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EXHIBIT 10.58
ORBCOMM PROCUREMENT AGREEMENT
This ORBCOMM Procurement Agreement (this "AGREEMENT") is made and
entered into as of the 1st day of February, 1999 (the "EFFECTIVE DATE") between
ORBCOMM Global, L.P., a Delaware limited partnership ("ORBCOMM GLOBAL") with its
principal place of business located at 2455 Horse Pen Road, Suite 100, Herndon,
Virginia 20171, and Orbital Sciences Corporation, a Delaware corporation
("ORBITAL") with its principal place of business located at 21700 Atlantic
Boulevard, Dulles, Virginia 20166.
WITNESSETH
WHEREAS ORBCOMM Global and Orbital previously entered into the
ORBCOMM System Procurement Agreement dated September 12, 1995, as amended (the
"ORIGINAL PROCUREMENT AGREEMENT"), and into other agreements for the
development, construction, operation and marketing of a global digital satellite
communications system of low-Earth orbit satellites and certain terrestrial
facilities to provide two-way data and message communications and position
determination services throughout the world (the "ORBCOMM SYSTEM") and related
activities in connection therewith;
WHEREAS ORBCOMM Global desires to contract with Orbital for the
overall construction, integration, test, launch and operation of a certain
number of replenishment satellites to complement the ORBCOMM System; and
WHEREAS, to maintain ORBCOMM Global's FCC license to deploy a
constellation of 48 satellites, two of the Firm Satellites (as defined in
Section 2.1(a)) are being constructed for insertion into a high inclination
orbit;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1 - DEFINITIONS
Except as otherwise specifically defined herein, capital terms shall
have the meanings ascribed to such terms in the Original Procurement Agreement.
"LAB" shall mean the high fidelity lab equipment as defined in the
Satellite Statement of Work.
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"LAUNCHES" shall mean the Firm Launches and the Optional Launches,
collectively, as set forth in Section 2.2.
"LAUNCH VEHICLE STATEMENT OF WORK AND SPECIFICATIONS" shall mean the
launch vehicle statement of work and specifications attached hereto as Exhibit
A, Part 2.
"OPTIONS" shall mean the Satellite Option, the Launch Option and the
Lab Option, collectively, as set forth in Sections 2.1, 2.2 and 2.3.
"SATELLITES" shall mean the Firm Satellites and the Optional
Satellites, collectively, as set forth in Section 2.1.
"SATELLITE SPECIFICATIONS" shall mean the satellite specifications
attached hereto as Exhibit A, Part 1B.
"SATELLITE STATEMENT OF WORK" shall mean the satellite statement of
work attached hereto as Exhibit A, Part 1A.
ARTICLE 2 - SCOPE OF WORK
Consistent with the terms and conditions set forth herein, Orbital
shall furnish the management, labor, facilities and materials required for the
performance by it of the following work (collectively, the "WORK"):
Section 2.1 - Construction of Satellites. (a) Orbital shall
construct and deliver to ORBCOMM Global eight satellites (the "FIRM SATELLITES")
in accordance with the Satellite Statement of Work and the Satellite
Specifications.
(b) ORBCOMM Global shall have the option (the "SATELLITE OPTION") to
require Orbital to construct and deliver to ORBCOMM Global up to six additional
satellites or, if the 68302 Processor Tests (as defined and described in the
Satellite Statement of Work) are successful, up to 22 additional satellites (the
"OPTIONAL SATELLITES").
(c) The Satellite Option shall be exercisable, in whole or in part,
at any time and from time to time on or before December 31, 2000, provided that
any one exercise of the Satellite Option after October 15, 1999 must be for a
minimum of six Optional Satellites.
(d) At the written direction of ORBCOMM Global, Orbital may be
required to store any Satellite (the "STORED SATELLITES") for an undetermined
period of time. During the storage of any Stored Satellite, Orbital shall be
required to safeguard the Stored Satellite and to insure the Stored Satellite at
ORBCOMM Global's expense in accordance with Section 4.8 against damage and/or
loss to cover repair and/or replacement costs. ORBCOMM Global shall provide
Orbital
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with 30 days' prior written notice of ORBCOMM Global's intent to remove a Stored
Satellite for shipment to the launch site. Prior to shipment of a Stored
Satellite, Orbital shall be required to retest, restore and/or reassemble the
Stored Satellite and verify the Stored Satellite for flight worthiness in
accordance with the Satellite Specifications. The costs associated for the work
performed by Orbital during this phase shall be reimbursed as set forth in
Section 2.5.
Section 2.2 - Provision of Launch Vehicle Launch Services. (a)
Orbital shall provide to ORBCOMM Global launch services for up to 16 Satellites
using two Pegasus XL Launch Vehicles (the "FIRM LAUNCHES") in accordance with
the Launch Vehicle Statement of Work and Specifications. The exact number of
Satellites to be launched on any of the Firm Launches shall be determined at the
sole discretion of ORBCOMM Global on written notice given to Orbital at the
latest six months prior to any such Firm Launch or, in the event ORBCOMM Global
exercises the Launch Pause Option (as defined in Section 2.2(c)), within 14 days
of the end of the Pause Period (as defined in Section 2.2(c)).
(b) ORBCOMM Global shall have the option (the "LAUNCH OPTION") to
require Orbital to provide to ORBCOMM Global launch services for up to eight
Satellites per launch using one or more Pegasus XL Launch Vehicles (the
"OPTIONAL LAUNCHES"). The Launch Option shall be exercisable, in whole or in
part, at any time and from time to time on or before December 31, 2000. Subject
to the negotiation of mutually agreeable terms, conditions, price and delivery
schedule, ORBCOMM Global may purchase additional launch services from Orbital
beyond December 31, 2000.
(c) ORBCOMM Global shall have the option (the "LAUNCH PAUSE OPTION")
to require Orbital to pause the work (the "PAUSE PERIOD") on the second of the
Firm Launches.
Section 2.3 - Construction of Lab. ORBCOMM Global shall have the
option (the "LAB OPTION"), exercisable at any time on or before October 15,
1999, to require Orbital to construct and deliver to ORBCOMM Global one set of
high fidelity laboratory equipment, as defined in the Satellite Statement of
Work (the "LAB").
Section 2.4 - Other Documentation. Orbital shall prepare, develop
and submit to ORBCOMM Global the documentation set forth in the CDRLs of the
Satellite Statement of Work.
Section 2.5 - Satellite Storage and Launch Campaign. Orbital shall
provide ORBCOMM Global, on a time and materials basis (including a fee not to
exceed ten percent (10%) to be mutually agreed upon by Orbital and ORBCOMM
Global), technical services associated with the storage of Satellites and the
conduct of launch campaigns for all the Satellites as and when required by
ORBCOMM Global, relating to the ORBCOMM System.
Section 2.6 - Right Ascension Ascending Nodes ("RAAN") Target
Accuracy. Notwithstanding the RAAN target accuracy parameters set forth in the
Launch Vehicle Statement
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of Work and Specification and the Satellite Statement of Work, ORBCOMM Global
shall, with at least 30-days' prior written notice to Orbital, inform Orbital as
to the RAAN accuracy ORBCOMM Global requires for each Launch, and Orbital shall
use reasonable efforts to meet such target accuracy. If ORBCOMM Global sets the
RAAN target accuracy below 2.5 degrees (the "NEW RAAN") and the Launch flight is
aborted solely due to the failure of Orbital to meet the New RAAN (as opposed to
other reasons), then ORBCOMM Global shall pay the costs associated with trying
again during the next Launch window.
Section 2.7 - Regulatory Matters. Orbital, directly or indirectly
through its subsidiaries, shall use all commercially reasonable efforts (a) to
obtain and maintain the required United States regulatory authority needed to
construct and launch the Satellites, and (b) to take reasonable actions in any
regulatory proceedings to defend any claims against any regulatory authority
granted to Orbital or any of its subsidiaries in connection with the Satellites.
ARTICLE 3 - WORK SCHEDULE AND DELIVERY
Section 3.1 - Delivery. (a) Orbital understands and agrees that
timely completion of the milestones as set forth in Exhibit B - 'Work Schedule
and Delivery' (the "MILESTONES") is of the essence of this Agreement. Completion
of Milestones shall be determined as described in Section 5.4.
(b) Firm Satellites. The first three Firm Satellites shall be ready
for a Launch at the latest 19 months following the Effective Date. The balance
of the Firm Satellites (being five Firm Satellites) shall be ready for one or
more Launches or for storage, at ORBCOMM Global's sole discretion, at the latest
22 months following the Effective Date. Orbital shall use all commercially
reasonable efforts to prepare any stored Satellite for Launch within six months
from ORBCOMM Global's written instructions to do so.
