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Exhibit 10.4
*** 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
ORBCOMM CONCEPT
DEMONSTRATION COMMUNICATION PAYLOAD
PROCUREMENT
AGREEMENT B10LG1192
This ORBCOMM Procurement Agreement (this "Agreement") is made and
entered into
as of the 3rd day of November, 2004 (the Effective Date") 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.
WITNESSETH
WHEREAS ORBCOMM has received United States Government Contract
#HSCG-23-04-C-ADA-001 (the "United States Government Contract" or the
"Contract") from the United States Coast Guard to develop the
capability to
receive, process, and forward the Automatic Identification System (AIS) Signal
via spacecraft and associated ground systems; and
WHEREAS ORBCOMM has received an order under the Contract to deliver a Concept
Demonstration Communications Payload and to launch and demonstrate
functionality
of the same; and
WHEREAS ORBCOMM desires to contract with Orbital for the overall design,
manufacture, test, and delivery to ORBCOMM the Concept Demonstration
Communication Payload for the ORBCOMM Automatic Identification System (AIS) and
provide payload integration support and on-orbit operations support as
specified
in the Contract Statement of Work. Additionally, as an option defined herein,
there is a potential for Orbital to provide thereafter up to five (5)
additional
identical or similar such payloads for the AIS, if approved, and an option for
six (6) ORBCOMM satellites with integrated AIS payloads and an option for six
(6) ORBCOMM satellites with integrated payloads similar to the current ORBCOM
payload utilized on the Plane B spacecraft.
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
"ORBCOMM AIS Demonstration Payload Statement of Work" B15051188 - Rev
New dated
November 2nd, 2004 And "ORBCOMM Concept Demonstration Spacecraft
Communications
Payload Specification" B15051189-Rev D dated October 6th, 2004 shall mean
the
payload statement of work and specifications attached hereto as Exhibit A,
"Options" shall mean the Additional AIS Payloads as set forth in
Section 2.1 and
ORBCOMM Spacecraft with AIS Payloads and ORBCOMM Spacecraft with ORBCOMM Plane
B
similar payloads to be defined at the time of the option execution.
"Payload" shall mean the communication payload equipment including an
Automatic
Identification System (AIS) receiver as described in the Concept Demonstration
Spacecraft Communications Payload Specifications and the ORBCOMM, AIS
Demonstration Payload Statement of Work (SOW) dated November 2nd, 2004 as set
forth at Exhibit A, Part 1
ARTICLE 2 - SCOPE OF WORK
<PAGE>
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 - Manufacture of Payload. (a) Orbital shall design, manufacture,
test and deliver to ORBCOMM the demonstration payload (the "Demo
Payload") in
accordance with the Payload Statement of Work and the Payload Specifications as
set forth at Exhibit A.
(b) ORBCOMM shall have the option (the "Option") to require Orbital
to construct
and deliver to ORBCOMM up to five additional payloads (the "Optional
Payloads")
Or
ORBCOMM shall have the option (the "Option") to require Orbital to
construct and
deliver to ORBCOMM six (6) ORBCOMM Spacecraft with AIS integrated payloads (the
"Optional AIS Spacecraft")
Or
ORBCOMM shall have the option (the "Option") to require Orbital to
construct and
deliver to ORBCOMM six (6) ORBCOMM Spacecraft without AIS integrated payloads
(the "Optional ORBCOMM Spacecraft")
(c) The Option shall be exercisable, at the times and prices defined in Exhibit
F.
Section 2.2 - Other Documentation. Orbital shall prepare, develop and submit to
ORBCOMM the documentation set forth in the CDRLs of the AIS Demonstration
Payload Statement of Work.
Section 2.3 - Payload Storage. Orbital shall provide ORBCOMM, on a time and
materials basis, at the rate specified in Exhibit B, technical services
associated with the storage of Payloads when required by ORBCOMM, relating to
the ORBCOMM AIS System.
Section 2.4 - Regulatory and Export Matters. Orbital shall provide to ORBCOMM
where practical, the technical data needed by ORBCOMM (a) to obtain and
maintain
the required United States regulatory authority needed to manufacture and
export
the Payload and any Option Payloads and (b) to take reasonable actions in any
regulatory proceedings to defend any claims against any regulatory authority
granted to ORBCOMM or any of its subsidiaries in connection with the Payloads.
ARTICLE 3 - WORK SCHEDULE AND DELIVERY
Section 3.1 - Completion of the milestones is set forth in Exhibit B - Work
Schedule and Delivery (the "Milestones"). Completion of Milestones
shall be
determined as described in Section 5.3.
