Exhibit 10.5
*** TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(b)(3),
200.80(b)(4) AND 230.406
Amendment Number 1
ORBCOMM CONCEPT DEMONSTRATION COMMUNICATION PAYLOAD PROCUREMENT AGREEMENT
B10LG1192 dated 3 November 2004 (THE "PROCUREMENT AGREEMENT")
This Amendment to the Procurement Agreement (this "Amendment") is made and
entered into as of the 21st day of April, 2006 between ORBCOMM Inc, a Delaware
corporation ("ORBCOMM") with its principal place of business located at 21700
Atlantic Boulevard, Dulles, VA 20166 and Orbital Sciences Corporation, a
Delaware corporation ("Orbital") with its principal place of business located at
21839 Atlantic Boulevard, Dulles, Virginia 20166 and constitutes the exercise
Option A of the Procurement Agreement, as modified herein. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Procurement Agreement. References herein to the Procurement Agreement shall be
deemed to include all Exhibits thereto provided that each of Exhibits A
(Specifications), B (Statement of Work), C (Key Personnel) and E (Milestone
Payments and T&M Billing Rates) are, for purposes hereof, replaced in their
entirety by Exhibits A-1, B-1, C-1 and E-1 hereto and references herein and in
the Procurement Agreement to these Exhibits shall be deemed to refer to such
revised Exhibits. This Amendment becomes effective on the date both parties have
signed this Amendment and the amount of the first Milestone Payment as defined
in Exhibit E-1 is received from ORBCOMM (the "Effective Date" or "AED").
WITNESSETH
WHEREAS ORBCOMM wishes to procure from Orbital, and Orbital wishes to supply to
ORBCOMM, six (6) additional Automatic Identification System (AIS) Signal
payloads as set forth herein.
WHEREAS, ORBCOMM and Orbital have agreed to amend certain particulars of the
Procurement Agreement as shall apply to this additional procurement.
NOW, THEREFORE, in consideration of the foregoing and for other valuable
considerations the receipt and adequacy of which each party hereby acknowledges,
the parties hereby agree as follows:
1. Additional Payloads. Orbital shall design, manufacture, test and deliver one
(1) payload (without antenna) engineering development unit (the "EDU Unit") and
six (6) additional Automatic Identification System (AIS) Signal payloads (the
"Additional Payloads") in accordance with the Statement of Work and
Specifications attached hereto, including (without limitation) the delivery
schedule set forth in Section 2.1.1 of the SOW (the "Delivery Schedule"). Except
where expressly stated otherwise herein, references herein to the Additional
Payloads shall be deemed to include the antenna subsystems associated therewith.
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2. Price. The firm fixed price for the six (6) Additional Payloads, each with an
additional SRX, shall total $17,000,000 (the "Price"), which ORBCOMM shall pay
Orbital, in accordance with Exhibit E-1 of this Amendment. Orbital acknowledges
and agrees that it shall provide all associated deliverables, including the EDU
Unit, documentation, and services, as specified in the Procurement Agreement,
this Amendment, and the SOW without additional charge, except if and to the
extent that a particular task is expressly stated as being subject to additional
payment for time and material expenses. Completion of the payment milestones
with respect to the Additional Payloads is set forth on Exhibit E-1 hereto (the
"AP Milestones"). Completion of AP Milestones shall be determined as described
in Section 5.3 of the Procurement Agreement.
3. Price Adjustments. Without prejudice to any other applicable rights and
remedies under the Procurement Agreement, the following price adjustments shall
apply to the Additional Payloads:
(i) Late Delivery. If one or more of the Additional Payloads is not
delivered in accordance with the requirements of this Amendment within fourteen
(14) months of the Effective Date plus sixty (60) days grace period (no penalty
shall be incurred in the grace period) for the Additional Payloads (less the
antenna subsystem) and fourteen (14) months plus ninety (90) days grace period
for the antenna subsystem associated therewith, starting on the first day after
such applicable grace period has been exhausted, Orbital shall pay ORBCOMM
liquidated delay damages of [***]% ($[***]) per day for each Additional Payload
that has not been so delivered for each day of delay, up to a total amount not
to exceed [***] percent ([***]%) of the Price ($[***]) and not to exceed $[***]
per day and inclusive of the penalties described in clause 3.(iv) below.