(c) Optional Satellites. Optional Satellites shall be ready for one
or more Launches at the latest 20 months after the date of exercise of a
Satellite Option if six Optional Satellites are ordered, subject to any revised
schedule to be agreed upon between the parties as may be reasonably required
giving effect to the timing of the exercise of the Satellite Option and the
number of Optional Satellites ordered.
(d) Firm Launches. The first of the Firm Launches shall take place
at the latest 20 months following the Effective Date. The second of the Firm
Launches shall take place at the latest on December 31, 2000, subject to the
good faith negotiation of a reasonable revised delivery schedule (not to exceed
six months from the end of the Pause Period, unless caused solely by manifest
constraints) in the event of the exercise by ORBCOMM Global of a Launch Pause
Option.
(e) Optional Launches. Any Optional Launch shall take place
according to standard delivery practice at the time of exercise of the Launch
Option, provided however that such
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Optional Launch shall take place no later than 24 months following the date of
exercise of the Launch Option.
(f) Launch Pause Option. For the second of the Firm Launches, the
Launch Pause Option may be exercised by ORBCOMM Global, with prior written
notice to Orbital, only once, on one of the two following dates: (i) 12 months
from the Effective Date or (ii) 16 months from the Effective Date. Within 30
days of Orbital's receipt of ORBCOMM Global's notice to exercise the Launch
Pause Option, Orbital shall inform ORBCOMM Global of the date at which the Pause
Period shall begin, which in any event, shall be no later that 18 months after
the Effective Date. The duration of the Pause Period shall not be pre-determined
but shall be no shorter than 90 days and no longer than 24 months. ORBCOMM
Global shall provide Orbital with a 45-day prior written notice of the date of
termination of the Pause Period.
(g) Lab Option. The Lab shall be delivered to ORBCOMM Global 14
months after the date of exercise of the Lab Option.
ARTICLE 4 - CONSIDERATION
Section 4.1 - Price. The price for the Firm Satellites and the Firm
Launches (the "PRICE") is as follows:
(a) Firm Satellites $[CONFIDENTIAL
TREATEMENT
REQUESTED](1)
(Quantity of Eight (8) at $[CONFIDENTIAL TREATMENT REQUESTED]
each)
(b) Firm Launches $[CONFIDENTIAL
TREATMENT
REQUESTED](2)
(Quantity of Two (2) at $[CONFIDENTIAL TREATMENT REQUESTED]
each)
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TOTAL $72,200,000
(1)The $[CONFIDENTIAL TREATMENT REQUESTED] price for the
Firm Satellites represents a price cap (the "SATELLITE
PRICE CAP"). However, if at the time of delivery of the
last of the Firm Satellites, the actual total costs
incurred by Orbital plus the 15% fee are less than
$[CONFIDENTIAL TREATEMENT REQUESTED] (the "ACTUAL
PRICE"), then ORBCOMM Global shall pay to Orbital an
amount equivalent to 60% of the difference between the
Satellite Price Cap and the Actual Price (the
"DIFFERENCE PAYMENT") within 30 days of the receipt by
ORBCOMM Global of the invoice certifying that the work
for the Firm
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Satellites has been completed and that all work subject
to the Satellite Price Cap has been invoiced.
(2)The $[CONFIDENTIAL TREATMENT REQUESTED] price for the
Firm Launches is a fixed price (the "LAUNCH PRICE").
Notwithstanding the foregoing, the $[CONFIDENTIAL
TREATMENT REQUESTED] price for the second of the Firm
Launches is exclusive of interest payments and
adjustments which are separately set forth in Section
5.2(b) and Section 5.2(c).
Section 4.2 - Price for Options. The prices for the Options (the
"OPTION PRICES") are as follows:
(a) Price per Optional Satellite for any
Satellite Option (the "SATELLITE OPTION
PRICE"):
(i) if exercised on or before October 15, 1999 $[CONFIDENTIAL
TREATMENT
REQUESTED](3)
(ii) if exercised between October 16, 1999 $[CONFIDENTIAL
and December 31, 2000 TREATMENT
REQUESTED](3)
(b) Price per Optional Launch for any Launch
Option (the "LAUNCH OPTION PRICE"):
(i) if exercised on or before September 30, 1999$[CONFIDENTIAL
TREATMENT
REQUESTED](4)
(ii) if exercised between October 1, 1999 $[CONFIDENTIAL
and December 31, 2000 TREATMENT
REQUESTED](4)
(iii) additional Launch(es) on or after $TBD(5)
January 1, 2001
(c) Lab Option Price $[CONFIDENTIAL
TREATMENT
REQUESTED]
(3)In addition to the Satellite Option Price, an
equitable adjustment shall be negotiated in good faith
by the parties if the Satellite Option is exercised for
the delivery of a total of more than six Optional
Satellites to reflect reasonable additional costs
incurred by Orbital, if any, as a result of
modifications to be implemented following completion of
the 68302 Processor Tests as set forth in the Satellite
Statement of Work.
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(4)The Launch Option Price(s) shall be subject in all
cases to the good faith negotiation of an equitable
adjustment in case of high inclination Launches.
(5)The price and terms of any such additional launches
shall be no less favorable to ORBCOMM Global than those
made available by Orbital to [CONFIDENTIAL TREATMENT
REQUESTED], without any obligation on ORBCOMM Global to
pay [CONFIDENTIAL TREATMENT REQUESTED] prices.
Section 4.3 - Technical Assistance. For technical assistance tasks,
other than those set forth in Section 2.5, the following shall apply:
(a) Orbital shall provide to ORBCOMM Global, on
a time and materials basis (including a fee
not to exceed ten percent (10%) to be
mutually agreed upon by Orbital and ORBCOMM
Global), technical services, the cost for
which is estimated to be less than One
Hundred Thousand Dollars ($100,000), as and
when required by ORBCOMM Global, relating to
the Satellites, the Launches or the Lab.
Orbital shall be required to submit to
ORBCOMM Global a monthly report in writing
that outlines the total hours expended
during the month and the total dollar amount
spent, including cumulative amount.
(b) Orbital shall provide to ORBCOMM Global, on
a time and materials basis (including a fee
not to exceed fifteen percent (15%) to be
mutually agreed upon by Orbital and ORBCOMM
Global), technical services, the cost for
which is estimated to exceed One Hundred
Thousand Dollars ($100,000), as and when
required by ORBCOMM Global, relating to the
Satellites, the Launches or the Lab. Orbital
shall be required to submit to ORBCOMM
Global a monthly report in writing that
details the subtotaled expenditures by each
subsystem (current month and cumulative for
the task), including but not limited to, (i)
the total labor hours expended, including
the dollar amounts, (ii) material costs,
with itemization of single items exceeding
$5,000, (iii) cost of subcontracts, and (iv)
other direct costs.
(c) Orbital shall not be obligated to perform
any individual task on a time and materials
basis which, in the reasonable opinion of
the parties, will amount to more than One
Million Dollars ($1,000,000).
Section 4.4 - Increase to Satellite Price Cap. For each Satellite
Option that is exercised, if any, or if the Lab Option is exercised, it shall
have the effect of increasing the Satellite Price Cap in an amount equal to the
price of the Optional Satellite(s) and/or the Lab Option; and, for each
Satellite Option that is exercised, the Milestones and delivery schedule shall
be renegotiated in good faith between the parties. The Milestones and delivery
schedule shall not be affected by the exercise of the Lab Option.
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Section 4.5 - Launch Pause Option Monthly Fee. Should ORBCOMM Global
exercise the Launch Pause Option, ORBCOMM Global shall be obligated to pay
Orbital a fixed monthly payment of Ninety-six Thousand Dollars ($96,000) (the
"LAUNCH PAUSE OPTION FEE") for each complete month during the Pause Period. It
is agreed between the parties that this Launch Pause Option Fee shall cover all
costs for all work required during the Pause Period as outlined in the Launch
Vehicle Statement of Work and Specifications.
Section 4.6 - Incentive Fee. In addition to the Price, ORBCOMM
Global shall pay to Orbital an incentive fee of One Hundred Thousand Dollars
($100,000) per functional Satellite if more than two-thirds of the Satellites in
any one Launch are functional, as determined on a date that is six months after
the date of such Launch (the "INCENTIVE FEE"). The functionality of a Satellite
shall be determined in accordance with the definition set forth in Schedule 4.6.
Orbital undertakes not to insure the Incentive Fee.
Section 4.7 - Taxes. (a) The Price (to include any Option Prices)
does not include any federal, state or local sales, use or excise taxes levied
upon or measured by the sale, the sales price, or the use of the items to be
delivered or services required to be performed hereunder. Orbital shall list
separately on its invoice any such tax lawfully applicable to the items to be
delivered or services required to be performed hereunder and payable by ORBCOMM
Global. The Price shall not however include any taxes on property owned by the
United States Government, or any U.S. or foreign federal, state or local income
taxes imposed on Orbital.
