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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
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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
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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
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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 b