(ii) On Time or Early Delivery. If the EDU Unit and all of the Additional
Payloads are delivered in accordance with the requirements of this Amendment by
the date specified in the Delivery Schedule, ORBCOMM shall pay Orbital a single
on-time delivery incentive of 1.2% of the Price ($204,000). In addition, if all
of the Additional Payloads are so delivered on time, for each day that the
Additional Payloads are so delivered early, ORBCOMM shall pay Orbital 0.01% of
Price ($1700) per day of early delivery, up to a total amount not to exceed
$100,000 for such early delivery (for all Additional Payloads combined).
(iii) Calculation of On-time, Late and Early Delivery. Timely delivery of
an Additional Payload shall require the timely delivery of both the payload unit
(without the antenna) and the associated antenna (A) within fourteen (14) months
of the Effective Date plus sixty (60) days grace period for the Additional
Payloads (less the antenna subsystem) and fourteen (14) months plus ninety (90)
days grace period for the antenna subsystem associated therewith, for purposes
of clause 3(i) above and (B) in accordance with the Delivery Schedule for
purposes of clause 3(ii) above. For purposes of calculating late delivery
penalties, however, late deliveries of separate items associated with the same
Additional Payload shall be determined by the greatest lateness of any single
item, but shall not be additive. For example, if the first flight
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Additional Payload (less the antenna subsystem) is delivered seventy-five (75)
days late, and the first flight antenna subsystem is delivered one hundred (100)
days late, the late charge shall be calculated on the basis that the first
Additional Payload was delivered seventy-five (75) days late, or fifteen (15)
days worth of late charges.
Conversely, for purposes of calculating early delivery incentives, the
least early item associated with a particular Additional Payload shall be
controlling. Accordingly, if the EDU is delivered twenty (20) days early; the
first flight payload (less antenna) is delivered ten (10) days early, and the
first flight antenna is delivered five (5) days early (and assuming all the
Additional Payloads were delivered on time), the early delivery incentive shall
be calculated on the basis of the first Additional Payload having been delivered
five (5) days early.
If and to the extent that a delay in delivery is excused by force
majeure then Orbital shall not be responsible for late charges under clause 3(i)
above for the period of such force majeure delay. The time required for delivery
in order for Orbital to achieve on-time or early delivery incentives under
clause 3(ii) above shall, however, not be extended by force majeure delays.
(iv) Power and Weight. If ORBCOMM agrees to accept Additional Payloads that
exceed the maximum operating power and/or weight limits set forth in the
Specifications, then Orbital shall pay ORBCOMM as compensation therefor, $10,000
per Kg in excess of 20.31 Kg (inclusive of 1kg grace) for the total Additional
Payload mass as set forth in Section 4.5.4 of the Specifications and $10,000 per
5 watts in excess of 120 watts (inclusive of 5 watts grace) of total Additional
Payload power as set forth in Section 4.5.5 of the Specifications, in each case
per Additional Payload, and in each case pro rated for partial amounts in excess
of such maximum weight and/or power. The maximum payment that shall be paid for
exceeding the power and/or weight limits shall not exceed $100,000.
(v) Additional Environmental Testing of the Integrated Flight Payloads. If
ORBCOMM directs (in writing) Orbital to perform the additional environmental
testing for flight payloads as set forth in Section 6.3.2.2 of the SOW, ORBCOMM
shall pay Orbital an additional amount of $94,000 for the first Additional
Payload so tested at ORBCOMM's direction and an amount of $26,000 for each
subsequent Additional Payload thereafter. In addition, Orbital shall be allowed
up to fourteen (14 days of schedule relief as necessary to accomplish such
testing. ORBCOMM's direction for this additional testing must be received within
six (6) months after the Effective Date.
(vi) Time and Material Charges. All time and material charges, if
applicable, shall be calculated in accordance with Exhibit E-1 hereto. Where
insofar in this regard it becomes necessary to calculate "costs," costs shall be
limited to reasonable, out of pocket, and documented costs actually incurred,
and only insofar as the costs exceed the cost that would have had to been
incurred by Orbital in any event without additional charge.