(b) In cases where Orbital and/or ORBCOMM Global are wholly or
partially exempt from such taxes and duties or otherwise entitled to relief by
way of protest, refund claims, litigation or other proceedings, Orbital shall
take all necessary steps to facilitate such exemption or relief by:
(i) Using reasonable efforts to bring about the exemption or relief
before submitting the invoices to ORBCOMM Global; and
(ii) Complying with all formalities necessary to enable ORBCOMM
Global to claim reimbursement with respect to taxes and duties that
have been paid. For this purpose, Orbital shall comply with the
reasonable instructions given to it by ORBCOMM Global and provide in
due time the information that ORBCOMM Global reasonably requires.
If any such tax is determined to be legally due from either Orbital or ORBCOMM
Global, ORBCOMM Global shall pay it separately. ORBCOMM Global shall pay, or
reimburse Orbital for all out-of-pocket expenses incurred in connection with the
activities contemplated by this Subsection 4.7(b).
Section 4.8 - Insurance. (a) The Price does not include the cost of
Launch or Satellite insurance (but includes Satellite on-ground transportation
insurance and property insurance for the pre-launch phase), which insurance
shall be procured by ORBCOMM Global or, at ORBCOMM Global's discretion, by
Orbital for ORBCOMM Global's account. ORBCOMM
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Global shall pay or promptly reimburse Orbital for all expenses incurred by
Orbital, on behalf of ORBCOMM Global in obtaining Launch and/or Satellite
insurance, upon receipt of Orbital's invoice therefor.
(b) The Price does not include the cost to insure the Satellites
during any period of time in which the Satellites are put into storage. Orbital
shall obtain the appropriate level(s) of insurance required to cover the repair
or replacement costs, as the case may be, of the Satellites during storage.
ORBCOMM Global shall pay or promptly reimburse Orbital for all expenses incurred
by Orbital, on behalf of ORBCOMM Global in obtaining the Satellite storage
insurance, upon receipt of Orbital's invoice therefor.
ARTICLE 5 - PAYMENT TERMS AND INVOICING
Section 5.1 - Satellites. Orbital shall be entitled to provide
ORBCOMM Global with monthly invoices, up to the maximum applicable limits set
forth in Schedule 5.1, as reasonably adjusted following an exercise of a
Satellite Option and/or the Lab Option, representing the costs incurred by
Orbital during the previous month for the fulfillment of the required work for
the Satellites and/or the Lab Option, as applicable, plus fifteen percent (15%).
ORBCOMM Global shall pay such invoices as follows:
(a) Seventy-five percent (75%) of the invoiced amount shall be paid
within 30 days of the receipt of the applicable invoice, and
(b) Twenty-five percent (25%) of the invoiced amount will be
accumulated and be paid on the latest of (i) the completion of the next
Milestone as shown in Exhibit B plus 30 days and (ii) the target date of such
Milestone, less 30 days.
Section 5.2 - Launches. (a) Subject to Section 5.2(b), Orbital shall
be entitled to provide ORBCOMM Global with monthly invoices, up to the maximum
applicable limits set forth in Schedule 5.2, as adjusted according to Section
5.2(b) in the event of the exercise by ORBCOMM Global of the Launch Pause
Option, representing the costs incurred by Orbital during the previous month for
the fulfillment of the required work for the Launches and ORBCOMM Global shall
pay such invoices as follows:
(i) Seventy-five percent (75%) of the invoiced amount shall be
paid within 30 days of the receipt of the applicable invoice, and
(ii) Twenty-five percent (25%) of the invoiced amount will be
accumulated and be paid on the latest of (A) the completion of the next
Milestone as shown in Exhibit B plus 30 days and (B) the target date of such
Milestone, less 30 days.
(b) On the exercise by ORBCOMM Global of a Launch Pause Option,
starting on the first day of the Pause Period, Orbital shall cease to provide
ORBCOMM Global with any further
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invoice (other than for the fixed monthly payment as set forth in Section 4.5)
and shall be entitled to provide ORBCOMM Global with:
(i) A Five Hundred Thousand Dollar ($500,000) invoice if ORBCOMM
Global has provided Orbital with prior written notice of the exercise of the
Launch Pause Option on the sixteenth month following the Effective Date (i.e.,
June 1, 2000), or
(ii) A Two Hundred Fifty Thousand Dollar ($250,000) invoice if
ORBCOMM Global has provided Orbital prior written notice of the exercise of the
Launch Pause Option on the twelfth month following the Effective Date (i.e.,
February 1, 2000); and
(iii) ORBCOMM Global shall pay any such invoice within 30 days
of the receipt thereof.
(c) During the Pause Period, if Orbital makes use of the launch
vehicle motor for another launch other than ORBCOMM Global's (subject to the
approval of ORBCOMM Global to be given at the sole discretion of ORBCOMM
Global), then Orbital shall promptly refund to ORBCOMM Global the amount of Two
Hundred Fifty Thousand Dollars ($250,000) and the parties shall negotiate in
good faith additional terms (such as a revised schedule and an appropriate
revision of the time and materials charges). The unpaid balance of the cost of
the second Firm Launch shall be subject to a five percent (5%) annual fee as
interest and Schedule 5.2 shall be adjusted accordingly.
Section 5.3 - Incentive Fee. The Incentive Fee shall be payable
within 30 days of the functionality determination as provided in Section 4.6 and
the provision of an invoice by Orbital to ORBCOMM Global.
Section 5.4 - Invoicing. For all invoices for progress payments,
Milestones and/or time and material tasks, Orbital shall provide a certificate,
signed by the Vice President and Controller of Orbital or by any other officer
designated by the Vice President and Controller of Orbital, certifying the
accuracy of the costs incurred that are the subject of the respective invoice.
The invoices shall include, but not be limited to, a listing of labor cost,
including labor hours by bid rate group, material, subcontracts and ODC's as to
enable ORBCOMM Global to fully comprehend the total monthly charges being
invoiced by Orbital. Invoices shall be submitted to the following address:
ORBCOMM Global, L.P.
Attn: Controller
2455 Horse Pen Road, Suite 100
Herndon, Virginia 20171
Section 5.5- Milestone Achievement. (a) A Milestone shall be deemed
achieved upon the successful demonstration by Orbital that the Work that is the
subject of the Milestone has been completed in accordance with the requirements
of this Agreement, and that all conditions
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established by this Agreement as prerequisites to payment of the invoice have
been fulfilled to ORBCOMM Global's reasonable satisfaction.
(b) In the event that Orbital fails to achieve any Milestone on or
before the scheduled completion date shown in Exhibit B, ORBCOMM Global shall be
relieved of its obligation to pay the applicable amounts specified for such
Milestone until such time as Orbital achieves such Milestone or obtains a waiver
in writing from ORBCOMM Global for such achievement. A Milestone attached to a
Launch shall be considered completed when all reports, documentation and
analyses pertaining to the Launch have been delivered to ORBCOMM Global and, in
the case of a failed Launch, when the final failure analysis report of the
Failure Review Board is delivered to ORBCOMM Global. The invoicing and payment
procedure referred to Section 5.1(b) and Section 5.2(a)(ii) shall then apply
mutatis mutandis. This, together with any additional rights and remedies ORBCOMM
Global may have under Article 12, shall constitute ORBCOMM Global's exclusive
right and remedy for Orbital's failure to achieve any or all such Milestones.
Orbital's failure to timely complete any Milestone shall not relieve ORBCOMM
Global from its obligation to pay for other achieved Milestones.
(c) If ORBCOMM Global concludes that the Milestone event for which
any invoices have been submitted has not been successfully completed in
accordance with the requirements of this Agreement or that any condition
established by this Agreement as prerequisite to payment has not been fulfilled,
it shall provide Orbital written exceptions within ten (10) business days after
receipt of the invoice, specifying in detail the non-conformance. The applicable
payments shall be made within five (5) business days after ORBCOMM Global's
receipt of Orbital's response, in writing, addressing in detail each of ORBCOMM
Global's exceptions; provided, however, if, with respect to any such Milestone,
ORBCOMM Global reasonably concludes that Orbital's response to ORBCOMM Global's
exceptions to be non-responsive and so notifies Orbital as provided in
Subsection 5.5(c)(i) below, ORBCOMM Global may, at its sole discretion, defer
any unpaid amount of the relevant Milestone payment until the resolution of the
matter as described in Subsection 5.5(c)(i) below.