(b) Demo Payload. The first Demo Payload shall be ready for delivery twelve
(12)
months following the receipt of the first milestone payment.
(c) Options. Options shall be ready for delivery in accordance with the
delivery
schedule defined in Exhibit B
ARTICLE 4 - CONSIDERATION
Section 4.1 - Price. The price for the Demo Payload (the "Price") is
as follows:
(a) Demo Payload
One (1) each $3,305,000
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TOTAL $3,305,000
==========
The Price for the Demo Payload represents a fixed price.
Section 4.2 - Price of Options. The prices for the Options (the "Option
Prices")
are defined in Exhibit F:
The price and terms of any such Option Payloads shall be no less favorable to
ORBCOMM than those made available by Orbital to NASA for similar products,
without any obligation on ORBCOMM to pay NASA prices.
Section 4.3 - Technical Assistance. For technical assistance tasks, other than
those set forth in Section 2.1, the following shall apply:
(a) Orbital shall provide to ORBCOMM on a time and materials basis as defined
in
Exhibit E technical services, the cost for which is estimated to be less than
One Hundred Thousands Dollars ($100,000), as and when required and directed by
a
Task Order issued by ORBCOMM, relating to the Payloads. Orbital shall be
required to submit to ORBCOMM a monthly report in writing for active Task
Orders
that outlines the total hours expended during the month and the total dollar
amount spent, including cumulative amount.
Section 4.4 - 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.
(b) In cases where Orbital and/or ORBCOMM are wholly or partially exempt from
such taxes and duties or otherwise entitled to relief by way of protest, refund
claims litigation or other proceeding, 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; and
(ii) Complying with all formalities necessary to enable ORBCOMM 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 and provide in due time the information that ORBCOMM reasonably
requires.
If any such tax is determined to be legally due from either Orbital or ORBCOMM,
ORBCOMM shall pay it separately. ORBCOMM shall pay, or reimburse Orbital for
all
out-of-pocket expenses incurred in connection with the activities contemplated
by this Subsection 4.4(b).
Section 4.5 - Insurance. (a) The Price(s) includes the cost of property
insurance and general and product liability insurance for the Payloads until
ORBCOMM takes delivery of the payload.
(b) The Price does not include the cost to insure the payloads during any
period
of time in which the Payloads are put into storage. Orbital shall obtain the
appropriate levels(s) of insurance required to cover the repair or replacement
costs, as the case may be of the Payloads during storage. ORBCOMM shall pay or
promptly reimburse Orbital for all expenses incurred by Orbital on behalf of
ORBCOMM in obtaining the Payload storage insurance, upon receipt of Orbital's
invoice therefor.
ARTICLE 5 - PAYMENT TERMS AND INVOICING
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Section 5.1 - Invoicing.
For all Milestone Payments, Orbital shall submit an invoice for each Milestone
Payment in accordance with the payment schedule defined in Exhibit E. Each
invoice shall identify the Milestone for which payment is being requested and
the amount requested. Payments shall be due net 30 days.
For all invoices for 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 costs, including labor hours by bid rate group, material subcontracts
and ODC's as to enable ORBCOMM to fully comprehend the total monthly charges
being invoiced by Orbital. Invoices shall be submitted to the following
address:
ORBCOMM, Inc
Attn: Controller
21700 Atlantic Blvd.
Dulles, VA 20166
Section 5.2 - 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 established by this Agreement as
prerequisites to payment of the invoice have been fulfilled to ORBCOMM'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 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 for such achievement. Orbital's failure to timely complete any
Milestone
shall not relieve ORBCOMM from its obligation to pay for other achieved
Milestones.
(c) If ORBCOMM 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's receipt of Orbital's
response, in writing, addressing in detail each of ORBCOMM's exceptions;
provided however, if with respect to any such Milestone, ORBCOMM reasonably
concludes that Orbital's response to ORBCOMM's exceptions to be non-responsive
and so notifies Orbital as provided in Subsection 5.5 (c) (i) below, ORBCOMM
may, at its sole discretion, defer any unpaid amount of the relevant Milestone
payment until the resolution of the matter as described in Subsection 5.3(c)(i)
below.
