10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For Annual and Transition Reports

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

(Mark One)
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2004
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from           to

Commission file number 1-14279

ORBITAL SCIENCES CORPORATION

(Exact name of registrant as specified in charter)

Delaware	06-1209561
(State or Other Jurisdiction of Incorporation or Organization of Registrant)	(I.R.S. Employer Identification No.)
21839 Atlantic Boulevard, Dulles, Virginia	20166 (Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code:

(703) 406-5000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share	The New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ     No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes þ     No o

     The aggregate market value of the voting common equity held by non-affiliates of the registrant based on the closing sales price of the registrant’s Common Stock as reported on The New York Stock Exchange on June 30, 2004 was approximately $669,900,000. The registrant has no non-voting common equity.

     As of March 1, 2005, 55,523,954 shares of the registrant’s Common Stock were outstanding.

     Portions of the registrant’s definitive proxy statement to be filed on or about March 22, 2005 are incorporated by reference in Part III of this report.

________________________________________________________________________________

TABLE OF CONTENTS

Item		Page
	PART I
Item 1.	Business		1
Item 2.	Properties		13
Item 3.	Legal Proceedings		13
Item 4.	Submission of Matters to a Vote of Security Holders		14
Item 4A.	Executive Officers of the Registrant		14
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		16
Item 6.	Selected Financial Data		17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		31
Item 8.	Financial Statements and Supplementary Data		32
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		57
Item 9A.	Controls and Procedures		57
Item 9B.	Other Information		58
	PART III
Item 10.	Directors and Executive Officers of the Registrant		58
Item 11.	Executive Compensation		58
Item 12.	Security Ownership of Certain Beneficial Owners and Management		58
Item 13.	Certain Relationships and Related Transactions		58
Item 14.	Principal Accountant Fees and Services		58
	PART IV
Item 15.	Exhibits, Financial Statement Schedules		59

Pegasus is a registered trademark and service mark of Orbital Sciences Corporation; Taurus is a registered trademark of Orbital Sciences Corporation; Orbital is a trademark of Orbital Sciences Corporation.

PART I

Item 1.  Business

General

   We design, develop, manufacture and operate small rockets and space systems for the U.S. Department of Defense (“DoD”) and other U.S. government agencies and for global commercial and scientific customers. We define small rockets and space systems to include the following major product lines:

•  Rockets that are used as interceptor and target vehicles for missile defense systems;

•  Small-class launch vehicles that place satellites weighing up to 4,000 lbs. into low-Earth orbit;

•  Low-Earth orbit, or LEO, satellites weighing up to 5,000 lbs. which are used for communications, remote sensing, scientific and military missions; and

•  Geosynchronous Earth orbit, or GEO, communications satellites weighing up to 5,000 lbs.

   Orbital was incorporated in Delaware in 1987 to consolidate the assets, liabilities and operations of two entities established in 1982 and 1983.

   It has been our general strategy to develop and expand a core integrated business of space systems technologies and products, focusing on the design and manufacturing of affordable lightweight rockets, small satellites and other space systems in order to establish and expand positions in niche markets that have not typically been emphasized by our larger competitors. It is also part of our strategy to seek contracts that will fund the development of enhancements to our existing launch vehicle and space systems product lines. As a result of our capabilities and experience in designing, developing, manufacturing and operating a broad range of small rockets and space systems, we believe we are well positioned to capitalize on the demand for small space-technology systems in missile defense, spaced-based military and intelligence operations, and commercial satellite communications programs, and to take advantage of continuing government-sponsored initiatives for space-based scientific research and lunar and planetary exploration initiatives.

   Our executive offices are located at 21839 Atlantic Boulevard, Dulles, Virginia 20166 and our telephone number is (703) 406-5000.

Available Information

   We maintain an Internet website at www.orbital.com. In addition to news and other information about our company, we make available on or through the Investor Information section of our website our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and all amendments to these reports as soon as reasonably practicable after we electronically file this material with, or furnish it to, the Securities and Exchange Commission.

   At the Investor Information section of our website, we have a Corporate Governance page that includes, among other things, copies of our Code of Business Conduct and Ethics, our Corporate Governance Guidelines and the charters for each standing committee of the Board of Directors, including the Audit and Finance Committee, the Corporate Governance and Nominating Committee and the Human Resources and Compensation Committee.

   Printed copies of all of the above-referenced reports and documents may be requested by contacting our Investor Relations Department either by mail at our corporate headquarters, by

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telephone at (703) 406-5543 or by e-mail at investor.relations@orbital.com. All of the above-referenced reports and documents are available free of charge.

Description of Orbital’s Products and Services

   Our products and services are grouped into three reportable segments that are described more fully below: launch vehicles (formerly launch vehicles and advanced programs), satellites and related space systems and transportation management systems. Our business is not seasonal. Customers that accounted for 10% or more of our consolidated revenues in 2004 were The Boeing Company (“Boeing”), DoD and the National Aeronautics and Space Administration (“NASA”).

   Launch Vehicles. Our launch vehicles segment is involved in developing and producing interceptor launch vehicles, suborbital launch vehicles and space launch vehicles, and designing and demonstrating launch vehicle technologies for advanced space and suborbital programs.

   Interceptor Launch Vehicles. We develop and produce interceptor launchers that boost “kill vehicles” to intercept hostile ballistic missiles and targets. Pursuant to a contract with Boeing, we are the primary supplier of operational and test interceptor boosters for the U.S. Missile Defense Agency’s (“MDA”) Ground-based Midcourse Defense (“GMD”) program, for which our interceptor boost vehicle, a modified version of our Pegasus rocket, is being used as a major operational element in the U.S. national missile defense system. We have also been awarded a contract to develop and produce a boost vehicle for MDA’s Kinetic Energy Interceptor (“KEI”) program. During 2004, we had one successful GMD interceptor flight test and delivered 10 GMD interceptors, including eight operational vehicles.

   Suborbital Launch Vehicles. We design and produce suborbital launch vehicles that place payloads into a variety of high-altitude trajectories, but unlike space launch vehicles, do not place payloads into orbit around the Earth. Our suborbital launch products include suborbital rockets and their principal subsystems, as well as payloads carried by such vehicles.

   Various branches and agencies of the U.S. military, including MDA, also use our suborbital launch vehicles as targets for defense-related applications such as ballistic missile interceptor testing and related experiments. These rockets are programmed to simulate incoming enemy missiles, offering an affordable and reliable means to test advanced missile defense systems. Our family of targets extends from long-range target launch vehicles, which include the primary targets for testing the MDA’s GMD system, to medium- and short-range target vehicles designed to simulate threats to U.S. and allied military forces deployed in overseas theaters. We have also developed a short-range supersonic sea-skimming target that flies just above the ocean’s surface and is currently being tested by the U.S. Navy.

   Since 1982, we have performed a total of 127 interceptor and major suborbital target launch missions, including five successful missions in 2004 and one successful mission so far in 2005.

   Space Launch Vehicles. We developed and produce the Pegasus, Taurus and Minotaur space launch vehicles that are used by commercial, civil government and military customers to launch small- and medium-class satellites into low-Earth orbit. Our Pegasus launch vehicle is launched from our L-1011 carrier aircraft to deploy relatively lightweight satellites into low-Earth orbit. The Taurus launch vehicle is a ground-launched derivative of the Pegasus vehicle that can carry heavier payloads to orbit. The ground-launched Minotaur launch vehicle combines Minuteman II and Peacekeeper ballistic missile rocket motors with our Pegasus and Taurus technology. Since 1990, the Pegasus, Taurus and Minotaur rockets have performed a total of 46 launches. Pursuant to a contract with the U.S. Air Force, we are developing a new class of Minotaur rockets that can carry heavier payloads

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than the Taurus. We carried out one successful Taurus mission in 2004. We did not conduct any Pegasus or Minotaur missions in 2004.

   Our launch vehicle technology has also been the basis for several other advanced space and suborbital programs, including supporting efforts to develop technologies that could be applied to reusable launch vehicles, space maneuvering vehicles, hypersonic aircraft and missiles, and missile defense systems. For example, we are developing for NASA a demonstration vehicle intended to validate technology that will allow spacecraft to rendezvous with other spacecraft without human intervention. Also, during 2004, we successfully launched two Pegasus-derived Hyper-X hypersonic research launchers for NASA.

   Customers that accounted for 10% or more of our launch vehicles segment revenues in 2004 were Boeing, DoD and NASA.

   Satellites and Related Space Systems. We design and manufacture spacecraft, including LEO and GEO satellites and planetary (or “deep space”) spacecraft for communications, remote sensing, scientific, military and technology demonstration missions. Since 1982, we have built and delivered 92 satellites for various commercial and governmental customers for a wide range of communications, broadcasting, remote imaging, scientific and national security applications. In 2004, we had 18 spacecraft in various stages of design, production and/or delivery, including 11 LEO satellites, six GEO satellites and one planetary spacecraft.

   We design and manufacture various other advanced space systems, including satellite command and data handling, attitude control and structural subsystems for a variety of government and commercial customers. In addition, we provide a broad range of space-related technical services, including specialized space-related analytical, engineering and production services for U.S. government agencies such as NASA, the Jet Propulsion Laboratory, the Naval Research Laboratory and the U.S. Department of Energy. Since 1982, we have supplied such systems and services on 24 major space missions and over 100 smaller missions.

   Customers that accounted for 10% or more of our satellites and related space systems segment revenues in 2004 were DoD, NASA and Optus Networks Pty. Limited.

   Transportation Management Systems. Our transportation management systems division develops and produces fleet management systems that are used primarily by metropolitan mass transit operators in the United States. We combine global positioning satellite vehicle tracking technology with terrestrial wireless communications to help transit agencies manage public bus and public works systems. Major customers for our transportation management systems include the metropolitan mass transit authorities in Los Angeles, Philadelphia, Phoenix, San Diego, and a number of other state and municipal transit systems and private vehicle fleet operators. In addition, we have a contract to provide a system to a mass transit service in Singapore. We do not consider this product line to be core to our business.

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Competition

   We believe that competition for sales of our products and services is based on performance, other technical features, reliability, price, scheduling and customization, and we believe that we compete favorably on the basis of these factors. The table below identifies our primary competitors for each major product line.

Product Line	Competitor(s)
Interceptor launch vehicles	Lockheed Martin Corporation Raytheon Company
Target launch vehicles	Lockheed Martin Corporation L-3 Communications, Inc. Space Vector Corporation, a wholly owned subsidiary of Pemco Aviation Group
Space launch vehicles	Russian and other international launch vehicles could represent competition for commercial, as opposed to U.S. government, launches Space Exploration Technologies Corp. (a potential U.S.-based competitor whose launch vehicle is still in the development phase)
GEO communications satellites	The Boeing Company Lockheed Martin Corporation Loral Space and Communications Ltd. Alcatel Alenia Space EADS Astrium
LEO science and technology satellites and interplanetary spacecraft	Ball Aerospace and Technology Corporation Lockheed Martin Corporation General Dynamics Corporation
Military and classified satellites and other space systems	Ball Aerospace and Technology Corporation Lockheed Martin Corporation The Boeing Company General Dynamics Corporation Northrop Grumman Corporation
Space technical services	Jackson and Tull Inc. Northrop Grumman Corporation Raytheon Company Swales Aerospace, Inc.
Transportation management systems	Siemens Corporation

   Many of our competitors are larger and have substantially greater resources than we do. Furthermore, it is possible that other domestic or foreign companies or governments, some with greater experience in the space and defense industry and many with greater financial resources than we possess, will seek to provide products or services that compete with our products or services. Any such foreign competitor could benefit from subsidies from or other protective measures by its home country.

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Research and Development

   We invest in product-related research and development to conceive and develop new products and to enhance existing products. Our research and development expenses totaled approximately $6.3 million, $7.8 million and $4.7 million for the years ended December 31, 2004, 2003 and 2002, respectively. In addition, a large portion of our total new product development and enhancement programs is funded under customer contracts.

Patents

   We rely, in part, on patents, trade secrets and know-how to develop and maintain our competitive position and technological advantage, particularly with respect to our launch vehicle and satellite products. We hold U.S. and foreign patents relating to the Pegasus vehicle, certain of our satellites and other systems and products. The majority of our U.S. patents relating to the Pegasus vehicle expire between 2007 and 2016, and most of our U.S. patents relating to our satellites expire beginning in 2013.

Components, Raw Materials and Carrier Aircraft

   We purchase a significant percentage of our product components, structural assemblies and certain key satellite components and instruments from third parties. We also occasionally obtain from the U.S. government parts and equipment that are used in the production of our products or in the provision of our services. Generally, we have not experienced material difficulty in obtaining product components or necessary parts and equipment and we believe that alternatives to our existing sources of supply are available, although increased costs and possible delays could be incurred in securing alternative sources of supply. We rely upon a sole source supplier for motors used on all our launch vehicles. While alternative sources would be available, the inability of such supplier to provide us with motors could result in significant delays, expenses and loss of revenues. Our ability to launch our Pegasus vehicle depends on the availability of an aircraft with the capability of carrying and launching such space launch vehicle. We own a modified Lockheed L-1011 carrier aircraft that is used to launch the Pegasus vehicle. In the event that our L-1011 carrier aircraft were to be unavailable, we would experience significant delays, expenses and loss of revenues as a result of having to acquire and modify a new carrier aircraft.

U.S. Government Contracts

   During 2004, 2003 and 2002, approximately 80%, 67% and 58%, respectively, of our total annual revenues were derived from contracts with the U.S. government and its agencies or from subcontracts with other U.S. government prime contractors. Most of our U.S. government contracts are funded incrementally on a year-to-year basis.

   Our major contracts with the U.S. government primarily fall into two categories: cost-reimbursable contracts and fixed-price contracts. Approximately 90% and 10% of revenues from U. S. government contracts in 2004 were derived from cost-reimbursable contracts and fixed-price contracts, respectively. Under a cost-reimbursable contract, we recover our actual allowable costs incurred, allocable overhead costs and a fee consisting of a base amount that is fixed at the inception of the contract and/or an award amount that is based on the customer’s evaluation of our performance in terms of the criteria stated in the contract. Our fixed-price contracts include firm fixed-price and fixed-price incentive fee contracts. Under firm fixed-price contracts, work performed and products shipped are paid for at a fixed price without adjustment for actual costs incurred in connection with the contract. Therefore, we bear the risk of loss due to increased cost, although some of this risk

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may be passed on to subcontractors. Fixed-price incentive fee contracts provide for sharing by us and the customer of unexpected costs incurred or savings realized within specified limits, and may provide for adjustments in price depending on actual contract performance other than costs. Costs in excess of the negotiated maximum (ceiling) price and the risk of loss by reason of such excess costs are borne by us, although some of this risk may be passed on to subcontractors.

   All our U.S. government contracts and, in general, our subcontracts with other U.S. government prime contractors provide that such contracts may be terminated for convenience by the U.S. government or the prime contractor, respectively. Furthermore, any of these contracts may become subject to a government-issued stop work order under which we would be required to suspend production. In the event of a termination for convenience, contractors generally are entitled to receive the purchase price for delivered items, reimbursement for allowable costs for work in process and an allowance for reasonable profit thereon or adjustment for loss if completion of performance would have resulted in a loss. For a more detailed description of risks relating to the U.S. government contract industry, see “Risks Related to Our Business and Industry.” We derive a significant portion of our revenues from U.S. government contracts, which are dependent on continued political support and funding and are subject to termination by the U.S. government at any time.

   A portion of our business is classified for national security purposes by the U.S. government and cannot be specifically described. The operating results of these classified programs are included in our consolidated financial statements. The business risks associated with classified programs, as a general matter, do not differ materially from those of our other U. S. government programs and products.

Regulation

   Our ability to pursue our business activities is regulated by various agencies and departments of the U.S. government and, in certain circumstances, the governments of other countries. Commercial space launches require licenses from the U.S. Department of Transportation (“DoT”) and operation of our L-1011 aircraft requires licenses from certain agencies of the DoT, including the Federal Aviation Administration. Our classified programs require that we and certain employees maintain appropriate security clearances. We also require licenses from the U.S. Department of State (“DoS”) and the U.S. Department of Commerce (“DoC”) with respect to work we do for foreign customers or with foreign subcontractors.

Backlog

   Our firm backlog was approximately $1.17 billion at December 31, 2004 and approximately $995 million at December 31, 2003. We expect to convert approximately $535 million of the 2004 year-end firm backlog into revenues during 2005.

   Our firm backlog as of December 31, 2004 included approximately $1.05 billion of contracts with the U.S. government and its agencies or from subcontracts with prime contractors of the U.S. government, of which approximately $615 million is related to contracts for GMD and KEI interceptor launch vehicles. Most of our government contracts are funded incrementally on a year-to-year basis. Firm backlog from government contracts at December 31, 2004 included total funded orders of $135 million and orders not yet funded of $915 million. Changes in government policies, priorities or funding levels through agency or program budget reductions by the U.S. Congress or executive agencies could materially adversely affect our financial condition and results of operations. Furthermore, contracts with the U.S. government may be terminated or suspended by the U.S.

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government at any time, with or without cause. Such contract suspensions or terminations could result in unreimbursable expenses or charges or otherwise adversely affect our business.

   Total backlog was approximately $2.31 billion at December 31, 2004. Total backlog includes firm backlog in addition to unexercised options, indefinite-quantity contracts and undefinitized orders and contract award selections. Backlog at December 31, 2004 does not give effect to new orders received or any terminations or cancellations since that date.

Employees

   As of February 1, 2005, Orbital had approximately 2,450 permanent employees. None of our employees is subject to collective bargaining agreements. We believe our employee relations are good.

* * *

   Financial information about our products and services, domestic and foreign operations and export sales is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the notes to our consolidated financial statements, and is incorporated herein by reference.

Special Note Regarding Forward-Looking Statements

   All statements other than those of historical facts included in this Form 10-K, including those related to our financial outlook, liquidity, goals, business strategy, projected plans and objectives of management for future operating results, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including the risks set forth below, and are based on our current expectations and projections about future events. Our actual results, performance or achievements could be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Although we believe the expectations reflected in these forward-looking statements are based on reasonable assumptions, there is a risk that these expectations will not be attained and that any deviations will be material. We disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained in this Form 10-K to reflect any changes in our expectations or any change in events, conditions or circumstances on which any statement is based.

Risks Related to Our Business and Industry

   Investors should carefully consider, among other factors, the risks listed below.

We derive a significant portion of our revenues from U.S. government contracts, which are dependent on continued political support and funding and are subject to termination by the U.S. government at any time.

   A substantial majority of our revenues and firm backlog is derived from U. S. government contracts. Most of our U.S. government contracts are funded incrementally on a year-to-year basis and are subject to uncertain future funding levels. Furthermore, our direct and indirect contracts with the U.S. government may be terminated or suspended by the U.S. government or its prime contractors at any time, with or without cause. There can be no assurance that government contracts will not be terminated or suspended in the future, or that contract suspensions or terminations will not result in unreimbursable expenses or charges or other adverse effects on our financial condition.

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A decline in U.S. government support and funding for key missile defense and space programs could materially adversely affect our financial condition and results of operations.

   We are also subject to laws and regulations regulating the formation, administration and performance of, and accounting for, U.S. government contracts. With respect to such contracts, any failure to comply with applicable laws could result in contract termination, price or fee reductions, or suspension or debarment from contracting with the U.S. government.

Our U.S. government contracts are subject to audits that could result in a material adverse effect on our financial condition and results of operations if a material adjustment is required.

   The accuracy and appropriateness of our direct and indirect costs and expenses under our contracts with the U.S. government are subject to extensive regulation and audit by the Defense Contract Audit Agency, or by other agencies of the U.S. government. These agencies have the right to audit our cost estimates and/or allowable cost allocations with respect to certain contracts. From time to time we have in the past made and may in the future be required to make adjustments and reimbursements as a result of these audits. Responding to governmental audits, inquiries or investigations may involve significant expense and divert management attention. Also, an adverse finding in any such audit, inquiry or investigation could involve fines, injunctions or other sanctions.

Termination of our backlog of orders could negatively impact our revenues.

   All of our direct and indirect contracts with the U.S. government or its prime contractors may be terminated or suspended at any time, with or without cause, for the convenience of the government. Our contract with Boeing to provide interceptor boosters for MDA’s GMD program is material, and the program’s termination could have an adverse impact on our liquidity and operations. From time to time, certain of our commercial contracts have also given the customer the right to unilaterally terminate the contracts. For these reasons, we cannot assure you that our backlog will ultimately result in revenues.

The majority of our contracts are long-term contracts, and our revenue recognition and profitability under such contracts may be adversely affected to the extent that actual costs exceed estimates or that there are delays in completing such contracts.

   The majority of our contracts are long-term contracts. We generally recognize revenues on long-term contracts using the percentage-of-completion method of accounting, whereby revenue, and therefore profit, is recognized based on actual costs incurred in relation to total estimated costs to complete the contract. Revenue recognition and our profitability, if any, from a particular contract may be adversely affected to the extent that original cost estimates, estimated costs to complete or incentive or award fee estimates are revised, delivery schedules are delayed or progress under a contract is otherwise impeded.

We may not receive full payment for our satellites or launch services in the event of a failure, and we could incur penalties if our satellites are not delivered or our rockets are not launched on schedule.

   Some of our satellite contracts provide for performance-based payments to be made to us after the satellite is on-orbit. Additionally, some contracts also require us to refund a percentage of payments made prior to launch if performance-based incentives are not achieved. Launch contracts may also have payments contingent upon a successful launch. While we generally intend to procure insurance to compensate us for incentive payments that are not made in the event of a launch or on-orbit failure, insurance may not be available on economical terms, if at all. In addition, some of our satellite and launch contracts require us to pay penalties in the event that satellites are not delivered, or the launch does not occur, on a timely basis. Our failure to receive incentive payments, or a

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requirement that we refund amounts previously received or pay delay penalties, could adversely affect revenue recognition, profitability and our liquidity.

Our fixed-price and cost-reimbursable contracts could subject us to losses and impair our liquidity if we experience cost overruns.

   We provide our products and services primarily through fixed-price and cost-reimbursable contracts. Cost overruns may result in losses and, if the magnitude of an overrun or overruns is significant, could impair our liquidity position:

•  Under fixed-price contracts, our customers pay us for work performed and products shipped without adjustment for the costs we incur in the process. Therefore, we generally bear all of the risk of losses as a result of increased costs on these contracts, although some of this risk may be passed on to subcontractors. Some of our fixed-price contracts provide for sharing of unexpected costs incurred or savings realized within specified limits and may provide for adjustments in price depending on actual contract performance other than costs. We bear the entire risk of cost overruns in excess of the negotiated maximum amount of unexpected costs to be shared. Any significant overruns in the future could materially impair our liquidity and operations.

•  Under cost-reimbursable contracts, we are reimbursed for allowable incurred costs plus a fee, which may be fixed or variable. There is no guarantee as to the amount of fee we will be awarded under a cost-reimbursable contract with a variable fee. The price on a cost-reimbursable contract is based on allowable costs incurred, but generally is subject to contract funding limitations. If we incur costs in excess of the funding limitation specified in the contract, this would be at our own risk and we may not be able to recover those cost overruns.

Our success depends on our ability to penetrate and retain markets for our existing products and to continue to conceive, design, manufacture and market new products on a cost-effective and timely basis.

   We anticipate that we will continue to incur expenses to design and develop new products. There can be no assurance that we will be able to achieve the technological advances necessary to remain competitive and profitable, that new products will be developed and manufactured on schedule or on a cost-effective basis or that our existing products will not become technologically obsolete. Our failure to predict accurately the needs of our customers and prospective customers, and to develop products or product enhancements that address those needs, may result in the loss of current customers or the inability to secure new customers. The development of new or enhanced products is a complex and uncertain process that requires the accurate anticipation of technological and market trends and can take a significant amount of time to complete. We may experience design, manufacturing, marketing and other difficulties that could delay or prevent the development, introduction or acceptance of new products and enhancements.

There can be no assurance that our products will be successfully developed or manufactured or that they will perform as intended.

   Most of the products we develop and manufacture are technologically advanced and sometimes include novel systems that must function under highly demanding operating conditions and are subject to significant technological change and innovation. We have in the past experienced product failures, cost overruns in developing and manufacturing our products, delays in delivery and other operational problems. We may experience some product and service failures, schedule delays and other problems in connection with our launch vehicles, satellites, transportation management systems and other products in the future. Some of our satellite and launch services contracts impose penalties on us for delays, which could be significant. In addition to any costs resulting from product

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warranties or required remedial action, product failures or significant delays may result in increased costs or loss of revenues due to postponement or cancellation of subsequently scheduled operations or product deliveries and claims against performance bonds. Negative publicity from product failures may also impair our ability to win new contracts.

Several years of low demand and overcapacity in the commercial satellite market have resulted in slow growth in demand for our small GEO satellites.

   The commercial satellite market has experienced pricing pressures due to excess capacity in the telecommunications industry and weakened demand over the past several years. Satellite demand also has been impacted by the business difficulties encountered by some companies in the commercial satellite services industry, which have resulted in reduced revenues and/or access to capital and a reduction in the total market size in the near term. In addition, our competitors tend to be larger satellite manufacturers who are able to provide aggressive pricing terms. We did not win any new commercial GEO satellite contracts in 2004. While the market appears to be making a recovery, we may continue to experience slow growth in the demand for our small GEO satellites.

If our key suppliers fail to perform as expected, our reputation may be damaged, we may experience delays and lose customers and our revenues, profitability and cash flow may decline.

   We purchase a significant percentage of our product components, structural assemblies and some key satellite components and instruments from third parties. We also occasionally obtain from the U.S. government parts and equipment used in the production of our products or the provision of our services. In addition, we have a sole source for the rocket motors we use on our Pegasus and Taurus launch vehicles and the interceptor boost vehicles that we are developing and producing for MDA under our contract with Boeing. If our subcontractors fail to perform as expected or encounter financial difficulties, we may have difficulty replacing them in a timely or cost effective manner. As a result, we may experience performance delays that could result in additional program costs, a customer terminating our contract for default, or damage to our customer relationships, causing our revenues, profitability and cash flow to decline. In addition, negative publicity from any failure of one of our products as a result of a failure by a key supplier could damage our reputation and prevent us from winning new contracts.

Our international business is subject to risks. Political and economic instability in foreign markets may have a material adverse effect on our operating results.

   For the years ended December 31, 2004, 2003 and 2002, direct sales to non-U.S. customers comprised approximately 15%, 19% and 12%, respectively, of our consolidated revenues. Further, as of December 31, 2004, approximately 7% of our firm backlog was derived from non-U.S. customers. International contracts are subject to numerous risks, including:

•  political and economic instability in foreign markets;

•  restrictive trade policies of the U.S. government and foreign governments;

•  inconsistent product regulation by foreign agencies or governments;

•  imposition of product tariffs and burdens;

•  costs of complying with a wide variety of international and U.S. export laws and regulatory requirements;

•  inability to obtain required U.S. export licenses; and

•  foreign currency and standby letter of credit exposure.

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We operate in a regulated industry, and our inability to secure or maintain the licenses, clearances or approvals necessary to operate our business could have a material adverse effect on our financial condition and results of operations.

   Our ability to pursue our business activities is regulated by various agencies and departments of the U.S. government and, in certain circumstances, the governments of other countries. Commercial space launches require licenses from the DoT, and operation of our L-1011 aircraft requires licenses from certain agencies of the DoT, including the Federal Aviation Administration. Our classified programs require that we and certain employees maintain appropriate security clearances. There can be no assurance that we will be successful in our future efforts to secure and maintain necessary licenses, clearances or regulatory approvals. Exports of our products, services and technical information frequently require licenses from the DoS or from the DoC. We have a number of international customers and subcontractors. Our inability to secure or maintain any necessary licenses or approvals or significant delays in obtaining such licenses or approvals could negatively impact our ability to compete successfully in international markets, and could result in an event of default under certain of our international contracts.

We face significant competition in each of our lines of business and many of our competitors possess significantly more resources than we do.

   Many of our competitors are larger and have substantially greater resources than we do. Furthermore, it is possible that other domestic or foreign companies or governments, some with greater experience in the space industry and many with greater financial resources than we possess, could seek to produce products or services that compete with our products or services, including new launch vehicles using new technology which could render our launch vehicles less competitively viable. Some of our foreign competitors currently benefit from, and others may benefit in the future from, subsidies from or other protective measures by their home countries.

Our financial covenants may restrict our operating activities.

   Our revolving credit facility and the indenture governing our 9% senior notes contain certain financial and operating covenants, including, among other things, certain coverage ratios, as well as limitations on our ability to incur debt, make dividend payments, make investments, sell all or substantially all of our assets and engage in mergers and consolidations and certain acquisitions. These covenants may restrict our ability to pursue certain business initiatives or certain acquisition transactions. In addition, failure to meet any of the financial covenants in our credit facility could cause an event of default under and/or accelerate some or all of our indebtedness, which would have a material adverse effect on us.

The loss of executive officers and our inability to retain other key personnel could adversely affect our operations.

   Our inability to retain our executive officers and other key employees, including personnel with security clearances required for classified work and highly skilled engineers, could have an adverse effect on our operations.

The anticipated benefits of future acquisitions may not be realized.

   From time to time we may evaluate potential acquisitions that we believe would enhance our business. Were we to complete any acquisition transaction, the anticipated benefits may not be fully realized if we are unable to successfully integrate the acquired operations, technologies and personnel into our organization.

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We are subject to environmental regulations.

   We are subject to various federal, state and local environmental laws and regulations relating to the operation of our business, including those governing pollution, the handling, storage and disposal of hazardous substances and the ownership and operation of real property. Such laws may result in significant liabilities and costs. We do not believe that compliance with or liability under environmental laws and regulations has had a material impact on our operations to date, but there can be no assurance that such laws and regulations will not have a material adverse effect on us in the future.

Our restated certificate of incorporation, our amended and restated bylaws, our stockholder rights plan and Delaware law contain anti-takeover provisions that may adversely affect the rights of our stockholders.

   Our Board of Directors has the authority to issue up to 10 million shares of our preferred stock, $0.01 par value per share, and to determine the price, rights, preferences and privileges of those shares without any further vote or action by the stockholders. The rights of the holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock.

   In addition to our ability to issue preferred stock without stockholder approval, our charter documents contain other provisions which could have an anti-takeover effect, including:

•  our charter provides for a staggered Board of Directors as a result of which only one of the three classes of directors is elected each year;

•  any merger, acquisition or other business combination that is not approved by our Board of Directors must be approved by 66²/3% of voting stockholders;

•  stockholders holding less than 10% of our outstanding voting stock cannot call a special meeting of stockholders; and

•  stockholders must give advance notice to nominate directors or submit proposals for consideration at stockholder meetings.

   In 1998, we adopted a stockholder rights plan which is intended to deter coercive or unfair takeover tactics. Under the rights plan, a preferred share purchase right, which is attached to each share of our common stock, generally will be triggered upon the acquisition, or actions that would result in the acquisition, of 15% or more of our common stock by any person or group. If triggered, these rights would entitle our stockholders (other than the acquirer) to purchase, for the exercise price, shares of Orbital’s common stock having a market value of two times the exercise price. The exercise price, which is subject to certain adjustments, is $210 per right. The stock purchase rights would cause substantial dilution to a person or group that attempts to acquire us on terms not approved by our Board of Directors.

   In addition, we are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which restricts the ability of current stockholders holding more than 15% of our voting shares to acquire us without the approval of 66²/3% of the other stockholders. These provisions could discourage potential acquisition proposals and could delay or prevent a change in control transaction. They could also have the effect of discouraging others from making tender offers for our common stock. As a result, these provisions may prevent our stock price from increasing

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substantially in response to actual or rumored takeover attempts. These provisions may also prevent changes in our management.

We may not have the ability to raise the funds necessary to finance the repurchase offer required by the indenture governing our senior notes in the event of a change of control, which may prevent us from entering into or consummating a change of control transaction otherwise in the best interests of our stockholders.

   In the event of a change of control, under the terms of the indenture governing the terms of our $126.4 million aggregate principal amount of our 9% senior notes due 2011, we are required to offer to repurchase the notes at a premium. If a change of control were to occur, there can be no assurance that we would have sufficient financial resources, or would be able to arrange financing, to pay the purchase price for all notes tendered by holders thereof. In addition, our repurchase of the notes as a result of a change of control may be prohibited or limited by, or constitute an event of default under, the terms of our credit facility or the terms of other agreements which we may enter into from time to time. Because our failure to repurchase the notes would constitute an event of default under the indenture, we may not be able to consummate a change of control transaction, even if the transaction may be in the best interests of our stockholders.

Item 2. Properties

   We lease approximately one million square feet of office, engineering and manufacturing space in various locations in the United States, as summarized in the table below:

Business Unit	Principal Location(s)
Corporate Headquarters	Dulles, Virginia
Launch Vehicles	Chandler, Arizona; Dulles, Virginia; Vandenberg Air Force Base, California
Satellites and Related Space Systems	Dulles, Virginia; Greenbelt, Maryland
Transportation Management Systems	Columbia, Maryland

   We also own a 125,000 square foot state-of-the-art space systems manufacturing facility that primarily houses our satellite manufacturing, assembly and testing activities in Dulles, Virginia.

   We believe that our existing facilities are adequate for our requirements for the foreseeable future.

Item 3. Legal Proceedings

   We are party to certain litigation or proceedings arising in the ordinary course of business. In the opinion of management, the probability is remote that the outcome of any such litigation or proceedings would have a material adverse effect on our results of operations or financial condition.

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Item 4. Submission of Matters to a Vote of Security Holders

   There was no matter submitted to a vote of our security holders during the fourth quarter of 2004.

Item 4A. Executive Officers of the Registrant

   The following table sets forth the name, age and position of each of the executive officers of Orbital as of February 25, 2005. All executive officers are elected annually and serve at the discretion of the Board of Directors.

Name	Age		Position
David W. Thompson		50	Chairman of the Board and Chief Executive Officer
James R. Thompson		68	Vice Chairman, President and Chief Operating Officer, Director
Garrett E. Pierce		60	Vice Chairman and Chief Financial Officer, Director
Ronald J. Grabe		59	Executive Vice President and General Manager, Launch Systems Group
John M. Danko		63	Executive Vice President and General Manager, Space Systems Group
Antonio L. Elias		55	Executive Vice President and General Manager, Advanced Programs Group
Leo Millstein		57	Senior Vice President, General Counsel and Corporate Secretary

   David W. Thompson is a co-founder of Orbital and has been Chairman of the Board and Chief Executive Officer of Orbital since 1982. From 1982 until October 1999, he also served as our President. Prior to founding Orbital, Mr. Thompson was employed by Hughes Electronics Corporation as special assistant to the President of its Missile Systems Group and by NASA at the Marshall Space Flight Center as a project manager and engineer, and also worked on the Space Shuttle’s autopilot design at the Charles Stark Draper Laboratory. Mr. Thompson is a Fellow of the American Institute of Aeronautics and Astronautics, the American Astronautical Society and the Royal Aeronautical Society, and is a member of the U.S. National Academy of Engineering.

   James R. Thompson (who is not related to David W. Thompson), has been Vice Chairman, President and Chief Operating Officer since April 2002, and was President and Chief Operating Officer since October 1999. He has been a director of the Company since 1992. He was Acting General Manager of our Transportation Management Systems Group from 2001 until August 2003. From 1993 until October 1999, Mr. Thompson served as Executive Vice President and General Manager, Launch Systems Group. Mr. Thompson was Executive Vice President and Chief Technical Officer of Orbital from 1991 to 1993. He was Deputy Administrator of NASA from 1989 to 1991. From 1986 until 1989, Mr. Thompson was Director of the Marshall Space Flight Center at NASA. Mr. Thompson was Deputy Director for Technical Operations at Princeton University’s Plasma Physics Laboratory from 1983 through 1986. Before that, he had a 20-year career with NASA at the Marshall Space Flight Center. He is a director of SPACEHAB Incorporated.

   Garrett E. Pierce has been Vice Chairman and Chief Financial Officer since April 2002, and was Executive Vice President and Chief Financial Officer since August 2000. He has been a director of the Company since August 2000. From 1996 until August 2000, he was Executive Vice President

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and Chief Financial Officer of Sensormatic Electronics Corp., a supplier of electronic security systems, where he was also named Chief Administrative Officer in July 1998. Prior to joining Sensormatic, Mr. Pierce was the Executive Vice President and Chief Financial Officer of California Microwave, Inc., a supplier of microwave, radio frequency and satellite systems and products for communications and wireless networks. From 1980 to 1993, Mr. Pierce was with Materials Research Corporation, a provider of thin film equipment and high purity materials to the semiconductor, telecommunications and media storage industries, where he progressed from Chief Financial Officer to President and Chief Executive Officer. Materials Research Corporation was acquired by Sony Corporation as a wholly owned subsidiary in 1989. From 1972 to 1980, Mr. Pierce held various management positions with The Signal Companies.

   Ronald J. Grabe has been Executive Vice President and General Manager, Launch Systems Group since 1999. From 1996 to 1999, he was Senior Vice President and Assistant General Manager of the Launch Systems Group, and Senior Vice President of the Launch Systems Group since 1995. From 1994 to 1995, Mr. Grabe served as Vice President for Business Development in the Launch Systems Group. From 1980 to 1993, Mr. Grabe was a NASA astronaut during which time he flew four Space Shuttle missions and was lead astronaut for development of the International Space Station.

   John M. Danko has been Executive Vice President and General Manager, Space Systems Group since 2003. He served as Senior Vice President and Acting General Manager, Space Systems Group during 2002. From 1998 until the end of 2001, he served as Deputy General Manager, Space Systems Group. He previously was in charge of our Technical Services Division, a position he had held since 1989 at one of our predecessor companies. Mr. Danko held various positions with OAO Corporation from 1975 until 1989, including General Manager of the Aerospace Division when it was formed in 1980.

   Antonio L. Elias has been Executive Vice President and General Manager, Advanced Programs Group since October 2001, and was Senior Vice President and General Manager, Advanced Programs Group since August 1997. From January 1996 until August 1997, Dr. Elias served as Senior Vice President and Chief Technical Officer of Orbital. From May 1993 through December 1995, he was Senior Vice President for Advanced Projects, and was Senior Vice President, Space Systems Division from 1990 to April 1993. He was Vice President, Engineering of Orbital from 1989 to 1990 and was Chief Engineer from 1986 to 1989. From 1980 to 1986, Dr. Elias was an Assistant Professor of Aeronautics and Astronautics at Massachusetts Institute of Technology. He was elected to the National Academy of Engineering in 2001.

   Leo Millstein has been Senior Vice President, General Counsel and Corporate Secretary since August 2003. From 2002 until 2003, Mr. Millstein worked as a consultant on software and telecommunications matters. From 2000 to 2002, Mr. Millstein was Vice President, General Counsel and Corporate Secretary of MERANT plc, a software company listed on the London Stock Exchange and NASDAQ. From 1989 to 2000, Mr. Millstein held a variety of senior management and legal positions at the International Telecommunications Satellite Organization (INTELSAT), including Director of Corporate Restructuring from 1999 to 2000, Deputy General Counsel from 1995 to 1999, and Assistant General Counsel from 1989 to 1995. From 1984 to 1989, he was a partner of Dyer, Ellis, Joseph & Mills, a Washington, D.C. based law firm. From 1974 to 1984, Mr. Millstein held various legal positions with the Communications Satellite Corporation (COMSAT).

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PART II

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

   On February 25, 2005, there were 2,055 Orbital common stockholders of record.

   Our common stock trades on the New York Stock Exchange (“NYSE”) under the symbol ORB. The range of high and low sales prices of Orbital common stock, as reported on the NYSE, was as follows:

2004	High		Low
4th Quarter	$	13.00	$	10.35
3rd Quarter	$	13.60	$	9.77
2nd Quarter	$	14.06	$	12.05
1st Quarter	$	13.74	$	11.32

2003	High		Low
4th Quarter	$	12.41	$	8.89
3rd Quarter	$	9.73	$	7.41
2nd Quarter	$	7.77	$	4.99
1st Quarter	$	5.96	$	4.25

   We have never paid any cash dividends on our common stock, nor do we anticipate paying cash dividends on our common stock at any time in the foreseeable future. Moreover, our credit facility and our indenture governing our 9% senior notes contain covenants limiting our ability to pay cash dividends. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

   The transfer agent for our common stock is:

EquiServe Trust Company, N.A.

P.O. Box 43010

Providence, RI 02940

Telephone: (781) 575-3170

www.equiserve.com

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________________________________________________________________________________

Item 6.  Selected Financial Data

Selected Consolidated Financial Data

   The selected consolidated financial data of the company for the years ended December 31, 2004, 2003, 2002, 2001 and 2000 have been derived from our audited consolidated financial statements. This information should be read in conjunction with the 2004, 2003 and 2002 consolidated financial statements and the related notes thereto appearing elsewhere in this Annual Report on Form 10-K.

		Years Ended December 31,
		2004(1)			2003(2)			2002			2001(3)			2000(4)
		(In thousands, except per share data)
Operating Data:
	Revenues	$	675,935		$	581,500		$	551,642		$	415,249		$	379,539
	Costs of goods sold		566,787			477,273			460,231			387,433			379,504
	Gross profit		109,148			104,227			91,411			27,816			35
	Operating expenses		53,825			68,669			62,372			80,789			165,499
	Income (loss) from operations		55,323			35,558			29,039			(52,973	)		(165,464	)
	Allocated share of losses of affiliate		—			—			—			(26,495	)		(119,183	)
	Gain on reversal of allocated losses of affiliate		—			40,586			—			—			—
	Debt extinguishment expense		(2,099	)		(38,836	)		—			—			—
	Other expense, net		(9,096	)		(17,336	)		(15,089	)		(16,146	)		(18,929	)
	Income (loss) before provision for income taxes
	and discontinued operations		44,128			19,972			13,950			(95,614	)		(303,576	)
	Benefit from (provision for) income taxes		155,872			265			(265	)		—			(9,886	)
	Income (loss) from continuing operations		200,000			20,237			13,685			(95,614	)		(313,462	)
	Income from discontinued operations		—			—			875			114,565			35,272
	Cumulative effect of change in accounting		—			—			(13,795	)		—			—
	Net income (loss)	$	200,000		$	20,237		$	765		$	18,951		$	(278,190	)
Basic Income (Loss) Per Share:
	Income (loss) from continuing operations	$	4.03		$	0.43		$	0.31		$	(2.49	)	$	(8.36	)
	Income from discontinued operations		—			—			0.02			2.98			0.94
	Cumulative effect of change in accounting		—			—			(0.31	)		—			—
	Net income (loss)	$	4.03		$	0.43		$	0.02		$	0.49		$	(7.42	)
	Shares used in computing basic per share amounts		49,658			46,718			43,908			38,424			37,468
Diluted Income (Loss) Per Share:
	Income (loss) from continuing operations	$	3.08		$	0.35		$	0.30		$	(2.49	)	$	(8.36	)
	Income from discontinued operations		—			—			0.02			2.98			0.94
	Cumulative effect of change in accounting		—			—			(0.30	)		—			—
	Net income (loss)	$	3.08		$	0.35		$	0.02		$	0.49		$	(7.42	)
	Shares used in computing diluted per share amounts		65,022			58,221			44,937			38,424			37,468
Statement of Cash Flow Data:
	Cash flow from operating activities	$	66,998		$	46,474		$	(29,848	)	$	(80,989	)	$	35,585
	Cash flow from investing activities		(3,399	)		(15,594	)		(14,341	)		236,980			42,675
	Cash flow from financing activities		1,005			(13,420	)		24,414			(137,852	)		(86,565	)

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		Years Ended December 31,
		2004(1)		2003(2)		2002		2001(3)			2000(4)
		(In thousands, except per share data)
Balance Sheet Data:
	Cash, restricted cash and short-term investments	$	133,819	$	80,158	$	53,741	$	74,030		$	52,049
	Net working capital		186,361		115,189		92,350		(63,384	)		(160,963	)
	Total assets		663,770		439,300		416,310		432,734			516,213
	Short-term borrowings		161		297		1,854		103,710			134,431
	Long-term obligations, net		128,375		137,116		114,833		4,665			108,291
	Stockholders’ equity		394,124		166,877		134,568		94,285			44,151

(1)	Operating income in 2004 included a $2.5 million gain recorded as a credit to settlement expense. Benefit from (provision for) income taxes in 2004 included a $156.5 million income tax benefit resulting from the December 31, 2004 reversal of substantially all of the company’s deferred income tax valuation allowance.
(2)	Operating income in 2003 included $3.9 million in net settlement expenses.
(3)	Revenue, gross profit and operating income in 2001 included a $13.0 million favorable adjustment as a result of a contract settlement and a $3.4 million reversal of a provision for uncollectible receivables in connection with a contract that was terminated in March 2001. Operating expenses in 2001 included $5.4 million of litigation-related settlement expenses.
(4)	Operating income in 2000 was negatively impacted by the following: (i) a $53.7 million provision to write down receivables and inventory related to a former affiliate; (ii) a $15.9 million asset impairment charge and a $3.4 million provision for uncollectible receivables related to a contract ultimately terminated in March 2001; and (iii) an $11.5 million charge in connection with the settlement of a class action lawsuit against the company.