(i) In the event ORBCOMM Global concludes that Orbital has been
non-responsive to ORBCOMM Global's exception to a Milestone, ORBCOMM Global
shall notify Orbital thereof in writing (the "EXCEPTION NOTIFICATION") within
ten (10) business days after receipt of Orbital's response to ORBCOMM Global's
written exception. The Exception Notification shall (A) specify in detail the
reason(s) ORBCOMM Global believes Orbital's response to be non-responsive, and
(B) advise Orbital formally that ORBCOMM Global intends to withhold payment for
such Milestone(s) until Orbital demonstrates to the reasonable satisfaction of
ORBCOMM Global that such Milestone(s) has been achieved. On receipt of an
Exemption Notification from ORBCOMM Global, Orbital shall have thirty (30) days
to demonstrate the achievement of the relevant Milestone to the reasonable
satisfaction of ORBCOMM Global. If Orbital is unable to make such demonstration,
either party may submit the matter to be resolved as provided in Section 15.4
hereof.
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Section 5.6 - Auditor Review of Submitted Invoices. In order to
ensure ORBCOMM Global that the invoices that are submitted accurately reflect
(i) the actual incurred costs and (ii) the correct percentage of costs to be
invoiced under the terms of this Agreement, an outside auditor firm selected by
ORBCOMM Global may review the accuracy of submitted invoices under this
Agreement against Orbital's accounting books and records. In the event that an
error was made and ORBCOMM Global was overcharged, the amount of the overcharge
shall be determined by the auditors and the overcharged amount, plus interest to
be calculated at the prime rate of Morgan Guaranty Trust Company of New York in
effect on the first business day for each relevant month from the date of
overpayment, shall be refunded to ORBCOMM Global within five (5) business days
from the date of notification by the auditors. All expenses of such audits shall
be paid by ORBCOMM Global except that, to the extent that there is an overcharge
greater than Fifty Thousand Dollars ($50,000) finally determined and that such
determination is binding upon the parties, Orbital shall pay audit expenses with
respect to any invoices for which an overcharge is so determined. To the extent
that Orbital does not agree with the auditors' determination, such dispute shall
be settled in accordance with Section 15.4.
ARTICLE 6 - SECONDARY PAYLOADS
ORBCOMM Global shall have the right to refuse, for technical reasons, the
inclusion of any secondary payload on any of the Launches. However, tertiary
payloads can be included at Orbital's discretion, so long as such payload does
not increase the risk of the ORBCOMM Global mission, as solely determined by
ORBCOMM Global acting reasonably. In addition, ORBCOMM Global shall have the
right to approve the price charged by Orbital for the inclusion of a secondary
payload. The price of any secondary payload included on a Launch shall be
allocated as follows: (a) the first One Million Five Hundred Thousand
($1,500,000) to Orbital, and (b) the balance to be allocated 60/40 between the
parties, with 60% being allocated to the party that identified and presented the
customer for the secondary payload to Orbital.
ARTICLE 7 - ACCESS AND ACCEPTANCE
Section 7.1 - Access. Subject to the receipt of any and all required
governmental approvals, ORBCOMM Global's authorized representatives shall have
the right, on a not-to-interfere basis, at all reasonable times during the
performance of this Agreement, to monitor the Work in progress (including
without limitation all test activities with access to related computer program
information to the extent reasonable safeguards can be implemented) at the
plant(s) of Orbital. Orbital shall use all commercially reasonable efforts to
incorporate in all of its subcontracts, Orbital's and ORBCOMM Global's rights to
monitor work in progress as provided herein, provided that any additional direct
expenses associated with the exercise or implementation of such rights shall be
borne by ORBCOMM Global.
Section 7.2 - Inspection and Acceptance. ORBCOMM Global's authorized
representatives shall promptly conduct a final inspection of the Satellites and
Launch Vehicle in accordance with
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the Verification and Test Plan or, at ORBCOMM Global's option, witness such
inspection by Orbital and shall either approve them for launch in writing or
promptly notify Orbital in writing of the particulars in which they are
non-conforming with the applicable Specifications. If no objections have been
sent by ORBCOMM Global within fifteen (15) days of the inspection, the relevant
Satellite and Launch Vehicle shall be deemed to have received approval for
launch by ORBCOMM Global. Corrections required to render the Satellites and
Launch Vehicle in conformance with the applicable Specification shall be made by
Orbital at its cost, whether the required corrections were the fault of Orbital
or Orbital's subcontractors. The decision as to how to make the corrections
shall be at Orbital's sole discretion and an item found to be non-conforming
during or after testing performed under this Agreement shall, at ORBCOMM
Global's request and without charge to ORBCOMM Global, be re-tested by Orbital
after Orbital has remedied the non-conformance. ORBCOMM Global may be assisted
in all inspections by its consultants or advisors.
Section 7.3 - Corrections in Unlaunched Satellites. (a) If at any
time, either Orbital or ORBCOMM Global becomes aware that defects exist in any
unlaunched Satellite as a result of the operation of on-orbit Satellites
(including any Satellite of the ORBCOMM System) or otherwise, then the following
shall occur: (i) if by Orbital, Orbital shall notify promptly ORBCOMM Global of
such defects and to the extent that ORBCOMM Global determines that such defects
would, in the reasonable opinion of ORBCOMM Global, materially and adversely
affect the operation of the Satellites or the ORBCOMM System, Orbital shall take
prompt and appropriate corrective measures to eliminate any such defects from
all unlaunched Satellites, or (ii) if by ORBCOMM Global, ORBCOMM Global shall
notify promptly Orbital of such defects that would, in the reasonable opinion of
ORBCOMM Global, materially and adversely affect the operation of the Satellites
or the ORBCOMM System, Orbital shall be obligated within ten days to verify and
respond to ORBCOMM Global's notification of defective unlaunched Satellites,
and, in the event the defect has been verified, Orbital shall take prompt and
appropriate corrective measures to eliminate any such defects from all
unlaunched Satellites. The decision as to how to make the corrections shall be
at Orbital's sole discretion.
(b) ORBCOMM Global shall pay the costs of such corrections
identified in Section 7.3(a) (to be in addition to the Satellite Price Cap) and
Orbital shall charge no markup or fee on such corrections; provided, however,
that if the material defect is found as a result of on-ground testing of the
Satellites by Orbital or Orbital's subcontractors, then the corrections shall be
deemed to be in the scope of Work subject to the Satellite Price Cap. Orbital's
obligation to correct such material defects in the Satellites at cost shall end
22 months following the Effective Date irrespective of whether or not a
Satellite Option has been exercised. After such date, corrections to unlaunched
Satellites shall be made at no more than cost plus ten percent (10%). ORBCOMM
Global shall decide whether or not to proceed with the corrections of such
material defects.
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ARTICLE 8 - TITLE AND RISK OF LOSS
With respect to the Launch Vehicles and to the Satellites, unless
otherwise provided in this Agreement, title to, beneficial ownership of, and
right to possession to and risk of loss of or damage to the Launch Vehicles and
the corresponding Satellites shall pass to ORBCOMM Global upon intentional
separation of the Launch Vehicle from the carrier aircraft. However, ORBCOMM
Global shall bear risk of loss to Stored Satellites, with such risks covered by
insurance provided by Orbital pursuant to Section 4.8(b). Correction of such
damage by Orbital shall be compensated by such insurance proceeds.
ARTICLE 9 - CHANGES
Section 9.1 - Changes. At any time and by written order, ORBCOMM
Global may make changes within the general scope of this Agreement in (a) the
Specifications or the Statements of Work, (b) the method of packing or shipment,
(c) place or time of delivery, or (d) the quantity or type of the items to be
delivered or services required to be performed hereunder.
Section 9.2 - Adjustments to Agreement. (a) If any change causes an
increase or decrease in the Price, or in the time required for performance of
any part of the Work, whether or not directly changed by the order, ORBCOMM
Global and Orbital shall negotiate an equitable adjustment to such Price,
delivery schedule or other provision of this Agreement. Orbital shall perform
the Work as changed pending resolution of any negotiation under this Article 9.
(b) Orbital must assert in a written proposal that addresses its
right to an adjustment under this Article 9 within sixty (60) days from receipt
of the written order; provided that, if Orbital requires additional time to
finalize its written proposal, it shall request an extension within the initial
sixty (60) day period, which request shall not be unreasonably denied by ORBCOMM
Global.
(c) If Orbital's proposal includes the cost of replacing property
made obsolete or excess by the change, ORBCOMM Global shall have the right to
prescribe the manner of the disposition of the obsolete or excess property.
(d) Failure to agree to any adjustment shall be a dispute and
settled in accordance with Section 15.4, provided that nothing in this Section
9.2 shall excuse Orbital from proceeding with the Work as changed.
(e) The exercise of any Option contemplated by this Agreement shall
not be considered a change to this Agreement.