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(vii) Holdback Charge. As shown in Exhibit E-1, four percent (4%) of the
Price ($680,000) (the "Holdback Amount") shall be held back by ORBCOMM until
one-year (12 months) after the successful completion of payload IOT for the
Additional Payloads. Said Holdback Amount shall be paid by ORBCOMM to Orbital if
all of the Additional Payloads are successfully operating in accordance with
their Specifications on said first anniversary date. In order to holdback such
amounts, ORBCOMM shall, not later than thirty (30) days prior to launch, deliver
to ORBITAL a performance bond or letter of credit to receive such payment,
failing which ORBCOMM shall make the Holdback Payment to Orbital or a mutually
agreeable third party escrow agent at that time, but subject to refund by
Orbital (or release to ORBCOMM by such escrow agent), on a pro rata basis, if
one or more of the Additional Payloads are not so successfully operating on said
first anniversary date.
4. Additional Options. ORBCOMM shall have the option to require Orbital to
manufacture, test and deliver to ORBCOMM up to two (2) Additional Payloads (in
addition to those delivered pursuant to clause 1 above) in accordance with the
SOW and the Specifications (the "Optional Payloads"). The firm fixed price for
each Optional Payload, each with an additional SRX, shall be $2,200,000.
Delivery of each Optional Payload(less the antenna subsystem) will be fourteen
(14) months (plus sixty (60) days grace period) and fourteen (14) months (plus
ninety (90) days grace period) for the antenna subsystem associated therewith,
after ORBCOMM's written direction is received exercising this option and the
first milestone payment for each Optional Payload in the amount of $200,000 is
received. The payment schedule for the Optional Payloads shall correspond as
closely as possible (in terms of time and percentage of total price) to the AP
Milestones set forth on Exhibit E-1. This option must be exercised, if at all
and at ORBCOMM's sole discretion, no later than three (3) months after the
Effective Date with respect to each Additional Option. This option may be
exercised by ORBCOMM in whole or in part. Except as specified above, all
references herein to Additional Payloads shall be deemed to include the Optional
Payloads to the extent this option is exercised by ORBCOMM.
5. Taxes, Delivery, Title. Orbital shall be responsible for all United States
(including political subdivisions) tax payments, liabilities, or claims required
by present or future laws and regulations. ORBCOMM shall be responsible for all
non-U.S. (including political subdivisions) taxes, liabilities, or claims, and
any customs duties, if any, levied upon or measured by the sale, the sales
price, or the use of the equipment deliverable under this Amendment required by
present or future laws and regulations. Transfer of title to each deliverable
item will pass to ORBCOMM prior to each deliverable item entering non-U.S.
territory and after each deliverable item leaves the United States. Orbital
shall agree to make reasonable changes in the Procurement Agreement and this
Amendment, such as modifying the place of delivery and/or delaying the passage
of title, as ORBCOMM may request in writing, in order to improve the tax
efficiencies with respect to the Additional Payloads, provided that any such
change shall be economically neutral to Orbital. ORBCOMM shall indemnify and
hold harmless Orbital from and against any damages as a result of Orbital
holding title to any Additional Payloads following delivery thereof to the
shipper at Orbital's facility.
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6. Payment Terms and Invoicing. Section 5.1 - Invoicing of the Procurement
Agreement is hereby amended to add the following after the second sentence: "
Payments shall be due net 10 days for those payments defined in Exhibit E-1".
7. Insurance. Orbital shall, at ORBCOMM's request, provide reasonable assistance
to ORBCOMM, in seeking to obtain launch and/or in-orbit insurance and/or in
pursuing any claim thereunder, including participating in a reasonable number of
technical presentations to insurers and providing such documentation as may be
reasonably requested.
8. Corrections. The fourth sentence of Section 6.2 of the Procurement Agreement
is hereby amended to be consistent with the last sentence of Section 6.3(a),
..i.e., the decision as to how corrections shall be mutually agreed by ORBCOMM
and Orbital. In addition, if integration testing reveals defects in the
Additional Payloads resulting from a defect in workmanship or materials or
noncompliance with the SOW or Specifications, Orbital shall be responsible, at
its own expense, for the timely repair and correction of the Additional
Payloads, if practical at the facility of the integrator (with the time spent by
its personnel not charged against then allocated time to ORBCOMM) and if not, at
Orbital's facilities, with all transportation, insurance, and risk of loss in
transit to and from the integrator's facilities and those of Orbital borne by
Orbital. If such remedies are required, the elapsed time needed to remedy such
defects or noncompliance shall be added to the actual delivery date to establish
the delivery of such items for the purpose of calculating a revised delivery
date for the purpose of assessing incentives and penalties. For example, if an
Additional Payload is delivered in AED plus 330 days, such a defect or
noncompliance is revealed in AED plus 360 days and remedied by AED plus 380
days, delivery shall have been deemed to occur on AED plus 350 days (i.e. 20
additional days) for the purpose of assessing incentives and penalties under
clauses 3(i) and 3(ii) above.