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Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

   With the exception of historical information, the matters discussed below under the headings “Consolidated Results of Operations for the Years Ended December 31, 2004, 2003 and 2002,” “Segment Results,” “Liquidity and Capital Resources” and elsewhere in this Annual Report include forward-looking statements that involve risks and uncertainties, many of which are beyond our control. Readers should be cautioned that a number of important factors, including those identified above in “Item 1 – Special Note Regarding Forward-Looking Statements” and “Risks Related to Our Business and Industry” may affect actual results and may cause actual results to differ materially from those anticipated or expected in any forward-looking statement.

   We develop and manufacture small rockets and space systems for commercial, military and civil government customers. Our primary products are satellites and launch vehicles, including low-orbit, geosynchronous and planetary spacecraft for communications, remote sensing, scientific and defense missions; ground- and air-launched rockets that deliver satellites into orbit; and missile defense systems that are used as interceptor and target vehicles. We also offer space-related technical services to government agencies and develop and build satellite-based transportation management systems for public transit agencies and private vehicle fleet operators.

Critical Accounting Policies and Significant Estimates

   The preparation of consolidated financial statements requires management to make judgments based upon estimates and assumptions that are inherently uncertain. Such judgments affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Management continuously evaluates its estimates and assumptions, including those related to long-term contracts and incentives, inventories, long-lived assets, warranty obligations, income taxes, contingencies and litigation, and the carrying values of assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

   The following is a summary of the most critical accounting policies used in the preparation of our consolidated financial statements.

•  Our revenue is derived primarily from long-term contracts. Revenues on cost-reimbursable contracts are recognized to the extent of costs incurred plus a proportionate amount of fee earned. Revenues on long-term fixed-price contracts are generally recognized using the percentage-of-completion method of accounting. Such revenues are recorded based on the percentage that costs incurred to date bear to the most recent estimates of total costs to complete each contract. Estimating future costs and, therefore, revenues and profits, is a process requiring a high degree of management judgment, including management’s assumptions regarding our future operations as well as general economic conditions. In the event of a change in total estimated contract cost or profit, the cumulative effect of such change is recorded in the period the change in estimate occurs. Frequently, the period of performance of a contract extends over a long period of time and, as such, revenue recognition and our profitability from a particular contract may be adversely affected to the extent that estimated cost to complete or incentive or award fee estimates are revised, delivery schedules are delayed or progress under a contract is otherwise impeded. Accordingly, our recorded revenues and gross profits from period to period can fluctuate significantly. In the event cost estimates indicate a loss on a contract, the

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total amount of such loss, excluding general and administrative expense, is recorded in the period in which the loss is first estimated.

Certain contracts include incentive provisions for increased or decreased revenue and profit based on actual performance against established targets. Incentive and award fees are included in estimated contract revenue at the time the amounts can be reasonably determined and are reasonably assured based on historical experience and other objective criteria. Should our performance under such contracts differ from previous assumptions, current period revenues would be adjusted.

•  Inventory is stated at the lower of cost or estimated market value. Estimated market value is determined based on assumptions about future demand and market conditions. If actual market conditions were less favorable than those previously projected by management, inventory write-downs could be required.

•  We record a liability in connection with certain warranty obligations. Our warranty obligations are affected by product failure rates and material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from our estimates, revisions to the estimated warranty liability would be required.

•  We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recorded for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a tax rate change on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We record valuation allowances to reduce net deferred tax assets to the amount considered more likely than not to be realized. Changes in estimates of future taxable income can materially change the amount of such valuation allowances.

Consolidated Results of Operations for the Years Ended December 31, 2004, 2003 and 2002

2004 Compared With 2003

   Revenues – Our consolidated revenues were $675.9 million in 2004, a 16% increase compared to $581.5 million in 2003. This increase was driven primarily by a $113.0 million revenue growth in our satellites and related space systems segment, offset partially by a $10.0 million decrease in our launch vehicles segment (formerly the launch vehicles and advanced programs segment) and a $7.4 million decrease in the transportation management systems segment. The increase in satellites and related space systems segment revenues is largely attributable to increased revenues from science, technology and defense satellite contracts.

   Gross Profit– Our consolidated gross profit was $109.1 million in 2004 as compared to $104.2 million in 2003. Gross profit is affected by a number of factors, including the mix of contract types and costs incurred thereon in relation to revenues recognized. Such costs include the costs of personnel, materials, subcontracts and overhead.

   The gross profit increase in 2004, as compared to 2003, was driven by a $9.1 million increase in our satellites and related space systems segment and a $5.6 million improvement in our transportation management systems segment, partially offset by a $9.8 million decrease in our launch vehicles segment. The increase in our satellites and related space systems segment was primarily due

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to profit derived from the significant revenue growth in the science, technology and defense satellite product line, offset by lower profit in the communications satellites product line. The improvement in our transportation management systems segment was mainly attributable to the absence in 2004 of cost increases and other charges recorded in 2003 on certain transportation management systems contracts. The decrease in gross profit in our launch vehicles segment was due to the completion of certain advanced space flight systems contracts in 2003 and lower profit in our space launch vehicles product line, offset partially by profit growth from our OBV missile defense interceptor program.

   Research and Development Expenses – Research and development expenses are comprised of our self-funded product research and development activities and exclude direct customer-funded development activities. Research and development expenses were $6.3 million, or 0.9% of revenues, and $7.8 million, or 1.3% of revenues, in 2004 and 2003, respectively. These expenses related primarily to the development of improved launch vehicles and satellites.

   Selling, General and Administrative Expenses – Selling, general and administrative expenses were $50.1 million, or 7.4% of revenues, and $57.0 million, or 9.8% of revenues, in 2004 and 2003, respectively. Selling, general and administrative expenses decreased largely due to a $2.7 million reduction in bid and proposal costs and $2.1 million of non-recurring litigation expenses in our transportation management systems segment in 2003. Selling, general and administrative expenses include the costs of marketing, advertising, promotional and other selling expenses, as well as the costs of our finance, legal, administrative and general management functions.

   Settlement Expense, Net – In 2004, we recorded a $2.5 million gain as a credit to settlement expense in connection with the sale of senior subordinated notes which we had received in 2003 from our former affiliate, Orbital Imaging Corporation (“ORBIMAGE”).

   In 2003, Orbital recorded $4.8 million of settlement charges in connection with the settlement of litigation between ORBIMAGE and Orbital. These charges included a $2.3 million delay penalty related to the OrbView-3 satellite and a $2.5 million litigation settlement payment. Also in 2003, we recorded a $0.9 million reduction in settlement expense in connection with the settlement of an action we had brought against certain of our insurers seeking reimbursement for defense and settlement costs we had incurred several years ago defending a breach of contract lawsuit.

   Interest Expense – Interest expense was $11.4 million and $18.7 million in 2004 and 2003, respectively. Interest expense decreased in 2004 as compared to 2003 primarily as a result of a lower interest rate on our debt and a reduction in the amortization of debt costs resulting from our refinancing transactions in the third quarter of 2003.

   Other Income, Net – Other income, net, was $2.3 million and $1.3 million in 2004 and 2003, respectively. Other income, net, included interest income of $2.0 million and $0.7 million in 2004 and 2003, respectively.

   Gain on Reversal of Allocated Losses of Affiliate – In 2003, we recorded a $40.6 million gain in connection with the reversal of our previously recorded liability related to the allocated losses of our former affiliate, ORBIMAGE. This gain was recorded as a result of the cancellation of our ownership interest in connection with ORBIMAGE’s reorganization in December 2003.

   Debt Extinguishment Expense – During 2004, we recorded $2.1 million in debt extinguishment expenses associated with repurchases of a portion of our 9% senior notes and the replacement of our bank credit agreement as further described in “Liquidity and Capital Resources.”

   In 2003, we recorded $38.8 million in debt extinguishment expenses associated with our debt refinancing in July 2003 as further described in “Liquidity and Capital Resources.” The debt

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extinguishment expenses consisted of $20.7 million in accelerated amortization of debt discount on our 12% notes issued in August 2002, $10.1 million in accelerated amortization of debt issuance costs and $8.0 million in prepayment premiums and other expenses.

   Income Taxes – The $155.9 million net tax benefit recorded in 2004 was comprised of (i) the $156.5 million deferred tax benefit in connection with the reversal of the valuation allowance discussed below and (ii) a $ 0.6 million current provision for 2004 alternative minimum taxes and state tax obligations. In 2003, the benefit recorded for income taxes was solely attributable to the refund of state income taxes paid in 2002.

   In prior years and until the fourth quarter of 2004, we had recorded a valuation allowance to fully reserve our net deferred tax assets based on our assessment that the realization of our net deferred tax assets did not meet the “more likely than not” criterion under SFAS No. 109, “Accounting for Income Taxes.” As of December 31, 2004 we determined that based upon a number of factors, including our cumulative taxable income in recent years and our expected profitability in future years, substantially all of our net deferred tax assets are “more likely than not” realizable through future earnings. Accordingly, as of December 31, 2004 we reversed $212.6 million of our deferred income tax valuation allowance and recorded (i) a tax benefit of $156.5 million in our consolidated income statement, (ii) a $39.7 million reduction in goodwill and (iii) a $16.4 million increase to additional paid-in capital. The portion of the reversal recorded as a reduction in goodwill relates to valuation allowances established in prior years in connection with business acquisitions. The portion of the reversal recorded as an increase to additional paid-in capital is primarily related to tax benefits associated with stock option exercises in 2004 and prior years.

   Beginning in 2005, we expect to record income tax provisions on current earnings at an effective tax rate of approximately 40%. However, as of December 31, 2004, the company had approximately $560 million of future tax deductions, including nearly $440 million of net operating loss carryforwards, which will be available to offset future taxable income. Accordingly, on a cash basis, we expect to pay minimal income taxes in the foreseeable future.

   Net Income – Our consolidated net income was $200.0 million, or $3.08 diluted earnings per share, and $20.2 million, or $0.35 diluted earnings per share, in 2004 and 2003, respectively. The increase in net income in 2004 consisted of a $24.2 million increase in pretax income, plus the $156.5 million, or $2.41 per diluted share, income tax benefit in 2004 discussed above.

2003 Compared With 2002

   Revenues – Our consolidated revenues were $581.5 million and $551.6 million in 2003 and 2002, respectively. Consolidated revenues increased in 2003 due to increased revenues in our launch vehicles segment, partially offset by lower revenues in our satellites and related space systems and our transportation management systems segments.

   Gross Profit – Our consolidated gross profit was $104.2 million and $91.4 million in 2003 and 2002, respectively. Gross profit increased by $16.4 million in our launch vehicles segment and by $5.7 million in our satellites and related space systems segment, partially offset by a $9.3 million decrease in gross profit in our transportation management systems segment. The increase in gross profit in our launch vehicles segment was largely attributable to increased revenues and profit in our Orbital Boost Vehicle (OBV) missile defense interceptor program and in our space launch vehicle product line. The increase in gross profit in our satellites and related space systems segment was largely attributable to increased gross profit from our communications satellites product line. The decrease in gross profit in our transportation management systems segment was largely attributable to

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significant increases in the first half of 2003 in the estimated costs to complete a number of contracts.

   Research and Development Expenses – Research and development expenses were $7.8 million, or 1.3% of revenues, and $4.7 million, or 0.9% of revenues, in 2003 and 2002, respectively. Research and development expenses increased primarily as a result of satellite design enhancements and space launch vehicle development activity.

   Selling, General and Administrative Expenses – Selling, general and administrative expenses were $57.0 million, or 9.8% of revenues, and $57.7 million, or 10.5% of revenues, in 2003 and 2002, respectively. The slight decrease in 2003 was largely due to lower expenses in our satellite manufacturing business, offset partially by higher general support costs in connection with our OBV missile defense interceptor program and increased bid and proposal activity. Selling, general and administrative expenses include the costs of marketing, advertising, promotional and other selling expenses, as well as the costs of our finance, legal, administrative and general management functions.

   Settlement Expense, Net – In 2003, Orbital recorded $4.8 million of settlement charges in connection with the settlement of litigation between ORBIMAGE and Orbital. These charges included a $2.3 million delay penalty related to the OrbView-3 satellite and a $2.5 million litigation settlement payment. Also in 2003, we recorded a $0.9 million reduction of settlement expense in connection with the settlement of an action we had brought against certain of our insurers seeking reimbursement for defense and settlement costs we had incurred several years ago defending a breach of contract lawsuit.

   Interest Expense – Interest expense was $18.7 million and $17.5 million for 2003 and 2002, respectively. Interest expense included $1.8 million and $3.1 million of amortization of debt issuance costs in 2003 and 2002, respectively. Interest expense in 2003 and 2002 also included $2.2 million and $1.4 million, respectively, of amortization of debt discount related to our $135 million notes that were issued in August 2002 and were repurchased or redeemed in full in the third quarter of 2003.

   Other Income, Net – Other income, net, was $1.3 million and $2.4 million for 2003 and 2002, respectively. Interest income and realized gains and losses on investments included in other income totaled $0.7 million and $1.0 million for 2003 and 2002, respectively.

   Gain on Reversal of Allocated Losses of Affiliate – In 2003, we recorded a $40.6 million gain in connection with the reversal of our previously recorded liability related to the allocated losses of our former affiliate, ORBIMAGE. This gain was recorded as a result of the cancellation of our ownership interest in connection with ORBIMAGE’s reorganization in December 2003.

   Debt Extinguishment Expense – In 2003, we recorded $38.8 million in debt extinguishment expenses associated with our debt refinancing in July 2003 as further described in “Liquidity and Capital Resources.” The debt extinguishment expenses consisted of $20.7 million in accelerated amortization of debt discount on our 12% notes issued in August 2002, $10.1 million in accelerated amortization of debt issuance costs and $8.0 million in prepayment premiums and other expenses.

   Income Taxes – In 2003, we recorded a $265,000 tax benefit related to the refund of 2002 state taxes. In 2002, we recorded a $265,000 provision for income taxes in connection with the initial estimated state income tax liability.

   Discontinued Operations – In 2002, we reported $875,000 of net income pertaining to operations discontinued in previous years.

   Cumulative Effect of Change in Accounting – In connection with our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets,” we recorded a $13.8 million impairment loss in 2002 in our

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transportation management systems segment to write off the remaining net book value of goodwill in this segment. The impairment loss was determined based on a comparison of the fair value of our transportation management systems reporting unit to its carrying value, including goodwill. The fair value of our transportation management systems reporting unit, and the resulting implied fair value of goodwill, were estimated after consideration of letters of interest in respect of purchase offers received by us in early 2002 during our attempts to sell the transportation management systems business. The impairment loss was recorded as a January 1, 2002 cumulative effect of a change in accounting.

   Net Income – Our net income for 2003 was $20.2 million, or $0.35 per diluted share, as compared to $0.8 million, or $0.02 per share, for 2002. The increase in net income from 2002 to 2003 was primarily related to increased operating income and the absence in 2003 of the $13.8 million goodwill impairment charge for 2002 discussed above.

Segment Results

   Our products and services are grouped into three reportable segments: (i) launch vehicles (formerly launch vehicles and advanced programs); (ii) satellites and related space systems; and (iii) transportation management systems. All of our other activities, as well as consolidating eliminations and adjustments, are reported in corporate and other.

   The following table summarizes revenues and income from operations for our reportable business segments and corporate and other (in thousands):

	Years Ended December 31,
	2004			2003			2002
Revenues
Launch Vehicles	$	323,287		$	333,272		$	257,851
Satellites and Related Space Systems		331,726			218,679			232,387
Transportation Management Systems		29,135			36,571			65,469
Corporate and Other		(8,213	)		(7,022	)		(4,065	)
Total	$	675,935		$	581,500		$	551,642
Income (Loss) from Operations
Launch Vehicles	$	30,103		$	32,801		$	23,643
Satellites and Related Space Systems		21,439			14,555			5,754
Transportation Management Systems		1,243			(7,629	)		242
Corporate and Other		2,538			(298	)		(600	)
Settlement Expense		—			(3,871	)		—
Total	$	55,323		$	35,558		$	29,039

2004 Compared With 2003

   Launch Vehicles – Launch vehicles segment revenues decreased 3% primarily due to a $17.0 million decrease in revenues from certain advanced space flight systems contracts that were completed in 2003 and a $7.3 million decrease in our space launch vehicle product line, offset partially by a $15.2 million increase in our OBV missile defense interceptor program. The OBV program to develop and manufacture interceptor boost vehicles for the U.S. Missile Defense

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Agency’s Ground-based Midcourse Defense system under a contract with The Boeing Company accounted for $176.3 million and $161.1 million in revenues, or 55% and 48% of total segment revenues in 2004 and 2003, respectively. The decrease in our space launch vehicle product line was primarily due to lower Pegasus and Taurus program revenues. We completed four Pegasus launches during 2003 compared to no Pegasus launches in 2004, and we completed one Taurus launch in May 2004 compared to no Taurus launches in 2003. The reduction in launch vehicle program activity in 2004 was partially offset by a $2.0 million early termination fee recognized in connection with a Taurus contract that was cancelled by the customer in December 2004 due to a change in the customer’s plans prior to our commencing any significant work on the contract. Revenues in our target vehicle product line were relatively unchanged in 2004 as compared to 2003.

   Operating income decreased 8% due to the completion of certain advanced space flight systems contracts in 2003 and lower profit in our space launch vehicles product line, offset partially by increased income from our OBV missile defense interceptor program. Operating income from our OBV missile defense interceptor program was $20.6 million in 2004, or 68% of total segment income, compared to $17.2 million, or 52% of total segment income, in 2003. Our space launch vehicle product line operating income decreased due to lower program activity, as discussed above, and significant cost growth in 2004 on a Pegasus contract and a Taurus contract, offset partially by the $2.0 contract termination fee discussed above. Operating income in our target vehicle product line was relatively unchanged in 2004 compared to 2003. The segment’s total operating margin (as a percentage of revenues) was 9.3% in 2004 compared to 9.8% in 2003.

   Satellites and Related Space Systems – Satellites and related space systems segment revenues increased 52% primarily as a result of revenue growth of $121.1 million in our science, technology and defense satellite product line and $4.5 million from technical services, offset partially by an $11.9 million revenue reduction in our communications satellites product line. The revenue increase in our science, technology and defense satellite product line was primarily due to $81.7 million in revenues from defense-related contracts awarded in 2004 and late 2003, together with 2004 revenue growth of $27.0 million from the Dawn interplanetary mission contract with NASA and $9.9 million from a new NASA scientific satellite contract started late in 2003. Revenues decreased $11.9 million to $91.2 million in our communications satellites product line primarily as a result of the completion of the BSAT-2c and PanAmSat Galaxy-XII satellites in 2003 and lower program activity in 2004 on the TELKOM satellite contract during 2004, partially offset by revenues from a new contract for two communications satellites awarded in late 2003.

   Operating income increased by 47% largely as a result of a $12.6 million increase in profits derived from the revenue growth in the science, technology and defense satellite product line, partially offset by a $5.1 million decrease in profits in our communications satellites product line. The decrease in communications satellites income in 2004 was primarily attributable to the completion and launch of the BSAT-2c satellite and the receipt of a $2.0 million fee associated with the cancellation of a contract in 2003 and an operating loss in 2004 on the new contract awarded in late 2003. These negative factors were partially offset by favorable profit adjustments on certain other communications satellites contracts. The profit growth in the science, technology and defense satellite product line reflects the revenue growth in this product line in addition to the absence in 2004 of $4.5 million of charges recorded in 2003 for increases in the costs to complete the OrbView-3 satellite contract. This segment’s operating margin (as a percentage of revenues) was 6.5% in 2004 compared to 6.7% in 2003.

   Transportation Management Systems – Transportation management systems segment revenues decreased 20% largely due to a reduction in activity on a contract that was substantially completed in

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the third quarter of 2004. This was partially offset by a $2.7 million favorable revenue adjustment on a previously suspended contract that was renegotiated and resumed in the third quarter of 2004.

   Operating results improved from a $7.6 million loss in 2003 to $1.2 million income in 2004. This improvement was primarily attributable to charges in 2003 that did not recur in 2004 and a $1.4 million favorable operating income adjustment in 2004 from the resumed contract mentioned above. The 2003 charges included $1.4 million of inventory-related charges, $2.1 million of non-recurring litigation expenses and $5.0 million of unfavorable adjustments as a result of cost increases on a number of contracts.

   Corporate and Other – Corporate and other revenues are comprised solely of the elimination of intercompany revenues.

   Corporate and other operating income in 2004 is comprised solely of the first quarter 2004 gain on the sale of notes received from ORBIMAGE discussed above. In 2003, corporate and other operating results included $4.8 million of settlement expense discussed in “Consolidated Results of Operations for the Years Ended December 31, 2004, 2003 and 2002.”

2003 Compared With 2002

   Launch Vehicles – Revenues increased 29% in 2003 as compared to 2002 in large part as a result of increased revenues in our OBV missile defense interceptor program. The OBV program accounted for $161.1 million in revenues, or 48% of total segment revenues in 2003, as compared to $119.4 million, or 46%, in 2002. Our space launch vehicle product line also contributed to the year-over-year increase in revenues, largely due to increased Pegasus launch vehicle activity and work on a contract begun in 2003 to build three Minotaur space launch vehicles for the U.S. Department of Defense. We completed four successful Pegasus launches during 2003 compared to one Pegasus launch in 2002. Higher revenues from our advanced programs in 2003 likewise contributed to increased segment revenues. These revenue increases were offset partially by decreased revenues in our target vehicle product line, which had fewer launches in 2003 than in 2002.

   Operating income increased approximately 39% in 2003 as compared to 2002 primarily due to the increased profits from the OBV missile defense interceptor program, our advanced programs and our space launch vehicle product line. Operating income from the OBV missile defense interceptor program accounted for approximately half of the total operating profit in this segment in 2003. The increase in our advanced programs was largely attributable to a favorable contract close-out. The increase in operating income in our space launch vehicle product line for 2003 versus 2002 was largely attributable to increased operating income from Pegasus launch vehicle programs, partially offset by a decrease in operating income from a Taurus program. The Taurus program experienced significant cost increases and a schedule delay in the fourth quarter of 2003. The operating margin in this segment (as a percentage of revenues) was 9.8% in 2003 compared to 9.2% in 2002.

   Satellites and Related Space Systems – Revenues from satellites and related space systems decreased approximately 6% in 2003 compared to 2002 primarily due to a decline in revenues from our communications satellites product line and our technical services business, offset partially by increased revenues from our science, technology and defense satellite product line. Our communications satellites product line revenues were $103.1 million in 2003 as compared to $135.2 million in 2002. This decrease in the product line’s revenues was primarily attributable to lower revenues on our PanAmSat contract, which was approximately 80% complete as of year-end 2002, and the absence in 2003 of revenues from the N-STARc satellite that was completed in mid-2002. This decline was offset partially by increased revenue on our TELKOM satellite contract order received in

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the second half of 2002. The increase in our science, technology and defense satellite product line revenues was largely attributable to work on two new scientific satellite contracts begun during 2002.

   Operating income increased from $5.8 million to $14.6 million, or 153%, in 2003 as compared to 2002 largely as a result of improved operating results in the communications satellites product line which were attributable primarily to increased profits from our BSAT-2c and TELKOM satellite contracts and the absence in 2003 of a loss from the N-STARc satellite that was launched in mid-2002. Also contributing to the increase in operating income in this segment was higher operating income in our science, technology and defense satellite product line, primarily attributable to income from two new scientific satellite contracts begun during 2002. In addition, operating income for 2003 included three transactions that largely offset each other. First, we recorded charges totaling $4.5 million for increases in the costs to complete the OrbView-3 satellite contract. Second, during 2003 we received a $2.0 million fee associated with the cancellation of a communications satellites contract. The contract was executed in early 2002 and the customer cancelled the contract in March 2003 as a result of changes to the customer’s strategy and plans prior to the commencement of any work on this satellite. Third, we recorded $1.8 million proceeds received in connection with a litigation settlement as a reduction in operating expense. The litigation settlement resulted in an approximately $1.2 million improvement in operating income in 2003, after considering the impact of the settlement on contract profits on a percentage-of-completion basis. The operating margin in this segment (as a percentage of revenues) improved to 6.7% in 2003 as compared to 2.5% for 2002.

   Transportation Management Systems – Revenues in our transportation management systems segment decreased approximately 44% in 2003 as compared to 2002 primarily due to a reduction in activity on several contracts that were nearing completion at the end of 2003, offset partially by increased revenue on one current contract.

   Our transportation management systems segment reported a $7.6 million loss in 2003 compared to operating income of $0.2 million in 2002. The operating loss in 2003 included $1.4 million of inventory-related charges, $2.1 million of non-recurring litigation expenses and $5.0 million of unfavorable adjustments as a result of cost increases on a number of contracts.

   Corporate and Other – Corporate and other revenues are comprised solely of the elimination of intercompany revenues. Corporate and other expenses include corporate general and administrative activities that are not attributable to or allocated to the operating segments, as well as consolidating adjustments for intercompany contracts.

Liquidity and Capital Resources

   Cash Flow from Operating Activities – Cash flow from operating activities in 2004 was $67.0 million as compared to $46.5 million in 2003 and negative $29.8 million in 2002. The net cash flow provided by operating activities in 2004 was primarily attributable to cash generated from continuing operations. The increase in 2004 as compared to 2003 was primarily attributable to, and consistent with, the year-over-year growth in operating results excluding the impact of significant nonrecurring non-cash transactions.

   The net cash flow provided by operating activities in 2003 was primarily attributable to cash generated from operations together with a $23.8 million increase in accounts payable and accrued liabilities, offset partially by a $14.3 million increase in receivables and an $11.8 million reduction in deferred revenues. In addition, cash flow from continuing operations in 2003 included a $38.8 million add-back to, and a $40.6 million subtraction from, net income from continuing operations associated with debt extinguishment expenses and the reversal of allocated losses of affiliate, respectively.

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   In 2002, we reported a $29.8 million net use of cash for continuing operations that was primarily attributable to cash used to fund our operations together with a reduction in accounts payable. The reduction in accounts payable was largely attributable to the payment of a $48.8 million vendor financing obligation.

   Cash Flow from Investing Activities – In 2004, we spent $14.3 million for capital expenditures and we reduced restricted cash by $10.9 million. Restricted cash was primarily associated with letters of credit issued by financial institutions on our behalf. These transactions resulted in a net $3.4 million use of cash for investing activities.

   In 2003, we spent $9.6 million for capital expenditures and we increased restricted cash by $9.0 million. These uses of cash were partially offset by a $3.0 million cash receipt from an escrow account related to the sale of a previously divested business, resulting in a net $15.6 million use of cash for investing activities.

   In 2002, we reported a net $14.3 million use of cash for investing activities, comprised of $15.3 million for capital expenditures, partially offset by $1.0 million received from an escrow account related to the sale of a previously divested business.

   Cash Flow from Financing Activities – In 2004, we received $18.1 million from issuances of common stock primarily in connection with stock option and warrant exercises. During 2004, we received $11.5 million from the exercise of 2.4 million common stock warrants, with an exercise price of $4.82 per share, that had originally been issued in 2001. A total of 2.1 million warrants expired unexercised on August 31, 2004.

   During 2004, we repurchased and retired 595,000 shares of our common stock for $7.0 million. We also repurchased and cancelled $8.6 million of our 9% senior notes at a cost of $9.6 million, and we expended $0.4 million to obtain a new credit facility discussed below.

   In December 2004, we replaced our previous $50.0 million revolving line of credit with a new five-year $50.0 million revolving credit facility (the “Revolver”) with Bank of America serving as the lead arranger in the syndicated line of credit. We have the option to increase the amount of the Revolver by up to $25 million to the extent that any one or more lenders commits to be a lender for such amount. Loans under the Revolver bear interest at LIBOR plus a margin ranging from 1.5% to 2.25%, or at a prime rate plus a margin ranging from zero to 0.75%, with the applicable margin in each case varying according to our ratio of total debt to earnings before interest, taxes, depreciation and amortization. The Revolver is collateralized by our intellectual property and accounts receivable. Up to $40.0 million of the Revolver may be reserved for letters of credit. As of December 31, 2004, there were no borrowings under the Revolver, although $6.4 million of letters of credit were issued under the Revolver. Accordingly, as of December 31, 2004, $43.6 million of the Revolver was available for borrowing.

   In 2003, we used $147.0 million to pay long-term debt obligations and we received $129.0 million net proceeds from issuances of long-term debt, primarily associated with the July 2003 financing transactions described below. In addition, we received $4.6 million net proceeds from issuances of common stock in connection with stock purchases from employees under our employee stock purchase plan and from the exercise of stock options and warrants.

   In July 2003, we closed two financing transactions. In the first transaction, we issued $135.0 million of 9% senior notes due 2011 with interest payable semi-annually each January 15 and July 15, starting in 2004. During the third quarter of 2003, we used the net proceeds from this offering, together with available cash on hand, to repurchase or redeem all of our $135.0 million 12% Second Priority Secured Notes due 2006. In the second transaction, we replaced our previous

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$35.0 million revolving line of credit with a $50.0 million revolving line of credit that was subsequently replaced in December 2004, as described above.

   In 2002, we received $145.5 million in net proceeds from issuances of long-term debt and warrants and $7.6 million from issuances of common stock, and we expended $128.7 million in principal payments on long-term debt. The net proceeds from issuances of long-term debt and warrants included $123.1 million in net proceeds from our sale of notes and warrants in August 2002 and $22.4 million in net proceeds from a term loan. Principal payments on long-term debt consisted primarily of the prepayment of a $25.0 million term loan and our $100.0 million 5% subordinated convertible notes, which were due in 2002, and $3.7 million of principal payments on capital leases and other debt. The cash received from the issuances of shares of common stock was attributable to issuances under our employee stock purchase plan and the exercise of stock options and warrants.

   The existing senior notes and the Revolver contain covenants limiting our ability to, among other things, incur more debt, pay cash dividends, make investments, redeem or repurchase Orbital stock, enter into transactions with affiliates, merge or consolidate with others and dispose of assets or create liens on assets. In addition, the Revolver contains financial covenants with respect to leverage, secured leverage, fixed charge coverage, consolidated net worth and the ratio of accounts receivable to senior secured indebtedness. As of December 31, 2004, the company was in compliance with all of these covenants.

   During 2003, we entered into an eight-year interest rate swap agreement with a financial institution on a notional amount of $50.0 million, whereby we receive fixed-rate interest of 9% in exchange for variable interest payments. The interest rate is reset quarterly and is equal to the 3-month LIBOR rate plus 4.28%. The total variable interest rate was 6.35% at December 31, 2004. This arrangement has been designated an effective fair value hedge of $50.0 million of our 9% senior notes due 2011. As of December 31, 2004, the fair value of the interest rate swap was $1.8 million, which was recorded as a non-current asset with an equal increase in long-term debt on the consolidated balance sheet.

   The following table sets forth our long-term obligations, excluding capital lease obligations (in thousands):

	December 31,
	2004		2003
9% senior notes, interest due semi-annually, principal due in July 2011.	$	126,425	$	135,000
Interest rate swap fair value hedge adjustment on $50 million of 9% senior notes		1,844		1,847
		128,269		136,847
Less current portion		—		—
Long-term portion	$	128,269	$	136,847

   The fair value of our senior notes at December 31, 2004 and 2003 was estimated at $142.5 million and $145.1 million, respectively, based on market trading activity.

   Available Cash and Future Funding – At December 31, 2004, we had $125.5 million of unrestricted cash and cash equivalents. Management believes that available cash, cash expected to be generated from operations and borrowing capacity under the Revolver will be sufficient to fund our operating and capital expenditure requirements in the foreseeable future. However, there can be no

29

assurance that this will be the case. Our ability to borrow additional funds is limited by the terms of our outstanding debt. Additionally, significant unforeseen events such as termination of major orders or late delivery or failure of launch vehicle or satellite products could adversely affect our liquidity and results of operations.

Aggregate Contractual Obligations

   The following summarizes Orbital’s contractual obligations at December 31, 2004, both on- and off-balance sheet, and the effect such obligations are expected to have on our liquidity and cash flow in future periods (in millions):

			Payments Due by Period
			Less than		1 to 3		3 to 5		More than
	Total		1 Year		Years		Years		5 Years
Long-term debt	$	128.3	$	—	$	—	$	—	$	128.3
Capital leases		0.3		0.2		0.1		—		—
Operating leases(1)		129.6		15.9		27.1		24.8		61.8
Purchase obligations(2)		138.8		132.7		6.1		—		—
Other long-term liabilities		0.2		0.2		—		—		—
Total	$	397.2	$	149.0	$	33.3	$	24.8	$	190.1

(1)	Our obligations under operating leases consist of minimum rental commitments under non-cancelable operating leases primarily for office space and equipment.
(2)	Purchase obligations consist of open purchase orders that we issued to acquire materials, parts or services in future periods.

   Occasionally, certain contracts require us to post letters of credit supporting our performance and refund obligations under the contracts. We had $14.7 million of letters of credit outstanding at December 31, 2004, of which $8.3 million was collateralized by our restricted cash and $6.4 million was issued under the Revolver.

Off-Balance Sheet Arrangements

   We believe that we do not have any material off-balance sheet arrangements, as defined by applicable securities regulations, that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

New Accounting Pronouncement

   In December 2004, Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment,” was issued. SFAS No. 123(R) amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to require companies to recognize as expense the fair value of all employee stock-based awards, including stock option grants. We expect to adopt SFAS No. 123(R) on July 1, 2005, using the modified prospective application method, as defined by SFAS No. 123(R). We are currently assessing the expected impact on our consolidated 2005 financial statements and the anticipated changes to our compensation strategies, if any, including our stock option and incentive plan, described more fully in Note 8 to the consolidated financial statements included herein.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

   At December 31, 2004, we had total receivables of approximately $4.3 million denominated in Japanese yen and $3.7 million denominated in Singapore dollars.

   From time to time, we enter into forward exchange contracts to hedge against foreign currency fluctuations on receivables denominated in foreign currency. At December 31, 2004, we had no foreign currency forward exchange contracts.

   The fair market value of our outstanding 9% senior notes due 2011 was estimated at approximately $142.5 million at December 31, 2004, based on market trading activity.

   During 2003, we entered into an eight-year interest rate swap agreement with a financial institution on a notional amount of $50.0 million, whereby we receive fixed-rate interest of 9% in exchange for variable interest payments. The interest rate is reset quarterly and is equal to the 3-month LIBOR rate plus 4.28%. The total variable interest rate was 6.35% at December 31, 2004. This arrangement has been designated an effective fair value hedge of $50.0 million of our 9% senior notes due 2011. As of December 31, 2004, the fair value of the interest rate swap was $1.8 million, which was recorded as a non-current asset with an equal increase in long-term debt on the consolidated balance sheet.

   We have an unfunded deferred compensation plan for senior managers and executive officers with a total liability balance of $4.9 million at December 31, 2004. This liability is subject to fluctuation based upon the market value of certain investment securities selected by participants to measure the market fluctuations and to measure our liability to each participant.

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Item 8.  Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

	Page
Report of Independent Registered Public Accounting Firm		33
Consolidated Income Statements		35
Consolidated Balance Sheets		36
Consolidated Statements of Stockholders’ Equity		37
Consolidated Statements of Cash Flows		38
Notes to Consolidated Financial Statements		39
Schedule II – Valuation and Qualifying Accounts		56

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
           Stockholders of Orbital Sciences Corporation:

   We have completed an integrated audit of the 2004 consolidated financial statements of Orbital Sciences Corporation and of its internal control over financial reporting as of December 31, 2004 and audits of its 2003 and 2002 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

  Consolidated financial statements and financial statement schedule

   In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Orbital Sciences Corporation and its subsidiaries at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

   As discussed in Note 1 to the consolidated financial statements, in 2002 the Company changed its method of accounting for goodwill to conform to Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”

  Internal control over financial reporting

   Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A, that the Company maintained effective internal control over financial reporting as of December 31, 2004 based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control – Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about

33

whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

   A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

   Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP

McLean, Virginia

March 4, 2005

34

ORBITAL SCIENCES CORPORATION

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share data)

		For the Years Ended December 31,
		2004			2003			2002
Revenues		$	675,935		$	581,500		$	551,642
Costs of goods sold			566,787			477,273			460,231
Gross profit			109,148			104,227			91,411
Research and development expenses			6,311			7,835			4,671
Selling, general and administrative expenses			50,052			56,963			57,701
Settlement expense, net			(2,538	)		3,871			—
Income from operations			55,323			35,558			29,039
Interest expense			(11,386	)		(18,683	)		(17,450	)
Other income, net			2,290			1,347			2,361
Gain on reversal of allocated losses of affiliate			—			40,586			—
Debt extinguishment expense			(2,099	)		(38,836	)		—
Income before income taxes			44,128			19,972			13,950
Benefit from (provision for) income taxes			155,872			265			(265	)
Income from continuing operations before cumulative effect of change in accounting			200,000			20,237			13,685
Discontinued operations — gain on disposal			—			—			875
Cumulative effect of change in accounting			—			—			(13,795	)
Net income		$	200,000		$	20,237		$	765
Basic earnings per share:
	Income from continuing operations	$	4.03		$	0.43		$	0.31
	Income from discontinued operations		—			—			0.02
	Cumulative effect of change in accounting		—			—			(0.31	)
	Net income	$	4.03		$	0.43		$	0.02
Diluted earnings per share:
	Income from continuing operations	$	3.08		$	0.35		$	0.30
	Income from discontinued operations		—			—			0.02
	Cumulative effect of change in accounting		—			—			(0.30	)
	Net income	$	3.08		$	0.35		$	0.02

See accompanying notes to consolidated financial statements.

35

ORBITAL SCIENCES CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

			December 31,
			2004			2003
ASSETS
Current Assets:
	Cash and cash equivalents		$	125,504		$	60,900
	Restricted cash			8,315			19,258
	Receivables, net			149,480			149,508
	Inventories, net			13,565			12,642
	Deferred income taxes, net			26,710			—
	Other current assets			3,880			5,496
		Total current assets		327,454			247,804
Property, plant and equipment, net				83,154			82,364
Goodwill				55,551			95,293
Deferred income taxes, net				185,940			—
Other non-current assets				11,671			13,839
		Total Assets	$	663,770		$	439,300
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
	Short-term borrowings and current portion of long-term obligations		$	161		$	297
	Accounts payable			30,740			24,841
	Accrued expenses			90,714			91,185
	Deferred revenues			19,478			16,292
		Total current liabilities		141,093			132,615
Long-term obligations, net of current portion				128,375			137,116
Other non-current liabilities				178			2,692
Commitments and contingencies
Stockholders’ Equity:
	Preferred Stock, par value $.01; 10,000,000 shares authorized, none outstanding			—			—
	Common Stock, par value $.01; 200,000,000 shares authorized, 52,823,032 and 48,072,580 shares outstanding, respectively			528			480
	Additional paid-in capital			618,232			591,482
	Deferred compensation			(53	)		(502	)
	Accumulated deficit			(224,583	)		(424,583	)
		Total stockholders’ equity		394,124			166,877
		Total Liabilities and Stockholders’ Equity	$	663,770		$	439,300

See accompanying notes to consolidated financial statements.

36

ORBITAL SCIENCES CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

								Additional
		Common Stock						Paid-In			Deferred			Accumulated
		Shares			Amount			Capital			Compensation			Deficit			Total
Balance, December 31, 2001			41,241		$	412		$	539,458		$	—		$	(445,585	)	$	94,285
	Shares issued to employees, officers and directors		3,834			39			15,340			—			—			15,379
	Shares issued for litigation settlement		300			3			1,000			—			—			1,003
	Warrants issued, net of issuance costs		—			—			22,306			—			—			22,306
	Warrants exercised		36			—			123			—			—			123
	Issuance of restricted stock		200			2			1,058			(1,060	)		—			—
	Amortization of deferred compensation		—			—			—			707			—			707
	Net income		—			—			—			—			765			765
Balance, December 31, 2002			45,611			456			579,285			(353	)		(444,820	)		134,568
	Shares issued to employees, officers and directors		2,140			21			10,401			—			—			10,422
	Warrants exercised		122			1			436			—			—			437
	Issuance of restricted stock		200			2			1,360			(1,362	)		—			—
	Amortization of deferred compensation		—			—			—			1,213			—			1,213
	Net income		—			—			—			—			20,237			20,237
Balance, December 31, 2003			48,073			480			591,482			(502	)		(424,583	)		166,877
	Shares issued to employees, officers and directors		1,260			13			5,915			—			—			5,928
	Warrants exercised		4,085			41			11,392			—			—			11,433
	Repurchases of common stock		(595	)		(6	)		(6,994	)		—			—			(7,000	)
	Amortization of deferred compensation		—			—			—			449			—			449
	Tax benefit of stock-based compensation		—			—			16,437			—			—			16,437
	Net income		—			—			—			—			200,000			200,000
Balance, December 31, 2004			52,823		$	528		$	618,232		$	(53	)	$	(224,583	)	$	394,124

See accompanying notes to consolidated financial statements.

37

ORBITAL SCIENCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

					For the Years Ended December 31,
					2004			2003			2002
Operating Activities:
	Income from continuing operations before cumulative effect of change in accounting				$	200,000		$	20,237		$	13,685
	Adjustments to reconcile income from continuing operations to net cash provided by (used in) operating activities:
		Depreciation and amortization expense				15,009			16,008			15,149
		Deferred income taxes				(156,471	)		—			—
		Amortization of debt costs				860			4,056			4,459
		Gain on reversal of allocated losses of affiliate				—			(40,586	)		—
		Debt extinguishment expense				2,099			38,836			—
		Stock-based compensation and contributions to defined contribution plan and other				(318	)		7,280			8,277
	Changes in assets and liabilities:
		Receivables				28			(14,332	)		(9,692	)
		Inventories				(923	)		4,494			2,648
		Other assets				1,370			(355	)		(2,743	)
		Accounts payable and accrued expenses				4,672			23,837			(64,459	)
		Deferred revenue				3,186			(11,802	)		4,208
		Other liabilities				(2,514	)		(1,199	)		(1,380	)
			Net cash provided by (used in) operating activities			66,998			46,474			(29,848	)
Investing Activities:
	Capital expenditures					(14,340	)		(9,578	)		(15,341	)
	Escrow proceeds received related to former business disposition					—			3,000			1,000
	Decrease (increase) in cash restricted for letters of credit, net					10,941			(9,016	)		—
				Net cash used in investing activities		(3,399	)		(15,594	)		(14,341	)
Financing Activities:
	Principal payments on long-term obligations and other					(10,109	)		(146,952	)		(128,729	)
	Net proceeds from issuances of long-term obligations					—			128,962			145,502
	Repurchase of common stock					(7,000	)		—			—
	Net proceeds from issuances of common stock					18,114			4,570			7,641
				Net cash provided by (used in) financing activities		1,005			(13,420	)		24,414
Net increase (decrease) in cash and cash equivalents						64,604			17,460			(19,775	)
Cash and cash equivalents, beginning of year						60,900			43,440			63,215
Cash and cash equivalents, end of year					$	125,504		$	60,900		$	43,440

See accompanying notes to consolidated financial statements.