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ARTICLE 10 - REPRESENTATIONS AND WARRANTIES
Section 10.1 - Representations and Warranties. Orbital represents
and warrants that (a) it has, and it shall deliver to ORBCOMM Global at the time
of title passing pursuant to Article 8, sole and good legal and equitable title
to the items to be delivered or to the extent applicable, the services required
to be performed pursuant to Article 2, free and clear of any and all security
interests, liens, claims, charges, and encumbrances of any kind or nature
whatsoever, together with full power and lawful authority to sell, deliver and
perform the items to be delivered or to the extent applicable, the services
required to be performed under Article 2, (b) the items to be delivered or to
the extent applicable, the services required to be performed shall be free from
defects in design, material and workmanship and shall operate and conform to the
performance capabilities, specifications, functions and other descriptions set
forth in the Specifications (as such Specifications may be modified from time to
time), (c) neither the delivery of the items nor the performance of the services
required to be performed by Orbital shall in any way constitute an infringement
or other violation of any copyright, trademark or patent or other validly
registered enforceable intellectual property right of any third party and (d)
the items to be delivered and the services required to be performed hereunder
shall be in compliance with all applicable United States laws, rules and
regulations.
Section 10.2 - Remedies for Breach of Warranty and Warranty Period.
For the Launch Vehicle Launch Services and the Satellites, following intentional
separation of the Launch Vehicle from the carrier aircraft, ORBCOMM Global's
sole remedy for launch failure, defects, failure to conform with applicable
Specifications or any other requirements shall be limited to (i) the potential
non-payment to Orbital of the related incentive payments and (ii) termination
remedies under Article 12.
Section 10.3 - Limitation of Liability. (a) ORBITAL SHALL NOT BE
LIABLE FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, OR OTHER DAMAGES RESULTING FROM
THE USE OF ANY OF THE GOODS OR SERVICES TO BE PROVIDED HEREUNDER, OTHER THAN THE
LIABILITY EXPRESSLY STATED HEREIN. THE WARRANTY SET FORTH HEREIN IS IN LIEU OF
ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
(b) Except as otherwise provided herein, regardless of fault, under
no circumstances shall Orbital be liable for any damages greater than Three
Million Dollars ($3,000,000) for any claim made, including any special,
incidental or consequential damages of any nature whatsoever, whether arising
from Orbital's breach of contract, breach of express or implied warranty,
arising in tort, at law or in equity including any law giving rise to a claim of
strict liability or for any other cause.
Section 10.4 - Patent Indemnification. (a) In the event of a breach
of the representation and warranty set forth in Section 10.1(c), Orbital agrees
to indemnify and hold harmless ORBCOMM Global and its permitted successors and
assigns of its products from and against all
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loss, damages, claims, demands and suits at law or in equity, for actual or
alleged claims, demands and suits at law or in equity, arising out of such
breach or alleged breach.
(b) Notwithstanding the provisions of Sections 10.1(c), 10.3(b) and
10.4(a), ORBCOMM Global agrees that Orbital shall be relieved of its obligations
referenced in Section 10.4(a), unless ORBCOMM Global notifies Orbital in writing
promptly, but in any event, no later than sixty (60) days after ORBCOMM Global
becomes aware of any such claim, suit or proceeding and, at Orbital's expense,
cooperates with and gives Orbital all necessary information and assistance to
mitigate, settle and/or defend any such claim, suit or proceeding; provided,
however, that ORBCOMM Global shall not be obligated to suspend service using the
ORBCOMM System in mitigation of Orbital's liability. In the event that the
actual liability of Orbital as a consequence of a claim, suit or proceeding in a
particular country, exceeds One Million Five Hundred Thousand Dollars
($1,500,000) in such country, excluding any country listed in Schedule 10.4(b)
for which the claim, suit or proceeding shall exceed Three Million Dollars
($3,000,000), and excluding the United States of America for which the claim,
suit or proceeding shall exceed the Price, then ORBCOMM Global shall release
Orbital from any obligation for liability for copyright, trademark and patent
infringement in such country in excess of the applicable limit. Notwithstanding
anything to the contrary herein contained, under no circumstances shall Orbital
be liable for any copyright, trademark or patent indemnification for countries
other than the United States of America, greater than Fifteen Million Dollars
($15,000,000) and copyrights, trademark or patent indemnification for all
countries including the United States of America greater than the Price.
(c) The patent indemnification in Sections 10(a) and 10(b) is
distinct from and shall not have the effect of modifying or limiting in any way
the patent indemnification set forth in the Original Procurement Agreement.
ARTICLE 11 - STOP WORK
Section 11.1 - Stop Work Order. ORBCOMM Global may, at any time, by
written order to Orbital, require Orbital to stop all, or any part, of the Work
called for by this Agreement for a period of sixty (60) days or for any further
period to which the parties may agree. The order shall be specifically
identified as a Stop Work issued under this Article 11. Upon receipt of the
order, Orbital shall immediately comply with its terms and take all reasonable
steps to minimize costs allocable to the work covered by the order during the
period of work stoppage. Within a period of sixty (60) days after a stop-work is
delivered to Orbital, or within any extension of that period to which the
parties agree, ORBCOMM Global shall either (a) cancel the stop-work order and
make an equitable adjustment to this Agreement for the delay or (b) terminate
the Work as provide in Article 12 hereof if applicable or if Orbital otherwise
agrees to terminate.
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ARTICLE 12 - TERMINATION
Section 12.1 - Termination. ORBCOMM Global may, by written notice of
termination to Orbital, terminate this Agreement upon the failure of Orbital (a)
to achieve any of the Milestones within forty weeks after the scheduled
completion date set forth in Exhibit B, provided that scheduled completion dates
shall be extended by any excusable delays as a result of a force majeure event
under Section 15.2; (b) to comply in any material respect with any of the
provisions of this Agreement and to correct such failure, within sixty (60) days
from the date of Orbital's receipt of written notice thereof from ORBCOMM
Global's authorized representative, setting forth in detail ORBCOMM Global's
basis for termination of the Agreement. However, damages to Stored Satellites
caused by other than gross negligence or willful misconduct on the part of
Orbital shall not be an event of termination under this Article.
Section 12.2 - Remedies Upon Termination. (a) In the event of
termination of this Agreement by ORBCOMM Global, as provided for hereinabove,
Orbital shall:
(i) To the extent it is permitted to do so by law,
regulation and third parties, deliver to ORBCOMM Global all
completed items to be delivered under Article 2, work-in-progress,
drawings, and other technical data associated with the Work
developed as part of the performance of the completed Milestones of
this Agreement along with appropriate licenses to the intellectual
property embodied in all such items (excluding any Launch Vehicle
Launch Services data), drawings and other technical data to use,
make and have made such items (excluding any Launch Vehicle Launch
Services data), provided, that such data and licenses shall be used
exclusively for purposes related to the ORBCOMM System and shall be
subject to appropriate confidentiality obligations;
(ii) Take all commercially reasonable steps to protect
and preserve the property referred to in (i) above in the possession
of Orbital until delivery to ORBCOMM Global;
(iii) At ORBCOMM Global's request and to the fullest
extent permitted by law, and subject to applicable laws and
regulations, transfer the approvals, permits, and licenses relating
to the ORBCOMM System and held by Orbital to ORBCOMM Global.
(iv) Be liable to ORBCOMM Global for liquidated damages
in the amount of Three Million Dollars ($3,000,000).
(b) In the event of ORBCOMM Global's proper exercise of its rights
under this Article 12, Orbital shall protect ORBCOMM Global, hold ORBCOMM Global
harmless and indemnify ORBCOMM Global from all claims (and related liabilities
and costs) by Orbital's customers or third parties, derived from or relating to
Orbital's rights under this Agreement, subject to any limitation provided in
Section 10.3 hereof.
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(c) Any disagreement under this provision, including disagreements
with respect to ORBCOMM Global's right to seek a termination and the appropriate
remedies for termination, shall be resolved in accordance with Article 15.4 of
this Agreement.
ARTICLE 13- OWNERSHIP OF INTELLECTUAL PROPERTY
Section 13.1. (a) Except as set forth in Sections 13.1(b) and
13.1(c), all designs, inventions (whether or not patented), processes, technical
data, drawings and/or confidential information related to the Work, including
without limitation the Satellites and Launch Vehicle Launch Services are the
exclusive property of Orbital and/or its subcontractors. All rights, title and
interest in and to all underlying intellectual property relating to the Work
shall remain exclusively in Orbital and/or its subcontractors, notwithstanding
Orbital's disclosure of any information or delivery of any data items to ORBCOMM
Global or ORBCOMM Global's payment to Orbital for engineering or non-recurring
charges. ORBCOMM Global shall not use or disclose such information or property
to any third party without the prior written consent of Orbital. Title to all
tools, test equipment and facilities not furnished by ORBCOMM Global or
specifically paid for by ORBCOMM Global and delivered to ORBCOMM Global under
this Agreement shall remain in Orbital and/or its subcontractors. ORBCOMM Global
agrees that it will not directly or through any third party reverse engineer the
Work.