(i) In the event ORBCOMM concludes that Orbital has been non-responsive to
ORBCOMM `s exception to a Milestone, ORBCOMM shall notify Orbital thereof in
writing (the "Exception Notification") within ten (10) business after
receipt of
Orbital's response to ORBCOMM written exception. The Exception Notification
shall (A) specify in detail the reason(s) ORBCOMM believes Orbital's response
to
be non-responsive, and (B) advise Orbital formally that ORBCOMM intends to
withhold payment for such Milestone(s). On receipt of an Exemption Notification
from ORBCOMM, Orbital shall have thirty (30) days to demonstrate the
achievement
of the relevant
<PAGE>
Milestone to the reasonable satisfaction of ORBCOMM. If Orbital is unable to
make such a demonstration, ORBCOMM may defer payment as provided above. If
Orbital continues to dispute the OBRCOMM assertions of non-compliance, either
party may, at any time after the filing of the Orbital additional response as
permitted by this Section 5.3 (c)(i), submit the matter to be resolved by
arbitration as provided in Section 12.3 hereof.
Section 5.3 - Certification and Auditor Review of Submitted Invoices. In order
to assure ORBCOMM that the invoices that are submitted accurately reflect (i)
the actual hours expended, and actual cost incurred for travel expenses,
material and other direct cost (ODC) for T&M payments, and (ii) the correct
Milestone completion effort to be invoiced under the terms of this Agreement,
Orbital will provide with each invoice a certification executed by the Vice
President of Orbital's Space Systems Group that the sums invoiced are current,
complete and accurate and that they are allowable and allocable to the invoice
being presented and to this contract. If the United States Government should
require that invoices be certified in addition to the above referenced
certification, Orbital shall provide such other Government required
certifications as are required. ORBCOMM may request the Government to 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 was
overcharged, the amount of the overcharge shall be determined by the auditors
and the overcharged amount, shall be refunded to ORBCOMM within thirty (30)
business days from the date of notification by the auditors. To the extent that
Orbital does not agree with the auditors' determination, such dispute shall be
settled in accordance with Section 12.3.
ARTICLE 6 - ACCESS AND ACCEPTANCE
Section 6.1 - Access. Subject to the receipt of any and all required
governmental approvals, ORBCOMM 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'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.
Section 6.2 - Inspection and Acceptance. ORBCOMM authorized representatives
shall promptly conduct a final inspection of the Demo Payload and any Option
Payloads ordered in accordance with the Verification and Test Plan or, at
ORBCOMM's option, witness such inspection by Orbital and shall either approve
them for acceptance 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 within (15) days of the inspection,
the relevant payload shall be deemed to have received approval for acceptance
by
ORBCOMM. Corrections required to render the payloads in conformance with the
applicable Specification shall be made by Orbital at its cost. The decision 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's request and without charge to ORBCOMM be retested by Orbital
after Orbital has remedied the non-conformance. ORBCOMM may be assisted in all
inspections by its consultants or advisors. This final inspection and
acceptance
shall take place at Orbital's Dulles facility prior to delivery to ORBCOMM.
Section 6.3. - Corrections in Delivered Payloads. (a) If at any time, either
Orbital or ORBCOMM becomes aware that any payloads delivered under this
contract
are defective as a result of the operation of on-orbit Satellites which
defect(s) has resulted from a defect in workmanship or materials or adherence
to
the statement of work or specification then the following shall occur: (i)
<PAGE>
if the discovery is made by Orbital, Orbital shall notify promptly ORBCOMM of
such defects and to the extent that ORBCOMM determines that such defects would,
in the reasonable opinion of ORBCOMM materially adversely affect the operation
of the ORBCOMM AIS System. Orbital shall take prompt and appropriate corrective
measures to eliminate any such defects from all unused payloads, or (ii) if the
discovery is made by ORBCOMM, ORBCOMM shall notify promptly Orbital of such
defects that would, in the reasonable opinion of ORBCOMM, materially and
adversely affect the operation of the ORBCOMM AIS System. Orbital shall be
obligated within ten days to verify and respond to the ORBCOMM notification of
defective delivered and not yet launched payloads, and, in the event the defect
has been verified, Orbital shall take prompt and appropriate corrective measures
to eliminate any such defects from all such payloads. The decision how to make
the corrections shall be mutually agreed upon by ORBCOMM and Orbital.
(b) If the defects so identified are not the result of any failure to adhere to
the applicable specifications and SOW on the part of Orbital, ORBCOMM shall pay
the costs of such corrections identified in Section 6.3(a) and Orbital shall
charge for the effort expended on such corrections; provided however, that if
the material defect is found as a result of on-ground testing of the payloads
by
Orbital or Orbital's subcontractors, then the corrections shall be deemed to be
in the Scope of Work. Orbital's obligation to correct such material defects in
the payloads shall end the sooner of Twelve (12) months after acceptance of the
hardware by ORBCOMM or launch. After such date corrections to such payloads
shall be made at a price mutually agreed to by ORBCOMM and Orbital. ORBCOMM
shall decide whether to proceed with the corrections of such material defects.
