redeem or repurchase certain indebtedness; (iv) make loans and investments; (v) sell, transfer or otherwise dispose of assets; (vi) incur or permit to exist certain liens; (vii) enter into certain types
of transactions with affiliates; (viii) enter into agreements restricting the Companys subsidiaries ability to pay dividends; and (ix) consolidate, amalgamate, merge or sell all or substantially all of their assets; subject, in
all cases, to certain specified exceptions. Such limitations have various exceptions and baskets as set forth in the Indenture, including the incurrence by the Company and its restricted subsidiaries of indebtedness under potential new credit
facilities in the aggregate principal amount at any one time outstanding not to exceed $50 million. In the event the Company incurs future first lien indebtedness, including under the potential new credit facilities, the Company will enter into an
intercreditor agreement substantially in the form attached as an exhibit to the Indenture.
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Upon certain change of control events, holders of the Notes will have the right to require the Company to make an
offer to purchase each holders Notes at a price equal to 101% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to the repurchase date.
The foregoing descriptions of the Indenture and the Notes are only summaries and are qualified in their entirety by reference to the full text of the
Indenture (including the form of Notes attached as an exhibit thereto), a copy of which is attached hereto as Exhibit 4.1 to this Report and is incorporated herein by reference.
Security Agreement
On April 10, 2017, the
Company and the Guarantors entered into a first lien security agreement (the Security Agreement) in favor of U.S. Bank National Association, as collateral agent (the Collateral Agent). Under the Security Agreement, the
Company and the Guarantors granted to the Collateral Agent, on behalf of and for the ratable benefit of the holders of the Notes, a security interest in substantially all of their personal property, to the extent a first priority security interest
is able to be granted or perfected therein, and subject to exclusions identified in the Security Agreement.
The foregoing description of the Security
Agreement is a summary only and is qualified in its entirety by reference to the full text of the Security Agreement, a copy of which is included as Exhibit 4.2 to this Report and incorporated herein by reference.
Termination of Existing Credit Facility
On April
10, 2017 a portion of the proceeds of the Notes was used to repay in full the Companys outstanding obligations under and terminate the Companys existing $160 million credit facilities (the Existing Credit Facilities) incurred
pursuant to a credit agreement dated September 30, 2014 among the Company, Macquarie CAF LLC, as administrative agent, and the other lenders party thereto. As of such date, $150 million of term loans were outstanding under the Existing Credit
Facilities.
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