(b) Except for the document jointly owned by ORBCOMM Global and
Orbital, those documents (the "DOCUMENTS") (including their underlying
intellectual property) set forth in Schedule 13.1 hereto are the exclusive
property of ORBCOMM Global. All rights, title and interest in and to all
underlying intellectual property relating to the Documents shall remain
exclusively in ORBCOMM Global, notwithstanding ORBCOMM Global's disclosure of
any information or delivery of any data items to Orbital. Orbital shall not use
or disclose such information or property to any third party without the prior
written consent of ORBCOMM Global.
(c) With respect to the document jointly owned by ORBCOMM Global and
Orbital as set forth in Schedule 13.1 hereto, each party shall jointly have all
rights, title and interest in and to all underlying intellectual property
relating to the jointly owned document. Without any prior consent of the other
party, a party may use, or license others to use, such underlying intellectual
property at its discretion.
Section 13.2. To the extent that computer software, source codes,
programming information and other related documentation relating to the Work,
other than the Launch Vehicles (the "BACKGROUND INFORMATION") are not
deliverable data under this Agreement (or to the extent that they are
deliverable data, that no ownership or license rights are being transferred to
ORBCOMM Global), Orbital, to the extent that it has the right to do so, shall
provide to ORBCOMM Global, on an as needed basis, the right to access and copy
such Background Information. ORBCOMM Global shall have the right to use such
Background Information to support its analysis of the ORBCOMM System, to develop
alternative solutions for technical
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problems affecting the operation and management of the ORBCOMM System and to
design modifications to the Background Information but in any event, not for any
reprocurement. To the extent that ORBCOMM Global designs modifications to the
Background Information, it shall not have the right to implement such
modifications without the prior written consent of Orbital. However, if ORBCOMM
Global decides to implement such modifications without the prior written consent
of Orbital, ORBCOMM Global shall be deemed to have waived its right to the
unpaid portion of the Incentive Fee and shall pay to Orbital within thirty (30)
days of the implementation of the modification such unpaid portion of the
Incentive Fee.
Section 13.3. Each party grants to the other party a non-exclusive
license for use of the other party's intellectual property as defined in
Section's 13.1 and 13.2 for purposes of performing the Work under this
Agreement.
ARTICLE 14 - SPECIAL PROVISIONS RELATING TO LAUNCH SERVICES
Section 14.1 - Cross-Waiver of Liability Relating to the Launch of
the Orbital Satellites. (a) In accordance with the applicable Department of
Transportation commercial launch license requirements, ORBCOMM Global agrees to
enter into an agreement with Orbital for a no-fault, no-subrogation,
inter-participant waiver of liability pursuant to which each shall not bring a
claim against or sue the employees of the other, or any of them, or the United
States Government, and each party agrees to be responsible for and to absorb the
financial and any other consequences of any Property Damage it incurs or for any
Bodily Injury to, or Property Damage incurred by, its own employees resulting
from activities carried out under this Agreement, irrespective of whether such
Bodily Injury or Property Damage is caused by ORBCOMM Global, Orbital or by
their contractors, subcontractors, officers, directors, agents, servants and
employees and the Government and regardless of whether such Bodily Injury or
Property Damage arises through negligence or otherwise.
(b) ORBCOMM Global and Orbital shall each be responsible for such
insurance as they deem necessary to protect their respective property. Any
insurance carried in accordance with this Article 14 and any policy taken out in
substitution or replacement for any such policy shall provide that the insurers
shall waive any rights of subrogation against ORBCOMM Global, Orbital, and the
United States Government, as the case may be, and their contractors and
subcontractors at every tier.
(c) ORBCOMM Global and Orbital hereby agree to obtain a similar
waiver in the form set forth above from any party with which it enters into an
agreement relating to the activities (launch of the Satellites) contemplated by
this Article, including without limitation, all of its respective contractors,
subcontractors and suppliers at every tier, and all persons and entities to whom
it assigns all or any part of its rights or obligations under this Agreement.
(d) As used herein, "BODILY INJURY" means bodily injury, sickness,
disease, disability, shock, mental anguish or mental injury sustained by any
person including death and damages for
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care and loss of services resulting therefrom. "PROPERTY DAMAGE" means injury to
or destruction of tangible property including the loss of use of such injured or
destroyed property.
Section 14.2 - Flight Readiness Assessment. Orbital shall brief
ORBCOMM Global on the technical status of each Launch prior to the mating of the
Satellites and/or Optional Satellites to the launch vehicle. Thereafter, Orbital
shall promptly inform Orbital of significant technical issues as they arise. In
the case of disagreement concerning whether or not to proceed with a Launch,
ORBCOMM Global, at any time, shall be allowed to discuss the issue(s) and
ORBCOMM Global's position concerning the issue(s) with the Chief Executive
Officer of Orbital. If after due consideration of the status of the launch
vehicle, spacecraft, and other launch support systems, ORBCOMM Global does not
agree that the mission is ready for Launch, ORBCOMM Global shall retain the
right to direct the delay to the Launch, at any time during a Launch campaign,
under the terms of the Changes provision of this Agreement.
Section 14.3 - Final Countdown Launch Authorization. ORBCOMM Global
shall also be polled in the final countdown procedure during status checks and
shall retain the right to concur or not to concur in the "GO" for launch.
ORBCOMM Global's designated representative shall be authorized to make such a
decision. If ORBCOMM Global does not concur, it may declare a "HOLD" and delay
the launch. If ORBCOMM Global calls for delay and the cause for such delay
cannot be shown to be attributable to Orbital's performance, or to have been
within its control or due to its fault or negligence, Orbital shall receive an
equitable adjustment to the Agreement price and schedule.
Section 14.4 - Range Support. Orbital is responsible for the range
costs, interface, and all coordination with the Government Agencies that control
the launch ranges required to launch each payload.
ARTICLE 15 - MISCELLANEOUS
Section 15.1 - Notices. (a) Except as otherwise specified herein,
all notices, requests and other communications required to be delivered to any
party hereunder shall be in writing (including any facsimile transmission or
similar writing), and shall be sent either by certified or registered mail,
return receipt requested, by telecopy or delivered in person addressed as
follows:
(i) if to Orbital, to it at:
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-5572
Attention: Senior Vice President and General Counsel
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(ii) If to ORBCOMM Global, to it at:
2455 Horse Pen Road, Suite 100
Herndon, Virginia 20171
Telecopy: (703) 406-3508
Attention: President & COO
with copies to:
Orbital Sciences Corporation
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3509
Attention: Executive Vice President and General Manager,
Communication and Information Systems Group
Teleglobe Mobile Partners
c/o Teleglobe Inc.
1000 de la Gauchetiere Street West
Montreal, Quebec
Canada H3B 4X5
Telecopy: (514) 868-7719
Attention: President, Teleglobe World Mobility
or to such other persons or addresses as any party may designate by written
notice to the others. Each such notice, request or other communication shall be
effective (i) if given by telecopy, when such telecopy is transmitted and the
appropriate answerback is received, (ii) if given by reputable overnight
courier, one (1) business day after being delivered to such courier, (iii) if
given by certified mail (return receipt requested), three (3) business days
after being deposited in the mail with first class postage prepaid, or (iv) if
given by any other means, when received at the address specified in this Section
15.1.
Section 15.2 - 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, the public enemy, embargo, governmental act, fire,
accident, war, riot, strikes, inclement weather or other cause of a similar
nature that is beyond the control of the parties. 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. Failure to agree
on an equitable extension shall be considered a dispute and resolved in
accordance with Section 15.4 hereof.
Delays in the launch of Satellites caused by the actions or
inactions of Orbital in connection with this Agreement, including without
limitation any Launch Vehicle Launch Service failure, directly or pursuant to
its subcontracts shall not constitute a force majeure event under this Section
15.2. All other delays in launches of Satellites arising for whatever reason
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shall constitute a force majeure event, including but not limited to delays in
the launch(es) of Satellite(s) due to delays of any other launches (i.e., not
under the Launch Vehicle Launch Service under this Agreement) preceding any of
the ORBCOMM System scheduled launches.
Section 15.3 - Licenses and Permits. Launches of the ORBCOMM System
Satellites shall be accomplished under the Commercial Space Launch Act (49
U.S.C. Section 2601, et seq.). Orbital shall be responsible for obtaining the
necessary licenses, permits and clearances that may be required by the United
States Department of Transportation, Department of Commerce, or other
governmental agency in order to operate as a launch service contractor.
