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Motorola / Iridium - Satellite System Operations & Maintenance Contract
IRIDIUM(R)
COMMUNICATIONS SYSTEM
OPERATIONS AND MAINTENANCE
IRIDIUM LLC
CONTRACT EFFECTIVE DATE: JULY 29, 1993 (CONFORMED 1/14/97 TO INCLUDE AMENDMENTS 1, 2, 3, 4, 5 AND 6)
IRIDIUM IS A REGISTERED TRADEMARK AND SERVICE MARK OF IRIDIUM LLC
TABLE OF CONTENTS TITLE PAGE
- ----- ----
RECITALS. 1
ARTICLE 1. DEFINITIONS. 2
ARTICLE 2. DESCRIPTION OF WORK. 3
ARTICLE 3. PERFORMANCE SCHEDULE. 4
ARTICLE 4. CONTRACTOR'S COMPENSATION. 4
ARTICLE 5. PAYMENT. 6
ARTICLE 6. TITLE TRANSFER. 6
ARTICLE 7. CHANGES. 6
ARTICLE 8. EXCUSABLE DELAYS. 7
ARTICLE 9. OWNER'S ACCESS. 7
ARTICLE 10. REPORTS. 8
ARTICLE 11. INTELLECTUAL PROPERTY RIGHTS. 8
ARTICLE 12. PATENT INDEMNITY. 9
ARTICLE 13. WARRANTY. 11
ARTICLE 14. TAXES. 11
ARTICLE 15 PERMITS AND LICENSES. 11
ARTICLE 16. CROSS WAIVER OF LIABILITY. 13
ARTICLE 17. INDEMNIFICATION. 14
ARTICLE 18. INSURANCE. 15
ARTICLE 19. EXPORT REGULATIONS. 15
ARTICLE 20. DEFAULT BY CONTRACTOR. 15
ARTICLE 21. DEFAULT BY OWNER. 17
ARTICLE 22. EXTENSION TO CONTRACT. 18
ARTICLE 23. TERMINATION OF SPACE SYSTEM CONTRACT. 18
ARTICLE 24. NEXT GENERATION SPACE SYSTEM. 18
ARTICLE 25. LIMITATION OF LIABILITY. 18
ARTICLE 26. DISCLOSURE AND USE OF INFORMATION BY THE PARTIES. 18
ARTICLE 27. PUBLIC RELEASE OF INFORMATION. 19
ARTICLE 28. ASSIGNMENT. 20
ARTICLE 29. RELATIONSHIP WITH OTHER AGREEMENTS. 20
ARTICLE 30. NOTICES. 20
ARTICLE 31. AUTHORIZED REPRESENTATIVES. 21
ARTICLE 32. EXHIBITS. 21
ARTICLE 33. ORDER OF PRECEDENCE. 21
ARTICLE 34. APPLICABLE LAW. 21
ARTICLE 35. ENTIRE AGREEMENT. 22
ARTICLE 36. EFFECTIVE DATE. 22
EXHIBIT A STATEMENT OF WORK
IRIDIUM Operations and Maintenance Contract
IRIDIUM OPERATIONS AND MAINTENANCE CONTRACT
THIS
CONTRACT is hereby made between Motorola, Inc. (hereinafter called "Motorola" or "Contractor") a corporation organized under the laws of the State of Delaware, U.S.A., and Iridium, Inc. (hereinafter called "Owner"), a corporation organized under the laws
of the State of Delaware, U.S.A. The Effective Date of this Contract is the date specified in ARTICLE 36, EFFECTIVE DATE.
A. On June 26, 1990, Motorola formally announced that it intended to
develop a global communication system that would allow communication
via portable radio telephones anywhere on Earth -- whether on land, at
sea or in the air. The new system, known as IRIDIUM(R), has at the
heart of its operation, a constellation of nominally sixty-six (66)
satellites in low-earth orbit working together as a digitally-switched
communications Space System in space. The system is intended to handle
both voice and data. One or more ground-based spacecraft control
facilities will maintain the satellite constellation and overall
operation of the system.