38

ORBITAL SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Business and Summary of Significant Accounting Policies

Business Operations

   Orbital Sciences Corporation (together with its subsidiaries, “Orbital” or the “company”), a Delaware corporation, develops and manufactures small rockets and space systems for commercial, military and civil government customers. The company’s primary products are satellites and launch vehicles, including low-orbit, geosynchronous and planetary spacecraft for communications, remote sensing, scientific and defense missions; ground- and air-launched rockets that deliver satellites into orbit; and missile defense systems that are used as interceptor and target vehicles. Orbital also offers space-related technical services to government agencies and develops and builds satellite-based transportation management systems for public transit agencies and private vehicle fleet operators.

Principles of Consolidation

   The consolidated financial statements include the accounts of Orbital and its wholly owned subsidiaries. As of December 31, 2004 and 2003, the company had no partially owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

Preparation of Consolidated Financial Statements

   The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions, including estimates of future contract costs and earnings. Such estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and earnings during the current reporting period. Management periodically assesses and evaluates the adequacy and/or deficiency of estimated liabilities recorded for various reserves, liabilities, contract risks and uncertainties. Actual results could differ from these estimates.

   All financial amounts are stated in U.S. dollars unless otherwise indicated.

Revenue Recognition

   Orbital’s revenue is derived primarily from long-term contracts. Revenues on cost-reimbursable contracts are recognized to the extent of costs incurred plus a proportionate amount of fee earned. Revenues on long-term fixed-price contracts are generally recognized using the percentage-of-completion method of accounting. Such revenues are recorded based on the percentage that costs incurred to date bear to the most recent estimates of total costs to complete each contract. Estimating future costs and, therefore, revenues and profits, is a process requiring a high degree of management judgment, including management’s assumptions regarding future operations of Orbital as well as general economic conditions. In the event of a change in total estimated contract cost or profit, the cumulative effect of such change is recorded in the period the change in estimate occurs. Frequently, the period of performance of a contract extends over a long period of time and, as such,

39

revenue recognition and the company’s profitability from a particular contract may be adversely affected to the extent that estimated cost to complete or incentive or award fee estimates are revised, delivery schedules are delayed or progress under a contract is otherwise impeded. Accordingly, the company’s recorded revenues and gross profits from period to period can fluctuate significantly. In the event cost estimates indicate a loss on a contract, the total amount of such loss, excluding general and administrative expenses, is recorded in the period in which the loss is first estimated.

   Certain contracts include incentive provisions for increased or decreased revenue and profit based on actual performance against established targets. Incentive and award fees are included in estimated contract revenue at the time the amounts can be reasonably determined and are reasonably assured based upon historical experience and other objective criteria. Should Orbital’s performance under such contracts differ from previous assumptions, current period revenues would be adjusted.

Property, Plant and Equipment

   Property, plant and equipment are stated at cost. Major improvements are capitalized while expenditures for maintenance, repairs and minor improvements are charged to expense. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is reflected in operations. Depreciation expense is determined using the straight-line method based on the following useful lives:

Buildings	20 years
Machinery, equipment and software	3 to 12 years
Leasehold improvements	Shorter of estimated useful life or lease term

Recoverability of Long-Lived Assets

   Orbital’s policy is to evaluate its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When an evaluation indicates that an asset impairment has occurred, a loss is recognized and the asset is adjusted to its estimated fair value. Given the inherent technical and commercial risks within the aerospace industry, combined with the special purpose use of certain of the company’s assets, future impairment charges could be required if the company were to change its current expectation that it will recover the carrying amount of its long-lived assets from future operations.

Income Taxes

   Orbital accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recorded for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a tax rate change on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The company records valuation allowances to reduce net deferred tax assets to the amount considered more likely than not to be

40

realized. Changes in estimates of future taxable income can materially change the amount of such valuation allowances.

Earnings Per Share

   Basic earnings per share are calculated using the weighted-average number of common shares outstanding during the periods. Diluted earnings per share include the weighted-average effect of all dilutive securities outstanding during the periods. Diluted per share loss is the same as basic per share loss when there is a loss from continuing operations.

   The following table presents the shares used in computing basic and diluted earnings per share (in thousands):

	Years Ended December 31,
	2004		2003		2002
Weighted average of outstanding shares for basic earnings per share		49,658		46,718		43,908
Dilutive effect of outstanding stock options		2,441		1,641		718
Dilutive effect of outstanding stock warrants		12,798		9,742		311
Dilutive effect of restricted stock		125		120		—
Shares for diluted earnings per share		65,022		58,221		44,937

   In 2004, diluted weighted-average shares outstanding excluded the effect of 2.0 million stock options that were anti-dilutive. In 2003, diluted weighted-average shares outstanding excluded the effect of 2.3 million stock options that were anti-dilutive. In 2002, diluted weighted-average shares outstanding excluded the effect of 3.4 million stock options and 16.5 million warrants that were anti-dilutive.

Cash and Cash Equivalents

   Cash and cash equivalents consist of cash and short-term, highly liquid investments with maturities of 90 days or less.

Inventories

   Inventory is stated at the lower of cost or estimated market value. Estimated market value is determined based on assumptions about future demand and market conditions. If actual market conditions were less favorable than those previously projected by management, inventory write-downs could be required.

Self-Constructed Assets

   The company self-constructs some of its ground and airborne support and special test equipment utilized in the manufacture, production and delivery of some of its products. Orbital capitalizes direct costs incurred in constructing such equipment and certain allocated indirect costs. Capitalized costs generally include direct software coding costs and certain allocated indirect costs.

41

Goodwill

   Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired companies. The company adopted SFAS No. 142, “Goodwill and Other Intangible Assets,” effective January 1, 2002. In accordance with SFAS No. 142, goodwill amortization was discontinued as of January 1, 2002 and instead is tested at least annually for impairment using an estimation of the fair value of the reporting unit that the goodwill is attributable to.

   In connection with the adoption of SFAS No. 142 in 2002, the company completed its assessment of goodwill impairment and as a result recorded a $13.8 million impairment loss in its transportation management systems segment to write off the remaining net book value of goodwill in this segment. The impairment loss was determined based on a comparison of the fair value of the company’s transportation management systems reporting unit to its carrying value, including goodwill. The fair value of the company’s transportation management systems reporting unit, and the resulting implied fair value of goodwill, were estimated after consideration of letters of interest in respect of purchase offers received by the company in early 2002 during its attempts to sell the transportation management systems business. The impairment loss was recorded as a January 1, 2002 cumulative effect of a change in accounting.

Deferred Revenue

   The company occasionally receives cash advances and payments from customers in excess of revenues recognized on certain contracts. These advances and payments are reported as deferred revenues on the balance sheet.

Comprehensive Income

   Orbital’s comprehensive income in the years ended December 31, 2004, 2003 and 2002 was equal to net income. Accumulated other comprehensive income as of December 31, 2004, 2003 and 2002 was $0.

Financial Instruments

   Orbital occasionally uses forward contracts and interest rate swaps to manage certain foreign currency and interest rate exposures, respectively. Derivative instruments, such as forward contracts and interest rate swaps, are viewed as risk management tools by Orbital and are not used for trading or speculative purposes. Derivatives used for hedging purposes must be designated and effective as a hedge of the identified risk exposure at the inception of the contract. Accordingly, changes in fair value of the derivative contract must be highly correlated with changes in the fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract. All derivative instruments are recorded on the balance sheet at fair value. The ineffective portion of all hedges, if any, is recognized currently in earnings.

Research and Development Expenses

   Expenditures for company-sponsored research and development projects are expensed as incurred. Customer-sponsored research and development projects performed under contracts are accounted for as contract costs as the work is performed.

42

Stock-Based Compensation and New Accounting Pronouncement

   In December 2004, Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment,” was issued. SFAS No. 123(R) amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to require companies to recognize as expense the fair value of all employee stock-based awards, including stock option grants. The company expects to adopt SFAS No. 123(R) on July 1, 2005, using the modified prospective application method, as defined under SFAS No. 123(R). The company is currently assessing the expected impact on its consolidated 2005 financial statements and the anticipated changes to its compensation strategies, if any, including its stock option and incentive plan, described more fully in Note 8.

   Through December 31, 2004, the company applied the provisions of SFAS No. 123, as amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure, an amendment of FASB Statement No. 123.” Under those provisions, the company has provided pro forma net income and earnings per share disclosures for its employee stock option grants as if the fair-value-based method defined in SFAS No. 123 had been applied (see below). The company has not recorded any compensation cost associated with stock options issued to date since all such options had an exercise price equal to the market value of the company’s common stock on the date of grant.

   The company used the Black-Scholes option-pricing model to determine the pro forma impact under SFAS Nos. 123 and 148 on the company’s net income and earnings per share. The model utilizes certain information, such as the interest rate on a risk-free security maturing generally at the same time as the option being valued, and requires certain assumptions, such as the expected amount of time an option will be outstanding until it is exercised or it expires, to calculate the fair value of stock options granted. This information and the assumptions used for 2004, 2003 and 2002 are summarized as follows:

	2004			2003			2002
Additional shares authorized for grant at December 31		536,670			1,535,279			4,101,991
Volatility		64	%		66	%		67	%
Risk-free interest rate		3.06	%		1.7	%		3.9	%
Weighted-average fair value per share at grant date	$	4.94		$	3.35		$	5.31
Expected dividend yield		—			—			—
Average expected life of options (years)		2.5 - 4.5			4.5			4.5

43

   The following table illustrates the effect on net income and earnings per share if the company had applied the fair value recognition provisions of SFAS No. 123 to its stock option plan (in thousands, except per share amounts):

		Years Ended December 31,
		2004			2003			2002
Net income, as reported		$	200,000		$	20,237		$	765
Deduct: Net stock-based employee compensation expense determined under fair value based method			(6,673	)		(4,464	)		(3,466	)
Pro forma net income (loss)		$	193,327		$	15,773		$	(2,701	)
Net income (loss) per share:
	Basic — as reported	$	4.03		$	0.43		$	0.02
	Basic — pro forma	$	3.89		$	0.34		$	(0.06	)
	Diluted — as reported	$	3.08		$	0.35		$	0.02
	Diluted — pro forma	$	2.97		$	0.27		$	(0.06	)

   Pro forma net income (loss) reflects only options granted through 2004 and, therefore, may not be representative of the effects for future periods.

2. Industry Segment Information

   Orbital’s products and services are grouped into three reportable segments: (i) launch vehicles (formerly launch vehicles and advanced programs); (ii) satellites and related space systems; and (iii) transportation management systems. Reportable segments are generally organized based upon product lines. Corporate office expenses that have not been attributed to a particular segment, as well as consolidating eliminations and adjustments, are reported in corporate and other.

   Intersegment sales are generally negotiated and accounted for under terms and conditions that are similar to other commercial and government contracts. Substantially all of the company’s assets and operations are located within the United States.

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   The following table presents operating information and identifiable assets by reportable segment (in thousands):

		Years Ended December 31,
		2004			2003			2002
Launch Vehicles:
	Revenues	$	323,287		$	333,272		$	257,851
	Operating income		30,103			32,801			23,643
	Identifiable assets		123,882			126,960			131,863
	Capital expenditures		4,303			5,228			4,965
	Depreciation and amortization		5,533			5,805			5,798
Satellites and Related Space Systems:
	Revenues	$	331,726		$	218,679		$	232,387
	Operating income		21,439			14,555			5,754
	Identifiable assets		130,047			149,933			137,644
	Capital expenditures		8,236			2,786			7,356
	Depreciation and amortization		5,286			5,705			5,032
Transportation Management Systems:
	Revenues	$	29,135		$	36,571		$	65,469
	Operating income (loss)		1,243			(7,629	)		242
	Identifiable assets		23,124			37,596			43,312
	Capital expenditures		166			266			555
	Depreciation and amortization		732			787			804
Corporate and Other:
	Revenues(1)	$	(8,213	)	$	(7,022	)	$	(4,065	)
	Operating income (loss)(2)		2,538			(4,169	)		(600	)
	Identifiable assets		386,717			124,811			103,491
	Capital expenditures		1,635			1,298			2,465
	Depreciation and amortization		3,458			3,711			3,515
Consolidated:
	Revenues	$	675,935		$	581,500		$	551,642
	Operating income		55,323			35,558			29,039
	Identifiable assets		663,770			439,300			416,310
	Capital expenditures		14,340			9,578			15,341
	Depreciation and amortization		15,009			16,008			15,149

(1)	Corporate and other revenues are comprised solely of the elimination of sales between segments.
(2)	Corporate and other operating income in 2004 included a $2.5 million gain in connection with the sale of a note from a former affiliate and in 2003 included $4.8 million of settlement charges (see Note 5).

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Export Sales and Major Customers

   Orbital’s revenues by geographic area were as follows (in thousands):

		Years Ended December 31,
		2004		2003		2002
United States		$	573,339	$	469,997	$	488,116
East Asia			102,596		111,503		63,347
Other			—		—		179
	Total	$	675,935	$	581,500	$	551,642

   Approximately 80%, 67% and 58% of the company’s revenues in 2004, 2003 and 2002, respectively, were generated under contracts with the U.S. government and its agencies or under subcontracts with the U.S. government’s prime contractors. Customers that accounted for 10% or more of consolidated revenue in 2004 and 2003 were The Boeing Company, the U. S. Department of Defense and the U.S. National Aeronautics and Space Administration (NASA).

3. Balance Sheet Accounts

Restricted Cash

   At December 31, 2004 and 2003, the company had $8.3 million and $19.3 million, respectively, of cash restricted primarily to collateralize letters of credit.

Inventory

   Inventories consisted of the following (in thousands):

		December 31,
		2004			2003
Inventories		$	16,554		$	15,475
Allowance for inventory obsolescence			(2,989	)		(2,833	)
	Total	$	13,565		$	12,642

   Substantially all of the company’s inventory consisted of component parts and raw materials.

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Receivables

   The components of receivables were as follows (in thousands):

		December 31,
		2004			2003
Billed		$	54,800		$	55,812
Unbilled			84,208			87,535
Retainages due upon contract completion			10,649			6,348
Allowance for doubtful accounts			(177	)		(187	)
	Total	$	149,480		$	149,508

   Approximately 90% of unbilled receivables and retainages at December 31, 2004 are due within one year and will be billed on the basis of contract terms and delivery schedules. At December 31, 2004 and 2003, $11.0 million and $27.8 million, respectively, were receivables from non-U.S. customers.

Property, Plant and Equipment

   Property, plant and equipment consisted of the following (in thousands):

		December 31,
		2004			2003
Land		$	4,061		$	4,061
Buildings and leasehold improvements			39,671			37,330
Furniture, fixtures and equipment			129,513			119,657
Software and other			18,013			14,633
Accumulated depreciation and amortization			(108,104	)		(93,317	)
	Total	$	83,154		$	82,364

   Depreciation expense for the years ended December 31, 2004, 2003 and 2002, was $15.0 million, $16.0 million and $15.1 million, respectively.

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Accrued Expenses

   Accrued expenses consisted of the following (in thousands):

		December 31,
		2004		2003
Contract related accruals		$	42,115	$	34,896
Payroll, payroll taxes and fringe benefits			30,939		28,086
Interest			3,844		4,544
Warranty obligations			3,145		5,020
Other			10,671		18,639
	Total	$	90,714	$	91,185

Warranties

   The company assumes warranty obligations in connection with certain transportation management systems contracts. The company records a liability for the expected costs to service estimated warranty claims. During 2004 and 2003, activity in the warranty liability consisted of the following (in thousands):

	2004			2003
Balance at January 1	$	5,020		$	4,554
Accruals during the year		844			1,473
Reductions during the year		(2,719	)		(1,007	)
Balance at December 31	$	3,145		$	5,020

4.  Debt Obligations

   Long-term obligations, excluding capital lease obligations, consisted of the following (in thousands):

	December 31,
	2004		2003
9% senior notes, interest due semi-annually, principal due in July 2011	$	126,425	$	135,000
Interest rate swap fair value hedge adjustment on $50 million of 9% senior notes		1,844		1,847
		128,269		136,847
Less current portion		—		—
Long-term portion	$	128,269	$	136,847

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Partial Debt Extinguishment

   During 2004, the company repurchased and cancelled $8.6 million of the company’s 9% senior notes at a cost of $9.6 million.

Revolving Credit Facility

   In December 2004, the company replaced its previous $50.0 million revolving line of credit with a new five-year $50.0 million revolving credit facility (the “Revolver”) with Bank of America serving as the lead arranger in the syndicated line of credit. The company has the option to increase the amount of the Revolver by up to $25 million to the extent that any one or more lenders commits to be a lender for such amount. Loans under the Revolver bear interest at LIBOR plus a margin ranging from 1.5% to 2.25% or at a prime rate plus a margin ranging from zero to 0.75%, with the applicable margin in each case varying according to the company’s ratio of total debt to earnings before interest, taxes, depreciation and amortization. The Revolver is collateralized by the company’s intellectual property and accounts receivable. Up to $40.0 million of the Revolver may be reserved for letters of credit. As of December 31, 2004, there were no borrowings under the Revolver, although $6.4 million of letters of credit were issued under the Revolver. Accordingly, as of December 31, 2004, $43.6 million of the Revolver was available for borrowing.

   In connection with this transaction, the company expended $0.4 million in debt issuance costs. The company also recorded $1.0 million of debt extinguishment expenses in the accompanying consolidated income statement comprised of accelerated amortization of previous debt issuance costs.

2003 Transactions

   In July 2003, the company closed two financing transactions. In the first transaction, Orbital issued $135.0 million of 9% senior notes due 2011 with interest payable semi-annually each January 15 and July 15, starting in 2004. During the third quarter of 2003, the company used the net proceeds from this offering, together with available cash on hand, to repurchase or redeem all of the company’s $135.0 million 12% Second Priority Secured Notes due 2006. The fair value of the 9% senior notes at December 31, 2004 was estimated at approximately $142.5 million, based on market trading activity.

   In the second transaction, the company replaced its previous $35.0 million revolving line of credit with a $50.0 million revolving line of credit that was subsequently replaced in December 2004, as described above. In connection with these two financing transactions, the company recorded $38.8 million of debt extinguishment expenses in 2003, which was comprised of accelerated amortization of unamortized debt discount of $20.7 million on our 12% notes, accelerated amortization of debt issuance costs of $10.1 million and $8.0 million in prepayment premiums and other expenses.

Debt Covenants

   The existing senior notes and the Revolver contain covenants limiting the company’s ability to, among other things, incur more debt, pay cash dividends, make investments, redeem or repurchase Orbital stock, enter into transactions with affiliates, merge or consolidate with others and dispose of assets or create liens on assets. In addition, the Revolver contains financial covenants with respect to

49

leverage, secured leverage, fixed charge coverage, consolidated net worth and the ratio of accounts receivable to senior secured indebtedness. As of December 31, 2004, the company was in compliance with all of these covenants.

Interest Rate Swap

   During 2003, the company entered into an eight-year interest rate swap agreement with a financial institution on a notional amount of $50.0 million, whereby the company receives fixed-rate interest of 9% in exchange for variable interest payments. The interest rate is reset quarterly and is equal to the 3-month LIBOR rate plus 4.28%. The total variable interest rate was 6.35% at December 31, 2004. This arrangement has been designated an effective fair value hedge of $50.0 million of the company’s 9% senior notes due 2011. As of December 31, 2004, the fair value of the interest rate swap was $1.8 million, which was recorded as a non-current asset with an equal increase in long-term debt on the consolidated balance sheet.

5.  Former Affiliate Transactions

   In December 2003, the company’s former affiliate, Orbital Imaging Corporation (“ORBIMAGE”), reorganized and Orbital’s equity ownership interest was cancelled. Orbital had used the equity method of accounting for its investment in ORBIMAGE and through December 31, 2003, Orbital had recognized $40.6 million of losses in excess of its investment. In connection with the cancellation of Orbital’s ownership interest, the company recorded a $40.6 million gain in December 2003 to reverse the previously recorded losses in excess of its investment. Orbital does not have any affiliation with ORBIMAGE’s successor company.

   In 2003, Orbital recorded $4.8 million of settlement charges in connection with the settlement of litigation and disputes between ORBIMAGE and Orbital. These charges included a $2.3 million delay penalty related to the OrbView-3 satellite and a $2.5 million litigation settlement payment.

   Orbital received $2.5 million of notes receivable from ORBIMAGE in connection with its reorganization in December 2003. In January 2004, Orbital sold the notes to a third party financial institution and recorded a $2.5 million gain as a credit to settlement expense.

6.  Income Taxes

   For the years ended December 31, 2002 and 2003, and until the fourth quarter of 2004, Orbital had recorded a valuation allowance to fully reserve its net deferred tax assets based on the company’s assessment that the realization of the net deferred tax assets did not meet the “more likely than not” criterion under SFAS No. 109, “Accounting for Income Taxes.” As of December 31, 2004 the company determined that based upon a number of factors, including the company’s cumulative taxable income in recent years and expected profitability in future years, substantially all of its net deferred tax assets are “more likely than not” realizable through future earnings. Accordingly, as of December 31, 2004 the company reversed $212.6 million of its deferred income tax valuation allowance and recorded (i) a tax benefit of $156.5 million in the consolidated income statement, (ii) a $39.7 million reduction in goodwill and (iii) a $16.4 million increase to additional paid-in capital. The portion of the reversal recorded as a reduction in goodwill relates to valuation allowances established in prior years in connection with business acquisitions. The portion

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of the reversal recorded as an increase to additional paid-in capital is primarily related to tax benefits associated with stock option exercises in 2004 and prior years.

   The company’s deferred tax assets and liabilities were (in thousands):

			December 31,
			2004			2003
Deferred Tax Assets:
	U.S. Federal and state net operating loss carryforwards		$	167,284		$	210,791
	Capitalized research and development costs			34,607			—
	Accruals and reserves			16,478			30,577
	Tax credit carryforwards			2,978			2,809
	Intangible assets and other			1,977			2,049
		Total deferred tax assets		223,324			246,226
	Valuation allowance			(3,986	)		(245,157	)
		Deferred tax assets, net		219,338			1,069
Deferred Tax Liabilities:
	Excess tax depreciation and other			(6,688	)		(1,069	)
		Net deferred tax assets	$	212,650		$	—

   Of the deferred net tax assets at December 31, 2004, $26.7 million are classified as current assets in the consolidated balance sheet, consisting of $10.1 million in U.S. Federal and state net operating loss carryforwards, $16.3 million in accruals and reserves and $0.3 million in intangible assets and other. The remaining net deferred tax assets are classified as non-current assets in the consolidated balance sheet.

   The $155.9 million tax benefit recorded in 2004 was comprised of (i) the $156.5 million deferred tax benefit in connection with the reversal of the valuation allowance discussed above and (ii) a $0.6 million current provision for 2004 alternative minimum taxes and state tax obligations.

   In 2003, the benefit for income taxes was solely attributable to the refund of state income taxes paid in 2002. The provision for income taxes in 2002 consisted solely of the accrual of initially estimated state income taxes.

   The income tax provisions (benefits) from continuing operations were different from those computed using the statutory U.S. Federal income tax rate as set forth below:

		Years Ended
		December 31,
		2004			2003			2002
U.S. Federal statutory rate			35.0	%		35.0	%		35.0	%
Investment in former affiliate			—			(70.2	)		—
State taxes			4.1			(5.0	)		4.0
Other, net			0.6			4.3			0.7
Changes in valuation allowance			(392.9	)		34.6			(37.8	)
	Effective rate		(353.2	)%		(1.3	)%		1.9	%

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   At December 31, 2004, the company had U.S. Federal net operating loss carryforwards (portions of which expire beginning in 2005 through 2023) of approximately $437.5 million and U.S. research and experimental tax credit carryforwards of approximately $2.5 million (portions of which expire beginning in 2005 through 2008). Such net operating loss carryforwards and tax credits are subject to certain limitations and other restrictions.

7. Commitments and Contingencies

Leases

   Aggregate minimum commitments under non-cancelable operating leases, primarily for office space and equipment rentals, at December 31, 2004 were as follows (in thousands):

2005	$	15,860
2006		13,987
2007		13,161
2008		12,730
2009		12,118
Thereafter		61,774
	$	129,630

   The company had a total of $0.3 million in capital lease obligations as of December 31, 2004, consisting of a $0.2 million current portion due in 2005 and a $0.1 million long-term portion due through 2007.

   Rent expense for 2004, 2003 and 2002 was approximately $15.0 million, $14.4 million and $16.1 million, respectively. The recorded amounts of capital lease obligations approximate their fair values.

Litigation

   The company is party to certain litigation or other legal proceedings arising in the ordinary course of business. In the opinion of management, the outcome of such legal matters will not have a material adverse effect on the company’s results of operations or financial condition.

U.S. Government Contracts

   The accuracy and appropriateness of Orbital’s direct and indirect costs and expenses under its U.S. government contracts, and, therefore, its receivables recorded pursuant to such contracts, are subject to extensive regulation and audit by the Defense Contract Audit Agency or by other governmental agencies. These agencies have the right to challenge Orbital’s direct and indirect costs charged to U.S. government contracts. Additionally, portions of the payments to the company under such contracts are provisional payments that are subject to potential adjustment upon audit by such agencies.

   Most of the company’s U.S. government contracts are funded incrementally on a year-to-year basis. Changes in government policies, priorities or funding levels through agency or program budget reductions by the U.S. Congress or executive agencies could materially adversely affect the

52

company’s financial condition or results of operations. Furthermore, contracts with the U.S. government may be terminated or suspended by the U.S. government at any time, with or without cause. Such contract suspensions or terminations could result in unreimbursable expenses or charges or otherwise adversely affect the company’s financial condition and/or results of operations.

8. Warrants, Common Stock and Stock Option Plans

   During 2004, 2.4 million common stock warrants with a $4.82 exercise price that had originally been issued in 2001 were exercised. The warrants expired on August 31, 2004. The company received $11.4 million of proceeds from the warrant exercises during 2004. A total of 2.1 million warrants expired unexercised.

   In August 2002, the company issued 135,000 warrants to purchase approximately 16.5 million shares of the company’s common stock as part of a sale of units consisting of notes and warrants. Each warrant is exercisable for up to 122.23 shares of Orbital’s common stock at an exercise price of $3.86 per share for a period of four years from the date of their issuance. As of December 31, 2004, 20,118 of these warrants had been exercised.

   In October 1998, the company adopted a stockholder rights plan in which preferred stock purchase rights were granted as a dividend at the rate of one right for each share of common stock to stockholders of record on November 13, 1998. The plan is designed to deter coercive or unfair takeover tactics. The rights become exercisable only if a person or group in the future becomes the beneficial owner of 15% or more of Orbital’s common stock or announces a tender or exchange offer that would result in its ownership of 15% or more of the company’s common stock. The rights are generally redeemable by Orbital’s Board of Directors at a redemption price of $0.005 per right and expire on October 31, 2008.

   In 1999, the company adopted an Employee Stock Purchase Plan (“ESPP”) for employees of the company. The ESPP has quarterly offering periods and allows employees to purchase shares of stock at the lesser of 85% of the fair market value of shares at the beginning or the end of the offering period. During the three years ended December 31, 2004, employees purchased approximately 2.1 million shares of Orbital’s common stock under the ESPP.

   As of December 31, 2004, the company’s 1997 Stock Option and Incentive Plan, as amended (the “1997 Plan”), provided for awards of up to 10.6 million incentive or non-qualified stock options and shares of restricted stock to employees, directors, consultants and advisors of the company and its subsidiaries. Under the terms of the 1997 Plan, the option exercise price must be at least equal to the fair market value of the company’s common stock on the date of grant. Options under the 1997 Plan vest at a rate set forth by the Board of Directors in each individual option agreement, generally in one-third increments over a two- or three-year period following the date of grant. Options expire no more than ten years following the grant date. The 1997 Plan provides for automatic grants of non-qualified stock options to non-employee directors of the company. The company also has options outstanding that were issued pursuant to two predecessor plans to the 1997 Plan.

   In the fourth quarter of 2002, the company offered a stock option exchange program to certain employees, pursuant to which 1,185,513 options previously granted under the 1997 Plan, each with an exercise price greater than $12.25 per common share, were cancelled. The company granted 870,928 new options in 2003 under the 1997 Plan, more than six months after the cancellation of the prior options.

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   The following two tables summarize information regarding the company’s stock options for the last three years:

							Weighted
							Average		Outstanding
		Number of			Option Price		Exercise		and
Options		Shares			Per Share		Price		Exercisable
Outstanding at December 31, 2001			8,116,380		$	1.30-$43.31	$	14.03		4,753,881
	Granted		607,500			2.95-6.15		5.31
	Exercised		(174,783	)		3.80-4.43		4.00
	Cancelled or expired		(2,425,370	)		3.45-43.31		21.58
Outstanding at December 31, 2002			6,123,727			1.30-43.31		10.53		4,397,349
	Granted		2,492,428			4.33-8.95		6.38
	Exercised		(639,323	)		3.45-5.79		3.85
	Cancelled or expired		(637,095	)		3.45-43.31		18.31
Outstanding at December 31, 2003			7,339,737			1.30-43.31		9.01		4,854,429
	Granted		1,154,500			9.77-12.62		12.09
	Exercised		(1,167,478	)		1.30-12.25		4.54
	Cancelled or expired		(284,222	)		3.45-36.50		20.18
Outstanding at December 31, 2004			7,042,537		$	1.30-$43.31	$	9.80		4,924,708

		Options Outstanding
								Options Exercisable
				Weighted
		Number		Average		Weighted		Number		Weighted
Range of		Outstanding		Remaining		Average		Exercisable		Average
Exercise Prices		at Dec. 31, 2004		Contractual Life		Exercise Price		at Dec. 31, 2004		Exercise Price
$	1.30-$5.79		2,671,475		7.38	$	4.73		2,123,220	$	4.51
	6.15-12.18		2,384,098		7.01		9.46		999,522		9.84
	12.25-43.31		1,986,964		3.95		17.03		1,801,966		17.51
$	1.30-$43.31		7,042,537		6.28	$	9.80		4,924,708	$	10.35

9. Supplemental Disclosures

Defined Contribution Plan

   At December 31, 2004, the company had a defined contribution plan (the “Plan”) generally covering all full-time employees. Company contributions to the Plan are made based on certain plan provisions and at the discretion of the Board of Directors and were $8.1 million, $6.8 million and $4.9 million during 2004, 2003 and 2002, respectively. The company’s 2004 contributions were made solely in the form of cash. The company’s 2003 contributions consisted of $1.2 million in cash and 0.8 million shares of Orbital common stock, which employees are permitted to exchange into other investment alternatives. The company’s 2002 contributions consisted of 1.1 million shares of Orbital common stock.

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   The company has a deferred compensation plan for senior managers and executive officers. At December 31, 2004 and 2003, liabilities related to this plan totaling $4.9 million and $4.4 million, respectively, were included in accrued expenses.

Cash Flow

   Cash payments for interest and income taxes were as follows (in thousands):

	Years Ended December 31,
	2004		2003			2002
Interest paid	$	11,224	$	15,781		$	12,268
Income taxes paid (refunds received)		529		(265	)		265

10. Summary of Selected Quarterly Financial Data (Unaudited)

   The following is a summary of selected quarterly financial data for the previous two years (in thousands, except share data).

		Quarters Ended
		March 31		June 30			Sept. 30			Dec. 31
2004(1)
	Revenues	$	151,372	$	177,683		$	171,695		$	175,185
	Gross profit		24,918		29,651			29,237			25,342
	Income from operations		14,205		14,509			14,323			12,286
	Net income		11,494		11,053			11,395			166,058
	Basic income per share		0.24		0.23			0.23			3.22
	Diluted income per share		0.18		0.17			0.18			2.58
2003(2)
	Revenues	$	136,681	$	158,400		$	128,629		$	157,790
	Gross profit		26,234		21,494			26,893			29,606
	Income from operations		9,387		1,451			11,224			13,496
	Net income (loss)		3,436		(4,626	)		(30,225	)		51,652
	Basic income (loss) per share		0.08		(0.10	)		(0.64	)		1.09
	Diluted income (loss) per share		0.07		(0.10	)		(0.64	)		0.82

(1)	Operating income included a $2.5 million gain recorded as a credit to net settlement expenses in the first quarter of 2004 related to the company’s sale of senior subordinated notes which the company had received in 2003 from ORBIMAGE. Net income included a $156.5 million income tax benefit in the fourth quarter of 2004 related to a deferred tax valuation allowance reversal.
(2)	During 2003, operating income included net settlement expenses related to the company’s settlement with ORBIMAGE in the amounts of $1.0 million in the first quarter, $3.5 million in the second quarter and $0.3 million in the fourth quarter. In the third quarter of 2003, the company recorded a $0.9 million reduction of settlement expense related to certain insurance proceeds.

In the third quarter of 2003, net loss included a $38.8 million debt extinguishment charge. In the fourth quarter of 2003, net income included a $40.6 million gain on reversal of allocated losses of affiliate.

55

ORBITAL SCIENCES CORPORATION

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

FORM 10-K FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(In thousands)

				Additions
						Charged/
		Balance at		Charged to		Credited to					Balance
		Start of		Costs and		Other					At End of
Description		Period		Expenses		Accounts		Deductions			Period
YEAR ENDED DECEMBER 31, 2002
	Allowance for doubtful accounts	$	2,032	$	1,641		—	$	(1,587	)	$	2,086
	Allowance for obsolete inventory		1,390		2,196		—		(353	)		3,233
	Deferred income tax valuation reserve		202,734		—		29,510		—			232,244
YEAR ENDED DECEMBER 31, 2003
	Allowance for doubtful accounts		2,086		66		—		(1,965	)		187
	Allowance for obsolete inventory		3,233		406		—		(806	)		2,833
	Deferred income tax valuation reserve		232,244		—		12,913		—			245,157
YEAR ENDED DECEMBER 31, 2004
	Allowance for doubtful accounts		187		—		—		(10	)		177
	Allowance for obsolete inventory		2,833		156		—		—			2,989
	Deferred income tax valuation reserve		245,157		—		—		(241,171	)		3,986

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Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

   None.

Item 9A.  Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures and Changes in Internal Control Over Financial Reporting

   An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective. There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

   Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934, as amended. Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

   Based on our evaluation under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2004. Our management’s assessment of the effectiveness of the company’s internal control over financial reporting as of December 31, 2004 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.

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Item 9B.  Other Information

   None.

PART III

Item 10.  Directors and Executive Officers of the Registrant

   The information required by this Item is included under the captions “Executive Officers of the Registrant” in Part I above and under the captions “Proposal 1 — Election of Directors — Directors to be Elected at the 2005 Meeting, — Directors Whose Terms Expire in 2006, — Directors Whose Terms Expire in 2007,” “Corporate Governance — Code of Business Conduct and Ethics,” “Information Concerning the Board and Its Committees — Our Committees” and “Other Matters — Section 16(a) Beneficial Ownership Reporting Compliance” of our definitive proxy statement to be filed pursuant to Regulation 14A on or about March 22, 2005 and is incorporated herein by reference.

Item 11.  Executive Compensation

   The information required by this Item is included under the captions “Executive Compensation — Summary Compensation Table, — Option Grants in Last Fiscal Year, — Aggregated Option Exercises During 2004 and December 31, 2004 Option Values, — Indemnification Agreements, — Executive Employment Agreements, — Compensation Committee Interlocks and Insider Participation” and “Information Concerning the Board and Its Committees — Director Compensation” of our definitive proxy statement to be filed pursuant to Regulation 14A on or about March 22, 2005 and is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

   The information required by this Item is included under the captions “Ownership of Common Stock” and “Proposal 2 — Approval of the Orbital Sciences Corporation 2005 Stock Incentive Plan — Equity Compensation Plan Information” of our definitive proxy statement to be filed pursuant to Regulation 14A on or about March 22, 2005 and is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions

   None.

Item 14.  Principal Accountant Fees and Services

   The information required by this Item is included under the caption “Other Matters — Fees of Independent Auditors, — Pre-Approval of Audit and Non-Audit Services” of our definitive proxy statement to be filed pursuant to Regulation 14A on or about March 22, 2005 and is incorporated herein by reference.

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PART IV

Item 15.  Exhibits, Financial Statement Schedules

   (a) Documents filed as part of this Report:

1.  Financial Statements. The following financial statements, together with the report of independent registered public accounting firm, are filed as a part of this report:

      A. Report of Independent Registered Public Accounting Firm

      B. Consolidated Income Statements

      C. Consolidated Balance Sheets

      D. Consolidated Statements of Stockholders’ Equity

      E. Consolidated Statements of Cash Flows

      F. Notes to Consolidated Financial Statements

2.  Financial Statement Schedule.

  The following additional financial data are transmitted with this report and should be read in conjunction with the consolidated financial statements contained herein. Schedules other than those listed below have been omitted because they are inapplicable or are not required.

Schedule II — Valuation and Qualifying Accounts

3.  Exhibits. A complete listing of exhibits required is given in the Exhibit Index that precedes the exhibits filed with this report.

   (b) See Item 15(a)(3) of this report.

   (c) See Item 15(a)(2) of this report.

59

   Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 4, 2005	ORBITAL SCIENCES CORPORATION
	By:	/s/ David W. Thompson ------------------------------------------------ David W. Thompson Chairman of the Board and Chief Executive Officer

   Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

DATED: March 4, 2005

Signature:	Title:
/s/ David W. Thompson David W. Thompson	Chairman of the Board and Chief Executive Officer, Director (Principal Executive Officer)
/s/ James R. Thompson James R. Thompson	Vice Chairman, President and Chief Operating Officer, Director
/s/ Garrett E. Pierce Garrett E. Pierce	Vice Chairman and Chief Financial Officer, Director (Principal Financial Officer)
/s/ N. Paul Brost N. Paul Brost	Senior Vice President, Finance
/s/ Hollis M. Thompson Hollis M. Thompson	Vice President and Controller (Principal Accounting Officer)
/s/ Edward F. Crawley Edward F. Crawley	Director
/s/ Daniel J. Fink Daniel J. Fink	Director
/s/ Lennard A. Fisk Lennard A. Fisk	Director
/s/ Robert M. Hanisee Robert M. Hanisee	Director

60

/s/ Robert J. Hermann Robert J. Hermann	Director
/s/ Janice I. Obuchowski Janice I. Obuchowski	Director
/s/ Frank L. Salizzoni Frank L. Salizzoni	Director
/s/ Harrison H. Schmitt Harrison H. Schmitt	Director
/s/ Scott L. Webster Scott L. Webster	Director

61

EXHIBIT INDEX

   The following exhibits are filed as part of this report. Where such filing is made by incorporation by reference to a previously filed statement or report, such statement or report is identified in parentheses.

Exhibit
Number			Description of Exhibit
	3	.1	Restated Certificate of Incorporation (incorporated by reference to Exhibit 4.1 to the company’s Registration Statement on Form S-3 (File Number 333-08769) filed and effective on July 25, 1996).
	3	.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
	3	.3	Certificate of Amendment to Restated Certificate of Incorporation, dated April 29, 1997 (incorporated by reference to Exhibit 3.3 to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
	3	.4	Certificate of Amendment to Restated Certificate of Incorporation, dated April 30, 2003 (incorporated by reference to Exhibit 3.4 to the company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003).
	3	.5	Certificate of Designation, Preferences and Rights of Series B Junior Participating Preferred Stock, dated November 2, 1998 (incorporated by reference to Exhibit 2 to the company’s Registration Statement on Form 8-A filed on November 2, 1998).
	4	.1	Form of Certificate of Common Stock (incorporated by reference to Exhibit 4.1 to the company’s Registration Statement on Form S-1 (File Number 33-33453) filed on February 9, 1990 and effective on April 24, 1990).
	4	.2	Indenture, dated as of July 10, 2003, by and between Orbital Sciences Corporation and U.S. Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the company’s Current Report on Form 8-K filed on July 18, 2003).
	4	.3	Form of 9% Senior Note due 2011 (incorporated by reference to Exhibit 4.2 to the company’s Current Report on Form 8-K filed on July 18, 2003).
	4	.4	Warrant Agreement, dated as of August 22, 2002, by and between Orbital Sciences Corporation and U.S. Bank, N.A., as Warrant Agent (incorporated by reference to Exhibit 4.2 to the company’s Current Report on Form 8-K filed on August 27, 2002).
	4	.5	Form of Common Stock Purchase Warrant for Warrants Expiring August 15, 2006 (restricted) (incorporated by reference to Exhibit 4.4 to the company’s Current Report on Form 8-K filed on August 27, 2002).
	4	.6	Form of Common Stock Purchase Warrant for Warrants Expiring August 15, 2006 (registered) (incorporated by reference to Exhibit 4.4 to the company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003).
	4	.8	Rights Agreement dated as of October 22, 1998, between Orbital Sciences Corporation and BankBoston N.A., as Rights Agent (incorporated by reference to Exhibit 1 to the company’s Report on Form 8-A filed on November 2, 1998).
	4	.9	Form of Rights Certificate (incorporated by reference to Exhibit 3 to the company’s Report on Form 8-A filed on November 2, 1998).
	10	.1	Amended and Restated Credit Agreement dated as of December 29, 2004, by and among Orbital Sciences Corporation, Bank of America, N.A., as administrative agent, Wachovia Bank, National Association, as documentation agent, and the other parties thereto (transmitted herewith).