If the defects so identified result from the failure of Orbital to adhere to
the
applicable specifications and/or SOW, then Orbital shall be responsible to
correct the defect in workmanship and/or material at no increase in Contract
price.
ARTICLE 7 - TITLE AND RISK OF LOSS
Title to, beneficial ownership of, and right to possession to and risk of loss
of or damage to the payloads shall pass to ORBCOMM upon final acceptance at
Orbital's Dulles facility.
ARTICLE 8 - CHANGES
Section 8.1 - Changes. At any time and by written order, ORBCOMM 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 8.2 - 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 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 8.
(b) Orbital must assert in written proposal that addresses its right to an
adjustment under this Article 8 within thirty (30) days from receipt of the
written order.
(c) If Orbital's proposal includes the cost of replacing property made obsolete
or excess by the change, ORBCOMM 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 shall be settled
in accordance with Section 12.3 provided that nothing in this Section 8.2 shall
excuse Orbital from proceeding with the Work as changed.
<PAGE>
(e) The exercise of any Option contemplated by this Agreement shall not be
considered a change to this Agreement.
ARTICLE 9 - REPRESENTATIONS AND WARRANTIES
Section 9.1 - Representations and Warranties. Orbital represents and warrants
that (a) it has and it shall deliver to ORBCOMM at the time of title passing
pursuant to Article 7, 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 material and
workmanship and shall operate and conform to the statement of work and
specifications as set forth in the in the contract, (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 9.2 Remedies for Breach of Warranty and Warranty Period. ORBCOMM's sole
remedy for payload failure, defects, failure to conform with applicable
Specifications or any other requirements shall be limited to (i) non-payment to
Orbital of the Price for the Payload (s) so affected and (ii) termination
remedies under Article 10.
Section 9.3 - 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
LIABILITIES 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.
Section 9.4 - Patent Indemnification. (a) In the event of a breach of the
representation and warranty set forth in Section 9.1(c), Orbital agrees to
indemnify and hold harmless ORBCOMM and its permitted successors and assigns of
its products from and against all 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.
ARTICLE 10 - TERMINATION
Section 10.1 Termination. (a) This order may be terminated at any time by the
mutual agreement of the parties, which agreement shall specify their respective
remaining rights and duties.
(b) ORBCOMM may, by written notice of termination to Orbital terminate this
Agreement upon the failure of Orbital (a) to achieve any of the Milestones
within four (4) 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 12.2; (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 authorized representative setting forth in
detail ORBCOMM basis for termination of the Agreement; or (c) termination of
<PAGE>
ORBCOMM's prime contract by ORBCOMM's customer, the United States Government.
(c) Orbital shall be in default under this agreement if it fails to deliver the
goods covered hereunder, or does so beyond a reasonable time, or delivers goods
of a quality differing from or inferior to the referenced applicable
specifications. A stoppage of work, initiated by Orbital as a direct result of
ORBCOMM's failure to make timely payment against any properly and appropriately
submitted invoice shall not be grounds for Default.
(d) Orbital shall be in default under this agreement in the event that Orbital
fails to comply with any applicable federal, state or local laws pertaining to
the subject matter of this agreement or the work required to fulfill the
requirements of this agreement.
(e) This order may be unilaterally terminated by ORBCOMM for default by Orbital
without prejudice to any claim for damages or other relief arising out of such
default.
(f) This order or, at the option of the ORBCOMM, individual orders placed
hereunder may be terminated in whole or in part by ORBCOMM for its convenience
or because of termination of a relevant United States Government prime
contract.
Section 10.2 - Remedies Upon Termination.
(a) In the event of termination of this Agreement by ORBCOMM as provided for
hereinabove, Orbital shall:
(i) At ORBCOMM's request, to the extent it is permitted to do so by law,
regulation and any third party obligations pertaining thereto, deliver to
ORBCOMM all completed items to be delivered under Article 2, work-in-process,
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,
drawings and other technical data sufficient to enable ORBCOMM to use, make and
have made such items, as would have been required as a deliverable had the work
continued to completion, 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) At ORBCOMM's request and to the fullest extent permitted by law, and
subject to applicable laws, regulations and terms of this Agreement, transfer
the applicable approvals, permits, and licenses pertaining to the goods
delivered under this Agreement.
(iii) 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.