B. A key component of the IRIDIUM Communications System will be a Space
System of "gateway" surface facilities in various countries that will
link the satellites with the public-switched telephone network. These
gateways will also store customer billing information and will keep
track of each user's location.
C. Other key components to the system are the Subscriber Units (ISUs) and
Mobile Exchange Units (MXUs).
D. On June 14, 1991 Motorola incorporated Iridium, Inc. to, among other
things, become the owner/operator of the Space System portion of the
IRIDIUM Communications System.
E. A Space System Contract has been or will be executed to function as
the mechanism whereby Motorola will sell to Iridium, Inc. the Space
System portion of the IRIDIUM Communications System.
F. Separate agreements between Iridium, Inc., Motorola, and/or other
appropriate parties will provide for the production and sale of the
Gateways, Subscriber Units, MXUs, and other components of the IRIDIUM
Communications System. Neither this Contract nor the Space System
Contract include the development, sale, operation or maintenance of
the Gateways of the IRIDIUM Communications System.
G. This contract is intended to function as the vehicle whereby Motorola
will operate or direct the operation of the entire IRIDIUM
Communications System, and will maintain the Space System itself by the
routine replacement of individual space vehicles.
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ARTICLE 1. DEFINITIONS
Capitalized terms and the terms specified below used and not otherwise defined herein shall have the following meanings:
A. Constellation or Space Segment: That part of the IRIDIUM
Communications System consisting solely of the space vehicles (also
referred to as spacecrafts or satellites) in low-earth orbit. It does
not include the System Control Segment, Gateways, ISUs, MXUs or other
components necessary for complete utilization of the IRIDIUM
Communications System.
B. Gateway: The Gateways encompass the ground-based facilities
constructed in accordance with the Gateway Interface Specification
supporting the subscriber billing/information functions in addition to
call processing operations and the connection of the IRIDIUM
subscriber communications through the Public Switched Telephone
Network (PSTN).
C. Gateway Interface Specification: The functional specification that
defines the radio frequency interface, logical and physical protocols,
and functionality necessary for Gateway interoperability with the
Space System. It does not include the voice encoding algorithm
necessary for complete interoperability with the IRIDIUM
Communications System.
D. IRIDIUM Communications Service: The telephony of voice and data
service between subscribers and PSTN customers and the paging service
to subscribers provided by IRIDIUM Communications Systems.
E. IRIDIUM Communications System (or simply "IRIDIUM"): The complete
integrated satellite- based digitally-switched communication system.
This term refers collectively to the Space Segment, System Control
Segment, Gateways and Subscriber Unit Segment.
F. Mobile Exchange Units (MXUs): The equipment designed to interconnect
multiple voice or data channels to the IRIDIUM Communications System
using the subscriber unit radio frequency interface to the Space
G. Paging Unit Interface Specification: The functional specification
that defines the radio frequency interface, logical and physical
protocols and paging unit functionality necessary for paging unit
interoperability with the Space System.
H. Satellite Subscriber Unit (Voice) Interface Specification: The radio
frequency interface, logical and physical protocols, and unit
functionality necessary for subscriber unit (voice) interoperability
with the Space System. It does not include the voice encoding
algorithm necessary for complete interoperability with the IRIDIUM
Communications System.
I. Space System Operations Plan: Documentation developed under the Space
System Contract that details the functional operation of the Space
System. It also
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IRIDIUM Operations and Maintenance Contract
describes the functional operation of the entire IRIDIUM
Communications System.
J. Space System: The term refers to the integrated combination of the
Space Segment and System Control Segment.
K. Space Vehicles: The terms "space vehicle", "satellite", or
"spacecraft" all have the same meaning throughout this contract and
refer to the individual or multiple satellites of the Constellation.
L. Spare Space Vehicle: A space vehicle built by Contractor to
substantially the same performance specifications as those Space
Vehicles built under the Space System Contract. Such Spare Space
Vehicles are intended to be used by Contractor to replace space
vehicles of the Constellation in accordance with its obligations under
this contract. Contractor may store such Spare Space Vehicles on the
ground or may launch one or more of them into an orbit below the orbit
of the Constellation (i.e. a storage orbit) for later insertion into
the Constellation.