62

Exhibit
Number			Description of Exhibit
	10	.2	Amended and Restated Security Agreement dated as of December 29, 2004, by and between Orbital Sciences Corporation, Bank of America, N.A., as administrative agent (transmitted herewith).
	10	.3	Lease Agreement by and between Boston Properties Limited Partnership and Orbital Sciences Corporation dated May 18, 1999 (incorporated by reference to Exhibit 10.4 to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
	10	.4	Lease Agreement by and between Boston Properties Limited Partnership and Orbital Sciences Corporation dated April 5, 1999 (incorporated by reference to Exhibit 10.5 to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
	10	.5	Lease Agreement by and between Boston Properties Limited Partnership and Orbital Sciences Corporation dated December 1, 1999 (incorporated by reference to Exhibit 10.6 to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
	10	.6	Office Lease, dated July 17, 1992, between S.C. Realty, Inc. and Orbital Sciences Corporation (incorporated by reference to Exhibit 10.3 to the company’s Annual Report on Form 10-K for the year ended December 31, 1992).
	10	.7	Sale/Leaseback Agreement, dated September 29, 1989, by and among Corporate Property Associates 8, L.P., Corporate Property Associates 9, L.P. and Space Data Corporation (incorporated by reference to Exhibit 10.2 to the company’s Registration Statement on Form S-1 (File Number 33-33453) filed on February 9, 1990).
	10	.8	First Amendment to Sale/Leaseback Agreement, dated as of December 27, 1990, by and among Corporate Property Associates 8, L.P., Corporate Property Associates 9, L.P. and Space Data Corporation (incorporated by reference to Exhibit 10.2.1 to the company’s annual Report on Form 10-K for the year ended December 31, 1991).
	10	.9	Orbital Sciences Corporation 1990 Stock Option Plan, restated as of April 27, 1995 (incorporated by reference to Exhibit 10.5.1 to the company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1995).*
	10	.10	Orbital Sciences Corporation 1990 Stock Option Plan for Non-Employee Directors, restated as of April 27, 1995 (incorporated by reference to Exhibit 10.5.2 to the company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1995).*
	10	.11	Amended and Restated Orbital Sciences Corporation 1997 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.18 to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
	10	.12	Orbital Sciences Corporation 2003 Nonqualified Management Deferred Compensation Plan (incorporated by reference to Exhibit 10.12 to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003).*
	10	.13	Executive Relocation Agreement between Orbital Sciences Corporation and Ronald J. Grabe, Executive Vice President and General Manager/Launch Systems Group dated August 7, 2003 (incorporated by reference to Exhibit 10.1 to the company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003).*
	10	.14	Executive Employment Agreement dated as of August 9, 2000, by and between Orbital Sciences Corporation and Garrett E. Pierce (incorporated by reference to Exhibit 10.3 to the company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).*
	10	.15	Executive Employment and Change of Control Agreement dated as of August 9, 2000, by and between Orbital Sciences Corporation and Garrett E. Pierce (incorporated by reference to Exhibit 10.4 to the company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).*

63

Exhibit
Number			Description of Exhibit
	10	.16	Supplemental Employment Agreement between Garrett E. Pierce and Orbital Sciences Corporation dated July 19, 2002 (incorporated by reference to Exhibit 10.1 to the company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2002).*
	10	.17	Form of Director and Executive Officer Indemnification Agreement (incorporated by reference to Exhibit 10.23 to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998).*
	10	.18	Form of Executive Employment Agreement (incorporated by reference to Exhibit 10.2 to the company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003).*
	10	.21	Purchase Contract dated as of March 27, 2002, by and between Orbital Sciences Corporation and The Boeing Company (incorporated by reference to Exhibit 10.2 to the company’s Quarterly Report on Form 10-Q/A for the fiscal quarter ended March 31, 2003).**
	10	.22	Amendment, dated as of January 13, 2005, to Purchase Contract by and between Orbital Sciences Corporation and The Boeing Company (transmitted herewith).
	10	.23	Form of Executive Nonstatutory Stock Option Agreement under the 1997 Stock Option and Incentive Plan (transmitted herewith).*
	10	.24	Form of Non-Employee Director Nonstatutory Stock Option Agreement under the 1997 Stock Option and Incentive Plan (transmitted herewith).*
	10	.25	Form of Director Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to the company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004).*
	10	.26	Non-Employee Director Compensation Program (transmitted herewith).*
	12		Statement re Computation of Earnings to Fixed Charges (transmitted herewith).
	23		Consent of PricewaterhouseCoopers LLP (transmitted herewith).
	31	.1	Certification of Chairman and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Sec. 1350) (transmitted herewith).
	31	.2	Certification of Vice Chairman and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Sec. 1350) (transmitted herewith).
	32	.1	Written Statement of Chairman and Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (transmitted herewith).
	32	.2	Written Statement of Vice Chairman and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (transmitted herewith).

*	Management Contract or Compensatory Plan or Arrangement.
**	Certain portions of this Exhibit were omitted by means of redacting a portion of the text in accordance with Rule 0-6 of the Securities Exchange Act of 1934, as amended.

64 EX-10.1 2 w05433exv10w1.htm EX-10.1

Exhibit 10.1

AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of December 29, 2004

among

ORBITAL SCIENCES CORPORATION,
as the Borrower,

THE SUBSIDIARIES OF THE BORROWER IDENTIFIED HEREIN,
as the Guarantors,

BANK OF AMERICA, N.A.,
as Administrative Agent, Swing Line Lender and L/C Issuer,

WACHOVIA BANK, NATIONAL ASSOCIATION,
as Documentation Agent

and

The Other Lenders Party Hereto

Arranged By:

BANC OF AMERICA SECURITIES LLC,
as Sole Lead Arranger and Sole Book Manager

TABLE OF CONTENTS

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS		1
	1.01 Defined Terms	1
	1.02 Other Interpretive Provisions	21
	1.03 Accounting Terms	21
	1.04 Rounding	22
	1.05 References to Agreements and Laws	22
	1.06 Times of Day	22
	1.07 Letter of Credit Amounts	22
ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS		23
	2.01 Revolving Loans	23
	2.02 Borrowings, Conversions and Continuations of Loans	23
	2.03 Letters of Credit	25
	2.04 Swing Line Loans	32
	2.05 Prepayments	34
	2.06 Termination or Reduction of Aggregate Revolving Commitments	35
	2.07 Repayment of Loans	35
	2.08 Interest	35
	2.09 Fees	36
	2.10 Computation of Interest and Fees	36
	2.11 Evidence of Debt	37
	2.12 Payments Generally	37
	2.13 Sharing of Payments	39
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY		39
	3.01 Taxes	39
	3.02 Illegality	41
	3.03 Inability to Determine Rates	41
	3.04 Increased Cost and Reduced Return; Capital Adequacy	41
	3.05 Funding Losses	42
	3.06 Matters Applicable to all Requests for Compensation	42
	3.07 Survival	42
ARTICLE IV GUARANTY		43
	4.01 The Guaranty	43
	4.02 Obligations Unconditional	43
	4.03 Reinstatement	44
	4.04 Certain Additional Waivers	44
	4.05 Remedies	44
	4.06 Rights of Contribution	45
	4.07 Guarantee of Payment; Continuing Guarantee	45
ARTICLE V CONDITIONS PRECEDENT TO CREDIT EXTENSIONS		46
	5.01 Conditions of Initial Credit Extension	46
	5.02 Conditions to all Credit Extensions	47
ARTICLE VI REPRESENTATIONS AND WARRANTIES		48
	6.01 Existence, Qualification and Power	48
	6.02 Authorization; No Contravention	48

i

	6.03 Governmental Authorization; Other Consents	48
	6.04 Binding Effect	49
	6.05 Financial Statements; No Material Adverse Effect	49
	6.06 Litigation	50
	6.07 No Default	50
	6.08 Ownership of Property; Liens	50
	6.09 Environmental Compliance	50
	6.10 Insurance	51
	6.11 Taxes	51
	6.12 ERISA Compliance	51
	6.13 Subsidiaries	52
	6.14 Margin Regulations; Investment Company Act; Public Utility Holding Company Act	52
	6.15 Disclosure	52
	6.16 Compliance with Laws	52
	6.17 Intellectual Property; Licenses, Etc.	53
	6.18 Effectiveness of Security Interests in the Collateral	53
	6.19 Legal Name; State of Formation	53
	6.20 Labor Matters	53
ARTICLE VII AFFIRMATIVE COVENANTS		53
	7.01 Financial Statements	54
	7.02 Certificates; Other Information	54
	7.03 Notices	56
	7.04 Payment of Obligations	56
	7.05 Preservation of Existence, Etc.	56
	7.06 Maintenance of Properties	56
	7.07 Maintenance of Insurance	56
	7.08 Compliance with Laws	57
	7.09 Books and Records	57
	7.10 Inspection Rights; Field Audits	57
	7.11 Use of Proceeds	57
	7.12 Subsidiaries	57
	7.13 ERISA Compliance	58
ARTICLE VIII NEGATIVE COVENANTS		58
	8.01 Liens	58
	8.02 Investments	60
	8.03 Indebtedness	61
	8.04 Fundamental Changes	63
	8.05 Dispositions	63
	8.06 Restricted Payments	63
	8.07 Change in Nature of Business	64
	8.08 Transactions with Affiliates and Insiders	64
	8.09 Burdensome Agreements	64
	8.10 Use of Proceeds	64
	8.11 Financial Covenants	65
	8.12 Senior Note Documents; Repurchase of Senior Notes	65

ii

	8.13 Organization Documents; Fiscal Year; Legal Name, State of Formation and Form of Entity; Chief Executive Office	66
	8.14 Ownership of Subsidiaries	66
	8.15 Sale and Leaseback Transactions	66
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES		66
	9.01 Events of Default	66
	9.02 Remedies Upon Event of Default	68
	9.03 Application of Funds	69
ARTICLE X ADMINISTRATIVE AGENT		70
	10.01 Appointment and Authorization of Administrative Agent	70
	10.02 Delegation of Duties	70
	10.03 Liability of Administrative Agent	71
	10.04 Reliance by Administrative Agent	71
	10.05 Notice of Default	71
	10.06 Credit Decision; Disclosure of Information by Administrative Agent	72
	10.07 Indemnification of Administrative Agent	72
	10.08 Administrative Agent in its Individual Capacity	73
	10.09 Successor Administrative Agent	73
	10.10 Administrative Agent May File Proofs of Claim	73
	10.11 Collateral and Guaranty Matters	74
	10.12 Other Agents; Arrangers and Managers	75
ARTICLE XI MISCELLANEOUS		75
	11.01 Amendments, Etc	75
	11.02 Notices and Other Communications; Facsimile Copies	76
	11.03 No Waiver; Cumulative Remedies	77
	11.04 Attorney Costs, Expenses and Taxes	77
	11.05 Indemnification by the Borrower	78
	11.06 Payments Set Aside	79
	11.07 Successors and Assigns	79
	11.08 Confidentiality	81
	11.09 Set-off	82
	11.10 Interest Rate Limitation	82
	11.11 Counterparts	82
	11.12 Integration	82
	11.13 Survival of Representations and Warranties	83
	11.14 Severability	83
	11.15 Tax Forms	83
	11.16 Replacement of Lenders	85
	11.17 Release of Collateral and Guarantees	85
	11.18 Governing Law	85
	11.19 Waiver of Right to Trial by Jury	86

iii

SCHEDULES
	S-1	Subject Property
	2.01	Commitments and Pro Rata Shares
	2.03	Existing Letters of Credit
	6.13	Subsidiaries
	6.17	IP Rights
	6.19	Changes in Legal Name, State of Formation and Structure
	8.01	Liens Existing on the Closing Date
	8.02	Investments Existing on the Closing Date
	8.03	Indebtedness Existing on the Closing Date
	8.15	Sale and Leaseback Transactions Existing on the Closing Date
	11.02	Certain Addresses for Notices
EXHIBITS
	A	Form of Loan Notice
	B	Form of Swing Line Loan Notice
	C-1	Form of Revolving Note
	C-2	Form of Swing Line Note
	D	Form of Compliance Certificate
	E	Form of Assignment and Assumption
	F	Form of Joinder Agreement

iv

AMENDED AND RESTATED CREDIT AGREEMENT

     This AMENDED AND RESTATED CREDIT AGREEMENT (the “Agreement”) is entered into as of December 29, 2004 among ORBITAL SCIENCES CORPORATION, a Delaware corporation (the “Borrower”), the Guarantors (defined herein), the Lenders (defined herein), and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

     WHEREAS, the Borrower has requested that the Lenders provide a $50,000,000 revolving credit facility for the purposes set forth herein, and the Lenders are willing to do so on the terms and conditions set forth herein; and

     WHEREAS, this Credit Agreement is given in amendment to, restatement of and substitution for the Credit Agreement dated as of July 10, 2003 among the Borrower, the Guarantors, the lenders identified therein and Bank of America, as administrative agent.

     In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

     1.01 Defined Terms.

     As used in this Agreement, the following terms shall have the meanings set forth below:

     “Acquisition”, by any Person, means the acquisition by such Person, in a single transaction or in a series of related transactions, of all or any substantial portion of the Property of another Person or at least a majority of the Voting Stock of another Person, in each case whether or not involving a merger or consolidation with such other Person and whether for cash, property, services, assumption of Indebtedness, securities or otherwise.

     “Administrative Agent” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

     “Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 11.02 or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.

     “Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

     “Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, power to vote 10% or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.

     “Aggregate Revolving Commitments” means the Revolving Commitments of all the Lenders. The initial amount of the Aggregate Revolving Commitments in effect on the Closing Date is FIFTY MILLION DOLLARS ($50,000,000).

     “Agreement” means this Amended and Restated Credit Agreement, as amended, modified, supplemented and extended from time to time.

     “Applicable Rate” means the following percentages per annum, based upon the Consolidated Total Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 7.02(a):

Pricing	Consolidated Total		Letters of Credit and
Tier	Leverage Ratio	Commitment Fee	Eurodollar Loans	Base Rate Loans
1	>2.75:1.0	0.50%	2.25%	0.75%
2	£2.75:1.0 but >2.25	0.50%	2.00%	0.50%
3	£2.25:1.0 but >1.75	0.50%	1.75%	0.25%
4	£ 1.75:1.0	0.50%	1.50%	0.00%

Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated Total Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate (together with the related financial statements required by Section 7.01(a) or Section 7.01(b), as applicable) is delivered pursuant to Section 7.02(a); provided, however, that if a Compliance Certificate is not delivered when due in accordance with such Section, then Pricing Tier 1 shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and shall continue to apply until the first Business Day immediately following the date such Compliance Certificate (together with the related financial statements required by Section 7.01(a) or Section 7.01(b), as applicable) is actually delivered. The Applicable Rate in effect from the Closing Date through the first Business Day immediately following the date a Compliance Certificate (together with the related financial statements required by Section 7.01(a) or Section 7.01(b), as applicable) is delivered pursuant to Section 7.02(a) for the fiscal year ending December 31, 2004 shall be determined based upon Pricing Tier 3.

     “Arranger” means Banc of America Securities LLC, in its capacity as sole lead arranger and sole book manager.

     “Assignment and Assumption” means an Assignment and Assumption substantially in the form of Exhibit E.

     “Attorney Costs” means and includes all reasonable fees, expenses and disbursements of any law firm or other external counsel.

     “Attributable Indebtedness” means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, (b) in respect of any Synthetic Lease, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease, and (c) in respect of any Securitization Transaction of any Person, the outstanding principal amount of such financing, after taking into account reserve accounts and making appropriate adjustments, determined by the Administrative Agent in its reasonable judgment.

2

     “Audited Financial Statements” means the audited consolidated and consolidating balance sheets of the Borrower and its Subsidiaries for the fiscal years ended December 31, 2001, December 31, 2002 and December 31, 2003, and the related consolidated and consolidating statements of income or operations, shareholders’ equity and cash flows for such fiscal years of the Borrower and its Subsidiaries, including the notes thereto.

     “Availability Period” means, with respect to the Revolving Commitments, the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Revolving Commitments pursuant to Section 2.06, and (c) the date of termination of the commitment of each Lender to make Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 9.02.

     “Bank of America” means Bank of America, N.A. and its successors.

     “Base Rate” means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% or (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate.” The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in the “prime rate” announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

     “Base Rate Loan” means a Loan that bears interest based on the Base Rate.

     “Borrower” has the meaning specified in the introductory paragraph hereto.

     “Borrowing” means a borrowing consisting of simultaneous Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01.

     “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

     “Businesses” means, at any time, a collective reference to the businesses operated by the Borrower and its Subsidiaries at such time.

     “Capital Stock” means (i) in the case of a corporation, capital stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (iii) in the case of a partnership, partnership interests (whether general or limited), (iv) in the case of a limited liability company, membership interests and (v) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

     “Cash Collateralize” has the meaning specified in Section 2.03(g).

3

     “Cash Equivalents” means, as at any date, (a) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) and securities issued by any state of the United States of America or any political subdivision thereof having the highest rating obtainable from either Moody’s or S&P, in each case maturing or having an auction date within one year after the date of acquisition, (b) time deposits, certificates of deposit, bankers’ acceptances and commercial paper issued by the parent corporation of any domestic commercial bank of recognized standing having capital and surplus in excess of $500 million, in each case maturing within one year after the date of acquisition, (c) commercial paper issued by others rated at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody’s, in each case maturing or having an auction date within one year after the date of acquisition, (d) repurchase obligations with a term of not more than seven days for underlying securities of the types described in (a) and (b) above entered into with any financial institution meeting the qualifications specified in (b) above, (e) investment or money market funds, substantially all of the assets of which constitute Cash Equivalents of the kinds described in (a) through (d) of this definition, (f) Investments, classified in accordance with GAAP as current assets, in money market mutual funds (as defined by Rule 2(a)-7 of the Investment Company Act of 1940) registered under the Investment Company Act of 1940, as amended, which are administered by reputable financial institutions having capital of at least $500,000,000 and which have a credit rating of A-1 or higher by S&P, or an equivalent credit rating by Moody’s or Fitch Ratings Services and (g) auction rate securities having an auction date within one year after the date of acquisition which have a long term credit rating A or higher by S&P, or an equivalent credit rating by Moody’s or Fitch Ratings Services.

     “Change of Control” means an event or series of events by which:

     (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all Capital Stock that such person or group has the right to acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of thirty percent (30%) of the Capital Stock of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or

     (b) during any period of 24 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or

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     (c) the occurrence of a “Change of Control” under, and as defined in, the Senior Note Indenture.

     “Closing Date” means the date hereof.

     “Closing Date Projections” has the meaning specified in Section 5.01(e).

     “Collateral” means a collective reference to all real and personal Property with respect to which Liens in favor of the Administrative Agent are purported to be granted pursuant to and in accordance with the terms of the Collateral Documents.

     “Collateral Documents” means a collective reference to the Security Agreement, the Pledge Agreement and such other security documents as may be executed and delivered by the Loan Parties.

     “Commitment Fee” has the meaning specified in Section 2.09(a).

     “Compliance Certificate” means a certificate substantially in the form of Exhibit D.

     “Consolidated Adjusted EBITDA” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, an amount equal to the sum of (a) Consolidated EBITDA for such period minus (b) Consolidated Cash Taxes for such period minus (c) Consolidated Capital Expenditures for such period, all as determined in accordance with GAAP; provided that if as of the last day of such period the Net Cash Position exceeds $50 million, then for purposes of calculating Consolidated Adjusted EBITDA for the period of four fiscal quarters ended as of the end of such fiscal quarter, Consolidated Capital Expenditures for such period shall be deemed to be $0.

     “Consolidated Asset Coverage Ratio” means, as of any date of determination, the ratio of (a) all accounts receivable of the Borrower and its Subsidiaries as of such date to (b) the sum of (i) Consolidated Secured Funded Indebtedness as of such date minus (ii) to the extent deemed Consolidated Secured Funded Indebtedness, the outstanding amount of letters of credit as of such date to the extent secured by cash collateral.

     “Consolidated Capital Expenditures” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, all capital expenditures, as determined in accordance with GAAP; provided, however, that Consolidated Capital Expenditures shall not include (a) expenditures made with proceeds of any Involuntary Disposition to the extent such expenditures are used to purchase Property that is the same as or similar to the Property subject to such Involuntary Disposition or (b) Permitted Acquisitions.

     “Consolidated Cash Taxes” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the aggregate of all income taxes, as determined in accordance with GAAP, to the extent the same are paid in cash during such period.

     “Consolidated EBITDA” means, for any period for the Borrower and its Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income for such period plus the following to the extent deducted in calculating such Consolidated Net Income: (a) Consolidated Interest Charges for such period, (b) the provision for federal, state, local and foreign income taxes payable by the Borrower and its Subsidiaries for such period and (c) the amount of depreciation and amortization expense for such period, all as determined in accordance with GAAP.

     “Consolidated Fixed Charges” means, for any period for the Borrower and its Subsidiaries on a consolidated basis, an amount equal to the sum of (a) Consolidated Interest Charges for such period plus

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(b) Consolidated Scheduled Funded Debt Payments for such period plus (c) all Restricted Payments (it being understood that Investments pursuant to Section 8.02(p) shall not constitute Restricted Payments for purposes of this clause (c)) made by the Borrower during such period (other than Restricted Payments for the repurchase of warrants for the Capital Stock of the Borrower that are made in an amount not exceeding the proceeds received by Borrower from the exercise of warrants for the Capital Stock of the Borrower), all as determined in accordance with GAAP; provided that if as of the last day of such period the Net Cash Position exceeds $50 million, then for purposes of calculating Consolidated Fixed Charges for the period of four fiscal quarters ended as of the end of such fiscal quarter, Restricted Payments for such period shall be deemed to be $0.

     “Consolidated Fixed Charges Coverage Ratio” means, as of any date of determination, the ratio of (i) Consolidated Adjusted EBITDA for the period of the four fiscal quarters most recently ended to (ii) Consolidated Fixed Charges for the period of the four fiscal quarters most recently ended.

     “Consolidated Funded Indebtedness” means Funded Indebtedness of the Borrower and its Subsidiaries on a consolidated basis determined in accordance with GAAP.

     “Consolidated Interest Charges” means, for any period for the Borrower and its Subsidiaries on a consolidated basis, all interest expense of the Borrower and its Subsidiaries for such period determined in accordance with GAAP (including, without limitation, the portion of rent expense of the Borrower and its Subsidiaries with respect to such period under capital leases that is treated as interest in accordance with GAAP).

     “Consolidated Net Income” means, for any period for the Borrower and its Subsidiaries on a consolidated basis, the net income of the Borrower and its Subsidiaries (excluding extraordinary gains) for such period as determined in accordance with GAAP.

     “Consolidated Net Worth” means, as of any date of determination, consolidated shareholders’ equity of the Borrower and its Subsidiaries as of such date determined in accordance with GAAP.

     “Consolidated Rental Expense” means for any period for the Borrower and its Subsidiaries on a consolidated basis, rental expense under operating leases for such period as determined in accordance with GAAP.

     “Consolidated Scheduled Funded Debt Payments” means for any period for the Borrower and its Subsidiaries on a consolidated basis, the sum of all scheduled payments of principal on Consolidated Funded Indebtedness, as determined in accordance with GAAP. For purposes of this definition, “scheduled payments of principal” (a) shall be determined without giving effect to any reduction of such scheduled payments resulting from the application of any voluntary or mandatory prepayments made during the applicable period (but giving effect to reductions from the application of prepayments made during any period prior to the applicable period), (b) shall be deemed to include the Attributable Indebtedness in respect of capital leases and Synthetic Leases and (c) shall not include any voluntary prepayments or mandatory prepayments required pursuant to Section 2.05.

     “Consolidated Secured Funded Indebtedness” means Consolidated Funded Indebtedness that is secured by a Lien on any Property of the Borrower or any Subsidiary.

     “Consolidated Secured Leverage Ratio” means, as of any date of determination, the ratio of (a) the sum of (i) Consolidated Secured Funded Indebtedness as of such date less (ii) the outstanding amount of letters of credit as of such date to the extent secured by cash collateral to (b) Consolidated EBITDA for the period of the four fiscal quarters most recently ended.

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     “Consolidated Total Leverage Ratio” means, as of any date of determination, the ratio of (a) the sum of (i) Consolidated Funded Indebtedness as of such date less (ii) the outstanding amount of letters of credit as of such date to the extent secured by cash collateral less (iii) solely for purposes of determining compliance with Section 8.11(a), the amount of Unrestricted Cash in excess of $50 million (it being understood that this clause (iii) shall not be applicable in the calculation of the Consolidated Total Leverage Ratio for purposes of determining the Applicable Margin) to (b) Consolidated EBITDA for the period of the four fiscal quarters most recently ended.

     “Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its Property is bound.

     “Control” has the meaning specified in the definition of “Affiliate.”

     “Credit Extension” means each of the following: (a) a Borrowing and (b) a L/C Credit Extension.

     “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

     “Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

     “Default Rate” means an interest rate equal to (a) the Base Rate plus (b) the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per annum; provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, in each case to the fullest extent permitted by applicable Laws.

     “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the Loans participations in L/C Obligations or participations in Swing Line Loans required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.

     “Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any Sale and Leaseback Transaction) of any Property by the Borrower or any Subsidiary (including the Capital Stock of any Subsidiary), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, but excluding (i) the sale, lease, license, transfer or other disposition of inventory in the ordinary course of business of the Borrower and its Subsidiaries, (ii) the sale, lease, license, transfer or other disposition of personal property (including, without limitation, intellectual property) no longer used in the conduct of business of the Borrower and its Subsidiaries, (iii) any sale, lease, license, transfer or other disposition of Property by the Borrower or any Subsidiary to any Loan Party, (iv) any Involuntary Disposition by the Borrower or any Subsidiary, (v) any sale, lease, license, transfer or other disposition of Property by any Foreign Subsidiary to another Foreign Subsidiary, (vi) the sale of the Borrower’s Transportation Management Systems division, (vii) the license by the Borrower or any Subsidiary, on a non-exclusive basis, of IP Rights in the ordinary course of business, (viii) the surrender or waiver of contract rights in

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the ordinary course of business, (ix) the settlement, release or surrender of tort or other litigation (or potential litigation) claims in the ordinary course of business and (x) the grant of Permitted Liens or the making of Permitted Investments.

     “Dollar” and “$” mean lawful money of the United States.

     “Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States.

     “Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; and (c) any other Person (other than a natural person) approved by (i) the Administrative Agent, the L/C Issuer and the Swing Line Lender, and (ii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

     “Environmental Laws” means any and all federal, state, local, foreign and other applicable statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

     “Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

     “Equity Issuance” means any issuance by the Borrower to any Person of shares of its Capital Stock, other than (a) any issuance of shares of its Capital Stock pursuant to the exercise of options or warrants, (b) any issuance of shares of its Capital Stock pursuant to the conversion of any debt securities to equity or the conversion of any class of equity securities to any other class of equity securities, (c) any issuance by the Borrower of shares of its Capital Stock as consideration for a Permitted Acquisition and (d) any stock grant to an employee of the Borrower or any Subsidiary under a stock option plan (including, without limitation, any 401(k) plan, employee stock option plan or executive compensation plan) of the Borrower.

     “ERISA” means the Employee Retirement Income Security Act of 1974.

     “ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Internal Revenue Code (and Sections 414(m) and (o) of the Internal Revenue Code for purposes of provisions relating to Section 412 of the Internal Revenue Code).

     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the

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commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

     “Eurodollar Base Rate” means, for any Interest Period with respect to any Eurodollar Rate Loan:

     (a) the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on the page of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or

     (b) if the rate referenced in the preceding clause (a) does not appear on such page or service or such page or service shall not be available, the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or

     (c) if the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum (rounded upward to the next 1/100^th of 1%) determined by the Administrative Agent as the rate of interest at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 4:00 p.m. (London time) two Business Days prior to the first day of such Interest Period.

     “Eurodollar Rate” means for any Interest Period with respect to any Eurodollar Rate Loan, a rate per annum determined by the Administrative Agent to be equal to the quotient obtained by dividing (a) the Eurodollar Base Rate for such Eurodollar Loan for such Interest Period by (b) one minus the Eurodollar Reserve Percentage for such Eurodollar Loan for such Interest Period.

     “Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the Eurodollar Rate.

     “Eurodollar Reserve Percentage” means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”). The Eurodollar Rate for each outstanding Eurodollar Rate Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

     “Event of Default” has the meaning specified in Section 9.01.

     “Existing Letters of Credit” means the letters of credit outstanding on the Closing Date and identified on Schedule 2.03.

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     “Facilities” means, at any time, a collective reference to the facilities and real properties owned, leased or operated by the Borrower or any Subsidiary.

     “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

     “Fee Letter” means the letter agreement dated November 23, 2004 among the Borrower, the Administrative Agent and the Arranger.

     “Foreign Lender” has the meaning specified in Section 11.15(a)(i).

     “Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

     “FRB” means the Board of Governors of the Federal Reserve System of the United States.

     “Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

     “Funded Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

     (a) all obligations for borrowed money, whether current or long-term (including the Obligations) and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

     (b) all purchase money Indebtedness;

     (c) the principal portion of all obligations under conditional sale or other title retention agreements relating to Property purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business);

     (d) all obligations arising under letters of credit, bankers’ acceptances, bank guaranties and similar instruments;

     (e) all obligations in respect of the deferred purchase price of Property or services (other than trade accounts payable in the ordinary course of business);

     (f) all Attributable Indebtedness;

     (g) all preferred stock or other equity interests providing for mandatory redemptions, sinking fund or like payments prior to the Maturity Date;

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     (h) all Funded Indebtedness of others secured by (or for which the holder of such Funded Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, Property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed;

     (i) all Guarantees with respect to Funded Indebtedness of the types specified in clauses (a) through (h) above of another Person; and

     (j) all Funded Indebtedness of the types referred to in clauses (a) through (i) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or joint venturer, except to the extent such Funded Indebtedness is expressly made non-recourse to such Person.

For purposes hereof, the amount of any obligation arising under letters of credit, bankers’ acceptances, bank guaranties and similar instruments shall be the maximum amount available to be drawn thereunder on the date of determination. Notwithstanding anything herein to the contrary, “Funded Indebtedness” shall not include obligations under surety bonds.

     “GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, consistently applied and as in effect from time to time.

     “Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

     “Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease Property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith (the “Guarantee Amount”), provided that with respect to any Guarantee under clause (b), if such Person has not assumed the applicable Indebtedness or obligation, then the amount of such Guarantee shall be the lesser of the Guarantee Amount and the fair market value of the assets subject to the applicable Lien. The term “Guarantee” as a verb has a corresponding meaning.

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     “Guaranty” means the Guaranty made by the Guarantors in favor of the Administrative Agent and the Lenders pursuant to Article IV hereof.

     “Guarantors” means each Person that joins as a Guarantor pursuant to Section 7.12, together with their successors and permitted assigns.

     “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

     “Immaterial Domestic Subsidiary” means (a) the Non-Guarantor Subsidiary unless and until either (i) the revenue of the Non-Guarantor Subsidiary exceeds one percent (1%) of the revenue of the Borrower and its Subsidiaries on a consolidated basis determined in accordance with GAAP or (ii) the book value of the assets of the Non-Guarantor Subsidiary exceeds one percent (1%) of the book value of the assets of the Borrower and its Subsidiaries on a consolidated basis determined in accordance with GAAP and (b) any other Domestic Subsidiary unless and until (i) the revenue of such Domestic Subsidiary exceeds 1% of the revenue of the Borrower and its Subsidiaries on a consolidated basis determined in accordance with GAAP or (ii) the book value of the assets of such Domestic Subsidiary exceeds 1% of the book value of the assets of the Borrower and its Subsidiaries on a consolidated basis determined in accordance with GAAP.

     “Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

     (a) all Funded Indebtedness;

     (b) all obligations under surety bonds; and

     (c) net obligations under any Swap Contract.

For purposes hereof the amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.

     “Indemnified Liabilities” has the meaning set forth in Section 11.05.

     “Indemnitees” has the meaning set forth in Section 11.05.

     “Interest Payment Date” means (a) as to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan (including any Swing Line Loan), the last Business Day of each March, June, September and December and the Maturity Date.

     “Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, each option as selected by the Borrower in its Loan Notice; provided that:

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     (i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

     (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

     (iii) no Interest Period shall extend beyond the Maturity Date.

     “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time.

     “Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Capital Stock of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) an Acquisition. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

     “Involuntary Disposition” means any material loss of, damage to or destruction of, or any condemnation or other taking for public use of, any material Property of the Borrower or any Subsidiary.

     “IP Rights” has the meaning set forth in Section 6.17.

     “IRS” means the United States Internal Revenue Service.

     “ISP” has the meaning set forth in Section 2.03(h).

     “Joinder Agreement” means a joinder agreement substantially in the form of Exhibit F executed and delivered by a Domestic Subsidiary in accordance with the provisions of Section 7.12.

     “Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

     “L/C Advance” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Pro Rata Share.

     “L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Borrowing of Revolving Loans.

     “L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof.

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     “L/C Issuer” means Bank of America in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.

     “L/C Issuer Policies” has the meaning assigned to such term in Section 2.03(a)(ii)(B).

     “L/C Obligations” means, as at any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings.

     “Lender” means each of the Persons identified as a “Lender” on the signature pages hereto and their successors and assigns and, as the context requires, includes the L/C Issuer and the Swing Line Lender.

     “Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.

     “Letter of Credit” means any standby letter of credit issued under this Agreement.

     “Letter of Credit Application” means an application and agreement for the issuance or amendment of a letter of credit in the form from time to time in use by the L/C Issuer.

     “Letter of Credit Expiration Date” means the day that is thirty days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).

     “Letter of Credit Sublimit” means, at any time, an amount equal to the sum of the Aggregate Revolving Commitments less $10,000,000. The Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Revolving Commitments.

     “Lien” means any mortgage, pledge, hypothecation, collateral assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing).

     “Loan” means an extension of credit by a Lender to the Borrower under Article II in the form of a Revolving Loan or a Swing Line Loan.

     “Loan Documents” means this Agreement, each Note, each Letter of Credit, each Letter of Credit Application, each Joinder Agreement, the Collateral Documents, each Request for Credit Extension, each Compliance Certificate, the Fee Letter and each other document, instrument or agreement from time to time executed by the Borrower or any Subsidiary or any Responsible Officer thereof and delivered in connection with this Agreement.

     “Loan Notice” means a notice of (a) a Borrowing of Revolving Loans, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A.

     “Loan Parties” means, collectively, the Borrower and each Guarantor.

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     “Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, financial condition or prospects of the Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.

     “Material Domestic Subsidiary” means any Domestic Subsidiary other than an Immaterial Domestic Subsidiary.

     “Maturity Date” means December 29, 2009.

     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

     “Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

     “Net Cash Position” means, as of any date of determination, the sum of (a) Unrestricted Cash as of such date minus (b) the Outstanding Amount of Loans as of such date.

     “Non-Guarantor Subsidiary” means Orbital Communications Corporation.

     “Note” or “Notes” means the Revolving Notes and/or the Swing Line Note, individually or collectively, as appropriate.

     “Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. The foregoing shall also include any Swap Contract between any Loan Party and any Lender or Affiliate of a Lender.

     “Optus” means Optus Networks Pty. Limited.

     “Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

     “Outstanding Amount” means (i) with respect to any Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of any Loans occurring on such date; and (ii) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension

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occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date.

     “Participant” has the meaning specified in Section 11.07(d).

     “PBGC” means the Pension Benefit Guaranty Corporation.

     “Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

     “Permitted Acquisitions” means Investments consisting of an Acquisition by the Borrower or any Subsidiary, provided that (i) the Property acquired (or the Property of the Person acquired) in such Acquisition is used or useful in a line of business permitted pursuant to Section 8.07, (ii) in the case of an Acquisition of the Capital Stock of another Person, the board of directors (or other comparable governing body) of such other Person shall have duly approved such Acquisition, (iii) the Borrower shall have delivered to the Administrative Agent a Pro Forma Compliance Certificate demonstrating that, upon giving effect to such Acquisition on a Pro Forma Basis, the Loan Parties would be in compliance with the financial covenants set forth in Section 8.11 as of the most recent fiscal quarter for which the Borrower has delivered financial statements pursuant to Section 7.01(a) or (b), (iv) the representations and warranties made by the Loan Parties in any Loan Document shall be true and correct in all material respects at and as if made as of the date of such Acquisition (after giving effect thereto) except to the extent such representations and warranties expressly relate to an earlier date, (v) if such transaction involves the purchase of an interest in a partnership between the Borrower (or a Subsidiary) as a general partner and entities unaffiliated with the Borrower or such Subsidiary as the other partners, such transaction shall be effected by having such equity interest acquired by a corporate holding company directly or indirectly wholly-owned by the Borrower newly formed for the sole purpose of effecting such transaction, (vi) after giving effect to such Acquisition, there shall be at least $5,000,000 of availability existing under the Aggregate Revolving Commitments, (vii) for any single Acquisition, the cash consideration (including the principal amount of any Indebtedness assumed) shall not exceed $30,000,000 and the Total Consideration shall not exceed $125,000,000, and (vii) for all Acquisitions, the cash consideration (including the principal amount of any Indebtedness assumed) shall not exceed $60,000,000 in any fiscal year of the Borrower and the Total Consideration shall not exceed $175,000,000 in any fiscal year of the Borrower.

     “Permitted Investments” means, at any time, Investments by the Borrower and its Subsidiaries permitted to exist at such time pursuant to the terms of Section 8.02.

     “Permitted Liens” means, at any time, Liens in respect of Property of the Borrower and its Subsidiaries permitted to exist at such time pursuant to the terms of Section 8.01.

     “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

     “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Internal Revenue Code or Title IV of ERISA, any ERISA Affiliate.

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     “Pledge Agreement” means the pledge agreement dated as of the Closing Date executed in favor of the Administrative Agent by each of the Loan Parties, as amended, modified, restated or supplemented from time to time.

     “Pro Forma Basis” means that any Disposition, Involuntary Disposition, Restricted Payment or Acquisition shall be deemed to have occurred as of the first day of the most recent four fiscal quarter period preceding the date of such transaction for which the Borrower has delivered financial statements pursuant to Section 7.01(a) or (b). In connection with the foregoing, (a) with respect to any Disposition or Involuntary Disposition, income statement and cash flow statement items (whether positive or negative) attributable to the Property disposed of shall be excluded to the extent relating to any period occurring prior to the date of such transaction, and (b) with respect to any Acquisition, income statement items attributable to the Person or Property acquired shall be included to the extent relating to any period applicable in such calculations to the extent (i) such items are not otherwise included in such income statement items for the Borrower and its Subsidiaries in accordance with GAAP or in accordance with any defined terms set forth in Section 1.1 and (ii) such items are supported by financial statements or other information reasonably satisfactory to the Administrative Agent.

     “Pro Forma Compliance Certificate” means a certificate of a Responsible Officer of the Borrower containing reasonably detailed calculations of the financial covenants set forth in Section 8.11 as of the most recent fiscal quarter end for which the Borrower has delivered financial statements pursuant to Section 7.01(a) or (b) after giving effect to the applicable transaction on a Pro Forma Basis.

     “Pro Rata Share” means, as to each Lender, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Revolving Commitment of such Lender at such time and the denominator of which is the amount of the Aggregate Revolving Commitments at such time; provided that if the commitment of each Lender to make Revolving Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 9.02, then the Pro Rata Share of each Lender shall be determined based on the Pro Rata Share of such Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof. The initial Pro Rata Share of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

     “Property” means any interest of any kind in any property or asset, whether real, personal or mixed, or tangible or intangible.

     “Register” has the meaning set forth in Section 11.07(c).

     “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

     “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty-day notice period has been waived.

     “Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Loans, a Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.

     “Required Lenders” means, at any time, Lenders holding in the aggregate at least sixty-six and two thirds percent (66 2/3%) of (a) the Revolving Commitments or (b) if the Revolving Commitments have been

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terminated, the outstanding Loans, L/C Obligations and participations therein. The Revolving Commitments of any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

     “Responsible Officer” means the chief executive officer, president, chief financial officer, senior vice president of finance, treasurer or assistant treasurer of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

     “Restricted Payment” means any dividend or other distribution (whether in cash, securities or other Property) with respect to any Capital Stock of the Borrower or any Subsidiary, or any payment (whether in cash, securities or other Property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Capital Stock or of any option, warrant or other right to acquire any such Capital Stock. The term “Restricted Payment” shall not include (a) Restricted Payments made by any Subsidiary (directly or indirectly) to any Loan Party and (b) dividend payments and other distributions to the extent payable in the Capital Stock of the Person making such payment or distribution.

     “Revolving Commitment” means, as to each Lender, its obligation to (a) make Revolving Loans to the Borrower pursuant to Section 2.01, (b) purchase participations in L/C Obligations, and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 (as such Schedule may be amended pursuant to Section 2.01(b)) or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

     “Revolving Loan” has the meaning specified in Section 2.01(a).

     “Revolving Note” has the meaning specified in Section 2.11(a).

     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.

     “Sale and Leaseback Transaction” means, with respect to the Borrower or any Subsidiary, any arrangement, directly or indirectly, with any person whereby the Borrower or such Subsidiary shall sell or transfer any Property used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such Property.

     “SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

     “Securitization Transaction” means any financing transaction or series of financing transactions (including factoring arrangements) pursuant to which the Borrower or any Subsidiary may sell, convey or otherwise transfer, or grant a security interest in, accounts, payments, receivables, rights to future lease payments or residuals or similar rights to payment to a special purpose Subsidiary or Affiliate or any other Person.

     “Security Agreement” means the security agreement dated as of the Closing Date executed in favor of the Administrative Agent by each of the Loan Parties, as amended, modified, restated or supplemented from time to time.

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     “Senior Note Documents” means the Senior Notes, the Senior Note Indenture, the Senior Note Purchase Agreement, the Senior Note Registration Rights Agreement and all other documents, instruments and agreements relating thereto, in each case as amended, modified, supplemented, refinanced and replaced in accordance with the provisions hereof.

     “Senior Note Indenture” means the Indenture dated as of July 10, 2003 between the Borrower and US Bank, National Association, as trustee, as amended, modified, supplemented, refinanced and replaced in accordance with the provisions hereof.

     “Senior Note Purchase Agreement” means the Purchase Agreement dated as of July 10, 2003 among the Borrower and the initial purchasers of the Senior Notes, as amended, modified, supplemented, refinanced and replaced in accordance with the provisions hereof.

     “Senior Note Registration Rights Agreement” means the Registration Rights Agreement dated as of July 10, 2003 among the Borrower and the initial purchasers of the Senior Notes, as amended, modified, supplemented, refinanced and replaced in accordance with the provisions hereof.

     “Senior Notes” means those 9% Senior Notes of the Borrower due July 15, 2011, as amended, modified, supplemented, refinanced and replaced in accordance with the provisions hereof.

     “Subject Property” means the Property owned by the Borrower and described on Schedule S-1.

     “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of Capital Stock having ordinary voting power for the election of directors or other governing body (other than Capital Stock having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

     “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, currency exchange transactions, interest rate exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

     “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap

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Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

     “Swing Line” means the revolving credit facility made available by the Swing Line Lender pursuant to Section 2.04.

     “Swing Line Lender” means Bank of America in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.

     “Swing Line Loan” has the meaning specified in Section 2.04(a).

     “Swing Line Loan Notice” means a notice of a Borrowing of Swing Line Loans pursuant to Section 2.04(b), which, if in writing, shall be substantially in the form of Exhibit B.

     “Swing Line Note” has the meaning specified in Section 2.11(a).

     “Swing Line Sublimit” means an amount equal to the lesser of (a) $5,000,000 or (b) the Aggregate Revolving Commitments. The Swing Line Sublimit is part of, and not in addition to, the Aggregate Revolving Commitments.

     “Synthetic Lease” means any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing arrangement whereby the arrangement is considered borrowed money indebtedness for tax purposes but is classified as an operating lease or does not otherwise appear on the balance sheet under GAAP.

     “Threshold Amount” means $5,000,000.

     “Total Consideration” means, with respect to any Acquisition, the aggregate cash and non-cash consideration for such Acquisition (including the principal amount of any Indebtedness assumed and the Borrower’s reasonable and good faith projections of the aggregate amount of any contingent payments (including earn-out payments) that the Borrower or any Subsidiary will ultimately have to pay in connection with such Acquisition, but specifically excluding the amount of any Capital Stock of the Borrower issued to the seller).

     “Total Revolving Outstandings” means the aggregate Outstanding Amount of all Revolving Loans, all Swing Line Loans and all L/C Obligations.

     “Type” means, with respect to any Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

     “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Internal Revenue Code for the applicable plan year.

     “United States” and “U.S.” mean the United States of America.

     “Unreimbursed Amount” has the meaning set forth in Section 2.03(c)(i).

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     “Unrestricted Cash” means cash on hand of the Borrower and its Subsidiaries that is not subject to any Lien (other than any Lien in favor of the Administrative Agent securing the Obligations) or any other restriction on access thereto or use thereof by the Borrower or any Subsidiary.

     “Voting Stock” means, with respect to any Person, Capital Stock issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency.

     “Wholly Owned Subsidiary” means any Person 100% of whose Capital Stock is at the time owned by the Borrower directly or indirectly through other Persons 100% of whose Capital Stock is at the time owned, directly or indirectly, by the Borrower.