Section 15.4 - Resolution of Disputes. (a) Any controversy or claim
that may arise under, out of, in connection with or relating to this Agreement
or any breach hereof, shall be submitted to a representative management panel of
ORBCOMM Global, Orbital and Teleglobe Mobile. Each of ORBCOMM Global, Orbital
and Teleglobe Mobile may appoint up to two (2) individuals to such panel. Such
appointments shall be made within ten (10) days of the receipt by the appointing
party of notice of the existence of such controversy or claim. The unanimous
decision and agreement of such panel shall resolve the controversy or claim. If
the panel is unable to resolve such matter within thirty (30) days of the
submission of such controversy or claim to such panel, it shall be brought
before the Presidents of ORBCOMM Global and Orbital and a designee of Teleglobe
Mobile for final resolution. If such individuals are unable to resolve the
matter within thirty (30) days of the submission of such controversy or claim to
such individuals by way of unanimous decision, either party may remove the
controversy or claim for arbitration in accordance with Section 15.4(b).
(b) Any controversy or claim that is not resolved under Section
15.4(a) shall be settled by final and binding arbitration in New York, New York,
in accordance with the then existing United States domestic rules of the
American Arbitration Association (the "AAA") (to the extent not modified by this
Section 15.4). In the event that claims or controversies arise under this
Agreement and any of the Definitive Agreements, such claims or controversies may
be consolidated in a single arbitral proceeding. The arbitral tribunal shall be
composed of three (3) arbitrators who are expert in satellite communications
systems and/or launch vehicles as may be appropriate depending on the nature of
the dispute. Each of ORBCOMM Global and Orbital shall appoint one (1)
arbitrator. If any party fails to appoint an arbitrator within thirty (30) days
from the date on which another party's request for arbitration has been
communicated to the first party, such appointment shall be made by the AAA. The
two (2) arbitrators so appointed shall agree upon the third arbitrator who shall
act as chairman of the arbitral tribunal. If the two (2) appointed arbitrators
fail to nominate a chairman within ten (10) days from the date as of which both
arbitrators shall have been appointed, such chairman shall be selected by the
AAA. In all cases, the arbitrators shall be fluent in English. Judgment upon any
award rendered by the arbitrators may be entered into any court having
jurisdiction or application may be made for judicial acceptance of the award and
an order of enforcement, as the case may be. The parties agree that if it
becomes necessary for any party to enforce an arbitral award by a legal action
or additional arbitration or judicial methods, the party against whom
enforcement is sought shall pay all reasonable costs and attorneys' fees
incurred by the party seeking to enforce the award.
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Section 15.5 - Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the Commonwealth of Virginia, USA,
without giving effect to the provisions, policies or principles thereof relating
to choice or conflict of laws.
Section 15.6 - Binding Effect; Assignment. This Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
successors and permitted assigns. Neither this Agreement nor any interest or
obligations hereunder shall be assigned or transferred (by operation of law or
otherwise) to any person without the prior written consent of the other party,
provided that any party may assign this Agreement and its interest and
obligations hereunder to any wholly owned subsidiary of such party.
Section 15.7 - Order of Precedence. Inconsistencies between or among
Articles of Agreements and/or any attachment shall be resolved in the following
order of precedence:
(a) Article 1 through Article 15 of this Agreement;
(b) the Statements of Work; and
(c) the Specifications.
Section 15.8 - Export Regulations. ORBCOMM Global acknowledges that
if Goods or technical data purchased, provided or produced hereunder are to be
exported, they are subject to applicable U.S. Commerce and/or State Department
export regulations. ORBCOMM Global accepts full responsibility for and agrees to
comply fully with such regulations, including obtaining export licenses and
re-export permission.
Section 15.9 - Key Personnel. Orbital agrees that those individuals
identified in Exhibit C are necessary for the successful completion of the Work
to be performed under this Agreement. Such key personnel shall be removed only
after proper advanced (two weeks minimum) consultation with ORBCOMM Global.
Advanced consultation shall include identification/qualifications of the
replacement and a transition plan. Orbital shall take considerable effort to
replace Key Personnel with personnel of substantially equal qualifications and
ability. In the event of a dispute, ORBCOMM Global shall communicate the concern
to Orbital's senior management to negotiate a mutually agreed upon alternative.
Notwithstanding its role in reviewing Key Personnel adjustments, ORBCOMM Global
shall have no supervisory control over Key Personnel work, and nothing in this
Section 15.9 shall relieve Orbital of any of its obligations under this
Agreement, or of its responsibility for any acts or omissions of its personnel.
To the extent that the Key Personnel voluntarily resign, ORBCOMM Global shall be
consulted in the selection of the replacement personnel but shall not have the
right to approve such replacement personnel.
23
24
Section 15.10 - Counterparts. This Agreement may be executed in any
number of counterparts of the signature pages, each of which shall be considered
an original, but all of which together shall constitute one and the same
instrument.
Section 15.11 - Headings. This section and other headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
Section 15.12 - Amendment Waiver. Except as provided otherwise
herein, this Agreement may not be amended nor may any rights hereunder by waived
except by an instrument in writing signed by the parties hereto.
Section 15.13 - Entire Agreement. This Agreement and all exhibits
(which are hereby made part of this Agreement) contain the entire understanding
between the parties and supersede the December 31, 1998 authorization to proceed
letter sent to Orbital by ORBCOMM Global and all other prior written and oral
understandings relating to the subject hereof. No representations, agreements,
modifications or understandings not contained herein shall be valid or effective
unless agreed to in writing and signed by both parties.
ARTICLE 16 - LIST OF EXHIBITS AND SCHEDULES
Exhibits
--------
Exhibit A STATEMENT OF WORK AND SPECIFICATIONS
Part 1A Satellite Statement of Work
Part 1B Satellite Specifications
Part 2 Launch Vehicle Statement of Work and Specifications
Exhibit B Work Schedule and Delivery
Exhibit C Key Personnel
Schedules
---------
Schedule 4.6 Working Satellites for Incentive Payment
Schedule 5.1 Maximum Cumulative Payments - Firm Satellites
Schedule 5.2 Maximum Cumulative Payments - Firm Launches
Schedule 10.4(b) Patent Indemnification - List of Countries
Schedule 13.1 Intellectual Property Listing
24
25
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
ORBITAL SCIENCES CORPORATION
By:
-----------------------
Name:
Title:
ORBCOMM GLOBAL, L.P.
By:
-----------------------
Name: Scott L. Webster
Title: Chairman and Chief Executive Officer
25
26
EXHIBIT A
27
EXHIBIT B
WORK SCHEDULE AND DELIVERY
FIRM SATELLITES:
SATELLITE MILESTONES
- --------------------------- -------------------------- ----------------------------------------------------
NO. MONTHS MILESTONE
- --------------------------- -------------------------- ----------------------------------------------------
- --------------------------- -------------------------- ----------------------------------------------------
1 0 Contract Signed
- --------------------------- -------------------------- ----------------------------------------------------
2 2 Gateway and STx Make/Buy Decision
- --------------------------- -------------------------- ----------------------------------------------------
3 4 50% Subcontracts Awarded
- --------------------------- -------------------------- ----------------------------------------------------
4 6 Design Change Review
- --------------------------- -------------------------- ----------------------------------------------------
5 8 100% Subcontracts Awarded
- --------------------------- -------------------------- ----------------------------------------------------
6 12 First Antenna Completed and Ready for Integration
- --------------------------- -------------------------- ----------------------------------------------------
7 14 Delta SPRR
- --------------------------- -------------------------- ----------------------------------------------------
8 16 100% of First Spacecraft Components In-House
- --------------------------- -------------------------- ----------------------------------------------------
9 18 Three Spacecraft Complete Integration
- --------------------------- -------------------------- ----------------------------------------------------
10 19 Three Spacecraft Finish I&T
- --------------------------- -------------------------- ----------------------------------------------------
11 22 Eighth Spacecraft Finish I&T
- --------------------------- -------------------------- ----------------------------------------------------
28
FIRM LAUNCHES:
- --------------------------------------------------------------------------------------------------------------
MILESTONE EST. DATE
- --------------------------------------------------------------------------------------------------------------
Preliminary Launch Vehicle ICD Submitted ATP + 2 mos
- --------------------------------------------------------------------------------------------------------------
Preliminary Mission Analysis Submitted ATP + 4 mos
- --------------------------------------------------------------------------------------------------------------
Stages 1 and 2 Motor Cases Hydroproofed ATP + 6 mos
- --------------------------------------------------------------------------------------------------------------
Interface Control Document Approved ATP + 8 mos
- --------------------------------------------------------------------------------------------------------------
ARAR Submitted to Range ATP + 10 mos
- --------------------------------------------------------------------------------------------------------------
Motors Cast, Cured, NDT Complete ATP + 12 mos
- --------------------------------------------------------------------------------------------------------------
PRD Submitted ATP + 14
- --------------------------------------------------------------------------------------------------------------
Program Support Plan Submitted to Range ATP + 16 mos
- --------------------------------------------------------------------------------------------------------------
Preliminary Flight Plan/Trajectory Analysis Completed ATP + 18mos
- --------------------------------------------------------------------------------------------------------------
Stage 1/2/3 Buy Off Complete ATP + 12 - 18 mos
- --------------------------------------------------------------------------------------------------------------
Motors Delivered to Field Site Launch - 4 mos
- --------------------------------------------------------------------------------------------------------------
HAPS and Avionics Section Delivered to Field Site Launch - 2 mos
- --------------------------------------------------------------------------------------------------------------
Pegasus XL Separation from Carrier Aircraft Launch
- --------------------------------------------------------------------------------------------------------------
29
EXHIBIT C
ORBITAL KEY PERSONNEL
John Stolte Program Manager
John Brunschwyler Deputy Program Manager
Todd Wantuch Bus Systems Lead
Gene Fujii Systems Lead
Jim Mollenkopf Communications Lead
David DeTroye I&T Lead
30
SCHEDULE 4.6 - INCENTIVE FEE
DEFINITION OF WORKING SATELLITE
- ------------------------------------------------- ---------------------------------------------------------------------------------
ITEM DEFINITION
- ------------------------------------------------- ---------------------------------------------------------------------------------
1. SRX has >=5 demodulators operating a) At least 5 demodulators can reliably pass packets. At least 2
demodulators can pass packets using acquisition/communicate
protocol and at least 2 demodulators can pass packets using
reservation protocol.