9. Security Interest; Property Accounting; Source Code Escrow. As collateral for
the timely performance by Orbital of its work hereunder, Orbital hereby grants
to ORBCOMM a first priority security interest in the work and work in progress
and any proceeds therefrom with respect to the Additional Payloads. ORBCOMM
agrees to execute any release of such security interest when Orbital has
transferred to it title to the Additional Payloads and all deliverables
associated therewith. Orbital shall execute such documentation thereof as
ORBCOMM may reasonably request. Supplies, prints, materials, components,
subsystems, and systems as associated with such work shall be properly
inventoried and identified as associated with such work in accordance with
Orbital's normal inventory control practice, documentation of which shall be
subject to inspection by ORBCOMM, and shall not be redeployed to other programs
without ORBCOMM's consent.
Orbital shall, in addition, contemporaneously with its entry into this
Amendment, execute (as the "Depositor") and thereafter perform the obligations
of a Depositor under the "Preferred Escrow Agreement" with Iron Mountain and
ORBCOMM (as the "Preferred Beneficiary"), attached hereto as Exhibit G. ORBCOMM
agrees that it shall pay Iron Mountain's fees under the Preferred Escrow
Agreement. Subject to
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ORBCOMM's obligation to pay Iron Mountain's fees, Orbital agrees that ORBCOMM
shall have the right to adjust the level of work to be performed by Iron
Mountain and/or terminate the Preferred Escrow Agreement in accordance with its
terms and Orbital shall execute and deliver such instructions to Iron Mountain
as ORBCOMM may reasonably request to reflect ORBCOMM's decisions in this regard.
10. Legal Compliance. Each Party shall comply with all applicable laws and
regulations with respect to the performance of this Amendment.
11. Specific Performance. Nothing in the Procurement Agreement or this Amendment
shall be deemed to bar either party from seeking specific performance of the
other party's obligations hereunder.
12. Force Majeure. The force majeure provision of the Procurement Agreement is
hereby replaced with the following:
"Section 12.2 Force Majeure. Neither party shall be responsible for failure or
delay in performance or delivery if such failure or delay is the result of an
act of God, terrorism, riot, or other hostilities, act of the public enemy,
embargo, governmental act, orders or regulations, fire, war, riot, strikes,
hurricane or other catastrophic weather condition, delay of spacecraft bus for
integration, delay of launch or other cause of a similar nature that is beyond
the control of such party claiming force majeure. In the event of such
occurrence, this Agreement shall be amended by mutual agreement to reflect an
extension in the period of performance and/or time of delivery necessitated by
such circumstances. Failure to agree on an equitable extension shall be
considered a dispute and resolved in accordance with Section 12.3 hereof. Any
failure or delay that could have been avoided or greater minimized by the
exercise of commercially reasonable diligence and care (including work around
solutions to minimize the effect of a force majeure event)."
13. Key Personnel. Exhibit C to the Procurement Agreement is hereby updated as
it relates to the work to be performed for the Additional Payloads by Exhibit
C-1 hereto.
14. Public Announcement. Except as may be required by applicable laws, neither
party will make a public announcement regarding this Amendment without the
approval of the other party, which approval will not be unreasonably withheld.
15. Statement of Work. A revised Statement of Work ("SOW") with respect to the
Additional Payloads and all associated deliverables, documentation and services
is attached hereto as Exhibit B-1.
16. Specifications. Revised Specifications ("Specifications") with respect to
the Additional Payloads and all associates deliverables, documentation and
services are attached hereto as Exhibit A-1.