     1.02 Other Interpretive Provisions.

     With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

      (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

      (b) (i) The words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import when used in any Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof.

     (ii) Article, Section, Exhibit and Schedule references are to the Loan Document in which such reference appears.

     (iii) The term “including” is by way of example and not limitation.

     (iv) The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.

      (c) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

      (d) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

     1.03 Accounting Terms.

     (a) Except as otherwise specifically prescribed herein, all accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the most recent Audited Financial Statements; provided, however, that calculations of Attributable Indebtedness under any Synthetic Lease or the

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implied interest component of any Synthetic Lease shall be made by the Borrower in accordance with accepted financial practice and consistent with the terms of such Synthetic Lease.

     (b) The Borrower will provide a written summary of any material changes in GAAP and in the consistent application thereof with each annual and quarterly Compliance Certificate delivered in accordance with Section 7.02(a). If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

     (c) Notwithstanding the above, the parties hereto acknowledge and agree that all calculations of the Consolidated Total Leverage Ratio (including for purposes of determining the Applicable Rate), the Consolidated Senior Secured Leverage Ratio and Consolidated Net Worth shall be made on a Pro Forma Basis.

     1.04 Rounding.

     Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

     1.05 References to Agreements and Laws.

     Unless otherwise expressly provided herein, (a) references to Organization Documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.

     1.06 Times of Day.

     Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

     1.07 Letter of Credit Amounts.

     Unless otherwise specified, all references herein to the amount of a Letter of Credit at any time shall be deemed to mean the maximum face amount of such Letter of Credit after giving effect to all increases thereof contemplated by such Letter of Credit or the Letter of Credit Application therefor, whether or not such maximum face amount is in effect at such time.

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ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

     2.01 Revolving Loans.

     (a) Revolving Loans. Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “Revolving Loan”) to the Borrower in Dollars from time to time on any Business Day during the Availability Period in an aggregate outstanding amount not to exceed at any time the amount of such Lender’s Revolving Commitment; provided, however, that after giving effect to any Borrowing of Revolving Loans, (i) the Total Revolving Outstandings shall not exceed the Aggregate Revolving Commitments, and (ii) the aggregate Outstanding Amount of the Revolving Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations, plus such Lender’s Pro Rata Share of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Revolving Commitment. Within the limits of each Lender’s Revolving Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01, prepay under Section 2.05, and reborrow under this Section 2.01. Revolving Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein, provided, however, all Borrowings made on the Closing Date shall be made as Base Rate Loans.

     (b) Additional Revolving Commitments. The Borrower may at any time, upon prior written notice by the Borrower to the Administrative Agent, increase the Aggregate Revolving Commitments by up to TWENTY-FIVE MILLION DOLLARS ($25,000,000) with additional Revolving Commitments from any existing Lender or new Revolving Commitments from any other Person selected by the Borrower and approved by the Administrative Agent (which approval shall not be unreasonably withheld or delayed); provided that:

      (i) any such increase shall be in a minimum principal amount of $5 million and in integral multiples of $5 million in excess thereof;

      (ii) no Default shall be continuing at the time of any such increase;

      (iii) no existing Lender shall be under any obligation to increase its Revolving Commitment and any such decision whether to increase its Revolving Commitment shall be in such Lender’s sole and absolute discretion; and

      (iv) any new Lender shall join this Agreement by executing such joinder documents reasonably required by the Administrative Agent (but no consent from any existing Lender (other than any consent described in (iii) above from any Lender that is increasing its Revolving Commitment) shall be necessary in connection with the exercise of the Borrower’s rights hereunder).

     In connection with any such increase in the Aggregate Revolving Commitments, Schedule 2.01 shall be revised by the Administrative Agent to reflect the new Revolving Commitments and shall be distributed to the Lenders.

     2.02 Borrowings, Conversions and Continuations of Loans.

     (a) Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the

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Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans. Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof. Except as provided in Sections 2.03(c) and 2.04(c), each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.

     (b) Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Pro Rata Share of the applicable Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection. In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in the applicable Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 5.02 (and, if such Borrowing is the initial Credit Extension, Section 5.01), the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower; provided, however, that if, on the date of a Borrowing of Revolving Loans, there are Swing Line Loans or L/C Borrowings outstanding, then the proceeds of such Borrowing shall be applied, first, to the payment in full of any such L/C Borrowings, second, to the payment in full of any such Swing Line Loans, and third, to the Borrower as provided above.

     (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of the Interest Period for such Eurodollar Rate Loan. During the existence of a Default, (i) no Loans may be requested as, converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders and (ii) the Required Lenders may demand that any or all of the then outstanding Eurodollar Rate Loans be converted immediately to Base Rate Loans.

     (d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate. The determination of the Eurodollar Rate by the Administrative Agent shall be conclusive in the absence of manifest error. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

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     (e) After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than six (6) Interest Periods in effect with respect to Revolving Loans.

     2.03 Letters of Credit.

     (a) The Letter of Credit Commitment.

      (i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the other Lenders set forth in this Section 2.03, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit in Dollars for the account of the Borrower or any of its Subsidiaries, and to amend or renew Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drafts under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of the Borrower; provided that the L/C Issuer shall not be obligated to make any L/C Credit Extension with respect to any Letter of Credit, and no Lender shall be obligated to participate in any Letter of Credit if as of the date of such L/C Credit Extension, (x) the Total Revolving Outstandings would exceed the Aggregate Revolving Commitments, (y) the aggregate Outstanding Amount of the Revolving Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations, plus such Lender’s Pro Rata Share of the Outstanding Amount of all Swing Line Loans would exceed such Lender’s Revolving Commitment or (z) the Outstanding Amount of the L/C Obligations would exceed the Letter of Credit Sublimit. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof.

      (ii) The L/C Issuer shall be under no obligation to issue any Letter of Credit if:

         (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;

         (B) the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer applicable to borrowers generally (“L/C Issuer Policies”);

         (C) such Letter of Credit is in an initial amount less than $10,000 or is to be denominated in a currency other than Dollars; or

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         (D) a default of any Lender’s obligations to fund under Section 2.03(c) exists or any Lender is at such time a Defaulting Lender hereunder, unless the L/C Issuer has entered into satisfactory arrangements with the Borrower or such Lender to eliminate the L/C Issuer’s risk with respect to such Lender.

      (iii) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

      (iv) The L/C Issuer shall be under no obligation to issue or amend any Letter of Credit if the L/C Issuer has received written notice from any Lender, the Administrative Agent or any Loan Party, on or prior to the Business Day prior to the requested date of issuance or amendment of such Letter of Credit, that one or more applicable conditions contained in Article V shall not then be satisfied.

     (b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Renewal Letters of Credit.

      (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least five Business Days (or such later date and time as the L/C Issuer may agree in a particular instance in its sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require.

      (ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Upon receipt by the L/C Issuer of confirmation from the Administrative Agent that the requested issuance or amendment is permitted in accordance with the terms hereof, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Pro Rata Share times the amount of such Letter of Credit.

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      (iii) If the Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic renewal provisions (each, an “Auto-Renewal Letter of Credit”); provided that any such Auto-Renewal Letter of Credit must permit the L/C Issuer to prevent any such renewal at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Nonrenewal Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer for any such renewal. Once an Auto-Renewal Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the renewal of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the L/C Issuer shall not permit any such renewal if (A) the L/C Issuer has determined that it would have no obligation at such time to issue such Letter of Credit in its renewed form under the terms hereof (by reason of the provisions of Section 2.03(a)(ii) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Nonrenewal Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such renewal or (2) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 5.02 is not then satisfied.

      (iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment. The Administrative Agent shall provide each Lender a quarterly report of the outstanding Letters of Credit and the amount of each Lender’s respective participation therein.

     (c) Drawings and Reimbursements; Funding of Participations.

      (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of drawing under such Letter of Credit, the L/C Issuer shall notify the Borrower and the Administrative Agent thereof. Not later than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor Date”), the Borrower shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing. If the Borrower fails to so reimburse the L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Lender’s Pro Rata Share thereof. In such event, the Borrower shall be deemed to have requested a Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Revolving Commitments and the conditions set forth in Section 5.02 (other than the delivery of a Loan Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

      (ii) Each Lender (including the Lender acting as L/C Issuer) shall upon any notice pursuant to Section 2.03(c)(i) make funds available to the Administrative Agent for the account of the L/C Issuer at the Administrative Agent’s Office in an amount equal to its Pro Rata Share of

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the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer.

      (iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing of Base Rate Loans because the conditions set forth in Section 5.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate (provided that if any amount of such L/C Borrowing is due to any Lender failing to make its Pro Rata Share of a Base Rate Loan pursuant to Section 2.03(c)(ii), then such amount of the L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at (A) from the Honor Date to the second Business Day after the Honor Date, the Base Rate plus the Applicable Margin and (B) thereafter, the Default Rate). In such event, each Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03.

      (iv) Until each Lender funds its Revolving Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Pro Rata Share of such amount shall be solely for the account of the L/C Issuer.

      (v) Each Lender’s obligation to make Revolving Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Revolving Loans pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 5.02 (other than delivery by the Borrower of a Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.

      (vi) If any Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the Federal Funds Rate from time to time in effect. A certificate of the L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.

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     (d) Repayment of Participations.

      (i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c), if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Pro Rata Share thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s L/C Advance was outstanding) in the same funds as those received by the Administrative Agent.

      (ii) If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 11.06 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Pro Rata Share thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect.

     (e) Obligations Absolute. The obligation of the Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

      (i) any lack of validity or enforceability of such Letter of Credit, this Agreement, any other Loan Document or any other agreement or instrument relating thereto;

      (ii) the existence of any claim, counterclaim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

      (iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

      (iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or

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      (v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower.

     The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will promptly notify the L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.

     (f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, the Administrative Agent, any of their Related Parties or any of the respective correspondents, participants or assignees of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Letter of Credit Application. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, the Administrative Agent, any of their Related Parties nor any of the respective correspondents, participants or assignees of the L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.03(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

      (g) Cash Collateral; Replacement.

         (i) Upon the request of the Administrative Agent or the Required Lenders, (A) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (B) if, as of the Maturity Date, (x) any Letter of Credit may for any reason remain outstanding and partially or wholly undrawn or (y) any amount remains available to be drawn under any Letter of Credit by reason of the operation of Section 3.14 of the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance), the Borrower shall immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations (in an amount equal to such Outstanding Amount determined as of the date of such L/C Borrowing or the Maturity Date, as the case may be). For purposes hereof, “Cash

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Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the Administrative Agent and the L/C Issuer (which documents are hereby consented to by the Lenders). Derivatives of such term have corresponding meanings. The Borrower hereby grants to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash collateral shall be maintained in blocked, interest bearing deposit accounts at Bank of America. All interest on such cash collateral shall be paid as follows: (A) if such cash collateral is delivered to the Administrative Agent by the Borrower pursuant to any of Sections 2.03(g)(i), 2.05 or 9.02, then such interest shall be paid to the Borrower upon the Borrower’s request, provided that such interest shall first be applied to all outstanding Obligations at such time and the balance shall be distributed to the Borrower, and (B) if such cash collateral is delivered to the Administrative Agent by the Borrower at any time that such cash collateral is not required to be delivered under this Agreement, then such interest shall be distributed to the Borrower (provided that if at any time after such delivery of cash collateral the Borrower would have been required to deliver cash collateral pursuant to any of Sections 2.03(g)(i), 2.05 or 9.02, the interest shall be applied as provided in clause (A)).

         (ii) If, as of the Maturity Date, any Letter of Credit may for any reason remain outstanding and partially or wholly undrawn and the Borrower Cash Collateralizes such Letter of Credit pursuant to clause (i) above, the Borrower agrees to replace such Letter of Credit with a new letter of credit issued under any replacement credit facility entered into by the Borrower with sixty days after the closing of such replacement credit facility.

     (h) Applicability of ISP. Unless otherwise expressly agreed by the L/C Issuer and the Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), the rules of the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance) (the “ISP”) shall apply to each Letter of Credit.

     (i) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Pro Rata Share a Letter of Credit fee for each Letter of Credit equal to the Applicable Rate for Eurodollar Loans times the daily maximum amount available to be drawn under such Letter of Credit (it being understood that for purposes of computation of the Letter of Credit fee the maximum amount available to be drawn under such Letter of Credit for any day shall be the maximum amount actually available to be drawn under such Letter of Credit on such day). Letter of Credit fees shall be due and payable as follows: (i) with respect to those Letters of Credit identified on Schedule 2.03 hereto and such other Letters of Credit as the Administrative Agent may from time to time agree in its sole discretion at the Borrower’s request, (A) Letter of Credit fees equal to seventy-five basis points (0.75%) times the daily maximum amount available to be drawn under the applicable Letter of Credit shall be due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand and (B) the balance of the Letter of Credit fees owing in respect of such Letters of Credit shall be payable on the first Business Day after the end of each December, and (ii) with respect to all other Letters of Credit, the full amount of the Letter of Credit fees owing in respect of such Letters of Credit to shall be due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. The letter of credit fees shall be computed on a quarterly or annual basis, as applicable, in arrears. If there is any change in the Applicable Rate during any quarter, the daily maximum amount of

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each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

     (j) Documentary and Processing Charges Payable to L/C Issuer. The Borrower shall pay directly to the L/C Issuer for its own account a fronting fee with respect to each Letter of Credit in the amounts and at the times specified in the Fee Letter. In addition, the Borrower shall pay directly to the L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

     (k) Conflict with Letter of Credit Application. In the event of any conflict between the terms hereof and the terms of any Letter of Credit Application, the terms hereof shall control.

     2.04 Swing Line Loans.

     (a) The Swing Line. Subject to the terms and conditions set forth herein, the Swing Line Lender agrees to make loans (each such loan, a “Swing Line Loan”) to the Borrower in Dollars from time to time on any Business Day during the Availability Period in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Pro Rata Share of the Outstanding Amount of Revolving Loans and L/C Obligations of the Swing Line Lender in its capacity as a Lender of Revolving Loans, may exceed the amount of such Lender’s Revolving Commitment; provided, however, that after giving effect to any Swing Line Loan, (i) the Total Revolving Outstandings shall not exceed the Aggregate Revolving Commitments, and (ii) the aggregate Outstanding Amount of the Revolving Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations, plus such Lender’s Pro Rata Share of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Revolving Commitment, and provided, further, that the Borrower shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.04, prepay under Section 2.05, and reborrow under this Section 2.04. Each Swing Line Loan shall be a Base Rate Loan. Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lender’s Pro Rata Share times the amount of such Swing Line Loan.

     (b) Borrowing Procedures. Each Borrowing of Swing Line Loans shall be made upon the Borrower’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by telephone. Each such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum principal amount of $500,000, or a whole multiple of $100,000 in excess thereof, and (ii) the requested borrowing date, which shall be a Business Day. Each such telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent of a written Swing Line Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of the proposed Borrowing of Swing Line Loans (A) directing the Swing Line Lender not to make such Swing

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Line Loan as a result of the limitations set forth in the proviso to the first sentence of Section 2.04(a), or (B) that one or more of the applicable conditions specified in Article V is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Borrower.

     (c) Refinancing of Swing Line Loans.

      (i) The Swing Line Lender at any time in its sole and absolute discretion may request, on behalf of the Borrower (which hereby irrevocably requests and authorizes the Swing Line Lender to so request on its behalf), that each Lender make a Base Rate Loan in an amount equal to such Lender’s Pro Rata Share of the amount of any Swing Line Loan then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the Aggregate Revolving Commitments and the conditions set forth in Section 5.02. The Swing Line Lender shall furnish the Borrower with a copy of the applicable Loan Notice promptly after delivering such notice to the Administrative Agent. Each Lender shall make an amount equal to its Pro Rata Share of the amount specified in such Loan Notice available to the Administrative Agent in immediately available funds for the account of the Swing Line Lender at the Administrative Agent’s Office not later than 1:00 p.m. on the day specified in such Loan Notice, whereupon, subject to Section 2.04(c)(ii), each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the Swing Line Lender.

      (ii) If for any reason any Swing Line Loan cannot be refinanced by such a Borrowing of Revolving Loans in accordance with Section 2.04(c)(i), the request for Base Rate Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan and each Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.

      (iii) If any Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i), the Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the Federal Funds Rate from time to time in effect. A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.

      (iv) Each Lender’s obligation to make Revolving Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right that such Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Revolving Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 5.02. No

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such purchase or funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swing Line Loans, together with interest as provided herein.

     (d)  Repayment of Participations.

      (i) At any time after any Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Pro Rata Share of such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s risk participation was funded) in the same funds as those received by the Swing Line Lender.

      (ii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 11.06 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Pro Rata Share thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender.

     (e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be responsible for invoicing the Borrower for interest on the Swing Line Loans. Until each Lender funds its Revolving Loans that are Base Rate Loans or risk participation pursuant to this Section 2.04 to refinance such Lender’s Pro Rata Share of any Swing Line Loan, interest in respect of such Pro Rata Share shall be solely for the account of the Swing Line Lender.

     (f) Payments Directly to Swing Line Lender. The Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.

     2.05 Prepayments.

     (a) Voluntary Prepayments of Loans.

      (i) Revolving Loans. The Borrower may, upon notice from the Borrower to the Administrative Agent, at any time or from time to time voluntarily prepay Revolving Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Loans, and (B) on the date of prepayment of Base Rate Loans; (ii) any such prepayment of Eurodollar Rate Loans shall be in a principal amount of $1,000,00 or a whole multiple of $500,000 in excess thereof (or, if less, the entire principal amount thereof then outstanding); (iii) any such prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof (or, if less, the entire principal amount thereof then outstanding). Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Pro Rata Share of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon. Each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Pro Rata Shares.

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      (ii) Swing Line Loans. The Borrower may, upon notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal amount of $500,000 or a whole multiple of $100,000 in excess thereof (or, if less, the entire principal amount thereof then outstanding). Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.

     (b) Mandatory Prepayments of Loans. If for any reason the Total Revolving Outstandings at any time exceed the Aggregate Revolving Commitments, the Borrower shall immediately prepay Revolving Loans and/or the Swing Line Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess; provided, however, that the Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(b) unless after the prepayment in full of the Revolving Loans and Swing Line Loans the Total Revolving Outstandings exceed the Aggregate Revolving Commitments.

     2.06 Termination or Reduction of Aggregate Revolving Commitments.

     The Borrower may, upon notice from the Borrower to the Administrative Agent, terminate the Aggregate Revolving Commitments or from time to time permanently reduce the Aggregate Revolving Commitments to an amount not less than the Total Revolving Outstandings; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. five Business Days prior to the date of termination or reduction and (ii) any such partial reduction shall be in an aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess thereof. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Revolving Commitments. Any reduction of the Aggregate Revolving Commitments shall be applied to the Revolving Commitment of each Lender according to its Pro Rata Share. All commitment fees accrued until the effective date of any termination of the Aggregate Revolving Commitments shall be paid on the effective date of such termination.

     2.07 Repayment of Loans.

     (a) The Borrower shall repay the aggregate outstanding principal amount of all Revolving Loans on the Maturity Date.

     (b) The Borrower shall repay the outstanding principal amount of each Swing Line Loan on the earlier to occur of (i) the date seven (7) days after such Swing Line Loan is made, (ii) demand by the Swing Line Lender and (iii) the Maturity Date.

     2.08 Interest.

     (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the sum of (A) the Eurodollar Rate for such Interest Period plus (B) the Applicable Rate; (ii) each Base Rate Loan (including each Swing Line Loan) shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.

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     (b) Upon the occurrence and during the continuation of an Event of Default, the Borrower shall pay interest on the principal amount of all outstanding Obligations at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

     (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

     2.09 Fees.

     In addition to certain fees described in subsections (i) and (j) of Section 2.03:

      (a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Pro Rata Share, a commitment fee equal to the product of (i) the Applicable Rate times (ii) the actual daily amount by which the Aggregate Revolving Commitments exceed the sum of (A) the Outstanding Amount of Revolving Loans and (B) the Outstanding Amount of L/C Obligations (it being understood that for purposes of computation of the commitment fee (x) the maximum amount available to be drawn under any Letter of Credit for any day shall be the maximum amount actually available to be drawn under such Letter of Credit on such day and (y) the Outstanding Amount of Swing Line Loans shall not be considered usage). The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article V is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the Maturity Date. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

      (b) Other Fees.

         (i) The Borrower shall pay to the Arranger and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall be non-refundable for any reason whatsoever.

         (ii) The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

     2.10 Computation of Interest and Fees.

     All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America’s “prime rate” shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or

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such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a), bear interest for one day.

     2.11 Evidence of Debt.

     (a) The Revolving Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Revolving Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a promissory note, which shall evidence such Lender’s Loans in addition to such accounts or records (provided that only the Swing Line Lender may request a Swing Line Note). Each such promissory note shall (i) in the case of Revolving Loans, be in the form of Exhibit C-1 (a “Revolving Note”), and (ii) in the case of Swing Line Loans, be in the form of Exhibit C-2 (a “Swing Line Note”). Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

     (b) In addition to the accounts and records referred to in subsection (a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases by such Lender (and, in the case of the L/C Issuer and Swing Line Lender, sales) of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

     2.12 Payments Generally.

     (a) All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Pro Rata Share (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.

     (b) Subject to the definition of “Interest Period”, if any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

     (c) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, L/C Borrowings, interest and fees then due hereunder, such funds shall be applied (i) first, toward costs and expenses (including Attorney Costs and amounts payable under Article III) incurred by the Administrative Agent and each Lender, (ii) second, toward repayment of

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interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (iii) third, toward repayment of principal and L/C Borrowings then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and L/C Borrowings then due to such parties.

     (d) Unless the Borrower or any Lender has notified the Administrative Agent, prior to the date any payment is required to be made by it to the Administrative Agent hereunder, that the Borrower or such Lender, as the case may be, will not make such payment, the Administrative Agent may assume that the Borrower or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to the Administrative Agent in immediately available funds, then:

      (i) if the Borrower failed to make such payment, each Lender shall forthwith on demand repay to the Administrative Agent the portion of such assumed payment that was made available to such Lender in immediately available funds, together with interest thereon in respect of each day from and including the date such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent in immediately available funds at the Federal Funds Rate from time to time in effect; and

      (ii) if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Administrative Agent the amount thereof in immediately available funds, together with interest thereon for the period from the date such amount was made available by the Administrative Agent to the Borrower to the date such amount is recovered by the Administrative Agent (the “Compensation Period”) at a rate per annum equal to the Federal Funds Rate from time to time in effect. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in the applicable Borrowing. If such Lender does not pay such amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent may make a demand therefor upon the Borrower, and the Borrower shall pay such amount to the Administrative Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to the applicable Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Revolving Commitment or to prejudice any rights which the Administrative Agent or the Borrower may have against any Lender as a result of any default by such Lender hereunder.

     A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (d) shall be conclusive, absent manifest error.

     (e) If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article V are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

     (f) The obligations of the Lenders hereunder to make Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to Section 10.07 are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make payments pursuant to Section 10.07 on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any

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other Lender to so make its Loan, purchase its participation or to make payments pursuant to Section 10.07.

     (g) Subject to Section 3.01(e), nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

     2.13 Sharing of Payments.

     If, other than as expressly provided elsewhere herein, any Lender shall obtain on account of the Loans made by it, or the participations in L/C Obligations or in Swing Line Loans held by it (but not including any amounts applied by the Swing Line Lender to outstanding Swing Line Loans), any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its ratable share (or other share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Administrative Agent of such fact, and (b) purchase from the other Lenders such participations in the Loans made by them and/or such subparticipations in the participations in L/C Obligations or Swing Line Loans held by them, as the case may be, as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such Loans or such participations, as the case may be, pro rata with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender under any of the circumstances described in Section 11.06 (including pursuant to any settlement entered into by the purchasing Lender in its discretion), such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender’s ratable share (according to the proportion of (i) the amount of such paying Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered, without further interest thereon. The Borrower agrees that any Lender so purchasing a participation from another Lender may exercise all rights of a Lender hereunder with respect to the amount of such participation as if such Lender were the direct creditor of the Borrower in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

     3.01 Taxes.

     (a) Subject to Section 11.15, any and all payments by any Loan Party to or for the account of the Administrative Agent or any Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of the Administrative Agent and each Lender, taxes imposed on or measured by its overall net income, and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which the Administrative Agent or such Lender, as the case may be, is organized or maintains a lending office (all such non-excluded taxes, duties, levies, imposts, deductions,

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assessments, fees, withholdings or similar charges, and liabilities being hereinafter referred to as “Taxes”). If any Loan Party shall be required by any Laws to deduct any Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), each of the Administrative Agent and such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Loan Party shall make such deductions, (iii) such Loan Party shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within thirty days after the date of such payment, such Loan Party shall furnish to the Administrative Agent (which shall forward the same to such Lender) the original or a certified copy of a receipt evidencing payment thereof or if no receipt is available, other evidence of payment reasonably satisfactory to the Administrative Agent.

     (b) In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as “Other Taxes”).

     (c) If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, the Borrower shall also pay to the Administrative Agent or to such Lender, as the case may be, at the time interest is paid, such additional amount that the Administrative Agent or such Lender specifies is necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) that the Administrative Agent or such Lender would have received if such Taxes or Other Taxes had not been imposed.

     (d) The Borrower agrees to indemnify the Administrative Agent and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by the Administrative Agent and such Lender, (ii) amounts payable under Section 3.01(c) and (iii) any liability (including additions to tax, penalties, interest and expenses) arising therefrom or with respect thereto, in each case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. Payment under this subsection (d) shall be made within thirty days after the date the Lender or the Administrative Agent makes a demand therefor.

     (e) If any Loan Party is required to pay any amount to any Lender or the Administrative Agent pursuant to this Section 3.01, then such Lender shall use reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its Lending Office so as to eliminate any such additional payment which may thereafter accrue, if such change in the reasonable judgment of such Lender is not otherwise disadvantageous to such Lender.

     (f) If the Borrower determines in good faith that a reasonable basis exists for contesting any Taxes for which indemnification has been demanded hereunder or on account of which the Borrower’s payment to a Lender has been increased hereunder, the relevant Lender or the Administrative Agent, as applicable, shall cooperate with the Borrower in challenging such Taxes at the Borrower’s expense if so requested by the Borrower in writing.

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     3.02 Illegality.

     If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice, prepayment or conversion and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender.

     3.03 Inability to Determine Rates.

     If the Administrative Agent determines in good faith that adequate and reasonable means do not exist for determining the Eurodollar Base Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan, or that the Eurodollar Base Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to the Lenders of funding such Loan, the Administrative Agent will promptly notify the Borrower and all Lenders. Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until the Administrative Agent revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.

     3.04 Increased Cost and Reduced Return; Capital Adequacy.

     (a) If any Lender determines in good faith that as a result of the introduction of or any change in or in the interpretation of any Law, or such Lender’s compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Loans or (as the case may be) issuing or participating in Letters of Credit, or a reduction in the amount received or receivable by such Lender in connection with any of the foregoing (excluding for purposes of this subsection (a) any such increased costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section 3.01 shall govern), (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or any foreign jurisdiction or any political subdivision of either thereof under the Laws of which such Lender is organized or has its Lending Office, and (iii) reserve requirements utilized, as to Eurodollar Rate Loans, in the determination of the Eurodollar Rate), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction.

     (b) If any Lender determines in good faith that the introduction of any Law regarding capital adequacy or any change therein or in the interpretation thereof, or compliance by such Lender (or its Lending Office) therewith, has the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender’s obligations hereunder (taking

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into consideration its policies with respect to capital adequacy and such Lender’s desired return on capital), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction.

     3.05 Funding Losses.

     Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

      (a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

      (b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; or

      (c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 11.16;

including any loss of reasonably anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

     For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Base Rate used in determining the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded.

     3.06 Matters Applicable to all Requests for Compensation.

     (a) A certificate of the Administrative Agent or any Lender claiming compensation under this Article III and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, the Administrative Agent or such Lender may use any reasonable averaging and attribution methods.

     (b) Upon any Lender’s making a claim for compensation under Section 3.01 or 3.04, the Borrower may replace such Lender in accordance with Section 11.16.

     3.07 Survival.

     All of the Borrower’s obligations under this Article III shall survive termination of the Aggregate Revolving Commitments and repayment of all other Obligations hereunder.

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ARTICLE IV

GUARANTY

     4.01 The Guaranty.

     Each of the Guarantors hereby jointly and severally guarantees to each Lender, each Affiliate of a Lender that enters into a Swap Contract, and the Administrative Agent as hereinafter provided, as primary obligor and not as surety, the prompt payment of the Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise) strictly in accordance with the terms thereof. The Guarantors hereby further agree that if any of the Obligations are not paid in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise), the Guarantors will, jointly and severally, promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Obligations, the same will be promptly paid in full when due (whether at extended maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise) in accordance with the terms of such extension or renewal.

     Notwithstanding any provision to the contrary contained herein or in any other of the Loan Documents or Swap Contracts, the obligations of each Guarantor under this Agreement and the other Loan Documents shall be limited to an aggregate amount equal to the largest amount that would not render such obligations subject to avoidance under the Debtor Relief Laws or any comparable provisions of any applicable state law.

     4.02 Obligations Unconditional.

     The obligations of the Guarantors under Section 4.01 are joint and several, absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of any of the Loan Documents or Swap Contracts, or any other agreement or instrument referred to therein, or any substitution, release, impairment or exchange of any other guarantee of or security for any of the Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 4.02 that the obligations of the Guarantors hereunder shall be absolute and unconditional under any and all circumstances. Each Guarantor agrees that such Guarantor shall have no right of subrogation, indemnity, reimbursement or contribution against the Borrower or any other Guarantor for amounts paid under this Article IV until such time as the Obligations have been paid in full and the Revolving Commitment have expired or terminated. Without limiting the generality of the foregoing, it is agreed that, to the fullest extent permitted by law, the occurrence of any one or more of the following shall not alter or impair the liability of any Guarantor hereunder, which shall remain absolute and unconditional as described above:

      (a) at any time or from time to time, without notice to any Guarantor, the time for any performance of or compliance with any of the Obligations shall be extended, or such performance or compliance shall be waived;

      (b) any of the acts mentioned in any of the provisions of any of the Loan Documents, any Swap Contract between any Loan Party and any Lender, or any Affiliate of a Lender, or any other agreement or instrument referred to in the Loan Documents or such Swap Contracts shall be done or omitted;

      (c) the maturity of any of the Obligations shall be accelerated, or any of the Obligations shall be modified, supplemented or amended in any respect, or any right under any of the Loan

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Documents, any Swap Contract between any Loan Party and any Lender, or any Affiliate of a Lender, or any other agreement or instrument referred to in the Loan Documents or such Swap Contracts shall be waived or any other guarantee of any of the Obligations or any security therefor shall be released, impaired or exchanged in whole or in part or otherwise dealt with;

      (d) any Lien granted to, or in favor of, the Administrative Agent or any Lender or Lenders as security for any of the Obligations shall fail to attach or be perfected; or

      (e) any of the Obligations shall be determined to be void or voidable (including, without limitation, for the benefit of any creditor of any Guarantor) or shall be subordinated to the claims of any Person (including, without limitation, any creditor of any Guarantor).

     With respect to its obligations hereunder, each Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Administrative Agent or any Lender exhaust any right, power or remedy or proceed against any Person under any of the Loan Documents, any Swap Contract between any Loan Party and any Lender, or any Affiliate of a Lender, or any other agreement or instrument referred to in the Loan Documents or such Swap Contracts, or against any other Person under any other guarantee of, or security for, any of the Obligations.

     4.03 Reinstatement.

     The obligations of the Guarantors under this Article IV shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any Person in respect of the Obligations is rescinded or must be otherwise restored by any holder of any of the Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and each Guarantor agrees that it will indemnify the Administrative Agent and each Lender on demand for all reasonable costs and expenses (including, without limitation, fees and expenses of counsel) incurred by the Administrative Agent or such Lender in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.

     4.04 Certain Additional Waivers.

     Each Guarantor agrees that such Guarantor shall have no right of recourse to security for the Obligations, except through the exercise of rights of subrogation pursuant to Section 4.02 and through the exercise of rights of contribution pursuant to Section 4.06.

     4.05 Remedies.

     The Guarantors agree that, to the fullest extent permitted by law, as between the Guarantors, on the one hand, and the Administrative Agent and the Lenders, on the other hand, the Obligations may be declared to be forthwith due and payable as provided in Section 9.02 (and shall be deemed to have become automatically due and payable in the circumstances provided in said Section 9.02) for purposes of Section 4.01 notwithstanding any stay, injunction or other prohibition preventing such declaration (or preventing the Obligations from becoming automatically due and payable) as against any other Person and that, in the event of such declaration (or the Obligations being deemed to have become automatically due and payable), the Obligations (whether or not due and payable by any other Person) shall forthwith become due and payable by the Guarantors for purposes of Section 4.01. The Guarantors acknowledge and agree that their obligations hereunder are secured in accordance with the terms of the Collateral Documents and that the Lenders may exercise their remedies thereunder in accordance with the terms thereof.

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     4.06 Rights of Contribution.

     The Guarantors hereby agree as among themselves that, if any Guarantor shall make an Excess Payment (as defined below), such Guarantor shall have a right of contribution from each other Guarantor in an amount equal to such other Guarantor’s Contribution Share (as defined below) of such Excess Payment. The payment obligations of any Guarantor under this Section 4.06 shall be subordinate and subject in right of payment to the Obligations until such time as the Obligations have been paid in full and the Revolving Commitments have expired or terminated, and none of the Guarantors shall exercise any right or remedy under this Section 4.06 against any other Guarantor until such Obligations have been paid in full and the Revolving Commitments have expired or terminated. For purposes of this Section 4.06, (a) ”Excess Payment” shall mean the amount paid by any Guarantor in excess of its Ratable Share of any Guaranteed Obligations; (b) ”Ratable Share” shall mean, for any Guarantor in respect of any payment of Obligations, the ratio (expressed as a percentage) as of the date of such payment of Guaranteed Obligations of (i) the amount by which the aggregate present fair saleable value of all of its assets and properties exceeds the amount of all debts and liabilities of such Guarantor (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of such Guarantor hereunder) to (ii) the amount by which the aggregate present fair saleable value of all assets and other properties of all of the Loan Parties exceeds the amount of all of the debts and liabilities (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of the Loan Parties hereunder) of the Loan Parties; provided, however, that, for purposes of calculating the Ratable Shares of the Guarantors in respect of any payment of Obligations, any Guarantor that became a Guarantor subsequent to the date of any such payment shall be deemed to have been a Guarantor on the date of such payment and the financial information for such Guarantor as of the date such Guarantor became a Guarantor shall be utilized for such Guarantor in connection with such payment; (c) ”Contribution Share” shall mean, for any Guarantor in respect of any Excess Payment made by any other Guarantor, the ratio (expressed as a percentage) as of the date of such Excess Payment of (i) the amount by which the aggregate present fair saleable value of all of its assets and properties exceeds the amount of all debts and liabilities of such Guarantor (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of such Guarantor hereunder) to (ii) the amount by which the aggregate present fair saleable value of all assets and other properties of the Loan Parties other than the maker of such Excess Payment exceeds the amount of all of the debts and liabilities (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of the Loan Parties) of the Loan Parties other than the maker of such Excess Payment; provided, however, that, for purposes of calculating the Contribution Shares of the Guarantors in respect of any Excess Payment, any Guarantor that became a Guarantor subsequent to the date of any such Excess Payment shall be deemed to have been a Guarantor on the date of such Excess Payment and the financial information for such Guarantor as of the date such Guarantor became a Guarantor shall be utilized for such Guarantor in connection with such Excess Payment; and (d) ”Guaranteed Obligations” shall mean the Obligations guaranteed by the Guarantors pursuant to this Article IV. This Section 4.06 shall not be deemed to affect any right of subrogation, indemnity, reimbursement or contribution that any Guarantor may have under Law against the Borrower in respect of any payment of Guaranteed Obligations. Notwithstanding the foregoing, all rights of contribution against any Guarantor shall terminate from and after such time, if ever, that such Guarantor shall be relieved of its obligations in accordance with Section 10.11.

     4.07 Guarantee of Payment; Continuing Guarantee.

     The guarantee in this Article IV is a guaranty of payment and not of collection, is a continuing guarantee, and shall apply to all Obligations whenever arising.

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ARTICLE V

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

     5.01 Conditions of Initial Credit Extension.

     The obligation of each Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following conditions precedent:

     (a) Loan Documents. Receipt by the Administrative Agent of executed counterparts of this Agreement and the other Loan Documents, each properly executed by a Responsible Officer of the signing Loan Party and, in the case of this Agreement, by each Lender.

     (b) Organization Documents, Resolutions, Etc. Receipt by the Administrative Agent’s of the following, each of which shall be originals or facsimiles (followed promptly by originals), dated as of a recent date before the Closing Date and in form and substance satisfactory to the Administrative Agent and its legal counsel:

     (i) copies of the Organization Documents of each Loan Party certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state or other jurisdiction of its incorporation or organization, where applicable, and certified by a secretary or assistant secretary of such Loan Party to be true and correct as of the Closing Date;

     (ii) a certificate from the secretary or assistant secretary of each Loan Party attesting to the resolutions of such Loan Party’s board of directors and the incumbency of Responsible Officers of each Loan Party evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party; and

     (iii) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and is validly existing and in good standing in its state of organization or formation and qualified to engage in business in the state of its principal place of business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

     (c) Opinion of Counsel. Receipt by the Administrative Agent’s of favorable opinions of counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, dated as of the Closing Date, and in form and substance satisfactory to the Administrative Agent.

     (d) Perfection and Priority of Liens. Receipt by the Administrative Agent of the following:

     (i) searches of Uniform Commercial Code filings in the jurisdiction of formation of each Loan Party;

     (ii) searches of ownership of, and Liens on, intellectual property of each Loan Party in the appropriate governmental offices; and

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     (iii) duly executed notices of grant of security interest in the form required by the Security Agreement as are reasonably requested by the Administrative Agent to perfect the Administrative Agent’s security interest in the intellectual property of the Loan Parties.

     (e) Financial Statements. The Administrative Agent shall have received:

     (i) the Audited Financial Statements;

     (ii) interim quarterly financial statements of the Borrower and its Subsidiaries for the fiscal quarter ending September 30, 2004;

     (iii) projections of the financial condition, results of operations and cash flows for the Borrower and its Subsidiaries for fiscal years ending December 31, 2005, December 31, 2006 and December 31, 2007 (collectively, the “Closing Date Projections”); and

     (iv) such other information as the Administrative Agent may reasonably request.

     (f) No Material Adverse Change. There shall not have occurred a material adverse change since December 31, 2003 in the business, assets, liabilities (actual or contingent), operations, financial condition or prospects of the Borrower, together with its Subsidiaries taken as a whole.

     (g) Closing Certificate. Receipt by the Administrative Agent of a certificate signed by a Responsible Officer of the Borrower certifying that the conditions specified in Section 5.01(f) and Sections 5.02(a), (b) and (c) have been satisfied.

     (h) Fees. Receipt by the Administrative Agent and the Lenders of any fees required to be paid on or before the Closing Date shall have been paid.

     (i) Attorney Costs. The Borrower shall have paid all Attorney Costs of the Administrative Agent to the extent invoiced prior to the Closing Date, plus such additional amounts of Attorney Costs as shall constitute the Administrative Agent’s reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent, as applicable).

     5.02 Conditions to all Credit Extensions.

     The obligation of each Lender to honor any Request for Credit Extension is subject to the following conditions precedent:

     (a) The representations and warranties of each Loan Party contained in Article VI and in the other Loan Documents shall be true and correct in all material respects on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this Section 5.02, the representations and warranties contained in subsections (a) and (b) of Section 6.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 7.01.

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     (b) No Default shall exist, or would result from such proposed Credit Extension.

     (c) There shall not have been commenced against the Borrower or any Subsidiary an involuntary case under any applicable Debtor Relief Law, now or hereafter in effect, or any case, proceeding or other action for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or for the winding up or liquidation of its affairs, and such involuntary case or other case, proceeding or other action shall remain undismissed.

     (d) The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.

     Each Request for Credit Extension submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 5.02(a), (b) and (c) have been satisfied on and as of the date of the applicable Credit Extension.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

     The Loan Parties represent and warrant to the Administrative Agent and the Lenders that:

     6.01 Existence, Qualification and Power.

     Each Loan Party (a) is a corporation, partnership or limited liability company duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

     6.02 Authorization; No Contravention.

     The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, (i) any Contractual Obligation to which such Person is a party or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its Property is subject; or (c) violate any Law (including, without limitation, Regulation U or Regulation X issued by the FRB).

     6.03 Governmental Authorization; Other Consents.

     No material approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any

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other Loan Document, other than (i) those that have already been obtained and are in full force and effect and (ii) filings to perfect the Liens created by the Collateral Documents.

     6.04 Binding Effect.

     This Agreement and each other Loan Document has been duly executed and delivered by each Loan Party that is party thereto. This Agreement and each other Loan Document constitutes a legal, valid and binding obligation of each Loan Party that is party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable Debtor Relief Laws or by equitable principals relating to enforceability.

     6.05 Financial Statements; No Material Adverse Effect.

     (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (ii) fairly present in all material respects the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein.

     (b) The unaudited consolidated financial statements of the Borrower and its Subsidiaries dated September 30, 2004 and the related consolidated statements of income or operations, shareholders’ equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (ii) fairly present in all material respects the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.

     (c) From December 31, 2003 to and including the Closing Date, there has been no Disposition by the Borrower or any Subsidiary, or any Involuntary Disposition, of any material part of the business or Property of the Borrower and its Subsidiaries, taken as a whole, and no purchase or other acquisition by any of them of any business or Property (including any Capital Stock of any other Person) material in relation to the consolidated financial condition of the Borrower and its Subsidiaries, taken as a whole, in each case, which is not reflected in the foregoing financial statements or in the notes thereto and has not otherwise been disclosed in writing to the Lenders on or prior to the Closing Date.

     (d) The financial statements delivered pursuant to Section 7.01(a) and (b) have been prepared in accordance with GAAP (except as may otherwise be permitted under Section 7.01(a) and (b)) and present fairly (in the case of the financial statements delivered pursuant to Section 7.01(a), on the basis disclosed in the footnotes to such financial statements) in all material respects the consolidated and, in the case of consolidating annual financial statements delivered pursuant to Section 7.01(a), consolidating, financial condition, results of operations and cash flows of the Borrower and its Subsidiaries as of such date and for such periods.

     (e) Since December 31, 2003 there has been no event or circumstance that has had or could reasonably be expected to have a Material Adverse Effect.

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     6.06 Litigation.

     There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Loan Parties after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or (b) is reasonably likely to be determined adversely to the Borrower or any of its Subsidiaries and, if determined adversely, could reasonably be expected to have a Material Adverse Effect.

     6.07 No Default.

     (a) Neither the Borrower nor any Subsidiary is in default under or with respect to any Contractual Obligation that could reasonably be expected to have a Material Adverse Effect.

     (b) No Default has occurred and is continuing.

     6.08 Ownership of Property; Liens.

     Each of the Borrower and its Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Property of the Borrower and its Subsidiaries is subject to no Liens, other than Permitted Liens.

     6.09 Environmental Compliance.

     Except as would not reasonably be expected to have a Material Adverse Effect:

     (a) Each of the Facilities and all operations at the Facilities are in compliance with all applicable Environmental Laws, and there is no violation of any Environmental Law with respect to the Facilities or the Businesses, and there are no conditions relating to the Facilities or the Businesses that would reasonably be expected to give rise to liability under any Environmental Laws.