M. Subscriber Unit Segment: The Subscriber Unit Segment refers
collectively to the individual equipment units to be used by
subscribers and capable of initiating and receiving communications
through the IRIDIUM Communications System. These may include for
example hand-held portable units, aircraft units, marine units,
portable office units, and pay phone units. As used herein, this term
also includes paging units.
N. System Control Segment (SCS): This term refers to the various
ground-based sites, equipment, and facilities to manage and control
the individual space vehicles of the Constellation, and the
communication links of the IRIDIUM Communications System. The System
Control Segment is composed of a Master Control Facility, a Backup
Control Facility, and associated Telemetry, Tracking and Command
Facilities (TTAC's).
O. ODN: A communications link, separate from the Space System and the
Constellation, which is solely between and among the MCF and the
Gateway Equipment, and which is sufficient for the transmission of
network management data between the MCF and the Gateway Equipment and
message delivery requests from the MOC to the MTC. Backup link
capabilities will be provided to the backup location(s) for the
Network Management and MTC functions. The ODN shall not include
intra-SCS communications, nor the transmission of IRIDIUM subscriber
data and fax transmissions. The ODN under this Contract is the same
communications link described under the same term in the Terrestrial
Network Development Contract between Contractor and Owner.
P. Gateway Equipment: The hardware and software for the IRIDIUM Gateway
necessary to perform the functions specified in Section 3.1 of Exhibit
A of the Terrestrial Network Development Contract.
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IRIDIUM Operations and Maintenance Contract
Q. Initial GEPAs: GEPAs for the installation of Gateway Equipment for
the following IRIDIUM Investors, provided the installation of such
Gateway Equipment is scheduled to occur prior to the Commercial
Activation Date:
1. Iridium U.S., L.P.
2. Iridium SudAmerica
3. Nippon Iridium Corp.
4. United Communication Industry Public Company Limited
[Thai Satellite Telecommunications Co., Ltd.]
5. Pacific Communications Co., Ltd. - #1 [Taiwan]
6. Pacific Communications Co., Ltd. - #2 [Indonesia]
7. Iridium Services Deutschland and STET
8. Khrunichev State Research and Production Space Center
9. Iridium China (Hong Kong), Ltd.
10. Iridium India Telecom, Ltd.
11. Korea Mobile Telecommunications Corp.
R. GEPA: A Gateway Equipment Purchase Agreement between Motorola and a
gateway equipment purchaser.
ARTICLE 2. DESCRIPTION OF WORK.
A. Contractor shall provide the necessary labor to operate the System
Control Segment facilities as specified by the Space System Operations
Plan to control the space vehicles of the Constellation and the
day-to-day Space System management for the entire IRIDIUM
Communications System. Such Space System management functions include
the monitoring of the Space System interface of the Space System with
the Gateways, Subscriber Units, Paging Units and Mobile Exchange Units
(MXUs).
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B. Contractor shall exert its best efforts to monitor, upgrade and
replace, the hardware and software of the Space System (including the
individual space vehicles) as necessary to maintain it at a quarterly
Average Actual Service Provided (AASP) coverage factor and capacity
factor of no less than 98.0%. The AASP shall be calculated pursuant
to Exhibit A hereto. However, if the Space System Contract is
completed and accepted by Owner at an AASP coverage or capacity factor
of less than 98.0%, the most recent AASP coverage factor and capacity
factor computed by Contractor preceding such completion and acceptance
shall apply to this contract for the first complete quarterly period
(and any initial partial quarterly period). This activity shall
additionally include the routine updating of the Space System
Operations Plan as specified by Exhibit A hereto.
C. Space vehicles lost or damaged by the acts of third parties during the
five (5) year period of this contract shall be replaced by Contractor
in accordance with Paragraph D of ARTICLE 4, CONTRACTORS COMPENSATION,
of this Contract.