17. Rights and Obligations under Procurement Agreement. Except insofar as the
terms and conditions of the Procurement Agreement, including all associated
exhibits,
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may be expressly in conflict with the terms and conditions of this Amendment,
the terms and conditions of such Procurement Agreement (also sometimes
internally referenced therein) shall remain in full force and effect and apply,
in context, to the parties' rights and obligations vis-a-vis the Additional
Payloads. In the event of any inconsistency or contradiction between the terms
of this Amendment and the Procurement Agreement, the provisions of this
Amendment shall prevail and control. On and after the date hereof each reference
in the Procurement Agreement to (a) "this Agreement", "this order", "herein", or
words of like import shall mean and be a reference to the Procurement Agreement
as amended hereby; (b) "Milestone(s)" shall mean "AP Milestone(s)" for purposes
of the AP Milestones; and (c) "Payload" (including without limitation in both
clauses (a) and (b) of Section 2.4 of the Procurement Agreement) shall be deemed
to refer to each Additional Payload.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of
the day and year first above written.
ORBITAL SCIENCES CORPORATION
By: /s/ R.A. Wolak
---------------------------------
Name: R. A. Wolak
Title: Director, Contracts
ORBCOMM Inc.
By: /s/ Jerry Eisenberg
---------------------------------
Name: Jerry Eisenberg
Title: Chief Executive Officer
ORBCOMM
QUICK LAUNCH PAYLOAD SPECIFICATION
ORBCOMM LLC
21700 Atlantic Boulevard
Dulles, Virginia 20166, U.S.A.
Signature Date:
--------- -----
Prepared Gene. Fujii
By: Manager Spacecraft Development
------------------- ----------
Approved Tony Robinson
By: VP, Space Segment
------------------- ----------
Approved John Stolte
By: EVP, Technology & Operations
------------------- ----------
Approved Tim Maclay
By: VP, System Engineering
------------------- ----------
Approved Dean Brickerd
By: VP, Sales and Product Engineering
------------------- ----------
Approved Mike Lord
By: VP, Gateway Engineering
------------------- ----------
Approved Chuck Rose
By: Senior Manager, Network Operations
------------------- ----------
Issue Date: April 21, 2006
Quick Launch Payload Specification
EXPORT CONTROL STATEMENT
The contents of this document, in whole or in part, shall not be exported from
the United States, which export shall include, but not be limited to,
transmittal to any non-U.S. citizen wherever said person is located, except in
accordance with all United States laws and regulations relating to exports and
to all administrative acts of the U.S. Government pursuant to such laws and
regulations. Diversion, re-export or transshipment of the contents of this
document, in whole or in part, contrary to U.S. law is also strictly prohibited.
[***]
[52 pages omitted]
ORBCOMM
QUICK LAUNCH PAYLOAD
STATEMENT
OF
WORK
ORBCOMM LLC
21700 Atlantic Boulevard
Dulles, Virginia 20166, U.S.A.
Signature Date:
--------- -----
Prepared G. FUJII
By: MANAGER SPACECRAFT DEVELOPMENT
-------------------- -------------
Approved T. ROBINSON
By: VP SPACE SEGMENT
-------------------- -------------
Approved J. STOLTE
By: EVP TECHNOLOGY AND OPERATIONS
-------------------- -------------
Issue Date: April 21, 2006
(ORBCOMM (R) LOGO)
GLOBAL DATA & MASSAGING
ORBCOMM QUICK LAUNCH PAYLOAD
STATEMENT
OF
WORK
ORBCOMM LLC
21700 Atlantic Boulevard
Dulles, Virginia 20166, U.S.A.
Issue Date: April 21, 2006
ORBCOMM Quick Launch Payload
Statement of Work
EXPORT CONTROL STATEMENT
The contents of this document, in whole or in part, shall not be exported from
the United States, which export shall include, but not be limited to,
transmittal to any non-U.S. citizen wherever said person is located, except in
accordance with all United States laws and regulations relating to exports and
to all administrative acts of the U.S. Government pursuant to such laws and
regulations. Diversion, re-export or transshipment of the contents of this
document, in whole or in part, contrary to U.S. law is also strictly prohibited.
[***]
[46 pages omitted]
Exhibit C
Key Personnel
The following individuals will be assigned to the Quick Launch Program in
accordance with the provisions of Section 12.0
Program Manager Robert Lockwood
Technical Manager Thierry Guichon
Exhibit E-1
Milestone Payments and T&M Billing Rates
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Total Price $17,000,000
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