     (b) None of the Facilities contains, or has previously contained, any Hazardous Materials at, on or under the Facilities in amounts or concentrations that constitute or constituted a violation of, or would reasonably be expected to give rise to liability under, Environmental Laws.

     (c) Neither the Borrower nor any Subsidiary has received any written or verbal notice of, or inquiry from any Governmental Authority regarding, any violation, alleged violation, non-compliance or Environmental Liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Facilities or the Businesses, nor does any Responsible Officer of any Loan Party have knowledge that any such notice will be received or is being threatened.

     (d) Hazardous Materials have not been transported or disposed of from the Facilities, or generated, treated, stored or disposed of at, on or under any of the Facilities or any other location, in each case by or on behalf the Borrower or any Subsidiary in violation of, or in a manner that would be reasonably likely to give rise to liability under, any applicable Environmental Law.

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     (e) No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Responsible Officers of the Loan Parties, threatened, under any Environmental Law to which the Borrower or any Subsidiary is or will be named as a party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders of Governmental Authorities, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Borrower, any Subsidiary, the Facilities or the Businesses.

     (f) There has been no release or, threat of release of Hazardous Materials at or from the Facilities, or arising from or related to the operations (including, without limitation, disposal) of the Borrower or any Subsidiary in connection with the Facilities or otherwise in connection with the Businesses, in violation of or in amounts or in a manner that would reasonably be expected to give rise to liability under Environmental Laws.

     6.10 Insurance.

     The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates.

     6.11 Taxes.

     The Borrower and its Subsidiaries have filed all federal, state and other material tax returns and reports required to be filed, and have paid all federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against the Borrower or any Subsidiary that would, if made, have a Material Adverse Effect.

     6.12 ERISA Compliance.

     (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Internal Revenue Code and other federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the Loan Parties, nothing has occurred which would prevent, or cause the loss of, such qualification. Each Loan Party and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Internal Revenue Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Internal Revenue Code has been made with respect to any Plan.

     (b) There are no pending or, to the best knowledge of the Loan Parties, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could be reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

     (c) (i) No Pension Plan has any Unfunded Pension Liability; (ii) no Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under

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Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (iii) no Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.

     6.13 Subsidiaries.

     Set forth on Schedule 6.13 is a complete and accurate list as of the Closing Date of each Subsidiary, together with (i) number of shares of each class of Capital Stock outstanding and (ii) number and percentage of outstanding shares of each class owned (directly or indirectly) by the Borrower or any Subsidiary. The outstanding Capital Stock of each Subsidiary is validly issued, fully paid and non-assessable and, except as set forth on Schedule 6.13, is not subject to any outstanding options, warrants, rights of conversion or purchase or any other similar rights with respect thereto.

     6.14 Margin Regulations; Investment Company Act; Public Utility Holding Company Act.

     (a) The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. Following the application of the proceeds of each Borrowing or drawing under each Letter of Credit, not more than 25% of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of Section 8.01 or Section 8.05 or subject to any restriction contained in any agreement or instrument between the Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of Section 9.01(e) will be margin stock.

     (b) None of the Borrower or any Subsidiary (i) is a “holding company,” or a “subsidiary company” of a “holding company,” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company,” within the meaning of the Public Utility Holding Company Act of 1935, or (ii) is or is required to be registered as an “investment company” under the Investment Company Act of 1940 or is controlled by any Person that is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

     6.15 Disclosure.

     No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information (including the Closing Date Projections), the Loan Parties represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

     6.16 Compliance with Laws.

     Each of the Borrower and each Subsidiary is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

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     6.17 Intellectual Property; Licenses, Etc.

     The Borrower and its Subsidiaries own, or possess the legal right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, “IP Rights”) that are reasonably necessary for the operation of their respective businesses. Set forth on Schedule 6.17 is a list of all IP Rights registered or pending registration with the United States Copyright Office or the United States Patent and Trademark Office and owned by each Loan Party or that any Loan Party has the right to use as of the Closing Date. No claim that is reasonably likely to be determined adversely to the Borrower or any of its Subsidiaries and, if determined adversely, could reasonably be expected to have a Material Adverse Effect has been asserted and is pending by any Person challenging or questioning the use of any IP Rights or the validity or effectiveness of any IP Rights, nor does any Loan Party know of any such claim. Except as could not reasonably be expected to have a Material Adverse Effect, to the knowledge of the Responsible Officers of the Loan Parties, the use of any IP Rights by the Borrower or any Subsidiary or the granting of a right or a license in respect of any IP Rights from the Borrower or any Subsidiary does not infringe on the rights of any Person. As of the Closing Date, none of the IP Rights owned by any of the Loan Parties is subject to any licensing agreement or similar arrangement except as set forth on Schedule 6.17.

     6.18 Effectiveness of Security Interests in the Collateral.

     The Collateral Documents, when executed and delivered by all parties thereto, create valid security interests in, and Liens on, the Collateral purported to be covered thereby.

     6.19 Legal Name; State of Formation.

     (a) The exact legal name and state of formation of each Loan Party is as set forth on the signature pages to this Agreement (or any Joinder Agreement, as applicable, or as indicated pursuant to Section 8.13).

     (b) Except as set forth on Schedule 6.19, no Loan Party has during the five years preceding the Closing Date (i) changed its legal name, (ii) changed its state of formation, or (iii) been party to a merger, consolidation or other similar change in structure.

     6.20 Labor Matters.

     There are no collective bargaining agreements or Multiemployer Plans covering the employees of the Borrower or any Subsidiary as of the Closing Date and neither the Borrower nor any Subsidiary has suffered any strikes, walkouts, work stoppages or other material labor difficulty within the last five years.

ARTICLE VII

AFFIRMATIVE COVENANTS

     So long as any Lender shall have any Revolving Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding (other than any Letter of Credit that is Cash Collateralized pursuant to Section 2.03(g)), the Loan Parties shall and shall cause each Subsidiary to:

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     7.01 Financial Statements.

     Deliver to the Administrative Agent, in form and detail satisfactory to the Administrative Agent and the Required Lenders:

     (a) as soon as available, but in any event by the earlier of the date ninety (90) days after the end of each fiscal year of the Borrower and the date the Borrower is required to file its Form 10-K with the SEC (without giving effect to any extension of such due date, whether obtained by filing the notification permitted by Rule 12b-25 or any successor provision thereto or otherwise), a consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated and consolidating statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of PricewaterhouseCoopers or other independent certified public accountant of nationally recognized standing reasonably acceptable to the Administrative Agent, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit; and

     (b) as soon as available, but in any event by the earlier of the date forty-five (45) days after the end of each fiscal quarter (other than the fourth fiscal quarter) of each fiscal year of the Borrower and the date the Borrower is required to file its Form 10-Q with the SEC (without giving effect to any extension of such due date) for such fiscal quarter, a consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated and consolidating statements of income or operations and cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of the Borrower as fairly presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes.

     7.02 Certificates; Other Information.

     Deliver to the Administrative Agent, in form and detail satisfactory to the Administrative Agent and the Required Lenders:

     (a) concurrently with the delivery of the financial statements referred to in Sections 7.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of the Borrower;

     (b) within forty-five (45) days of the start of each fiscal year of the Borrower, the annual business plan and budget of the Borrower and its Subsidiaries containing, among other things, projected financial statements for each quarter of such fiscal year;

     (c) promptly after any request by the Administrative Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Borrower by independent

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accountants in connection with the accounts or books of the Borrower or any Subsidiary, or any audit of any of them;

     (d) promptly after the same are available, (i) copies of Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current reports, (ii) notice of (and, upon the request of the Administrative Agent, copies of) any other filings made by Borrower or any Subsidiary with the SEC concerning material business developments, and (iii) notice of (and, upon the request of the Administrative Agent, copies of) any other information that is provided by Borrower to its shareholders generally;

     (e) upon the request of the Administrative Agent or any Lender, copies of all reports and written information to and from the United States Environmental Protection Agency, or any state or local agency responsible for environmental matters, the United States Occupational Health and Safety Administration, or any state or local agency responsible for health and safety matters, or any successor agencies or Governmental Authorities concerning allegations of Environmental Liability;

     (f) promptly, such additional information regarding the business, financial or corporate affairs of the Borrower or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request; and

     (g) concurrently with the delivery of the financial statements referred to in Section 7.01(a) and the financial statements referred to in Section 7.01(b) for the fiscal quarter ended June 30 of each fiscal year, a certificate of a Responsible Officer of the Borrower listing (i) all applications, if any, for Copyrights, Patents or Trademarks (each such term as defined in the Security Agreement) made with the United States Copyright Office or the United States Patent and Trademark Office since the date of the prior certificate (or, in the case of the first such certificate, the Closing Date), (ii) all issuances of registrations or letters on existing applications for Copyrights, Patents and Trademarks (each such term as defined in the Security Agreement) by the United States Copyright Office or the United States Patent and Trademark Office received since the date of the prior certificate (or, in the case of the first such certificate, the Closing Date), and (iii) all material Trademark Licenses, Copyright Licenses and Patent Licenses (each such term as defined in the Security Agreement) registered or pending registration with the United States Copyright Office or the United States Patent and Trademark Office and entered into since the date of the prior certificate (or, in the case of the first such certificate, the Closing Date).

       Documents required to be delivered pursuant to Section 7.01(a) or (b) or Section 7.02(d) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 11.02; or (ii) on which such documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent and each Lender of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificates required by Section 7.02 to the Administrative Agent. Except for such Compliance Certificates, the Administrative Agent shall have no obligation to request the

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delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

     7.03 Notices.

     (a) Promptly (and in any event within two Business Days) after a Responsible Officer of a Loan Party obtains knowledge thereof, notify the Administrative Agent and each Lender of the occurrence of any Default.

     (b) Promptly notify the Administrative Agent and each Lender of any material change in accounting policies or financial reporting practices by the Borrower or any Subsidiary.

     Each notice pursuant to this Section 7.03 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 7.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

     7.04 Payment of Obligations.

     Pay and discharge as the same shall become due and payable prior to any penalty or interest accruing thereon, all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary.

     7.05 Preservation of Existence, Etc.

     (a) Preserve, renew and maintain in full force and effect its legal existence under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 8.04 or 8.05; (b) preserve, renew and maintain in full force and effect its good standing under the Laws of the jurisdiction of its organization except (i) in a transaction permitted by Section 8.04 or 8.05 and (ii) as could not reasonably be expected to have a Material Adverse Effect; (c) take all reasonable action to maintain all material rights, privileges, permits, licenses and franchises necessary or desirable (in the Borrower’s commercially reasonable judgment) in the normal conduct of its business; and (d) preserve or renew all of its material registered patents, trademarks, trade names and service marks used in and necessary to its business.

     7.06 Maintenance of Properties.

     (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear and Involuntary Dispositions excepted; (b) make all necessary repairs thereto and renewals and replacements thereof as appropriate in the exercise of its commercially reasonable judgment; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.

     7.07 Maintenance of Insurance.

     Maintain in full force and effect insurance (including worker’s compensation insurance, liability insurance, casualty insurance and business interruption insurance) with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts, with such deductibles and covering

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such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates, provided that if any insurance company with which the Borrower maintains any such insurance fails to meet the foregoing criteria subsequent to the Borrower obtaining such insurance, the Borrower will within thirty (30) days after obtaining knowledge thereof obtain such insurance from one or more insurance companies that meet the foregoing criteria

     7.08 Compliance with Laws.

     Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its Property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

     7.09 Books and Records.

     (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower or such Subsidiary, as the case may be.

     7.10 Inspection Rights; Field Audits.

     Permit representatives and independent contractors of the Administrative Agent and any Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided, however, that (i) so long as no Event of Default has occurred and is continuing, the Borrower shall be obligated to pay only the expenses incurred by the Administrative Agent in connection with only two such visits and inspections made by the Administrative Agent in any calendar year and (ii) when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice. Notwithstanding the foregoing, neither the Borrower nor any Subsidiary shall be required to disclose (a) any materials subject to a confidentiality obligation binding upon the Borrower or such Subsidiary or (b) any communications protected by attorney-client privilege the disclosure or inspection of which would waive such privilege.

     7.11 Use of Proceeds.

     Use the proceeds of the Credit Extensions to finance working capital, capital expenditures and other general corporate purposes (including Permitted Acquisitions).

     7.12 Subsidiaries.

     (a) Within forty-five (45) days after the acquisition or formation of any Subsidiary, notify the Administrative Agent thereof in writing, together with (i) jurisdiction of formation, (ii) number of shares of

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each class of Capital Stock outstanding, (iii) number and percentage of outstanding shares of each class owned (directly or indirectly) by the Borrower or any Subsidiary and (iv) number and effect, if exercised, of all outstanding options, warrants, rights of conversion or purchase and all other similar rights with respect thereto.

     (b) Within thirty (30) days after any Person becomes a Material Domestic Subsidiary, cause such Person to (i) become a Guarantor by executing and delivering to the Administrative Agent a Joinder Agreement or such other document as the Administrative Agent shall deem appropriate for such purpose, and (ii) if requested by the Administrative Agent or the Required Lenders, deliver to the Administrative Agent documents of the types referred to in Sections 5.01(b) and (d) and favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clause (a)), all in form, content and scope reasonably satisfactory to the Administrative Agent.

     (c) Notwithstanding anything to the contrary contained herein, if at any time any Person that is not a Guarantor provides a Guarantee of the Senior Notes, then the Borrower shall cause such Person to deliver to the Administrative Agent, concurrent with such Person providing a Guarantee of the Senior Notes, (i) a Joinder Agreement pursuant to which such Person become a Guarantor and grants a Liens in its Property pursuant to the Collateral Documents and (ii) if requested by the Administrative Agent or the Required Lenders, documents of the types referred to in Sections 5.01(b) and 5.01(d) and favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clause (i)), all in form, content and scope reasonably satisfactory to the Administrative Agent.

     7.13 ERISA Compliance.

     Do, and cause each of its ERISA Affiliates to do, each of the following: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Internal Revenue Code and other federal or state law; (b) cause each Plan that is qualified under Section 401(a) of the Internal Revenue Code to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412 of the Internal Revenue Code.

ARTICLE VIII

NEGATIVE COVENANTS

     So long as any Lender shall have any Revolving Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding (other than any Letter of Credit that is Cash Collateralized pursuant to Section 2.03(g)), no Loan Party shall, nor shall it permit any Subsidiary to, directly or indirectly:

     8.01 Liens.

     Create, incur, assume or suffer to exist any Lien upon any of its Property or revenues, whether now owned or hereafter acquired, other than the following:

     (a) Liens pursuant to any Loan Document;

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     (b) Liens existing on the date hereof and listed on Schedule 8.01 and any renewals or extensions thereof, provided that the Property covered thereby is not increased and any renewal or extension of the obligations secured or benefited thereby is permitted by Section 8.03(b);

     (c) Liens (other than Liens imposed under ERISA) for taxes, assessments or governmental charges or levies not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

     (d) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and suppliers and other Liens imposed by law or pursuant to customary reservations or retentions of title arising in the ordinary course of business, provided that such Liens secure only amounts not yet due and payable or, if due and payable, are unfiled and no other action has been taken to enforce the same or are being contested in good faith by appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established;

     (e) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;

     (f) deposits to secure (i) the performance of bids, trade contracts, licenses and leases (other than Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business, or (ii) indemnification obligations relating to any Disposition (including any transaction described in the definition of “Disposition”) permitted by this Agreement;

     (g) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the real property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

     (h) Liens securing judgments for the payment of money that do not constitute an Event of Default pursuant to Section 9.01(h);

     (i) Liens securing purchase money Indebtedness permitted under Section 8.03(b), (c) or (h) and any renewals or extensions thereof; provided that (i) such Liens do not at any time encumber any Property other than the Property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the purchase price of the Property acquired;

     (j) leases, licenses or subleases granted to others not interfering in any material respect with the business of the Borrower or any Subsidiary;

     (k) any interest of title of a lessor under, and Liens arising from Uniform Commercial Code financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) relating to, leases permitted by this Agreement;

     (l) Liens deemed to exist in connection with Investments in repurchase agreements permitted under Section 8.02;

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     (m) normal and customary rights of setoff upon deposits of cash in favor of banks or other depository institutions;

     (n) Liens of a collection bank arising under Section 4-210 of the Uniform Commercial Code (or equivalent in foreign jurisdictions) on items in the course of collection;

     (o) Liens of sellers of goods to the Borrower and any of its Subsidiaries arising under Article 2 of the Uniform Commercial Code or similar provisions of applicable law in the ordinary course of business, covering only the goods sold and securing only the unpaid purchase price for such goods and related expenses;

     (p) Liens on cash collateral securing reimbursement obligations of the Borrower and its Subsidiaries under letters of credit;

     (q) the non-exclusive right granted to The Boeing Company to use certain property of the Borrower pursuant to that certain letter agreement dated December 4, 2001 between the Borrower and The Boeing Company, but only to the extent such right exists on the Closing Date;

     (r) Liens granted to the United States Government pursuant to F.A.R. 52.232-16 and F.A.R. 52.245-5 on certain assets of Borrower or any Subsidiary in prime contracts with the United States Government or any United States Agency or as specified in subcontracts to which the Borrower is a party;

     (s) Liens in favor of Optus in the Subject Property to secure the Borrower’s obligations under the spacecraft sales contract (together with the related security agreement and escrow agreement) between the Borrower and Optus;

     (t) Liens on real property (other than any satellite manufacturing facility) owned by the Borrower or any of its Subsidiaries; and

     (u) earn-out or similar obligations issued by the Borrower or any of its Subsidiaries in connection with an Acquisition (to the extent such earn-out or similar obligation is deemed a Lien).

     8.02 Investments.

     Make any Investments, except:

     (a) Investments held by the Borrower or such Subsidiary in the form of cash or Cash Equivalents;

     (b) Investments existing as of the Closing Date and set forth in Schedule 8.02;

     (c) Investments consisting of advances or loans to directors, officers and employees for travel, entertainment, relocation and analogous business purposes made in the ordinary course of business on terms consistent with past practices of the Borrower in an aggregate principal amount (including Investments of such type set forth in Schedule 8.02) not to exceed $1,000,000 at any time outstanding;

     (d) Investments by any Foreign Subsidiary in another Foreign Subsidiary;

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     (e) Investments by the Borrower or any Domestic Subsidiary in the Borrower or any Domestic Subsidiary;

     (f) Investments by the Borrower or any Domestic Subsidiary in Foreign Subsidiaries in an aggregate principal amount not to exceed $1,000,000 at any time outstanding;

     (g) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business;

     (h) Investments received in satisfaction or partial satisfaction of judgments, foreclosures of liens or settlement of litigation, claims or debts (whether pursuant to a plan of reorganization or otherwise);

     (i) Guarantees permitted by Section 8.03;

     (j) Permitted Acquisitions;

     (k) Investments consisting of cash collateral to secure letters of credit;

     (l) Investments in any of the Senior Notes to the extent permitted pursuant to Section 8.12;

     (m) obligations under Swap Contracts to the extent permitted under Section 8.03;

     (n) Investments made as a result of the receipt of non-cash consideration from (i) a Disposition permitted by Section 8.05, (ii) the sale of the Borrower’s Transportation Management Systems division, or (iii) any licensing of IP Rights not constituting a Disposition;

     (o) Investments by the Borrower in the amount and type of debt or equity securities (including mutual funds) that are substantially the same as the investments made by participants in the Borrower’s non-qualified deferred compensation plan (including any subsequent or replacement plans) in an aggregate amount not to exceed $10,000,000 at any time outstanding;

     (p) other Investments in an aggregate amount not to exceed $2,000,000 at any time outstanding, provided that at the time of making any such Investment the Borrower would be permitted to make a Restricted Payment in the amount of such Investment pursuant to Section 8.06(a); and

     (q) Investments not contemplated in the foregoing clauses in an amount not to exceed $7,500,000 in the aggregate at any time outstanding.

     8.03 Indebtedness.

     Create, incur, assume or suffer to exist any Indebtedness, except:

     (a) Indebtedness under the Loan Documents;

     (b) Indebtedness of the Borrower and its Subsidiaries set forth in Schedule 8.03 and renewals, refinancings and extensions thereof on terms and conditions not materially less favorable to the applicable debtor(s) and any increase in the principal amount of any Indebtedness on such

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Schedule by an aggregate amount of up to $1,000,000, and renewals, refinancings and extensions thereof on terms and conditions not materially less favorable to the applicable debtor(s);

     (c) purchase money Indebtedness (including obligations in respect of Capital Leases or Synthetic Leases) hereafter incurred (or assumed in connection with a Permitted Acquisition) by the Borrower or any of its Subsidiaries to finance the purchase of fixed assets, and renewals, refinancings and extensions thereof, provided that (i) the total of all such Indebtedness incurred pursuant to this Section 8.03(c) for all such Persons taken together shall not exceed $20,000,000 at any one time outstanding (ii) such Indebtedness when incurred by Borrower or any of its Subsidiaries (or, in the case of an assumption in connection with a Permitted Acquisition, at the time incurred by the target of such Permitted Acquisition) shall not exceed the purchase price of the asset(s) financed and (iii) no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance outstanding thereon at the time of such refinancing;

     (d) obligations (contingent or otherwise) of the Borrower or any Subsidiary existing or arising under any Swap Contract, provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a “market view;” and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;

     (e) intercompany Indebtedness permitted under Section 8.02;

     (f) Indebtedness under the Senior Note Documents, and renewals, refinancings and extensions thereof to the extent permitted under Section 8.12;

     (g) Indebtedness in respect of letters of credit;

     (h) Indebtedness assumed in connection with a Permitted Acquisition in an aggregate principal amount not to exceed $10,000,000 at any time outstanding;

     (i) performance bonds and surety bonds incurred in the ordinary course of business;

     (j) other unsecured Indebtedness in an aggregate principal amount not to exceed $15,000,000 at any time;

     (k) Indebtedness secured by real property (other than any satellite manufacturing facility) owned by the Borrower or any Subsidiary, and renewals, refinancings and extensions thereof, provided that (i) such Indebtedness when incurred by Borrower or any Subsidiary (or, in the case of an assumption in connection with a Permitted Acquisition, at the time incurred by the target of such Permitted Acquisition) shall not exceed the fair market value of the applicable real property at the time of such incurrence and (ii) no such Indebtedness shall be refinanced for a principal amount in excess of the fair market value of the applicable real property at the time of such refinancing; and

     (l) Guarantees with respect to Indebtedness permitted under this Section 8.03.

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     8.04 Fundamental Changes.

     Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person; provided that, notwithstanding the foregoing provisions of this Section 8.04 but subject to the terms of Sections 7.12 and 7.14, (a) the Borrower may merge or consolidate with any Subsidiary; provided that the Borrower shall be the continuing or surviving entity, (b) any Domestic Subsidiary may merge or consolidate with any other Domestic Subsidiary; provided that if a Loan Party is a party thereto then a Loan Party shall be the continuing or surviving entity, (c) any Foreign Subsidiary may merge or consolidate with any Domestic Subsidiary; provided that a Domestic Subsidiary shall be the continuing or surviving entity (and if a Loan Party is a party thereto then a Loan Party shall be the continuing or surviving entity), (d) any Foreign Subsidiary may be merged or consolidated with or into any other Foreign Subsidiary, (e) any Subsidiary may merge with any Person that is not a Loan Party in connection with a Disposition permitted under Section 8.05 or a Permitted Acquisition; provided that, if such transaction involves the Borrower, the Borrower shall be the continuing or surviving corporation, and (g) any Wholly Owned Subsidiary may dissolve, liquidate or wind up its affairs at any time provided that such dissolution, liquidation or winding up, as applicable, could not reasonably be expected to have a Material Adverse Effect.

     8.05 Dispositions.

     Make any Disposition unless (a) at least seventy-five percent (75%) of the consideration paid in connection therewith shall be cash or cash equivalents that is received contemporaneous with the consummation of such Disposition and the total consideration paid shall be in an amount not less than the fair market value (as reasonably determined by the Borrower) of the Property disposed of, (b) if such transaction is a Sale and Leaseback Transaction, such transaction is not prohibited by the terms of Section 8.15, (c) such transaction does not involve a sale or other disposition of receivables other than receivables owned by or attributable to other Property concurrently being disposed of in a transaction otherwise permitted under this Section 8.05 or receivables that are being sold because the selling party reasonably believes that such receivables will be difficult or expensive to collect, and (d) the aggregate net book value of all of the assets sold or otherwise disposed of by the Borrower and its Subsidiaries in all Dispositions in any fiscal year of the Borrower shall not exceed $5,000,000.

     8.06 Restricted Payments.

     Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:

     (a) the Borrower may make Restricted Payments, provided that (i) no Default shall exist on the date of such Restricted Payment and (ii) the Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer of the Borrower demonstrating that, upon giving effect on a Pro Forma Basis to such Restricted Payment, the Loan Parties would be in compliance with the financial covenants set forth in Section 8.11 as of the most recent fiscal quarter end for which the Borrower has delivered financial statements pursuant to Section 7.01(a) or (b);

     (b) the Borrower may repurchase Capital Stock of the Borrower issued to employees and directors of the Borrower in an amount necessary to satisfy such individual’s income tax withholding obligations relating to the vesting of any restricted stock grants that have been approved by the Borrower’s Board of Directors or the appropriate committee thereof; and

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     (c) the Borrower may repurchase Capital Stock of the Borrower issued to employees, directors or managers upon the death, disability or termination of employment of such person or pursuant to the terms of any subscription, stockholder or other agreement or plan approved by the Borrower’s Board of Directors in an aggregate amount not to exceed (i) $500,000 in any fiscal year or (ii) $2,000,000 during the term of this Agreement.

     8.07 Change in Nature of Business.

     Engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Subsidiaries on the Closing Date or any business substantially related or incidental thereto (or any reasonable expansions or extensions therof).

     8.08 Transactions with Affiliates and Insiders.

     Enter into or permit to exist any transaction or series of transactions with any officer, director or Affiliate of such Person other than (a) transactions between Loan Parties, (b) intercompany transactions expressly permitted by Section 8.02, Section 8.03, Section 8.04, Section 8.05 or Section 8.06, (c) reasonable compensation and reimbursement of expenses of officers and directors and (d) except as otherwise specifically limited in this Agreement, other transactions which are entered into in the ordinary course of such Person’s business on terms and conditions substantially as favorable to such Person as would be obtainable by it in a comparable arms-length transaction with a Person other than an officer, director or Affiliate.

     8.09 Burdensome Agreements.

     Enter into or permit to exist any Contractual Obligation that encumbers or restricts the ability of any such Person to (a) pay dividends or make any other distributions to any Loan Party on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, (b) pay any Indebtedness or other obligation owed to any Loan Party, (c) make loans or advances to any Loan Party, (d) sell, lease or transfer any of its Property to any Loan Party, (e) pledge its Property pursuant to the Loan Documents or any renewals, refinancings, exchanges, refundings or extension thereof or (f) act as a Loan Party pursuant to the Loan Documents or any renewals, refinancings, exchanges, refundings or extension thereof, except (in respect of any of the matters referred to in clauses (a)-(e) above) for (i) this Agreement and the other Loan Documents, (ii) any document or instrument governing Indebtedness (A) permitted pursuant to Section 8.03(b), (B) incurred pursuant to Section 8.03(c), provided that any such restriction contained therein relates only to the Property financed thereby, or (C) incurred pursuant to Section 8.03(j), provided that any such restriction therein does not relate to the Collateral, inventory or the proceeds thereof, (iii) any Permitted Lien or any document or instrument governing any Permitted Lien, provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien, (iv) customary restrictions and conditions contained in any agreement relating to the sale of any Property permitted under Section 8.05 pending the consummation of such sale, (v) non-assignability provisions in contracts entered into in the ordinary course of business, (vi) restrictions on transfer of the Capital Stock of Subsidiaries that prohibit transfers in contravention of applicable securities laws, (vii) restrictions on the pledge of interests in any joint venture that is not a Subsidiary contained in the applicable joint venture agreement and (viii) the Senior Note Documents.

     8.10 Use of Proceeds.

     Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.

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     8.11 Financial Covenants.

     (a) Consolidated Total Leverage Ratio. Permit the Consolidated Total Leverage Ratio as of the end of any fiscal quarter of the Borrower to be greater than 3.00:1.0.

     (b) Consolidated Senior Secured Leverage Ratio. Permit the Consolidated Senior Secured Leverage Ratio as of the end of any fiscal quarter of the Borrower to be greater than 1.50:1.0.

     (c) Consolidated Net Worth. Permit Consolidated Net Worth as of the end of any fiscal quarter of the Borrower to be less than an amount equal to the sum of (i) $123 million, plus (ii) on a cumulative basis as of the end of each fiscal quarter of the Borrower, commencing with the fiscal quarter ending December 31, 2004, an amount equal to 50% of Consolidated Net Income (to the extent positive (it being understood that there shall be no deduction for losses)) for the fiscal quarter then ended plus (iii) 100% of the proceeds of all Equity Issuances after the Closing Date.

     (d) Consolidated Fixed Charges Coverage Ratio. Permit the Consolidated Fixed Charges Coverage Ratio as of the end of any fiscal quarter of the Borrower to be less than 1.50:1.0.

     (e) Consolidated Asset Coverage Ratio. Permit the Consolidated Asset Coverage Ratio at any time to be less than 1.33:1.0.

     8.12 Senior Note Documents; Repurchase of Senior Notes.

     (a) Amend or modify any of the terms of any of the Senior Note Documents if such amendment or modification would (i) increase the principal amount thereof to more than $200 million or (ii) add or change any terms in a manner materially adverse to the Borrower or such Subsidiary (including any amendment or modification that would shorten the final maturity or average life to maturity or require any payment to be made sooner than originally scheduled or increase the interest rate applicable thereto).

     (b) Make (or give any notice with respect thereto) any voluntary or optional prepayment, redemption, defeasance or acquisition for value of (including without limitation, by way of depositing money or securities with the trustee with respect thereto before due for the purpose of paying when due), or refund, refinance or exchange of any Senior Notes other than:

     (i) regularly scheduled payments of principal and interest;

     (ii) the repurchase of up to 35% of the aggregate principal amount of the Senior Notes with the net cash proceeds of any public offering of the Borrower’s common stock within ninety (90) days of such public offering, to the extent permitted under the Senior Note Indenture;

     (iii) the repurchase of the Senior Notes with cash on hand of the Borrower and its Subsidiaries, provided that, immediately after giving effect to such repurchase, the outstanding principal amount of Loans shall be zero and the Borrower shall have on hand at least $10,000,000 in cash and Cash Equivalents; and

     (iv) the refinancing or replacement of the Senior Notes, provided that (A) such refinancing shall be in a principal amount of not more than $200 million and (B) the terms of such refinancing shall not be materially less favorable to the Borrower and its Subsidiaries than the terms of the Senior Note Documents in effect on the date of such refinancing (it being understood that the terms of such refinancing shall not (x) increase the interest rate or fees

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(excluding any arrangement, underwriting, trustee or similar fees) applicable to the Senior Notes, (y) have a maturity of not earlier than six (6) months following the Maturity Date, require any amortization of principal of the Senior Notes or otherwise require any payment of principal on the Senior Notes sooner than six (6) months following the Maturity Date or (z) contain any covenant or default that is more restrictive in a manner materially adverse to the Borrower and its Subsidiaries than the covenants and defaults contained in the Senior Note Documents on the date of such refinancing).

     8.13 Organization Documents; Fiscal Year; Legal Name, State of Formation and Form of Entity; Chief Executive Office.

     (a) Amend, modify or change its Organization Documents in a manner materially adverse to the Lenders.

     (b) Change its fiscal year without thirty (30) days prior written notice to the Administrative Agent.

     (c) Unless otherwise approved by the Administrative Agent in writing, without providing thirty (30) days prior written notice to the Administrative Agent, change the name, state of formation or form of organization of any Loan Party.

     8.14 Ownership of Subsidiaries.

     Notwithstanding any other provisions of this Agreement to the contrary, (i) create, incur, assume or suffer to exist any Lien on any Capital Stock of any Subsidiary, except for Permitted Liens or (ii) permit any Subsidiary to issue any shares of preferred Capital Stock to any Person other than the Borrower or any Subsidiary.

     8.15 Sale and Leaseback Transactions.

     Enter into or permit to exist any Sale and Leaseback Transaction, other than (i) those Sale and Leaseback Transactions existing on the Closing Date and described on Schedule 8.15 and (ii) to the extent the Attributable Indebtedness is permitted under Section 8.03(c).

ARTICLE IX

EVENTS OF DEFAULT AND REMEDIES

     9.01 Events of Default.

     Any of the following shall constitute an Event of Default:

     (a) Non-Payment. Any Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan or any L/C Obligation, or (ii) within three days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any commitment fee or other fee due hereunder, or (iii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

     (b) Specific Covenants.

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     (i) Any Loan Party fails to perform or observe any term, covenant or agreement contained in any of Section 7.01, 7.02 or 7.05(a) and such failure continues for five days; or

     (ii) Any Loan Party fails to perform or observe any term, covenant or agreement contained in any of Section 7.03, 7.10, 7.11, 7.12(b), or Article VIII; or

     (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty days after the earlier of any Responsible Officer of a Loan Party obtaining knowledge thereof or the Administrative Agent providing notice thereof to the Borrower; or

     (d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or

     (e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event (other than an Involuntary Disposition which is covered by independent third-party insurance as to which the insurer does not dispute coverage and which does not constitute a default) occurs, the effect of which default or other event is (x) to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise) or such Guarantee to become payable or cash collateral in respect thereof to be demanded, or (y) to require, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to require, an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract), (B) any Termination Event (as defined in such Swap Contract but excluding any Termination Event arising from an Illegality (as defined in such Swap Contract) or Tax Event (as defined in such Swap Contract)) as to which the Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount or (C) any Termination Event (as defined in such Swap Contract) arising from an Illegality (as defined in such Swap Contract) or Tax Event (as defined in such Swap Contract)) as to which the Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof is greater than $10 million; or

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     (f) Insolvency Proceedings, Etc. Any Loan Party institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its Property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its Property is instituted without the consent of such Person and continues undismissed or unstayed for sixty calendar days, or an order for relief is entered in any such proceeding; or

     (g) Inability to Pay Debts; Attachment. (i) Any Loan Party becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the Property of any such Person and is not released, vacated or fully bonded within thirty days after its issue or levy; or

     (h) Judgments. There is entered against any Loan Party one or more final judgments or orders for the payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) and the same shall not be stayed, bonded or discharged within sixty (60) days; or

     (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

     (j) Invalidity of Loan Documents. Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party contests in any manner the validity or enforceability of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or

     (k) Change of Control. There occurs any Change of Control.

     9.02 Remedies Upon Event of Default.

     If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

     (a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;

     (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan

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Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower;

     (c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and

     (d) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable law;

provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.

Notwithstanding the foregoing, as between the Administrative Agent and the Lenders, the Administrative Agent agrees that it will not foreclose on, or otherwise exercise remedies with respect to, any Mortgage Instrument unless the Administrative Agent has received environmental reports for the real property subject to such Mortgage Instrument disclosing no environmental liabilities with respect to such real property or, if any such environmental liabilities are disclosed, such liabilities shall be reasonably satisfactory to all of the Lenders. The foregoing sentence is an agreement solely between the Administrative Agent and the Lenders and is not intended to, and does not, convey any rights or benefits to any Loan Party.

     9.03 Application of Funds.

     After the exercise of remedies provided for in Section 9.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 9.02), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order:

First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including Attorney Costs and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;

Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including Attorney Costs and amounts payable under Article III), ratably among them in proportion to the amounts described in this clause Second payable to them;

Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and L/C Borrowings, fees, premiums and scheduled periodic payments, and any interest accrued thereon, due under any Swap Contract between any Loan Party and any Lender, or any Affiliate of a Lender, to the extent such Swap Contract is permitted by Section 8.03(d), ratably among the Lenders (and, in the case of such Swap Contracts, Affiliates of Lenders) in proportion to the respective amounts described in this clause Third held by them;

Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings and breakage, termination or other payments, and any interest accrued

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thereon, due under any Swap Contract between any Loan Party and any Lender, or any Affiliate of a Lender, to the extent such Swap Contract is permitted by Section 8.03(d), and to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit, ratably among the Lenders (and, in the case of such Swap Contracts, Affiliates of Lenders) in proportion to the respective amounts described in this clause Fourth held by them; and

Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.

     Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fourth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.

ARTICLE X

ADMINISTRATIVE AGENT

     10.01 Appointment and Authorization of Administrative Agent.

     (a) Each Lender hereby irrevocably appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Loan Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the term “agent” herein and in the other Loan Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

     (b) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (i) provided to the Administrative Agent in this Article X with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and the applications and agreements for letters of credit pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in this Article X included the L/C Issuer (including, where applicable, each Related Party of the L/C Issuer) with respect to such acts or omissions, and (ii) as additionally provided herein with respect to the L/C Issuer.

     10.02 Delegation of Duties.

     The Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel

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and other consultants or experts concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct.

     10.03 Liability of Administrative Agent.

     Neither the Administrative Agent nor any of its Related Parties shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any Lender or participant for any recital, statement, representation or warranty made by any Loan Party or any officer thereof, contained herein or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Loan Party or any other party to any Loan Document to perform its obligations hereunder or thereunder. Neither the Administrative Agent nor any of its Related Parties shall be under any obligation to any Lender or participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party or any Affiliate thereof.

     10.04 Reliance by Administrative Agent.

     (a) The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to any Loan Party), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under any Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders (or such greater number of Lenders as may be expressly required hereby in any instance) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.

     (b) For purposes of determining compliance with the conditions specified in Section 5.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

     10.05 Notice of Default.

     The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such

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Default and stating that such notice is a “notice of default.” The Administrative Agent will notify the Lenders of its receipt of any such notice. The Administrative Agent shall take such action with respect to such Default as may be directed by the Required Lenders in accordance with Article IX; provided, however, that unless and until the Administrative Agent has received any such direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable or in the best interest of the Lenders.

     10.06 Credit Decision; Disclosure of Information by Administrative Agent.

     Each Lender acknowledges that neither the Administrative Agent nor any of its Related Parties has made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Loan Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by the Administrative Agent or any of its Related Parties to any Lender as to any matter, including whether the Administrative Agent or any of its Related Parties has disclosed material information in their possession. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any of its Related Parties and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their respective Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrower and the other Loan Parties hereunder. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any of its Related Parties and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower and the other Loan Parties. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their respective Affiliates which may come into the possession of the Administrative Agent or any of its Related Parties.

     10.07 Indemnification of Administrative Agent.

     To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under Section 11.04 and Section 11.05 to be paid by it to the Administrative Agent (or any sub-agent thereof), the L/C Issuer or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the case may be, such Lender’s Pro Rata Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the L/C Issuer in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or L/C Issuer in connection with such capacity. The obligations of the Lenders under this Section 10.07 are subject to the provisions of Section 2.12(f).

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     10.08 Administrative Agent in its Individual Capacity.

     Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with each of the Loan Parties and their respective Affiliates as though Bank of America were not the Administrative Agent or the L/C Issuer hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding any Loan Party or its Affiliates (including information that may be subject to confidentiality obligations in favor of such Loan Party or such Affiliate) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them. With respect to its Loans, Bank of America shall have the same rights and powers under this Agreement as any other Lender and may exercise such rights and powers as though it were not the Administrative Agent or the L/C Issuer, and the terms “Lender” and “Lenders” include Bank of America in its individual capacity.

     10.09 Successor Administrative Agent.

     The Administrative Agent may resign as Administrative Agent upon thirty days’ notice to the Lenders; provided that any such resignation by Bank of America shall also constitute its resignation as L/C Issuer and Swing Line Lender. If the Administrative Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders, which successor administrative agent shall be consented to by the Borrower at all times other than during the existence of an Event of Default (which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor administrative agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Borrower, a successor administrative agent from among the Lenders. Upon the acceptance of its appointment as successor administrative agent hereunder, the Person acting as such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent, L/C Issuer and Swing Line Lender and the respective terms “Administrative Agent”, “L/C Issuer” and “Swing Line Lender” shall mean such successor administrative agent, Letter of Credit issuer and swing line lender, and the retiring Administrative Agent’s appointment, powers and duties as Administrative Agent shall be terminated and the retiring L/C Issuer’s and Swing Line Lender’s rights, powers and duties as such shall be terminated, without any other or further act or deed on the part of such retiring L/C Issuer or Swing Line Lender or any other Lender, other than the obligation of the successor L/C Issuer to issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or to make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article X and Sections 11.04 and 11.05 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor administrative agent has accepted appointment as Administrative Agent by the date thirty days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.

     10.10 Administrative Agent May File Proofs of Claim.

     In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other similar judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the

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Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

     (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.03(i) and (j), 2.09 and 11.04) allowed in such judicial proceeding; and

     (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.09 and 11.04.

     Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

     10.11 Collateral and Guaranty Matters.

     The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion,

     (a) to release any Lien on any Collateral granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Aggregate Revolving Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit, (ii) that is transferred or to be transferred as part of or in connection with any Disposition permitted hereunder or under any other Loan Document or any Involuntary Disposition, or (iii) as approved in accordance with Section 11.01;

     (b) to subordinate any Lien on any Property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such Property that is permitted by Section 8.01(i); and

     (c) to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.

Upon request by the Administrative Agent or the Borrower at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of Property, or to release any Guarantor from its obligations under the Guaranty, pursuant to this Section 10.11.

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     10.12 Other Agents; Arrangers and Managers.

     None of the Lenders or other Persons identified on the facing page or signature pages of this Agreement as a “syndication agent,” “documentation agent,” “co-agent,” “book manager,” “lead manager,” “arranger,” “lead arranger” or “co-arranger” shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than, in the case of such Lenders, those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder.

ARTICLE XI

MISCELLANEOUS

     11.01 Amendments, Etc.

     No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by any Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:

     (a) extend or increase the Revolving Commitment of any Lender (or reinstate any Revolving Commitment terminated pursuant to Section 9.02) without the written consent of such Lender (it being understood and agreed that a waiver of any condition precedent set forth in Section 5.02 or of any Default or Event of Default or a mandatory reduction in Revolving Commitments is not considered an extension or increase in Revolving Commitments of any Lender);

     (b) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;

     (c) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate;

     (d) change Section 2.13 or Section 9.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender directly affected thereby;

     (e) change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder without the written consent of each Lender directly affected thereby;

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     (f) except in connection with a Disposition permitted under Section 8.05, release all or substantially all of the Collateral without the written consent of each Lender directly affected thereby; or

     (g) release the Borrower or, except in connection with a merger or consolidation permitted under Section 8.04 or a Disposition permitted under Section 8.05, any material Guarantor, from its obligations under the Loan Documents without the written consent of each Lender directly affected thereby;

and, provided further, that (i) except in connection with an increase in the Aggregate Revolving Commitments pursuant to Section 2.01(b), no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Letter of Credit Application relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Revolving Commitment of such Lender may not be increased or extended without the consent of such Lender.

Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, (x) each Lender is entitled to vote as such Lender sees fit on any bankruptcy reorganization plan that affects the Loans, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent provisions set forth herein and (y) the Required Lenders shall determine whether or not to allow a Loan Party to use cash collateral in the context of a bankruptcy or insolvency proceeding and such determination shall be binding on all of the Lenders.

     11.02 Notices and Other Communications; Facsimile Copies.

     (a) General. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered to the applicable address, facsimile number or (subject to subsection (c) below) electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

     (i) if to the Borrower, the Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 11.02 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and

     (ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Borrower, the Administrative Agent, the L/C Issuer and the Swing Line Lender.

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     All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered; provided, however, that notices and other communications to the Administrative Agent, the L/C Issuer and the Swing Line Lender pursuant to Article II shall not be effective until actually received by such Person. In no event shall a voicemail message be effective as a notice, communication or confirmation hereunder.