(iv) In the event this agreement is terminated as a result of a termination for
convenience of the United States Government prime contract in support of which
this agreement has been entered, provide to ORBCOMM as soon as possible but in
any event not later than ninety (90) days after receipt of notice of such
termination for convenience, a certified statement of all damages for which it
will require ORBCOMM to seek reimbursement. In such event, Orbital shall retain
all Milestone payments received to date and be reimbursed for all costs
(including a reasonable fee thereon) that are in excess of Milestone payments
received and for which ORBCOMM is able to obtain payment from the United States
Government. Orbital shall cooperate fully with the United States Government and
ORBCOMM regarding the presentation of a termination for convenience request for
payment, including but not limited to providing all required certifications and
permitting all required United States Government audits in conjunction
therewith. ORBCOMM shall present the Orbital termination for convenience costs
to the Government and shall use its best efforts to permit Orbital to be able
to
participate directly with the Government in the negotiation of those
termination
for convenience costs which pertain to Orbital.
(v) In the event this Agreement is terminated solely for the convenience of
ORBCOMM (and not due to the termination of the relevant United States prime
contract), Orbital shall be entitled to
<PAGE>
retain all Milestone payments received to date and shall further be entitled to
be reimbursed for all costs (including a reasonable fee) in excess of such
Milestone payments that have been incurred by Orbital in support of this
Agreement. Orbital shall have the obligation to mitigate all such costs to the
extent such mitigation is possible.
(vi) In the event that this Agreement is terminated for default, Orbital shall
be permitted to retain the Milestone payments previously received prior to the
termination subject to the following conditions. ORBCOMM shall be obliged to
mitigate the damages sustained as a result of such default by Orbital to the
extent permitted by the Contract. If ORBCOMM elects to complete the undelivered
items specified in the Agreement, Orbital will be responsible for the
reprocurement cost of the remaining undelivered items up to the value of those
undelivered items as specified in this Agreement, and, if requested by ORBCOMM,
Orbital will, for the sole purpose of enabling ORBCOMM to complete the
undelivered items specified in the Agreement, make available to ORBCOMM
Foreground and Background Information necessary to enable ORBCOMM or its
designee to complete the items. Orbital will permit use of the aforementioned
Foreground and Background Information by ORBCOMM's designee only after Orbital
has been notified of ORBCOMM's intentions to make such Information available to
a third party and Orbital and ORBCOMM's designee have executed a non-disclosure
agreement, which will be in substantially the same form as that non-disclosure
agreement which exists between Orbital and ORBCOMM at the time of execution of
this Agreement, to protect such Information If ORBCOMM elects not to complete
the undelivered items specified in the Agreement, ORBCOMM and Orbital shall
agree on the disposition and amount of payment for undelivered manufacturing
materials decided by the parties to be delivered to ORBCOMM. Failure to agree
will be a dispute under Section 12.3. If, after termination, it is determined
that Orbital was not in default, or that the default was excusable, the rights
and obligations of the parties shall be the same as if the termination had been
issued for the convenience of the Government.
(b) Any disagreement under this provision, including disagreements with respect
to ORBCOMM's right to seek a termination and the appropriate remedies for
termination, shall be resolved in accordance with Article 12.3 of this
Agreement.
ARTICLE 11 - OWNERSHIP OF INTELLECTUAL PROPERTY
Section 11.1 (a) Except as set forth in Sections 11.1(b) and 11.1(c) and except
as required by the terms of the Prime Contract, all foreground IP related to
the
Work is the exclusive property of ORBCOMM. All rights, title and interest in
and
to all background IP 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 or ORBCOMM's payment to
Orbital for engineering or non-recurring charges. ORBCOMM shall not use or
disclose such information or property to any third party other than as required
by the terms of the Prime Contract without the prior written consent of
Orbital.
Title to all tools, test equipment and facilities not furnished by ORBCOMM or
specifically paid for by ORBCOMM and delivered to ORBCOMM under this Agreement
shall remain in Orbital and/or its subcontractors. Foreground information is
defined as that data, regardless of format, that is first conceived, developed
or produced by Orbital in the performance of this Agreement. Background
information is defined as data, regardless of format, and inclusive of all
technical information trade secrets, and proprietary information that was
conceived, developed or produced by Orbital prior to performing under this
Agreement or outside of the efforts required by this Agreement.
Section 11.2 To the extent that computer software, source codes, programming
information and other related documentation relating to the Work, (the
"Background Information") are not deliverable data under this
Agreement (or to
the extent that they are deli