b) At least 5 demodulators are commandable into all four operating modes
c) DCAAS scans show noise spectra consistent with expected on-orbit values.
- ------------------------------------------------- ---------------------------------------------------------------------------------
2. Subscriber downlink EIRP is no less than 3 a) At 20W STX setting, nominal EIRP measures > 10.5 Dbw (using TSM or
Db below spec. spectrum analyzer and reference antenna) after accounting for propagation
and equipment characteristics and uncertainties.
- ------------------------------------------------- ---------------------------------------------------------------------------------
3. Gateway links are operational a) [Gateway link outages attributable to satellites less than [2%] of time
over 30 days with >5 degrees elevation at US GESs.]
b) Gateway EIRP measures>-1.75 Dbw after accounting for propagation and
equipment characteristics and uncertainties over variety of angles to
spacecraft boresight.}
c) Gateway uplink received signal level, as determined from the DSP
estimate, is within 4Db of the expected value, after accounting for
propagation and equipmentcharacteristics and uncertainties over variety of
angles to spacecraft boresight}
d) Telemetry dumps received at GES
e) Commands received at satellite
- ------------------------------------------------- ---------------------------------------------------------------------------------
4. ACS/GPS operates to specifications a) ACS points toward nadir to <=10 deg 90% and 5 deg CEP over a total of 30
days of normal operations without commanded deviations.
- ------------------------------------------------- ---------------------------------------------------------------------------------
5. >=50% of the datagram memory is available a) At least 250 kbytes of flight computer memory operational and available
for datagrams
- ------------------------------------------------- ---------------------------------------------------------------------------------
6. Orbit propagator is operating a) Orbit propagator operates consistent with observed orbit elements.
- ------------------------------------------------- ---------------------------------------------------------------------------------
7.Solar array power output is at least 70% of a) Solar array power output is at least 121 Watts
BOL specification
- ------------------------------------------------- ---------------------------------------------------------------------------------
8. System shall pass >=50% of the specified a) No Health and Maintenance activity indicating fundamental degradation with
message traffic rate processor throughput or serial link
b) Nominal interactions between gateway and STX DSPs and 68302 processors
c) No evidence that demonstrates that the spacecraft fails to pass 50% of
the specified message throughput.
- ------------------------------------------------- ---------------------------------------------------------------------------------
9. Power system shall support 80% of the a) Solar array drive rotates
specified transmitter duty cycles b) Support 80% required power consumption for all nominal eclipse operations.
- ------------------------------------------------- ---------------------------------------------------------------------------------
31
SCHEDULE 5.1 - MAXIMUM CUMULATIVE PAYMENTS
FIRM SATELLITES
The following Schedule 5.1 is the Maximum Cumulative Payments for the Firm
Satellites. Schedule 5.1 shall be adjusted following an exercise, by ORBCOMM
Global, of a Satellite Option and/or the Lab Option.
- --------------------------------------------------------------------------------------------------------------
YEAR QUARTER INCREMENTAL CUMULATIVE PAYMENT CAP
(INCLUDES 15% FEE)
- --------------------------------------------------------------------------------------------------------------
1999 1 $3,300,000 $3,300,000
- --------------------------------------------------------------------------------------------------------------
2 $5,200,000 $8,500,000
- --------------------------------------------------------------------------------------------------------------
3 $8,500,000 $17,000,000
- --------------------------------------------------------------------------------------------------------------
4 $5,000,000 $22,000,000
- --------------------------------------------------------------------------------------------------------------
2000 1 $6,000,000 $28,000,000
- --------------------------------------------------------------------------------------------------------------
2 $4,000,000 $32,000,000
- --------------------------------------------------------------------------------------------------------------
3 $2,800,000 $34,800,000
- --------------------------------------------------------------------------------------------------------------
4 $400,000 $35,200,000
- --------------------------------------------------------------------------------------------------------------
32
SCHEDULE 5.2 - MAXIMUM CUMULATIVE PAYMENTS
FIRM LAUNCHES
The following Schedule 5.2 is the Maximum Cumulative Payments for the Firm
Launches. Schedule 5.2 shall be adjusted following an exercise, by ORBCOMM
Global, of the Launch Pause Option.
PEGASUS 1 (FIRST FIRM LAUNCH):
- ------------------------------------------------------------------------------------------------------------
YEAR QUARTER INCREMENTAL CUMULATIVE PAYMENT CAP
- ------------------------------------------------------------------------------------------------------------
1999 1 $748,000 $748,000
- ------------------------------------------------------------------------------------------------------------
2 $631,000 $1,379,000
- ------------------------------------------------------------------------------------------------------------
3 $1,286,000 $2,665,000
- ------------------------------------------------------------------------------------------------------------
4 $2,349,000 $5,014,000
- ------------------------------------------------------------------------------------------------------------
2000 1 $4,019,000 $9,033,000
- ------------------------------------------------------------------------------------------------------------
2 $4,569,000 $13,602,000
- ------------------------------------------------------------------------------------------------------------
3 $4,145,000 $17,747,000
- ------------------------------------------------------------------------------------------------------------
4 $753,000 $18,500,000
- ------------------------------------------------------------------------------------------------------------
PEGASUS 2 (SECOND FIRM LAUNCH)(1):
- ---------------------------------------------------------------------------------------------------------
YEAR QUARTER INCREMENTAL CUMULATIVE PAYMENT CAP
- ---------------------------------------------------------------------------------------------------------
1999 1 $623,000 $623,000
- ---------------------------------------------------------------------------------------------------------
2 $506,000 $1,129,000
- ---------------------------------------------------------------------------------------------------------
3 $1,161,000 $2,290,000
- ---------------------------------------------------------------------------------------------------------
4 $1,524,000 $3,814,000
- ---------------------------------------------------------------------------------------------------------
2000 1 $2,802,000 $6,616,000
- ---------------------------------------------------------------------------------------------------------
2 $2,416,000 $9,033,000
- ---------------------------------------------------------------------------------------------------------
3 $2,685,000 $11,718,000
- ---------------------------------------------------------------------------------------------------------
4 $3,768,000 $15,486,000
- ---------------------------------------------------------------------------------------------------------
2001 1 $3,014,000 $18,500,000
- ---------------------------------------------------------------------------------------------------------
(1)Orbital shall be entitled to provide ORBCOMM
Global, on the date of execution of this Agreement,
with an invoice in the amount of One Million Dollars
($1,000,000). All payments over the One Million
Dollars ($1,000,000) normally due to Orbital in Year
1999 that relate to work conducted with respect to
the second of the Firm Launches shall be invoiced by
Orbital monthly, 12 months after the date they are
incurred, plus ten percent (10%) (as interest), and
ORBCOMM Global shall pay such invoices within 30
days of their receipt.
33
SCHEDULE 10.4(b) - PATENT INDEMNIFICATION
LIST OF COUNTRIES OR REGION
Europe
Canada
Mexico Region
Brazil
China
Argentina
South Africa
Venezuela
34
SCHEDULE 13.1 - OWNERSHIP OF INTELLECTUAL PROPERTY
LIST OF INTELLECTUAL PROPERTY (BY OWNER)
- -------------------------------------------------------------------------------------------------------
DOCUMENT NAME OWNER
- -------------------------------------------------------------------------------------------------------
Payload Software ICD ORBCOMM Global
- -------------------------------------------------------------------------------------------------------
Subscriber Terminal Physical Interface Document ORBCOMM Global
- -------------------------------------------------------------------------------------------------------
ORBCOMM Global
And
Orbital
GES to Spacecraft ICD (Joint Ownership)
- -------------------------------------------------------------------------------------------------------