D. (1) ODN Connectivity:
Motorola shall manage and provide for the Operations and Maintenance
of the Operations Data Network (ODN), a frame relay network separate
from the Space System and the Constellation, which links the Gateways
and the MCF, and provides backup links to the BCF, or to other backup
sites at which the Network Management Function and the redundant MTC
may be located. The ODN shall include links and capacity as designated
by Iridium LLC for IBSS requirements, including connectivity of
remotely located GBS installations. Availability of the ODN shall be
consistent with the requirements for reliable delivery of the traffic
carried, and Motorola and Iridium shall periodically review ODN
performance data and make adjustments, if required, as mutually
(2) ODN Capacity, Traffic Allocation and Cost Allocation
Initial Capacity:
Initially, Motorola shall provide a 64 KBPS link between the frame
relay network and each gateway and a 256KBPS link between the frame
relay network and the MCF. Sizing of the link to the BCF, or to other
backup sites at which the Network Management Function and the
redundant MTC may be located shall be sufficient to accommodate the
equivalent traffic as would be carried by the link to the MCF. In
addition, Motorola shall provide links to remotely located GBS sites,
as designated by Iridium LLC. Such remote site designations and the
initial capacity of each link shall be communicated to Motorola by
Iridium LLC by a mutually agreeable date consistent with commercial
and operational needs.
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Anticipated Traffic:
Traffic (data) to be transported by the ODN includes:
- Motorola responsible network management data between the MCF and the
Gateways and message delivery requests from the MOC to the MTC.
- Iridium LLC responsible Call Detail Record traffic among GBS
(whether colocated with the gateway or remotely located), Gateway and
IBS (whether colocated with MCF or remotely located).
Network management and performance data will be shared between
Motorola and Iridium LLC in order to jointly plan network capacity
allocations and adjustments.
Cost Allocation:
Motorola shall procure and manage the configuration, operation and
maintenance of the entire ODN. Iridium LLC will reimburse Motorola for
the following costs:
- Non-recurring installation charges and recurring operating costs for
links with GBS
installations remote from the Gateways and IBS installations remote
from the MCF.
- Non-recurring installation charges and recurring operating costs for
the IBSS traffic and associated links beyond the cost of the initially
installed capacity as described above.
Each party has first rights to capacity it acquires for its respective traffic. To the extent spare link capacity exists, Motorola and Iridium agree to share such spare capacity in order to achieve more
efficient use of installed capacity and to minimize unnecessary expansions.
ARTICLE 3. PERFORMANCE SCHEDULE.
Contractor shall immediately commence all appropriate preparations in order for it to be responsible for the performance
of all of the work described in ARTICLE 2, DESCRIPTION OF WORK, immediately upon completion of the final milestone of the Space System Contract. Such effort shall continue thereafter for a period of five (5) years after the completion of the final milest
o
ne of the Space System Contract. Both Owner and Contractor recognize the Contractor may need to hire and train personnel, order materials from suppliers, produce Spare Space Vehicles, and, in the event Contractor utilizes an on-orbit sparing approach, to
launch such Spare Space Vehicles, all prior to completion of the Space System Contract.
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IRIDIUM Operations and Maintenance Contract
Contractor hereby grants to Owner the Option to extend this Contract for eight calendar quarters beyond the five-year period of this Contract. Such Option must be unconditionally exercised by Owner by delivering a written notice to Contractor no later tha
n
the last day of the 20th month after the start of the five year period of this Contract. In the event Owner exercises this Option, during such additional eight calendar quarters, Owner will pay Contractor the applicable quarterly payments determined from
the table in paragraph A of Article 4, "CONTRACTOR'S COMPENSATION."
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IRIDIUM Operations and Maintenance Contract
ARTICLE 4. CONTRACTOR'S COMPENSATION.
A. During each of the twenty (20) calendar quarters of the five (5) years
of this Contract, Owner shall pay Contractor quarterly payments as
determined from the table below.
PAYMENT (U.S.)
Year Per Calendar Quarter*
---- --------------------
1998 $129,360,000
1999 $134,360,000
2000 $139,360,000
2001 $145,360,000
2002 $151,360,000
2003 $157,748,000
2004 $164,762,000
2005 $171,777,000
2006 $178,794,000
*Although the parties anticipate that the five year period of this Contract will commence at the beginning of the fourth quarter of 1998 the actual date cannot be determined at this time, but will be the day of the acceptance of the final milestone of the
Space System under the Space System Contract. The quarterly periods will be January through March, April through June, July through September, and, October through December. The quarterly payment of the first period shall be prorated against the applicabl
e
quarterly period and be based upon the actual number of days remaining in the quarter from and including the day of final acceptance of the Space System under the Space System Contract compared to the total number of days in the quarter. The quarterly pa
y
ment for the final period of the five year duration of this contract shall be prorated based upon the actual number of days covered in the final quarter up to and including the last day of the fifth year compared to the total number of days in the quarter
.