     (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as manually signed originals and shall be binding on all Loan Parties, the Administrative Agent and the Lenders. The Administrative Agent may also require that any such documents and signatures be confirmed by a manually signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature.

     (c) Limited Use of Electronic Mail. Electronic mail and internet and intranet websites may be used only to distribute routine communications, such as financial statements and other information as provided in Section 7.02, and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose.

     (d) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Loan Notices and Swing Line Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. All telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

     11.03 No Waiver; Cumulative Remedies.

     No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

     11.04 Attorney Costs, Expenses and Taxes.

     The Borrower agrees (a) to pay or reimburse the Administrative Agent for all reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation, negotiation and execution of this Agreement and the other Loan Documents and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs and costs and expenses in connection with the use of Intralinks, Inc. or other similar information transmission systems in connection with this Agreement and (b) to pay or reimburse the Administrative Agent and each Lender for all costs and expenses incurred in

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connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or the other Loan Documents (including all such costs and expenses incurred during any “workout” or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs. The foregoing costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by the Administrative Agent and the cost of independent public accountants and other outside experts reasonably retained by the Administrative Agent or any Lender. All amounts due under this Section 11.04 shall be payable within ten Business Days after demand therefor. The agreements in this Section shall survive the termination of the Aggregate Revolving Commitments and repayment of all other Obligations.

     11.05 Indemnification by the Borrower.

     Whether or not the transactions contemplated hereby are consummated, the Borrower agrees to indemnify and hold harmless the Administrative Agent (and any sub-agent thereof), the L/C Issuer, each Lender and the Related Parties of the foregoing Persons (collectively the “Indemnitees”) from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments and suits, and all reasonable and actual costs, expenses and disbursements (including Attorney Costs), which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with (a) the execution, delivery, enforcement, performance or administration of any Loan Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, (b) any Revolving Commitment, Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (c) any civil penalty or fine assessed by the U.S. Department of the Treasury’s Office of Foreign Assets Control (including all costs and expenses (including Attorney Costs) incurred in the defense thereof) as a result of the funding of any Credit Extension or the acceptance of payments due under the Loan Documents, (d) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned or operated by the Borrower, any Subsidiary or any other Loan Party, or any Environmental Liability related in any way to the Borrower, any Subsidiary or any other Loan Party, or (e) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”); provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. No Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through IntraLinks or other similar information transmission systems in connection with this Agreement, nor shall any Indemnitee have any liability for any indirect or consequential damages relating to this Agreement or any other Loan Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date). It is understood that if any Lender assigns all or any part of its interests under this Agreement for a loss (i.e., an amount below par), the indemnity in this Section 11.05 shall not extend to such loss. All amounts due under this Section 11.05 shall be payable within ten Business Days after demand therefor. The agreements in this Section shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Aggregate Revolving Commitments and the repayment, satisfaction or discharge of all the other Obligations.

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     11.06 Payments Set Aside.

     To the extent that any payment by or on behalf of any Loan Party is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.

     11.07 Successors and Assigns.

     (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.

     (b) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Revolving Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender’s Revolving Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender with respect to a Lender, the aggregate amount of the Revolving Commitment (which for this purpose includes Loans outstanding thereunder) subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $2,500,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Revolving Commitment assigned, except that this clause (ii) shall not apply to rights in respect of Swing Line Loans; (iii) any assignment of a Revolving Commitment must be approved by the Administrative Agent, the L/C Issuer and the Swing Line Lender unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500. Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after

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the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, 11.04 and 11.05 with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

     (c) The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Revolving Commitments of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

     (d) Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Revolving Commitment and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 11.01 that directly affects such Participant. Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.09 as though it were a Lender, provided such Participant agrees to be subject to Section 2.13 as though it were a Lender.

     (e) A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 11.15 as though it were a Lender.

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     (f) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

     (g) Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Revolving Commitment and Loans pursuant to subsection (b) above, Bank of America may, (i) upon thirty days’ notice to the Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon thirty days’ notice to the Borrower, resign as Swing Line Lender. In the event of any such resignation as L/C Issuer or Swing Line Lender, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided, however, that no failure by the Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case may be. If Bank of America resigns as L/C Issuer, it shall retain all the rights and obligations of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)). If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c).

     11.08 Confidentiality.

     Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and must agree to keep such Information confidential); (b) to the extent requested by any regulatory authority; (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party to this Agreement; (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any direct or indirect contractual counterparty or prospective counterparty (or such contractual counterparty’s or prospective counterparty’s professional advisor) to any credit derivative transaction relating to obligations of the Loan Parties; (g) with the consent of the Borrower; (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower; or (i) to the National Association of Insurance Commissioners or any other similar organization or any nationally recognized rating agency that requires access to information about a Lender’s or its Affiliates’ investment portfolio in connection with ratings issued with respect to such Lender or its Affiliates. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry, and service providers to the Administrative Agent and the Lenders in connection with the administration and management of this Agreement, the other Loan Documents, the Revolving Commitments, and the Credit Extensions. For the purposes of this Section, “Information” means all information received from any Loan Party relating to any Loan Party or its business, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by any Loan Party;

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provided that, in the case of information received from a Loan Party after the date hereof, such information is clearly identified in writing at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

     11.09 Set-off.

     In addition to any rights and remedies of the Lenders provided by law, upon the occurrence and during the continuance of any Event of Default, with the prior consent of the Administrative Agent, each Lender and any Affiliate of a Lender is authorized at any time and from time to time, without prior notice to the Borrower or any other Loan Party, any such notice being waived by the Borrower (on its own behalf and on behalf of each Loan Party) to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender to or for the credit or the account of the respective Loan Parties against any and all Obligations owing to such Lender hereunder or under any other Loan Document, now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or indebtedness. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.

     11.10 Interest Rate Limitation.

     Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

     11.11 Counterparts.

     This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

     11.12 Integration.

     This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof.

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     11.13 Survival of Representations and Warranties.

     All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

     11.14 Severability.

     If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

     11.15 Tax Forms.

     (a) (i) Each Lender that is not a “United States person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code (a “Foreign Lender”) shall deliver to the Administrative Agent, prior to receipt of any payment subject to withholding under the Internal Revenue Code (or upon accepting an assignment of an interest herein), two duly signed completed copies of either IRS Form W-8BEN or any successor thereto (relating to such Foreign Lender and entitling it to an exemption from, or reduction of, withholding tax on all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto (relating to all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement) or such other evidence satisfactory to the Borrower and the Administrative Agent that such Foreign Lender is entitled to an exemption from, or reduction of, U.S. withholding tax, including any exemption pursuant to Section 881(c) of the Internal Revenue Code. Thereafter and from time to time, each such Foreign Lender shall (A) promptly submit to the Administrative Agent such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is satisfactory to the Borrower and the Administrative Agent of any available exemption from or reduction of, United States withholding taxes in respect of all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement, (B) promptly notify the Administrative Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction, and (C) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable Laws that the Borrower make any deduction or withholding for taxes from amounts payable to such Foreign Lender.

     (ii) Each Foreign Lender, to the extent it does not act or ceases to act for its own account with respect to any portion of any sums paid or payable to such Lender under any of the

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Loan Documents (for example, in the case of a typical participation by such Lender), shall deliver to the Administrative Agent on the date when such Foreign Lender ceases to act for its own account with respect to any portion of any such sums paid or payable, and at such other times as may be necessary in the determination of the Administrative Agent (in the reasonable exercise of its discretion), (A) two duly signed completed copies of the forms or statements required to be provided by such Lender as set forth above, to establish the portion of any such sums paid or payable with respect to which such Lender acts for its own account that is not subject to U.S. withholding tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or any successor thereto), together with any information such Lender chooses to transmit with such form, and any other certificate or statement of exemption required under the Internal Revenue Code, to establish that such Lender is not acting for its own account with respect to a portion of any such sums payable to such Lender.

     (iii) The Borrower shall not be required to pay any additional amount to any Foreign Lender under Section 3.01 (A) with respect to any Taxes required to be deducted or withheld on the basis of the information, certificates or statements of exemption such Lender transmits with an IRS Form W-8IMY pursuant to this Section 11.15(a) or (B) if such Lender shall have failed to satisfy the foregoing provisions of this Section 11.15(a); provided that if such Lender shall have satisfied the requirement of this Section 11.15(a) on the date such Lender became a Lender or ceased to act for its own account with respect to any payment under any of the Loan Documents, nothing in this Section 11.15(a) shall relieve the Borrower of its obligation to pay any amounts pursuant to Section 3.01 in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender or other Person for the account of which such Lender receives any sums payable under any of the Loan Documents is not subject to withholding or is subject to withholding at a reduced rate.

     (iv) The Administrative Agent may, without reduction, withhold any Taxes required to be deducted and withheld from any payment under any of the Loan Documents with respect to which the Borrower is not required to pay additional amounts under this Section 11.15(a).

     (b) Upon the request of the Administrative Agent, each Lender that is a “United States person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code shall deliver to the Administrative Agent two duly signed completed copies of IRS Form W-9. If such Lender fails to deliver such forms, then the Administrative Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable back-up withholding tax imposed by the Internal Revenue Code, without reduction.

     (c) If any Governmental Authority asserts that the Administrative Agent did not properly withhold or backup withhold, as the case may be, any tax or other amount from payments made to or for the account of any Lender, such Lender shall indemnify the Administrative Agent therefor, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent under this Section, and costs and expenses (including Attorney Costs) of the Administrative Agent. The obligation of the Lenders under this Section shall survive the termination of the Aggregate Revolving Commitments, repayment of all other Obligations hereunder and the resignation of the Administrative Agent.

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     11.16 Replacement of Lenders.

     Under any circumstances set forth herein providing that the Borrower shall have the right to replace a Lender as a party to this Agreement and in the case of a refusal by a Lender to consent to a proposed change, waiver, discharge or termination with respect to this Agreement or any other Loan Document that has been approved by the Required Lenders (or, in the event there are only two Lenders party to this Agreement, approved by the Lender that is also the Administrative Agent), the Borrower may, upon notice to such Lender and the Administrative Agent, replace such Lender by causing such Lender to assign its Revolving Commitment and outstanding Loans (with the assignment fee to be paid by the Borrower in such instance) pursuant to Section 11.07(b) to one or more other Lenders or Eligible Assignees procured by the Borrower The Borrower shall (x) pay in full all principal, accrued interest, accrued fees and other amounts owing to such Lender through the date of replacement (including any amounts payable pursuant to Section 3.05), (y) provide appropriate assurances and indemnities (which may include letters of credit) to the L/C Issuer and the Swing Line Lender as each may reasonably require with respect to any continuing obligation to fund participation interests in any L/C Obligations or any Swing Line Loans then outstanding, and (z) release such Lender from its obligations under the Loan Documents. Any Lender being replaced shall execute and deliver an Assignment and Assumption with respect to such Lender’s Revolving Commitment and outstanding Loans and participations in L/C Obligations and Swing Line Loans; provided that, the failure by such replaced Lender to execute and deliver an Assignment and Assumption shall not impair the validity of the removal of such replaced Lender and the mandatory assignment of a replaced Lender’s Revolving Commitment and outstanding Loans and participations in L/C Obligations and Swing Line Loans pursuant to this Section 11.16 shall nevertheless be effective without the execution by such replaced Lender of an Assignment and Assumption.

     11.17 Release of Collateral and Guarantees.

     The Administrative Agent hereby agrees with the Borrower that the Administrative Agent shall, upon the request of the Borrower:

     (a) release any Lien on any Collateral granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Aggregate Revolving Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit, (ii) that is transferred or to be transferred as part of or in connection with any Disposition permitted hereunder or under any other Loan Document or any Involuntary Disposition, or (iii) as approved in accordance with Section 11.01;

     (b) subordinate any Lien on any Property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such Property that is permitted by Section 8.03(c); and

     (c) release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.

     11.18 Governing Law.

     (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

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     (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK, NEW YORK, OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

     11.19 Waiver of Right to Trial by Jury.

     EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

[SIGNATURE PAGES FOLLOW]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

BORROWER:	ORBITAL SCIENCES CORPORATION,
	a Delaware corporation
	By:	/s/ Michael R. Williams
	Name:	Michael R. Williams
	Title:	Senior Vice President and Treasurer
ADMINISTRATIVE AGENT:	BANK OF AMERICA, N.A., as Administrative Agent
	By:	/s/ Anne M. Zeschke
	Name:	Anne M. Zeschke
	Title:	Assistant Vice President
LENDERS:	BANK OF AMERICA, N.A., as a Lender, L/C Issuer and Swing Line Lender
	By:	/s/ Michael J. Landini
	Name:	Michael J. Landini
	Title:	Senior Vice President
	WACHOVIA BANK, NATIONAL ASSOCIATION
	By:	/s/ Robert G. McGill, Jr.
	Name:	Robert G. McGill, Jr.
	Title:	Director
	FIRST HORIZON BANK, A DIVISION OF FIRST TENNESSEE BANK NA
	By:	/s/ Gill H. Waller
	Name:	Gill H. Waller
	Title:	Senior Vice President

EX-10.1

exv10w1

EX-10.2

Exhibit 10.2

AMENDED AND RESTATED SECURITY AGREEMENT

     THIS AMENDED AND RESTATED SECURITY AGREEMENT (this “Security Agreement”) dated as of December 29, 2004 is by and among the parties identified as “Grantors” on the signature pages hereto and such other parties as may become Grantors hereunder after the date hereof (individually a “Grantor”, and collectively the “Grantors”) and BANK OF AMERICA, N.A., as administrative agent (in such capacity, the “Administrative Agent”) for the holders of the Secured Obligations referenced below.

W I T N E S S E T H

     WHEREAS, a $50 million credit facility has been established in favor of Orbital Sciences Corporation, a Delaware corporation (the “Borrower”), pursuant to the terms of that Amended and Restated Credit Agreement (as amended, modified, supplemented and extended from time to time, the “Credit Agreement”) dated as of the date hereof among the Borrower, the Guarantors identified therein, the Lenders identified therein and Bank of America, N.A., as Administrative Agent;

     WHEREAS, this Security Agreement is required under the terms of the Credit Agreement; and

     WHEREAS, this Security Agreement is given in amendment to, restatement of and substitution for the Security Agreement dated as of July 10, 2003 by and among the Grantors and the Administrative Agent.

     NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     1. Definitions.

     (a) Capitalized terms used and not otherwise defined herein shall have the meanings provided in the Credit Agreement.

     (b) The following terms shall have the meanings assigned thereto in the Uniform Commercial Code in effect in the State of New York on the date hereof: Accession, Account, As-Extracted Collateral, Consumer Goods, Farm Products, General Intangible, Manufactured Home, Proceeds, Software, timber to be cut and Supporting Obligation.

     (c) As used herein, the following terms shall have the meanings set forth below:

     “Collateral” has the meaning provided in Section 2 hereof.

     “Copyright License” means any written agreement of any Grantor, naming such Grantor as licensor, granting any right under any Copyright including, without limitation, any thereof referred to in Schedule 6.17 to the Credit Agreement.

     “Copyrights” means (a) all registered United States copyrights in all Works, now existing or hereafter created or acquired, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, registrations, recordings and applications in the United States Copyright Office including, without limitation, any thereof referred to in Schedule 6.17 to the Credit Agreement, and (b) all renewals thereof including, without limitation, any thereof referred to in Schedule 6.17 to the Credit Agreement.

     “Patent License” means any agreement, whether written or oral, of any Grantor providing for the grant by or to such Grantor of any right to manufacture, use or sell any invention covered by a

Patent, including, without limitation, any thereof referred to in Schedule 6.17 to the Credit Agreement.

     “Patents” means (a) all letters patent of the United States or any other country and all reissues and extensions thereof, including, without limitation, any letters patent referred to in Schedule 6.17 to the Credit Agreement, and (b) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, including, without limitation, any thereof referred to in Schedule 6.17 to the Credit Agreement.

     “Secured Obligations” means, without duplication, (a) all of the Obligations and (b) all costs and expenses incurred in connection with enforcement and collection of the Obligations, including reasonable attorneys’ fees and the allocated cost of internal counsel.

     “Trademark License” means any agreement, written or oral, of any Grantor providing for the grant by or to such Grantor of any right to use any Trademark, including, without limitation, any thereof referred to in Schedule 6.17 to the Credit Agreement.

     “Trademarks” means (a) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and the goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof, or otherwise, including, without limitation, any thereof referred to in Schedule 6.17 to the Credit Agreement, and (b) all renewals thereof.

     “UCC” means the Uniform Commercial Code.

     “Work” means any work that is subject to copyright protection pursuant to Title 17 of the United States Code.

     2. Grant of Security Interest in the Collateral. To secure the prompt payment and performance in full when due, whether by lapse of time, acceleration, mandatory prepayment or otherwise, of the Secured Obligations, each Grantor hereby grants to the Administrative Agent, for the benefit of the holders of the Secured Obligations, a continuing security interest in, and a right to set off against, any and all right, title and interest of such Grantor in and to all of the following, whether now owned or existing or owned, acquired, or arising hereafter (collectively, the “Collateral”):

     (a) all Accounts;

     (b) all Copyrights;

     (c) all Copyright Licenses;

     (d) all General Intangibles;

     (e) all Patents;

     (f) all Patent Licenses;

     (g) all Software;

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     (h) all Supporting Obligations;

     (i) all Trademarks;

     (j) all Trademark Licenses; and

     (k) to the extent not otherwise included, all Accessions and all Proceeds of any and all of the foregoing.

     Notwithstanding anything to the contrary contained herein, the security interests granted under this Security Agreement shall not extend to the following (the “Excluded Property”): (a) any lease, license or other contract if the grant of a security interest in such lease, license or contract in the manner contemplated by this Security Agreement is prohibited by the terms of such lease, license or contract or by law and would result in the termination of, or any claim for damages or the availability of any other remedial action under, such lease, license or contract, but only to the extent that such prohibition is not rendered ineffective pursuant to the UCC or any other applicable law (including Debtor Relief Laws) or principles of equity and (b) any of the Subject Property until the release or termination of the Lien in favor of Optus in such Subject Property.

     Each Grantor and the Administrative Agent, on behalf of the holders of the Secured Obligations, hereby acknowledges and agrees that the security interest created hereby in the Collateral (i) constitutes continuing collateral security for all of the Secured Obligations, whether now existing or hereafter arising and (ii) is not to be construed as an assignment of any Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks or Trademark Licenses.

     3. Provisions Relating to Accounts.

     (a) Anything herein to the contrary notwithstanding, each of the Grantors shall remain liable under each of its Accounts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account. Neither the Administrative Agent nor any holder of the Secured Obligations shall have any obligation or liability under any Account (or any agreement giving rise thereto) by reason of or arising out of this Security Agreement or the receipt by the Administrative Agent or any holder of the Secured Obligations of any payment relating to such Account pursuant hereto, nor shall the Administrative Agent or any holder of the Secured Obligations be obligated in any manner to perform any of the obligations of a Grantor under or pursuant to any Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts that may have been assigned to it or to which it may be entitled at any time or times.

     (b) At any time after the occurrence and during the continuation of an Event of Default, following notification to the Grantors, the Administrative Agent in its own name or in the name of others may communicate with account debtors on the Accounts to verify with them to the Administrative Agent’s satisfaction the existence, amount and terms of any Accounts.

     4. Representations and Warranties. Each Grantor hereby represents and warrants to the Administrative Agent, for the benefit of the holders of the Secured Obligations that:

     (a) Ownership. Each Grantor is the legal and beneficial owner of its Collateral and has the right to pledge, sell, assign or transfer the same.

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     (b) Security Interest/Priority. This Security Agreement creates a valid security interest in favor of the Administrative Agent, for the benefit of the holders of the Secured Obligations, in the Collateral of such Grantor and, when properly perfected by filing, shall constitute a valid perfected security interest in such Collateral, to the extent such security interest can be perfected by filing under the UCC, free and clear of all Liens except for Permitted Liens.

     (c) Types of Collateral. None of the Collateral consists of, or is the Accessions or the Proceeds of, As-Extracted Collateral, Consumer Goods, Farm Products, Manufactured Homes, or timber to be cut.

     (d) Accounts. (i) Each Account of such Grantor and the papers and documents relating thereto are genuine and in all material respects what they purport to be, and (ii) each Account of such Grantor arises out of (A) a bona fide sale of goods sold or to be sold and delivered by such Grantor (or is in the process of being delivered) or (B) services theretofore rendered or to be rendered by such Grantor to, the account debtor named therein.

     (e) Copyrights, Patents and Trademarks.

     (i) Schedule 6.17 to the Credit Agreement includes all Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses registered or pending registration with the United States Copyright Office or United States Patent and Trademark Office and owned by any Grantor in its own name, or to which such Grantor has a right to use, as of the date hereof.

     (ii) Except as set forth in Schedule 6.17 to the Credit Agreement, as of the date hereof, none of the material Copyrights, Patents and Trademarks of such Grantor is the subject of any licensing agreement or similar agreement.

     5. Covenants. Each Grantor covenants that, so long as any of the Secured Obligations remains outstanding and until all of the commitments relating thereto have been terminated, such Grantor shall:

     (a) Other Liens. Defend the Collateral against the claims and demands of all other parties claiming an interest therein other than Permitted Liens.

     (b) Perfection of Security Interest. Execute and deliver to the Administrative Agent such agreements, assignments or instruments (including affidavits, notices, reaffirmations and amendments and restatements of existing documents, as the Administrative Agent may reasonably request) and do all such other things as the Administrative Agent may reasonably deem necessary, appropriate or convenient (i) to assure to the Administrative Agent the effectiveness and priority of its security interests hereunder, including (A) such instruments as the Administrative Agent may from time to time reasonably request in order to perfect and maintain the security interests granted hereunder in accordance with the UCC, (B) with regard to Copyrights, a Notice of Grant of Security Interest in Copyrights for filing with the United States Copyright Office in the form of Schedule 5(b)(i) attached hereto, (C) with regard to Patents, a Notice of Grant of Security Interest in Patents for filing with the United States Patent and Trademark Office in the form of Schedule 5(b)(ii) attached hereto and (D) with regard to Trademarks, a Notice of Grant of Security Interest in Trademarks for filing with the United States Patent and Trademark Office in the form of Schedule 5(b)(iii) attached hereto, (ii) to consummate the transactions contemplated hereby and (iii) to otherwise protect and assure the Administrative Agent of its rights and interests hereunder. To that end, each Grantor authorizes the Administrative Agent to file one or more financing statements disclosing the Administrative Agent’s security interest in any or all of the Collateral of such Grantor without such Grantor’s signature thereon, and further each Grantor also hereby irrevocably makes,

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constitutes and appoints the Administrative Agent, its nominee or any other Person whom the Administrative Agent may designate, as such Grantor’s attorney-in-fact with full power and for the limited purpose to sign in the name of such Grantor any such amendments and supplements, notices or any similar documents that in the Administrative Agent’s reasonable discretion would be necessary, appropriate or convenient in order to perfect and maintain perfection of the security interests granted hereunder, such power, being coupled with an interest, being and remaining irrevocable so long as the Secured Obligations remain unpaid and until the commitments relating thereto shall have been terminated. Each Grantor hereby agrees that a carbon, photographic or other reproduction of this Security Agreement or any such financing statement is sufficient for filing as a financing statement by the Administrative Agent without notice thereof to such Grantor wherever the Administrative Agent may in its sole discretion desire to file the same. In the event for any reason the law of any jurisdiction other than New York becomes or is applicable to the Collateral of any Grantor or any part thereof, or to any of the Secured Obligations, such Grantor agrees to execute and deliver all such instruments and to do all such other things as the Administrative Agent in its sole discretion reasonably deems necessary, appropriate or convenient to preserve, protect and enforce the security interests of the Administrative Agent under the law of such other jurisdiction (and, if a Grantor shall fail to do so promptly upon the request of the Administrative Agent, then the Administrative Agent may execute any and all such requested documents on behalf of such Grantor pursuant to the power of attorney granted hereinabove).

     (c) Federal Assignment of Claims Act.

     At any time and from time to time, upon the written request of the Administrative Agent or the Required Lenders and at the sole expense of the Grantors, each Grantor will promptly take all actions required under the Federal Assignment of Claims Act or any similar state statute, as the Administrative Agent or the Required Lenders may reasonably request.

     6. Advances by Holders of the Secured Obligations. On failure of any Grantor to perform any of the covenants and agreements contained herein, the Administrative Agent may, at its sole option and in its sole discretion, perform the same and in so doing may expend such sums as the Administrative Agent may reasonably deem advisable in the performance thereof, including, without limitation, the payment of any insurance premiums, the payment of any taxes, a payment to obtain a release of a Lien or potential Lien, expenditures made in defending against any adverse claim and all other expenditures that the Administrative Agent may make for the protection of the security hereof or that may be compelled to make by operation of law. All such sums and amounts so expended shall be repayable by the Grantors on a joint and several basis (subject to Section 23 hereof) promptly upon timely notice thereof and demand therefor, shall constitute additional Secured Obligations and shall bear interest from the date said amounts are expended at the Default Rate specified in Section 2.08 of the Credit Agreement for Base Rate Loans. No such performance of any covenant or agreement by the Administrative Agent on behalf of any Grantor, and no such advance or expenditure therefor, shall relieve the Grantors of any default under the terms of this Security Agreement, the other Loan Documents or any other documents relating to the Secured Obligations. The Administrative Agent may make any payment hereby authorized in accordance with any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax lien, title or claim except to the extent such payment is being contested in good faith by a Grantor in appropriate proceedings and against which adequate reserves are being maintained in accordance with GAAP.

     7. Remedies.

     (a) General Remedies. Upon the occurrence of an Event of Default and during the continuation thereof, the Administrative Agent and the holders of the Secured Obligations shall have, in addition to the rights and remedies provided herein, in the Loan Documents, in any other documents relating to the Secured

5

Obligations, or by law (including, without limitation, levy of attachment and garnishment), the rights and remedies of a secured party under the UCC of the jurisdiction applicable to the affected Collateral. In addition to all other sums due the Administrative Agent and the holders of the Secured Obligations with respect to the Secured Obligations, the Grantors shall pay the Administrative Agent and each of the holders of the Secured Obligations all reasonable documented costs and expenses incurred by the Administrative Agent or any such holder of the Secured Obligations, including, but not limited to, reasonable attorneys’ fees, the allocated cost of internal counsel and court costs, in obtaining or liquidating the Collateral, in enforcing payment of the Secured Obligations, or in the prosecution or defense of any action or proceeding by or against the Administrative Agent or the holders of the Secured Obligations or the Grantors concerning any matter arising out of or connected with this Security Agreement, any Collateral or the Secured Obligations, including, without limitation, any of the foregoing arising in, arising under or related to a case under the Bankruptcy Code of the United States. The Administrative Agent and the holders of the Secured Obligations shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given. To the extent permitted by law, any holder of the Secured Obligations may be a purchaser at any such sale. To the extent permitted by applicable law, each of the Grantors hereby waives all of its rights of redemption with respect to any such sale. Subject to the provisions of applicable law, the Administrative Agent and the holders of the Secured Obligations may postpone or cause the postponement of the sale of all or any portion of the Collateral by announcement at the time and place of such sale, and such sale may, without further notice, to the extent permitted by law, be made at the time and place to which the sale was postponed, or the Administrative Agent and the holders of the Secured Obligations may further postpone such sale by announcement made at such time and place.

     (b) Remedies relating to Accounts. Upon the occurrence of an Event of Default and during the continuation thereof, whether or not the Administrative Agent has exercised any or all of its rights and remedies hereunder, (i) each Grantor will promptly upon request of the Administrative Agent instruct all account debtors to remit all payments in respect of Accounts to a mailing location selected by the Administrative Agent and (ii) the Administrative Agent shall have the right to enforce any Grantor’s rights against its customers and account debtors, and the Administrative Agent or its designee may notify any Grantor’s customers and account debtors that the Accounts of such Grantor have been assigned to the Administrative Agent or of the Administrative Agent’s security interest therein, and may (either in its own name or in the name of a Grantor or both) demand, collect (including without limitation by way of a lockbox arrangement), receive, take receipt for, sell, sue for, compound, settle, compromise and give acquittance for any and all amounts due or to become due on any Account, and, in the Administrative Agent’s discretion, file any claim or take any other action or proceeding to protect and realize upon the security interest of the holders of the Secured Obligations in the Accounts. Each Grantor acknowledges and agrees that the Proceeds of its Accounts remitted to or on behalf of the Administrative Agent in accordance with the provisions hereof shall be solely for the Administrative Agent’s own convenience and that such Grantor shall not have any right, title or interest in such Accounts or in any such other amounts except as expressly provided herein. The Administrative Agent and the holders of the Secured Obligations shall have no liability or responsibility to any Grantor for acceptance of a check, draft or other order for payment of money bearing the legend “payment in full” or words of similar import or any other restrictive legend or endorsement or be responsible for determining the correctness of any remittance. Each Grantor hereby agrees to indemnify the Administrative Agent and the holders of the Secured Obligations from and against all liabilities, damages, losses, actions, claims, judgments, costs, expenses, charges and reasonable attorneys’ fees (including the allocated cost of internal counsel) suffered or incurred by the Administrative Agent or the holders of the Secured Obligations (each, an “Indemnified Party”) because of the maintenance of the foregoing arrangements except as relating to or arising out of the gross negligence or willful misconduct of an Indemnified Party or its officers, employees or agents. In the case of any investigation, litigation or other proceeding, the foregoing indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by a Grantor, its directors, shareholders or creditors or an Indemnified Party or any other Person or any other Indemnified Party is otherwise a party thereto.

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     (c) Access. In addition to the rights and remedies hereunder, upon the occurrence of an Event of Default and during the continuation thereof, the Administrative Agent shall have the right to enter and remain upon the various premises owned by any Grantor without cost or charge to the Administrative Agent, and use the same, together with materials, supplies, books and records of the Grantors for the purpose of collecting and liquidating the Collateral, or for preparing for sale and conducting the sale of the Collateral, whether by foreclosure, auction or otherwise. In addition, the Administrative Agent may remove Collateral, or any part thereof, from such premises and/or any records with respect thereto, in order to effectively collect or liquidate such Collateral.

     (d) Nonexclusive Nature of Remedies. Failure by the Administrative Agent or the holders of the Secured Obligations to exercise any right, remedy or option under this Security Agreement, any other Loan Document, any other documents relating to the Secured Obligations, or as provided by law, or any delay by the Administrative Agent or the holders of the Secured Obligations in exercising the same, shall not operate as a waiver of any such right, remedy or option. No waiver hereunder shall be effective unless it is in writing, signed by the party against whom such waiver is sought to be enforced and then only to the extent specifically stated, which in the case of the Administrative Agent or the holders of the Secured Obligations shall only be granted as provided herein. To the extent permitted by law, neither the Administrative Agent, the holders of the Secured Obligations, nor any party acting as attorney for the Administrative Agent or the holders of the Secured Obligations, shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct hereunder. The rights and remedies of the Administrative Agents and the holders of the Secured Obligations under this Security Agreement shall be cumulative and not exclusive of any other right or remedy that the Administrative Agent or the holders of the Secured Obligations may have.

     (e) Deficiency. In the event that the proceeds of any sale, collection or realization are insufficient to pay all amounts to which the Administrative Agent or the holders of the Secured Obligations are legally entitled, the Grantors shall be jointly and severally liable for the deficiency (subject to Section 23 hereof), together with interest thereon at the Default Rate specified in Section 2.08 of the Credit Agreement for Base Rate Loans, together with the costs of collection and reasonable attorneys’ fees (including the allocated cost of internal counsel). Any surplus remaining after the full payment and satisfaction of the Secured Obligations shall be returned to the Grantors or to whomsoever a court of competent jurisdiction shall determine to be entitled thereto.

     8. Rights of the Administrative Agent.

     (a) Power of Attorney. In addition to other powers of attorney contained herein, each Grantor hereby designates and appoints the Administrative Agent, on behalf of the holders of the Secured Obligations, and each of its designees or agents, as attorney-in-fact of such Grantor, irrevocably and with power of substitution, with authority to take any or all of the following actions upon the occurrence and during the continuation of an Event of Default:

     (i) to demand, collect, settle, compromise and adjust, and give discharges and releases concerning the Collateral, all as the Administrative Agent may reasonably deem appropriate;

     (ii) to commence and prosecute any actions at any court for the purposes of collecting any of the Collateral from any third party and enforcing any other right in respect thereof;

     (iii) to defend, settle or compromise any action brought by any third party and, in connection therewith, give such discharge or release as the Administrative Agent may reasonably deem appropriate;

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     (iv) to receive, open and dispose of mail addressed to a Grantor and endorse checks, notes, drafts, acceptances, money orders, bills of lading, warehouse receipts or other instruments or documents evidencing payment, shipment or storage of the goods giving rise to the Collateral on behalf of and in the name of such Grantor, or securing, or relating to such Collateral;

     (v) to pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Collateral;

     (vi) to direct any parties liable for any payment in connection with any of the Collateral to make payment of any and all monies due and to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct;

     (vii) to receive payment of and receipt for any and all monies, claims, and other amounts due and to become due at any time in respect of or arising out of any Collateral;

     (viii) to adjust and settle claims under any insurance policy relating thereto;

     (ix) to execute and deliver all assignments, conveyances, statements, financing statements, renewal financing statements, security and pledge agreements, affidavits, notices and other agreements, instruments and documents that the Administrative Agent may reasonably deem appropriate in order to perfect and maintain the security interests and liens granted in this Security Agreement and in order to fully consummate all of the transactions contemplated herein;

     (x) to institute any foreclosure proceedings that the Administrative Agent may reasonably deem appropriate; and

     (xi) to do and perform all such other acts and things as the Administrative Agent may reasonably deem appropriate or convenient in connection with the Collateral.

     This power of attorney is a power coupled with an interest and shall be irrevocable for so long as any of the Secured Obligations shall remain outstanding and until all of the commitments relating thereto shall have been terminated. The Administrative Agent shall be under no duty to exercise or withhold the exercise of any of the rights, powers, privileges and options expressly or implicitly granted to the Administrative Agent in this Security Agreement, and shall not be liable for any failure to do so or any delay in doing so. The Administrative Agent shall not be liable for any act or omission or for any error of judgment or any mistake of fact or law in its individual capacity or its capacity as attorney-in-fact except acts or omissions resulting from its gross negligence or willful misconduct. This power of attorney is conferred on the Administrative Agent solely to protect, preserve and realize upon its security interest in the Collateral.

     (b) The Administrative Agent’s Duty of Care. Other than the exercise of reasonable care to assure the safe custody of the Collateral while being held by the Administrative Agent hereunder, the Administrative Agent shall have no duty or liability to preserve rights pertaining thereto, it being understood and agreed that the Grantors shall be responsible for preservation of all rights in the Collateral, and the Administrative Agent shall be relieved of all responsibility for the Collateral upon surrendering it or tendering the surrender of it to the Grantors. The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Administrative Agent accords its own property, which shall be no less than the treatment employed by a reasonable and prudent agent in the industry, it being understood that the Administrative Agent shall not have responsibility for taking any necessary steps to preserve rights against

8

any parties with respect to any of the Collateral. In the event of a public or private sale of Collateral pursuant to Section 7 hereof, the Administrative Agent shall have no obligation to clean, repair or otherwise prepare the Collateral for sale.

     9. Rights of Required Lenders. All rights of the Administrative Agent hereunder, if not exercised by the Administrative Agent, may be exercised by the Required Lenders.

     10. Application of Proceeds. Upon the occurrence and during the continuation of an Event of Default, any payments in respect of the Secured Obligations and any proceeds of the Collateral, when received by the Administrative Agent or any of the holders of the Secured Obligations in cash or its equivalent, will be applied in reduction of the Secured Obligations in the order set forth in Section 9.03 of the Credit Agreement, and each Grantor irrevocably waives the right to direct the application of such payments and proceeds and acknowledges and agrees that the Administrative Agent shall have the continuing and exclusive right to apply and reapply any and all such payments and proceeds in the Administrative Agent’s sole discretion, notwithstanding any entry to the contrary upon any of its books and records.

     11. Continuing Agreement.

     (a) This Security Agreement shall be a continuing agreement in every respect and shall remain in full force and effect so long as any of the Secured Obligations remains outstanding and until all of the commitments relating thereto have been terminated (other than any contingent indemnification obligations under the Loan Documents that are not yet due and payable). Upon such payment and termination, this Security Agreement and the liens and security interests of the Administrative Agent hereunder shall be automatically terminated and the Administrative Agent shall, upon the request and at the expense of the Grantors, authorize, execute and deliver all UCC termination statements and/or other documents reasonably requested by the Grantors evidencing such termination. Notwithstanding the foregoing, all releases and indemnities provided hereunder shall survive termination of this Security Agreement.

     (b) This Security Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Secured Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any holder of the Secured Obligations as a preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar law, all as though such payment had not been made; provided that in the event payment of all or any part of the Secured Obligations is rescinded or must be restored or returned, all reasonable costs and expenses (including, without limitation, attorneys’ fees, the allocated cost of internal counsel and disbursements) incurred by the Administrative Agent or any holder of the Secured Obligations in defending and enforcing such reinstatement shall be deemed to be included as a part of the Secured Obligations.

     12. Amendments and Waivers. This Security Agreement and the provisions hereof may not be amended, waived, modified, changed, discharged or terminated except as set forth in Section 11.01 of the Credit Agreement.

     13. Successors in Interest. This Security Agreement shall create a continuing security interest in the Collateral and shall be binding upon each Grantor, its successors and assigns, and shall inure, together with the rights and remedies of the Administrative Agent and the holders of the Secured Obligations hereunder, to the benefit of the Administrative Agent and the holders of the Secured Obligations and their successors and permitted assigns; provided, however, that none of the Grantors may assign its rights or delegate its duties hereunder without the prior written consent of the requisite Lenders under the Credit Agreement. To the fullest extent permitted by law, each Grantor hereby releases the Administrative Agent and each holder of the Secured Obligations, their respective successors and assigns and their respective officers, attorneys, employees and agents, from any liability for any act or omission or any error of judgment or mistake of fact or of law relating to this Security Agreement or the Collateral, except for any liability

9

arising from the gross negligence or willful misconduct of the Administrative Agent or such holder, or their respective officers, attorneys, employees or agents.

     14. Notices. All notices required or permitted to be given under this Security Agreement shall be given as provided in Section 11.02 of the Credit Agreement.

     15. Counterparts. This Security Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Security Agreement to produce or account for more than one such counterpart.

     16. Headings. The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Security Agreement.

     17. Governing Law; Submission to Jurisdiction; Venue.

     (a) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

     (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK, NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

     18. Waiver of Right to Trial by Jury.

     EACH PARTY TO THIS SECURITY AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS SECURITY AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH

10

ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     19. Severability. If any provision of this Security Agreement is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions.

     20. Entirety. This Security Agreement, the other Loan Documents and the other documents relating to the Secured Obligations represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including any commitment letters or correspondence relating to the Loan Documents, any other documents relating to the Secured Obligations, or the transactions contemplated herein and therein.

     21. Survival. All representations and warranties of the Grantors hereunder shall survive the execution and delivery of this Security Agreement, the other Loan Documents and the other documents relating to the Secured Obligations, the delivery of the Notes and the extension of credit thereunder or in connection therewith.

     22. Other Security. To the extent that any of the Secured Obligations are now or hereafter secured by property other than the Collateral (including, without limitation, real property and securities owned by a Grantor), or by a guarantee, endorsement or property of any other Person, then the Administrative Agent shall have the right to proceed against such other property, guarantee or endorsement upon the occurrence and during the continuation of any Event of Default, and the Administrative Agent shall have the right, in its sole discretion, to determine which rights, security, liens, security interests or remedies the Administrative Agent shall at any time pursue, relinquish, subordinate, modify or take with respect thereto, without in any way modifying or affecting any of them or the Secured Obligations or any of the rights of the Administrative Agent or the holders of the Secured Obligations under this Security Agreement, under any of the other Loan Documents or under any other document relating to the Secured Obligations.

     23. Joint and Several Obligations of Grantors.

     (a) Subject to subsection (c) of this Section 23, each of the Grantors is accepting joint and several liability hereunder in consideration of the financial accommodation to be provided by the holders of the Secured Obligations, for the mutual benefit, directly and indirectly, of each of the Grantors and in consideration of the undertakings of each of the Grantors to accept joint and several liability for the obligations of each of them.

     (b) Subject to subsection (c) of this Section 23, each of the Grantors jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Grantors with respect to the payment and performance of all of the Secured Obligations arising under this Security Agreement, the other Loan Documents and any other documents relating to the Secured Obligations, it being the intention of the parties hereto that all the Secured Obligations shall be the joint and several obligations of each of the Grantors without preferences or distinction among them.

     (c) Notwithstanding any provision to the contrary contained herein, in any other of the Loan Documents or in any other documents relating to the Secured Obligations, the obligations of each Guarantor under the Credit Agreement and the other Loan Documents shall be limited to an aggregate amount equal to the largest amount that would not render such obligations subject to avoidance under Section 548 of the Bankruptcy Code of the United States or any comparable provisions of any applicable state law.

[Signature Pages Follow]

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     Each of the parties hereto has caused a counterpart of this Security Agreement to be duly executed and delivered as of the date first above written.

GRANTORS:	ORBITAL SCIENCES CORPORATION,
	a Delaware corporation
	By: /s/ Michael R. Williams
	Name: Michael R. Williams
	Title: Senior Vice President and Treasurer

Accepted and agreed to as of the date first above written.

BANK OF AMERICA, N.A., as Administrative Agent

By: /s/ Anne M. Zeschke                     
Name: Anne M. Zeschke
Title: Assistant Vice President

SCHEDULE 5(b)(i)

NOTICE

OF

GRANT OF SECURITY INTEREST

IN

COPYRIGHTS

United States Copyright Office

Ladies and Gentlemen:

     Please be advised that pursuant to the Amended and Restated Security Agreement dated as of December 29, 2004 (as the same may be amended, modified, extended or restated from time to time, the “Security Agreement”) by and among the Grantors party thereto (each an “Grantor” and collectively, the “Grantors”) and Bank of America, N.A., as Administrative Agent (the “Administrative Agent”) for the holders of the Secured Obligations referenced therein, the undersigned Grantor has granted a continuing security interest in and continuing lien upon the copyrights and copyright applications shown on Schedule 1 attached hereto to the Administrative Agent for the ratable benefit of the holders of the Secured Obligations.

     The undersigned Grantor and the Administrative Agent, on behalf of the holders of the Secured Obligations, hereby acknowledge and agree that the security interest in the copyrights and copyright applications set forth on Schedule 1 attached hereto (i) may only be terminated in accordance with the terms of the Security Agreement and (ii) is not to be construed as an assignment of any copyright or copyright application.

Very truly yours,

[Grantor]

By:                                                                                               

Name:

Title:

Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Administrative Agent

By:                                                                                 
Name:
Title:

SCHEDULE 5(b)(ii)

NOTICE

OF

GRANT OF SECURITY INTEREST

IN

PATENTS

United States Patent and Trademark Office

Ladies and Gentlemen:

     Please be advised that pursuant to the Amended and Restated Security Agreement dated as of December 29, 2004 (the “Security Agreement”) by and among the Grantors party thereto (each an “Grantor” and collectively, the “Grantors”) and Bank of America, N.A., as Administrative Agent (the “Administrative Agent”) for the holders of the Secured Obligations referenced therein, the undersigned Grantor has granted a continuing security interest in and continuing lien upon the patents and patent applications set forth on Schedule 1 attached hereto to the Administrative Agent for the ratable benefit of the holders of the Secured Obligations.