Notwithstanding the foregoing, in the event the completion of the Space System Contract and, therefore, the commencement of the five year period of this Contract is delayed for more than six (6) months for any reason other than causes within the reasonab
le control of Contractor, the quarterly payments specified in Paragraph A above shall be adjusted to account for any additional costs incurred by Contractor.
Nineteen (19) months after the commencement of this Contract, Contractor will evaluate its relativ
e risks and cost experience on the Contract to date and will consider as appropriate a possible downward only price adjustment to the quarterly prices stated herein. Any such price adjustment will be based upon Contractor's sole and absolute discrition.
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IRIDIUM Operations and Maintenance Contract
B. Upon termination of this Contract prior to its expiration, as a result
of the termination of the Space System Contract prior to completion of
its final milestone for the convenience of Owner, Owner shall
immediately pay Contractor:
1. the sum of $46,000,000 (U.S.) for each Spare Space Vehicle
then located in a low-earth storage orbit; and
2. the sum of $31,000,000 (U.S.) for each Spare Space Vehicle
not yet launched; and,
3. a portion of the sum stated in B.2. above for each partially
completed Spare Space Vehicle whereby such portion shall be
equal to the percentage of completion of each space vehicle
multiplied times the sum listed in Paragraph B.2. above (for
example if a space vehicle is 75% complete, Owner shall pay
Contractor 75% of $31,000,000 for that partially completed
space vehicle).
Upon such termination or expiration of this contract or Space System
Contract, and payment by Owner to Contractor of all of the sums
specified above, (items 1, 2, and 3), title and risk of loss to each
such spare space vehicle not yet launched and the materials of each
partially completed spare space vehicle (items 2 and 3 above) shall
pass to Owner. Title and risk of loss to each spare space vehicle
already in a low-earth storage orbit passes to Owner as provided by
ARTICLE 6, TITLE TRANSFER.
C. Upon expiration of the five (5) year period of this Contract, Owner
shall pay Contractor the amounts specified in Paragraphs B1, B2 and B3
above; provided however that if Owner gives Contractor written notice
on or before the first day of the last full year of this Contract of
Owner's intent to not renew this Contract, Owner shall only pay
Contractor the amounts for item B1 above upon expiration of the five
(5) year duration of this Contract.
D. In the event one or more space vehicles of the Constellation, or, any
space vehicle in a low earth storage orbit are damaged by the acts of
third parties (including but not limited to the degradation or
complete loss of any space vehicle due to contact with space debris of
any size or character) and, upon request by Owner, Contractor agrees
to promptly replace such damaged space vehicles. In addition to the
quarterly payments, Owner agrees to pay Contractor the sum of
$46,000,000 (U.S.) upon the delivery by Contractor of a replacement
space vehicle in the orbital position in which such damaged or lost
space vehicle had been located. Furthermore, any such damaged or lost
space vehicles shall be considered fully functional for purposes of
the computation of the Average Actual Service Provided percentages in
Exhibit A. Upon arrival of such replacement space vehicle in the
designated Constellation orbital position, such replacement space
vehicle will commence to be evaluated for purposes of the computation
of the Average Actual Service Provided percentages in Exhibit A.
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IRIDIUM Operations and Maintenance Contract
The parties anticipate having evidence available when a space vehicle
is impacted by a large object in space and is totally destroyed as a
result. However, the parties also recognize that it may be extremely
difficult to determine the actual cause of the partial or complete
degradation or inoperability of a space vehicle in the event it is
impacted by small objects in space. Therefore, the parties agree that,
in the event the evidence available to the parties suggests to
reasonable and prudent experts knowledgeable in the field of
spacecraft orbital operations and/or space debris that a space object
(i.e., space debris) may have impacted a space vehicle and caused it
to become partially or completely inoperative, such situations shall
be deemed to be a situation whereby such spacecraft degradation was in
fact caused by a third party for purposes of this Article; provided
however that in such situations, Owner shall only be obligated to pay
Contractor $23,000,000 (U.S.) upon the delivery by Contractor of a
replacement space vehicle in the orbital position in which such
damaged or lost space vehicle had been located.
ARTICLE 5. PAYMENT.
A. The quarterly payments referred to in ARTICLE 4, CONTRACTOR'S
COMPENSATION, shall be paid by Owner to Contractor on or before the
first day of each calendar quarter. Payment to Contractor shall be
made by cable/wire transfer to a banking institution as Contractor
designates or by such other means as Contractor may designate from
time to time.
ARTICLE 6. TITLE TRANSFER.
Unless otherwise stated herein, the following shall apply:
A. Title and risk of loss or damage to each individual Spare Space
Vehicle of the Constellation shall pass to Owner upon the earlier of
the arrival of each such Spare Space Vehicle in a low-earth storage
orbit, or, upon the date on which Contractor demonstrates to Owner the
arrival of each space vehicle at its designated orbital location in
the Constellation. Except as provided by Paragraph D of ARTICLE 4,
CONTRACTOR'S COMPENSATION and other specific provisions of this
Contract, this transfer of title and risk of loss shall not affect
Contractor's best effort obligation to maintain the quarterly Average
Actual Service Provided percentages at a minimum 98.0% by replacing
such Spare Space Vehicles as appropriate without any price adjustment.
B. Title and risk of loss to the updates to the Space System Operations
Plan, replacements or repairs to hardware and revisions to items of
software in the System Control Segment shall pass to Owner upon the
earlier of either the delivery of such items from Contractor to Owner
at Contractor's Chandler, Arizona facility, or their incorporation and
use in the books, records or facilities of Owner's System Control
Segment. Repairs or replacements of hardware, software or other
components of the System Control Segment due to damages caused by
events which constitute excusable delays under ARTICLE 8 are not
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IRIDIUM Operations and Maintenance Contract
included in the quarterly payments specified in ARTICLE 4. In addition
to the remedies provided in ARTICLE 8, Owner agrees to pay Contractor
for such repair and replacement work based upon terms and conditions
mutually acceptable to both parties.
ARTICLE 7. CHANGES.
Changes to this Contract may be made only by mutual agreement of both parties he
reto. Such changes shall be evidenced by a written agreement executed by authorized representatives of both parties. No change shall be binding on either party unless and until such written document is fully executed by both parties.
ARTICLE 8. EXCUSABLE DELAYS.
A. Without limiting any other provision specifying what constitutes an
excusable delay under this Contract, any event which causes a failure
or delay to perform hereunder, and in every case is beyond the
reasonable control and without the fault or negligence of Contractor
and its subcontractors hereunder shall constitute an excusable delay,
if notice thereof is given to Owner within thirty (30) days after such
event shall have occurred. Such excusable delay events include but
are not limited to acts of God or of the public enemy; acts of
governments in their sovereign or contractual capacity, including
government priorities, allocations, regulations or orders affecting
materials, facilities, or completed spacecraft; fires; floods;
snowstorms; earthquakes; epidemics; quarantine restrictions; strikes;
labor difficulties; wars; and freight embargoes. Delays in launches
of spacecraft caused by the actions or inactions of Contractor's
launch service subcontractors directly pursuant to their subcontracts
with Contractor shall not constitute excusable delays hereunder. All
other delays in launches of spacecraft arising for whatever reason not
caused by Contractor shall constitute excusable delays hereunder.
Such excusable delays include, but, are not limited to delays in the
launch(es) of the Contractor's spacecraft due to delays of any other
launch(es) (i.e. not for this contract) preceding any of Contractor's
scheduled launch(es) whether or not caused by the actions or inactions
of Contractor's launch service subcontractors relating to such
preceding launches.
B. In the event of any such excusable delay, the performance schedule
shall be extended equitably and the quarterly payments shall be
adjusted to account for any additional costs incurred by Contractor as
a result of such delay. Contractor sha...
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