     The undersigned Grantor and the Administrative Agent, on behalf of the holders of the Secured Obligations, hereby acknowledge and agree that the security interest in the patents and patent applications set forth on Schedule 1 attached hereto (i) may only be terminated in accordance with the terms of the Security Agreement and (ii) is not to be construed as an assignment of any patent or patent application.

Very truly yours,

[Grantor]

By:                                                                                               

Name:

Title:

Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Administrative Agent

By:                                                                                 
Name:
Title:

SCHEDULE 5(b)(iii)

NOTICE

OF

GRANT OF SECURITY INTEREST

IN

TRADEMARKS

United States Patent and Trademark Office

Ladies and Gentlemen:

     Please be advised that pursuant to the Amended and Restated Security Agreement dated as of December 29, 2004 (the “Security Agreement”) by and among the Grantors party thereto (each an “Grantor” and collectively, the “Grantors”) and Bank of America, N.A., as Administrative Agent (the “Administrative Agent”) for the holders of the Secured Obligations referenced therein, the undersigned Grantor has granted a continuing security interest in and continuing lien upon the trademarks and trademark applications set forth on Schedule 1 attached hereto to the Administrative Agent for the ratable benefit of the holders of the Secured Obligations.

     The undersigned Grantor and the Administrative Agent, on behalf of the holders of the Secured Obligations, hereby acknowledge and agree that the security interest in the trademarks and trademark applications set forth on Schedule 1 attached hereto (i) may only be terminated in accordance with the terms of the Security Agreement and (ii) is not to be construed as an assignment of any trademark or trademark application.

Very truly yours,

[Grantor]

By:                                                                                               

Name:

Title:

Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Administrative Agent

By:                                                                                      
Name:
Title:

EX-10.22

Exhibit 10.22

Amendment, dated as of January 13, 2005, to Purchase Contract by and between
Orbital Sciences Corporation and The Boeing Company

ITEM		SUBCONTRACT NO.	PAGE NO.
NO.	SUBCONTRACT SCHEDULE (Rev 21)	101018	1 of 11

TABLE OF CONTENTS

I.	STATEMENT OF WORK
II.	PERIOD OF PERFORMANCE
III.	COMPLETION DATES
IV.	TERMS AND CONDITIONS/FORMS
V.	CONTRACT LINE ITEMS
VI.	TARGET COST, AWARD FEE, AND AWARD FEE PLAN
VII.	FUNDING LIMITATION
VIII.	GOVERNMENT AND BUYER FURNISHED PROPERTY
IX.	PRINCIPAL PLACE OF PERFORMANCE
X.	RESERVED
XI.	INVOICE PAYMENT INSTRUCTIONS
XII.	PRIORITY
XIII.	SECURITY REQUIREMENTS
XIV.	RELATIONSHIP WITH SUBCONTRACTOR
XV.	ALABAMA TAX EXEMPTION
XVI.	ORDER OF PRECEDENCE
XVII.	RESERVED
XVIII.	DATA REQUIREMENTS
XIX.	EXPLOSIVES/ORDNANCE
XX.	EXHIBITS

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I.	STATEMENT OF WORK
	The Orbital Sciences Corporation (hereinafter referred to as “Subcontractor”, “Supplier”, Seller”, or OSC) shall provide to The Boeing Company, (hereinafter referred to as “Boeing,” or “Buyer”) on a Cost Plus Award Fee Basis, all labor, services, materials, and equipment (except for GFE/GFP authorized herein) necessary to perform and complete the efforts as set forth in Exhibit B, Statement of Work or Exhibit I, Statement of Work. Paragraph 3.5.3.4 Trade Studies is not applicable to Exhibit B Statement of Work (SOW) Rev. C. This paragraph will be updated with the next revision of this SOW. Exhibit B SOW applies to all effort under Flight Test, Test Bed, and Capabilities Enhancement I. Exhibit I SOW applies to all effort under Capabilities Enhancement II.
	Exhibit C, Document Matrix, contains the current document revisions for those documents identified in the Applicable Documents Exhibit to the Statement of Work. Due to the frequency of document releases/updates/SCN’s, Exhibit C may be updated via direction in a Contract Letter between formal changes to this subcontract. The Exhibit will be formally updated to incorporate all updates made via contract letter with each Purchase Contract Change.
	Approved Deviations and/or Waivers to the technical requirements of this subcontract are set forth in Exhibit H, Approved Deviations/Waivers. Due to the frequency of deviations/waivers Exhibit H may be updated via direction in a Contract Letter between formal changes to this subcontract. The Exhibit will be formally updated to incorporate all updates made via contract letter with each Purchase Contract Change.
II.	PERIOD OF PERFORMANCE
	The period of performance of this subcontract is 18 December 2001 through 31 March 2007. The specific period for each line item, as required, is shown on the purchase contract faceplate.
III.	COMPLETION DATES
	Seller shall accomplish the requirements specified herein so as to meet the completion dates shown on the purchase contract faceplate.
IV.	TERMS AND CONDITIONS/FORMS
	The Terms and Conditions applicable to this subcontract are attached hereto as Exhibit A, Subcontract 101018 Terms and Conditions.
V.	CONTRACT LINE ITEMS
	The Contract Line Items are shown on the purchase contract faceplate. The items require CLIN identification and some items require additional clarification or descriptions. The additional information is as follows:

No.	CLIN	Description	*
0001	N/A	Taurus Lite (Transferred to PO 101954)	N/A
0002	0101	Flight Test (previously ABV Design) includes the following elements:
		1 Lot - Non-Tactical Boost Vehicles (1 Lot = 8 vehicles), $315,252,803	Def
		1 Lot - 04/06 Replan Definitization (PPOA-9), $54,132,717	Def
		1 Lot - Special Studies (CLIN 0109) Descope, ($9,866,253)	Def
		1 Lot - BAN Implementation, $868,316	Def
		1 Lot - EIS-4, $431,536	Def
		1 Lot - WIC’s (1 Lot = 6 units), $142,411	Def

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		1 Lot - 10Mb Hard-line Telemetry, $175,000	Def
		1 Lot - Transportation Credit, ($1,272,111)	Def
		1 Lot - Battery Credit, ($29,165)	Def
		1 Lot - MAB Support for BV-6 and Electrical Pathfinder, $144,887	Def
		1 Lot - Software Support Credit, ($93,542)	Def
		1 Lot - IFT-13b/IFT-13c Range Safety Requirement, $237,981	Def
		1 Lot - Chocks, $8,518	Def
		1 Lot - Loader Interface Module (LIM) and Cables, $7,848	Def
		1 Lot - Mechanical Pathfinder, $48,460	Def
		1 Lot - DGT Test (includes functional testing for three digital GPS	Def
		Transponders in support of IFT-13b, IFT-13c, and IFT-14. DGT Test to
		be performed at VAFB.), $43,446
		1 Lot - Award Fee Forfeit ($718,980 for Period 2 and $264,126 for	Def
		Period 3), ($983,106)
		1 Lot - Solar Capability (Solar Parts Testing), $50,000 NTE	Undef
		1 Lot - Award Fee Forfeit for Period 4 ($302,993)	Def
		1 Lot - DD254/Security Classification Guide (includes internal	Def
		Security Classification Guide Users Guide and training), $161,458
		1 Lot - Capabilities Enhancement and Replan Requirement (1 Lot = 1	Def
		Non-Tactical Boost Vehicle and Non-Recurring Engineering),
		$24,696,105 (includes 1 vehicle @ $12,420,076, Ground Support
		Equipment @ $5,099,076, Vendor Tooling @ $4,190,487, Vendor NRE @
		$682,377, Acceleration @ $550,789, NTE NRE @ $719,173, Parker TVA ’s
		$1,034,127 and budget transfer to CLIN 0401 for PPOA-9 Labor Credit,
		$3,950,650 and PPOA-9 Material Credit $3,507,426)
		1 Lot - Telemetry Test Set, $48,156	Def
		1 Lot - Development Verification Test (DVT), $120,000 NTE. The	Undef
		supplemental statement of work "SOW – DVT" applies. The following
		tasks are included:
		- EKV Sep Test – Technical Interchanges (x3); GTM Support for
		EDV Setup; EDV Test Setup and Pre-Sep Testing; EDV Sep Test;
		EKV Sep Test Data Review
		- Full Motion Test Support – Software Development; Software
		Configuration Management; Test Support; Data Review
		1 Lot – Begin Redesign & Modification to the Yoke, $600,000 NTE	Undef
		1 Lot – Begin Repair to EIS #2, $20,000 NTE. Includes fixing loose	Undef
		backshells, incorrect or no dust caps, loose jam nuts, missing
		screws, improper securing & routing of cables and minor surface
		corrosion.
		1 Lot – Stage 1 TVC Simulator, $28,000	Def
		1 Lot – Non Tactical Equipment (NTE) Kits (1 Lot=2 Kits) Vehicles	Undef
		are To Be Determined, $5,584,196
		1 Lot – ACS Weldment Boot Assembly Set (2 ea. 1034-1014-003 and 2	Def
		ea. 1034- 1014-004) $6,440
		1 Lot – VLS repair, $32,736	Def
0003	0111	Test Bed, Tactical Boost Vehicles (1 Lot = 5 vehicles), $70,518,028	Def
		1 Lot - Transportation Credit, ($1,062,593)	Def
		1 Lot - Award Fee Forfeit ($86,550 for Period 2	Def
		and $96,392 for Period 3),($182,942)
		1 Lot - Award Fee Forfeit for Period 4 ($126,785)	Def
		1 Lot - Tactical Boost Vehicles (1 Lot = 3 vehicles), $35,782,581	Def
		1 Lot - Integration Support (2 EPs) – See Statement of	Def
		Work Attachment under this item, $26,615

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0004		0101	Capabilities Enhancement – I Proposal Preparation (includes proposal preparation for CE and Replan efforts)	Def
0013		N/A	Capabilities Enhancement – I — transferred and definitized under Line Item 0078	N/A
0018		0107	Item unit value is a firm price.	Def
0078		0401	Capabilities Enhancement – I, Tactical Boost Vehicles (1 Lot = 10 vehicles), $120,330,777 (includes budget transfer from CLIN 0101 for PPOA-9 Labor Credit, $3,950,650 and PPOA-9 Material Credit $3,507,426)	Def
0088		0101	Capabilities Enhancement – II Proposal Preparation ($139,664)	Undef
0089	Risk		Capabilities Enhancement – II Long Lead for six Motor Sets, Ordnance, and Tanks ($5,660,000 – includes $2,280,000 Termination Liability as this item is issued under a Boeing Risk account. Ultimately it is expected this effort will be transferred under CLIN 0409). Material is to support deliveries which are planned to begin on 1/19/06 for BAMs and 2/17/06 for Booster Stacks and continue at a rate of one per month.	Undef
0091		0111	Integration Support – See Statement of Work Attachment under this item. ($210,118)	Def
0096		0401	OSC Support to Ft. Greely – See Statement of Work Attachment under this item. This item includes “Harsh Weather Clothing” (Outer Coat/Parka, REI Triad Parka; Insulated Pants, Mountain Hardware Chugach Pants; Gloves, REI Tapped Overmitts with liners; Balaclava, Turtle Fur MFS Shellaclava; Duffle Bag, Outdoor Products Cordura Duffel). These items shall be retained for utilization as appropriate throughout the duration of this program. Boots (Kamik K2) are also included but are considered consumable items.	Def
0099		0101	VLS Repair – value transferred under Line Item 0002	Def

*(Def) = Definitized Value; (Undef) = Undefinitized Value. Segregate costs and report separately on the monthly CPR-Format 6 submittal for each item identified with “Undef”.

As an inducement to and as additional consideration for the issuance of this contract, Subcontractor hereby grants to Buyer the following option exercisable at the sole election of Buyer by issuing written notice thereof to Subcontractor on or before the option exercise date contained herein, to purchase under the same terms and conditions of this subcontract, as may be amended from time to time, additional effort at a price to be negotiated by not to exceed the price below.

		NTE PRICE
ITEM DESCRIPTION	OPTION EXERCISE DATE	(TO BE NEGOTIATED)
0201 – Option superceded by Capabilities Enhancement requirement			N/A
0203 – Qty 45 boost vehicles	No later than 12/15/2003*	$	396,233,354
0301 – Sustainment of the items produced under CLIN 0203	No later than 10/1/2005*	$	18,885,247

It is mutually agreed and understood that the additional effort procured by buyer under the provisions of this option clause shall be performed in strict compliance with all of the requirements of this contract as such may be amended from time to time and made applicable hereto.

It is contemplated that Buyer may make changes in accordance with the Changes article hereof at any time in the services ordered or to be ordered hereunder. In the event that any changes are made, the prices provided for herein shall, with respect to the effort changed, be subject to equitable adjustment in accordance with the Changes article.

Exercise of any option hereunder will be by change notice hereto or by separate contract.

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It is further mutually agreed and understood that Buyer is under no obligation whatsoever to exercise the above optionand that no representations have been made by committing to the exercise of any option herein, and that Buyer may procure any additional requirements elsewhere.

*   Buyer and Subcontractor agree that Buyer’s option exercise date(s) are contingent upon exercise by Buyer’s customer of options in its contract with the Buyer. Delay in the customer’s exercise of any option will, in turn, delay the exercise of the related option in this order on a day-for-day basis, until such time as the Buyer’s contract option is exercised.

VI.	TARGET COST, AWARD FEE, AND AWARD FEE PLAN
	Subject to Exhibit A, Form GP-4, provision entitled “Allowable Cost and Payment — FAR 52.216-7”, the Subcontractor shall be compensated for performance as follows:

			Est. Cost
	Estimated Cost		of Money		Award Fee		Contract Value
Line Item 0002 (CLIN 0101)
Definitive	$	327,326,073	$	1,321,913	$	47,813,586	$	376,461,572
Undefinitive		--		--		--	$	6,374,196
Sub-Total	$	327,326,073	$	1,321,913	$	47,813,586	$	382,835,768
Line Item 0003 (CLIN 0111)
Definitive	$	91,384,017	$	172,806	$	13,398,081	$	104,954,904
Undefinitive		--		--		--		--
Sub-Total	$	91,384,017	$	172,806	$	13,398,091	$	104,954,904
Line Item 0004 (CLIN 0101)
Definitive Total	$	214,144	$	866	$	32,122	$	247,132
Line Item 0013
Definitive Total	$	0	$	0	$	0	$	0
Line Item 0018 (CLIN 0107)
Definitive Total	$	78,201	$	48	$	11,730	$	89,979
Line Item 0078 (CLIN 0401)
Definitive	$	104,792,851	$	148,998	$	15,718,928	$	120,660,777
Undefinitive		--		--		--	$	0
Sub-Total	$	104,792,851	$	148,998	$	15,718,928	$	120,660,777
Line Item 0088 (CLIN 0101)
Definitive	$	0	$	0	$	0	$	0
Undefinitive		--		--		--	$	139,664
Sub-Total	$	0	$	0	$	0	$	139,664
Line Item 0089 (Boeing Risk)
Definitive	$	0	$	0	$	0	$	0
Undefinitive		--		--		--	$	5,660,000
Sub-Total	$	0	$	0	$	0	$	5,660,000
Line Item 0091 (CLIN 0111)
Definitive	$	182,178	$	613	$	27,327	$	210,118
Undefinitive		--		--		--	$	0
Sub-Total	$	182,178	$	613	$	27,327	$	210,118
Line Item 0096 (CLIN 0401)
Definitive	$	44,046	$	149	$	6,607	$	50,802
Undefinitive		--		--		--	$	0
Sub-Total	$	44,046	$	149	$	6,607	$	50,802
Line Item 0099 (CLIN 0101)
Definitive Total	$	0	$	0	$	0	$	0

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Total Definitive	$	524,021,510	$	1,645,393	$	77,008,381	$	602,675,284
Total Undefinitive		—		—		—	$	12,173,860
Total Contract	$	524,021,510	$	1,645,393	$	77,008,381	$	614,849,144

As established in the Award Fee Plan, Exhibit E, the award amount and the award fee determination methodology are unilateral decisions made solely at the discretion of Boeing.

Per paragraph 8.1, Potential Award Fee, of the Award Fee Plan, the potential award fee available for each performance evaluation period is as follows:

	Flight Test		Test Bed				ISTIC		Proposal
Period	Pool		Pool		CE Pool		Pool		Prep. Pool		Total Pool
1 - 12/18/01-9/30/02	$	8,895,159	$	547,685		– –		– –		– –	$	9,442,844
2 - 10/1/02-3/31/03	$	10,358,532	$	1,280,268		– –		– –		– –	$	11,638,800
3 - 4/1/03-9/30/03	$	7,878,368	$	2,433,632		– –		– –		– –	$	10,312,000
4 - 10/1/0 3/31/04	$	7,202,549	$	3,015,875		– –		– –		– –	$	10,218,424
5 - 4/1/04-9/30/04	$	5,695,651	$	1,521,151	$	7,055,700		– –		– –	$	14,272,502
6 - 10/1/04-3/31/05	$	3,746,358	$	1,763,353	$	5,787,468	$	11,730	$	32,122	$	11,341,031
7 - 4/1/05-9/30/05	$	3,748,867	$	2,593,597	$	2,882,367		– –		– –	$	9,224,831
8 - 10/1/05-3/31/06	$	748,065	$	579,574		– –		– –		– –	$	1,327,639
9 - 4/1/0-9/30/06	$	405,290		– –		– –		– –		– –	$	405,290
10 - 10/l/06-/31/07	$	416,586		– –		– –		– –		– –	$	416,586

VII. FUNDING LIMITATION

A. Of the total estimated price of this subcontract, the following maximum funding amounts are available for payment and allotted to this subcontract. NOTE: Only the items with funding allotted are listed. If the item is not listed, it does not have funding allotted.

Line Item	Funding Limitation		Funded Through:
0002	$	291,271,493	January 2005
0003	$	69,897,055	January 2005
0004	$	247,132	Fully Funded
0013	$	0		N/A
0018	$	89,979	Fully Funded
0078	$	83,424,198	January 2005
0088	$	169,664	January 2005
0089	$	5,660,000	Fully Funded (includes Termination Liability)
0091	$	210,118	Fully Funded
0096	$	50,802	Fully Funded
Total	$	451,020,441

B.	Reserved
C.	Notwithstanding any other provision of this subcontract, all payments to the Subcontractor shall be subject to the funding limitation as set forth in Paragraph A above, and in accordance with Exhibit A, Form GP-4, Clause 11, entitled “Limitation of Funds”.

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D.	Upon issuance by Boeing to the Subcontractor of a subcontract change notice signed by an authorized agent of Boeing, the expenditure limitation specified above as Boeing’s maximum liability shall be deemed to be adjusted in accordance with said Change Notice for the continued performance of the work specified in Exhibit B.
E.	Notwithstanding potential termination liability amounts reported by Seller to Buyer, pursuant to the Limitation of Funds provisions of this Subcontract, Seller shall fully utilize the funding released by Buyer, for performance of the requirements under this subcontract. Seller shall not reserve or withhold from its expenditures, any funding that represents potential termination costs. In the event that this Subcontract is terminated for convenience pursuant to the Termination clauses of this subcontract, Buyer shall remain liable to Seller for termination costs in accordance with the provisions of the Termination clause hereof.
	In addition, in the event that this Subcontract is terminated for convenience during GFY 2003 or GFY 2004, buyer shall remain liable to Seller for all valid incurred costs, which arise under the Limitation of Funds or Limitation of Costs clauses, or “F” below. Notification of Termination for Convenience will have no effect on Buyer’s obligation to pay deferred bills within the time limitations specified in “F” below.
F.	Deferred Billing of Incurred Costs - It is understood that Seller’s funding requirements projected for Government Fiscal Year (GFY) 2003 and GFY 2004 may exceed available funding. At Seller’s election and while reporting all incurred costs and estimated potential termination liability pursuant to “E” above, Seller may continue performance beyond funds released by Buyer, but Seller shall defer billing of any incurred costs and fee beyond the authorized “bill up to” ceiling stated in subparagraphs (a) and (b) for the then current GFY, under condition that: [i] deferred billing of incurred costs beyond funds released by Buyer may be billed in the next fiscal year (GFY 2003 deferred costs billed in GFY 2004; GFY 2004 deferred costs billed in GFY 2005) and shall be paid within 60 days of receipt of Invoice; and, [ii] no increase in cost or fee shall be billed by Seller or paid by Buyer for deferred billing of incurred costs. The following “bill up to” ceilings are imposed:

(a)	For GFY 2003, the maximum “bill up to” ceiling is: $ 142.89M
(b)	For GFY 2004, the maximum “bill up to” ceiling is: N/A

VIII. GOVERNMENT AND BUYER FURNISHED PROPERTY

A.	A list of the current Government Furnished Property (GFP) is located in Exhibit F titled Government Furnished Property (GFP) Listing. Additional Government Furnished Property is subject to definitization by the government.
B.	A list of the current Buyer Furnished Property (BFP) is located in Exhibit G titled Buyer Furnished Property (BFP) Listing. Additional Buyer Furnished Property is subject to definitization as required.

IX.	PRINCIPAL PLACE OF PERFORMANCE
	The principal place of performance of this subcontract shall be at the Subcontractor’s site located in Chandler, Arizona.

X. RESERVED

XI. INVOICE PAYMENT INSTRUCTIONS

A. Subcontractor may invoice bi-monthly with the approximate billing dates to be the 7th and the 21st of each month. Subcontractor may bill 1/3 of the potential 15% Award Fee retroactive to the December 01 billing

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	period. For the months of Oct., Nov., and Dec., 2002 OSC may bill 2/3 of the potential 15% award fee. Beginning in January 2003, the amount reverts back to the 1/3 of the potential 15%. Beginning with the June 2004 billings, Seller may provisionally bill 10% of the potential 15% award fee.
B.	Payments. Payments are made from “original” invoices only. Fax copies, copies of invoices or statements will not be accepted. “Duplicate original” invoices must not be sent without prior authorization from either your purchasing agent or accounts payable. Duplicate original invoices, altered invoices or computer prints of invoices not on your company letterhead must be signed and dated with full signature of the appropriate manager in your company. Initials will not be accepted. Third party billing is not allowed.
C.	Invoice mailing information. Invoices are to be mailed to:

Standard Mail	Overnight/Express Mail
The Boeing Company	The Boeing Company
Accounts Payable	5651 Phantom Drive
P. O. Box 66956, Mail Code S276-1371	Hazelwood, MO 63042
St. Louis, MO 63166-6956
Attention: Carolyn Washington	Attention: Accounts Payable
	M/C S276-1371
Phone: (314) 232-8455  Fax: (314) 232-8846

	Invoices sent to any other address or to buyers may delay your payment.
	A copy of invoices will be e-mailed to Buyer identified on purchase contract faceplate when the originals have been mailed to Accounts Payable.
D.	Prepaid freight charges. When prepaid freight charges are authorized by your procurement agent, include a copy of each freight bill with the invoice if total charges exceed $100.00. Freight charges over $100.00 require approval from Boeing traffic prior to payment and will be deducted from your invoice payment. It is not necessary to re-invoice. When the approval has been received, an additional check will be issued for the approved freight charge.
E.	Invoice requirements. All invoices must contain the following information:

1.	The name and address of the supplier, which must match the name, and address on the purchase
2.	Invoice number.
3.	Invoice date.
4.	Boeing purchase contract number. Only one purchase contract number per invoice.
5.	Boeing purchase contract line item number(s) and description of item ordered (Boeing part number).
6.	Quantity invoiced, which must equal quantity shipped, and cannot exceed quantity ordered.
7.	Unit of measure. If the invoice-billing unit of measure is different than the purchase contract order unit of measure, both units of measure must be included on the invoice.
8.	Unit price, which must agree with the purchase contract unit price. If the invoice billing unit price is different than the purchase contract unit price, both unit prices must be included on the invoice.
9.	Extended unit price. Each Boeing purchase contract line item must be subtotaled individually before tax, freight or any additional charges are listed. Each invoice must have a grand total, which includes all charges.
10.	Payment terms, which must agree with the purchase contract payment terms.
11.	Shipping information, which includes shipment number, date of shipment and freight carrier.

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12.	Name and address where invoice payment is to be mailed. Name must agree with the purchase contract name.
13.	Name, title, phone/fax number and mailing address of person to be notified in event of a defective invoice.
14.	Signed certification similar to the following: “I hereby certify, to the best of my knowledge and belief, that this invoice is correct, and that all items invoiced are based upon actual costs incurred or services rendered consistent with the terms of the subcontract agreement.”

F.	The purchase contract is the sole basis for your payment. Incorrect invoices will be returned unpaid. Accounts payable cannot authorize or negotiate any changes to the purchase contract. Please contact your procurement agent directly to resolve invoice discrepancies.
G.	Payment inquiries. Accounts payable checks are generated twice a week. Checks are prepared and mailed or transmitted (if Electronic Funds Transfer applies) each Tuesday and Thursday. Inquiries on past due invoices (aged 45 days from invoice date) or payment problems may be faxed directly to accounts payable representative identified herein. A copy of the invoice in question should be annotated with the specific problem.
H.	Identification. For accounting purposes all invoices submitted by the Subcontractor shall note: Subcontract Number 101018, Prime Contract HQ0006-01-C-0001, and the “Project CCN”, shown on the purchase contract faceplate, for the item being invoiced.

XII.	PRIORITY
	The priority rating for this subcontract is DX-C9. This is a rated order certified for national defense use, and you are required to follow all of the provisions of the Defense Priorities and Allocation System regulation (15 CFR Part 700). Pursuant to the Defense Priorities and Allocations System regulation, you are required to acknowledge this order in writing within fifteen working days after receipt of a “DO” rated order and within ten working days after receipt of a “DX” rated order.
XIII.	SECURITY REQUIREMENTS
	The security requirements applicable to this subcontract are set forth in the DD Form 254, Contract Security Classification Specification, Exhibit D.
XIV.	RELATIONSHIP WITH SUBCONTRACTOR
	The Subcontractor shall, at the request of Buyer, arrange and conduct meetings at the Subcontractor’s or lower-tier supplier’s or subcontractor’s facilities with Buyer and Government personnel in attendance. Buyer may request such meetings to review in-process work, investigate problem areas or activities critical to program schedules, or to witness or review test activities.
XV.	ALABAMA TAX EXEMPTION
	The items and/or services purchased hereunder are for resale to the U. S. Government and are exempt from taxation per Certificate Number 6800 04598.

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XVI.	ORDER OF PRECEDENCE
	In the event of any inconsistency between the provisions of this subcontract, the inconsistency shall be resolved by giving precedence in the following order:

(a)	Subcontract Schedule and Exhibit G, Buyer Furnished Property (BFE) Listing
(b)	General Provisions, Terms and Conditions
(c)	Statements of Work
(d)	Other documents incorporated by reference

XVII.	RESERVED
XVIII.	DATA REQUIREMENTS

A.	Product Data Requirements applicable hereto are identified in Exhibit B, Statement of Work. The required submittals shall be delivered to Data Management with a courtesy copy of the cover letter to the Buyer(s) , OBV IPT Lead, and OBV IPT Deputy/Chief Engineer.
	NOTES:

1)	Source code which is marked “Orbital Proprietary” shall be delivered via CD only (not placed on TINS). Buyer may provide this source code to its Subcontractors which perform system verification (see exception language to GP4 in Exhibit A, Terms and Conditions).
2)	If required, software executable code (only) for software submittals (GMD289) may be delivered concurrently to Configuration Management, Huntsville.

        Data Management Representatives: Evelyn Martinez, e-mail: evelyn.l.martinez@boeing.com
Lorelei Collins, e-mail: lorelei.l.collins@boeing.com

     Mailing address: The Boeing Company
Evelyn Martinez, MC 031-GB34
3370 Miraloma Avenue
Anaheim, CA 92806

        Configuration Management Representative: Ken Ille, e-mail: Kenneth.w.ille@boeing.com

     Mailing address: The Boeing Company
Ken Ille, MC JN-26
799A James Record Road
Huntsville, AL 35824

B.   Exhibit B, Attachment A, references “Integration Phases”. The Integration Phase periods of performance are:

Integration Phase No.	Period of Performance	Units/Vehicles Included
III	12/28/01 – 2/15/05	BV-6 through IFT-15
Test Bed	3/29/03 – 9/30/04	TB-1 through TB-5
Capabilities Enhancement – VAFB	11/3/03 – 12/22/05	CE-2 through CE-5
Capabilities Enhancement – Ft. Greely	11/3/03 – 4/10/06	CE-1 and CE-6 through CE-15
IV	3/29/02 – 4/30/07	1FT-19 through IFT-21
V	4/29/03 – 9/3/07	1FT-25

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11 of 11

C.   Data submittals which have previously been submitted and are unchanged for the Capabilities Enhancement segment of this purchase contract are not required to be resubmitted in whole. Subcontractor need only to submit a letter certifying the previous submittal has been reviewed for consideration of the Capabilities Enhancement requirements and no changes/updates to the previous submittal are required. The letter must clearly identify the previous submittal which was reviewed.

XIX.   EXPLOSIVES/ORDNANCE

A.	The intended use of the explosives/ordnance items under this contract are for installation/integration into the end–item Booster. The business Employer Identification Number (EIN) for use on shipping documentation is 910425694 and Boeing’s principal address is shown on the purchase contract faceplate (Boeing’s local business address is the same).
B.	Seller agrees that Buyer may return any surplus ordnance material resulting from this contract to Seller.

XX.	EXHIBITS
	The following Exhibits, referenced herein, are attached hereto and made a part hereof:

No.     Title

A	Subcontract 101018 Terms and Conditions, dated 10/11/04
B	Ground-based Missile Defense Orbital Sciences Subcontractor Statement of Work for the Orbital Boost Vehicle, Document D743-16366-1, Revision C, dated 1/7/04

Attachment A - Product Data Requirements List (PDRL),dated 1/7/04
Attachment B - Working Group Correlation Matrix, dated 1/7/04
Attachment C - Hardware Delivery Schedule, dated 3/25/04
Attachment D - Applicable Documents, dated 1/7/04

C	Document Matrix, dated 10/20/04
D	DD Form 254, Contract Security Classification Specification for Subcontract Number 101018, Revision 3, dated 7/1/04
E	Award Fee Plan, dated 3/29/02
F	Government Furnished Property (GFP) Listing, dated 5/24/04
G	Buyer Furnished Property (BFP) Listing, dated 3/25/04
H	Approved Deviations/Waivers, dated 10/20/04
I	(DRAFT) Ground-based Missile Defense Orbital Sciences Corporation Subcontractor Statement of Work for the Orbital Boost Vehicle, Block 2006 Capabilities Enhancement II, dated 5/21/04 Draft

EX-10.23

Exhibit 10.23

ORBITAL SCIENCES CORPORATION

NONSTATUTORY STOCK OPTION

NONSTATUTORY STOCK OPTION AGREEMENT

     Pursuant to the 1997 Stock Option and Incentive Plan (the “Plan”) of ORBITAL SCIENCES CORPORATION (the “Company”), the Company has granted a nonstatutory stock option to [___] (the “Optionee”) to purchase shares of its Common Stock, par value $0.01 per share, thereby affording the Optionee an opportunity to acquire a proprietary interest in the Company and to share in its success as a stockholder, with the added incentive to work effectively for and in the interest of the Company. The Company and Optionee desire to enter into this Agreement to evidence the terms of such option to the extent such terms are not otherwise set forth in the Plan, all relevant terms of which are incorporated by reference herein.

     NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

     1. Acknowledgment of Grant. The Company hereby acknowledges that it has granted on [ ] (the “Grant Date”) to the Optionee, on the terms and subject to the conditions specified in the Plan and in this Agreement, an option (the “Option”) to purchase ___(___) shares of the Company’s Common Stock (the “Option Shares”) for the price of ___and ___/l00 Dollars ($___) per share.

     2. Term. Unless sooner terminated as provided in the Plan, the Option shall expire at midnight of the day preceding the sixth anniversary of the Grant Date.

     3. Exercise. Subject to the other provisions of the Plan and of this Agreement, the Option shall become exercisable only to the extent one-third (1/3) of the Option Shares on the Grant Date, and, thereafter, to the extent of an additional one-third (1/3) of the Option Shares on [Month, Day], 2006 and the remaining one-third (1/3) of the Option Shares on [Month, Day], 2007. The Option may be exercised by written notice delivered to the Secretary of the Company at its principal place of business, specifying the number of Option Shares to be purchased and signed by the person exercising the Option, and accompanying payment of the exercise price in the form of (a) a cashier’s check made payable to the Company; (b) shares of the Company’s Common Stock to which the Optionee has a right (unless the Company’s Board of Directors or its designated committee has determined that payment in the form of shares is not permitted); (c) in accordance with a so-called cashless exercise plan established with a securities brokerage form, or (d) by any combination of the aforementioned permissible forms of payment. The Option shall be deemed to have been exercised on the date of receipt by the Secretary of (i) the written notice; and (ii) payment for the Option Shares. Unless the Option Shares received upon exercise have been registered under the Securities Act of 1933, as amended (the “1933 Act”), and under applicable blue sky laws, certificates representing such Option Shares shall bear an appropriate legend in accordance with the securities law restrictions set forth in Section 5 of this Agreement.

     4. Restrictions. The Option shall not be transferable otherwise than by will or the law of descent and distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee.

     5. Forfeiture. In the discretion of the Board, the Optionee’s rights with respect to the Option granted pursuant to this Agreement may be forfeited and terminated for “cause.” “Cause” shall include engaging in an activity that is detrimental to the Company including, without limitation, criminal activity, failure to carry out the duties assigned to the Optionee as a result of incompetence or willful neglect, conduct casting such discredit on the Company as in the opinion of the Board justifies termination or forfeiture of the Option, or such other reasons, including the existence of a conflict of interest, as the Board may determine. “Cause” is not limited to events that have occurred prior to the Grantee’s termination of service, nor is it necessary that the Board’s finding of “cause” occur prior to such termination.

     6. Securities Law Compliance. The Company shall not be obligated to register any of the Option Shares under the 1933 Act or to seek an exemption from the registration requirements of the 1933 Act with respect to exercise of the Option. The Optionee understands that the Optionee may not be permitted to exercise the Option if, at the time of the desired exercise, no registration of the Option Shares under the 1933 Act shall be effective and current and if no exemption from the registration requirements of the 1933 Act shall be available with respect to such exercise. The Optionee also understands that applicable securities laws may restrict the right of the Optionee to dispose of any Option Shares which the Optionee may acquire and may govern the manner in which such Option Shares may be sold. The Optionee shall not offer, sell or otherwise dispose of any of the Option Shares in any manner which would (a) require the Company to file any registration statement with the Securities and Exchange Commission; (b) require the Company to amend or supplement any registration statement that the Company may at any time have on file with the Securities and Exchange Commission; or (c) violate the 1933 Act or any other state or federal law.

     7. General Provisions. Nothing herein shall be construed to obligate the Company to retain the Optionee in its employ or on any Board of Directors. This Agreement shall be binding upon, and shall inure to the benefit of, any successor or successors to the Company.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the Granting Date.

ORBITAL SCIENCES CORPORATION

By By

2

EX-10.24

Exhibit 10.24

ORBITAL SCIENCES CORPORATION

NONSTATUTORY STOCK OPTION AGREEMENT

        Pursuant to the 1997 Stock Option and Incentive Plan (the “Plan”) of ORBITAL SCIENCES CORPORATION (the “Company”), the Company has granted a nonstatutory stock option to ______(the “Optionee”) to purchase shares of its Common Stock, par value $0.01 per share, thereby affording the Optionee an opportunity to acquire a proprietary interest in the Company and to share in its success as a stockholder, with the added incentive to work effectively for and in the interest of the Company. The Company and Optionee desire to enter into this Agreement to evidence the terms of such option to the extent such terms are not otherwise set forth in the Plan, all relevant terms of which are incorporated by reference herein.

        NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

     1. Acknowledgment of Grant. The Company hereby acknowledges that it has granted on January ___, 200___(the “Grant Date”) to the Optionee, on the terms and subject to the conditions specified in the Plan and in this Agreement, an option (the “Option”) to purchase Five Thousand (5,000) shares of the Company’s Common Stock (the “Option Shares”) for the price of ___ ($___).

     2. Term. Unless sooner terminated as provided in the Plan, the Option shall expire at midnight of the day preceding the tenth anniversary of the Grant Date.

     3. Exercise. Subject to the other provisions of the Plan and of this Agreement, the Option shall become exercisable with respect to all the Option Shares on the first anniversary of the Grant Date. The Option may be exercised by written notice delivered to the Secretary of the Company at its principal place of business, specifying the number of Option Shares to be purchased and signed by the person exercising the Option, and accompanying payment of the exercise price in the form of (a) a cashier’s check made payable to the Company; (b) shares of the Company’s Common Stock to which the Optionee has a right (unless the Company’s Board of Directors or its designated committee has determined that payment in the form of shares is not permitted); (c) in accordance with a so-called cashless exercise plan established with a securities brokerage form, or (d) by any combination of the aforementioned permissible forms of payment. The Option shall be deemed to have been exercised on the date of receipt by the Secretary of (i) the written notice; and (ii) payment for the Option Shares. Unless the Option Shares received upon exercise have been registered under the Securities Act of 1933, as amended (the “1933 Act”), and under applicable blue sky laws, certificates representing such Option Shares shall bear an appropriate legend in accordance with the securities law restrictions set forth in Section 5 of this Agreement.

     4. Restrictions. The Option shall not be transferable otherwise than by will or the law of descent and distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee.

     5. Forfeiture. In the discretion of the Board, the Optionee’s rights with respect to the Option granted pursuant to this Agreement may be forfeited and terminated for “cause.” “Cause” shall include engaging in an activity that is detrimental to the Company including, without limitation, criminal activity, failure to carry out the duties assigned to the Optionee as a result of incompetence or willful neglect, conduct casting such discredit on the Company as in the opinion of the Board justifies termination or forfeiture of the Option, or such other reasons, including the existence of a conflict of interest, as the Board may determine. “Cause” is not limited to events that have occurred prior to the Grantee’s termination of service, nor is it necessary that the Board’s finding of “cause” occur prior to such termination.

     6. Securities Law Compliance. The Company shall not be obligated to register any of the Option Shares under the 1933 Act or to seek an exemption from the registration requirements of the 1933 Act with respect to exercise of the Option. The Optionee understands that the Optionee may not be permitted to exercise the Option if, at the time of the desired exercise, no registration of the Option Shares under the 1933 Act shall be effective and current and if no exemption from the registration requirements of the 1933 Act shall be available with respect to such exercise. The Optionee also understands that applicable securities laws may restrict the right of the Optionee to dispose of any Option Shares which the Optionee may acquire and may govern the manner in which such Option Shares may be sold. The Optionee shall not offer, sell or otherwise dispose of any of the Option Shares in any manner which would (a) require the Company to file any registration statement with the Securities and Exchange Commission; (b) require the Company to amend or supplement any registration statement that the Company may at any time have on file with the Securities and Exchange Commission; or (c) violate the 1933 Act or any other state or federal law.

     7. General Provisions. Nothing herein shall be construed to obligate the Company to retain the Optionee in its employ or on any Board of Directors. This Agreement shall be binding upon, and shall inure to the benefit of, any successor or successors to the Company.

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the Grant Date.

ORBITAL SCIENCES CORPORATION

By	By
		Optionee

EX-10.26

Exhibit 10.26

Non-Employee Director Compensation Program

     The following is a summary of the compensation arrangements for Orbital’s non-employee directors effective January 1, 2005:

Annual Retainers and Meeting Fees*:

•   Annual retainer of $28,000

•   Annual retainer of $10,000 for the lead independent director

•   Annual retainer of $5,000 for the chairperson of each standing committee for up to one standing committee per year

•   Annual retainer of $1,000 for each non-chair member of each standing committee for up to two standing committees per year

•   $1,000 for each Board meeting attended in person in excess of five meetings per year

•   $1,000 for each committee meeting attended in person

•   A pro-rated amount up to $1,000 for each Board or committee meeting held telephonically based on the length of such meeting

*The annual retainers and meeting fees are payable in cash or shares of restricted common stock at the non-employee director’s election. The restricted common stock grants have a two-year vesting term.

Stock Purchase Matching Program:

•   Matching a non-employee director’s purchase of up to $10,000 worth of common stock in the open market in a calendar year with a grant of restricted common stock that vests in its entirety two years from the date of grant.

Annual Stock Option Grant:

•   Under Orbital’s 1997 Stock Option and Incentive Plan, on the first business day in January, each non-employee director receives an automatic annual grant of 5,000 options to purchase common stock at an exercise price equal to the fair market value on the date of grant. All of the option grants vest in their entirety one year from the date of grant.

EX-12

Exhibit 12

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	Years ended December 31,
	2004		2003			2002		2001 (a)			2000 (a)
Earnings—
Pre-tax income (loss) from continuing operations	$	44,128	$	19,972		$	13,950	$	(95,614	)	$	(303,576	)
Add: Allocated (gains) losses of equity investees		¾		(40,586	)		¾		26,495			119,183
Fixed charges		18,449		62,324			22,824		26,100			29,613
Amortization of capitalized interest		180		180			182		222			3,846
Less: Interest capitalized		¾		¾			¾		¾			(1,846	)
Earnings	$	62,757	$	41,890		$	36,956	$	(42,797	)	$	(152,780	)
Fixed Charges—
Interest costs	$	11,386	$	18,683		$	17,450	$	21,671		$	25,883
Debt extinguishment expense		2,099		38,836			¾		¾			¾
Portion of rental expense representative of interest factor		4,964		4,805			5,374		4,429			3,730
Fixed Charges	$	18,449	$	62,324		$	22,824	$	26,100		$	29,613
Ratio of Earnings to Fixed Charges		3.4		0.7			1.6		¾			¾

(a) For the years ending December 31, 2001 and 2000, earnings were inadequate to cover fixed charges by approximately $68.9 million and $182.4 million, respectively.

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-84296, 333-62277, 333-64517, 333-53585, 333-69887, 333-69885, 333-27999, 333-59470, 333-59474 and 333-105341) and Form S-3 (Nos. 333-59402 and 333-101329) of Orbital Sciences Corporation of our report dated March 4, 2005, relating to the financial statements, financial statement schedule, management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

PricewaterhouseCoopers LLP
McLean, Virginia
March 4, 2005

EX-31.1

Exhibit 31.1

CERTIFICATION

I, David W. Thompson, Chairman and Chief Executive Officer, certify that:

1. I have reviewed this annual report on Form 10-K of Orbital Sciences Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 4, 2005
	/s/ David W. Thompson
	David W. Thompson
	Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Garrett E. Pierce, Vice Chairman and Chief Financial Officer, certify that:

1.	I have reviewed this annual report on Form 10-K of Orbital Sciences Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 4, 2005

/s/ Garrett E. Pierce

Garrett E. Pierce
Vice Chairman and Chief Financial Officer

EX-32.1

Exhibit 32.1

Written Statement of Chairman and Chief Executive Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

     The undersigned, the Chairman and Chief Executive Officer of Orbital Sciences Corporation (the “Company”), hereby certifies that, to his knowledge, on the date hereof:

(a)	the Annual Report on Form 10-K of the Company for the Year Ended December 31, 2004 filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(b)	information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David W. Thompson

David W. Thompson
Chairman and Chief Executive Officer

March 4, 2005

     A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Written Statement of Vice Chairman and Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

     The undersigned, the Vice Chairman and Chief Financial Officer of Orbital Sciences Corporation (the “Company”), hereby certifies that, to his knowledge, on the date hereof:

(a)	the Annual Report on Form 10-K of the Company for the Year Ended December 31, 2004 filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(b)	information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Garrett E. Pierce

Garrett E. Pierce
Vice Chairman and Chief Financial Officer

March 4, 2005

     A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.