RADARSAT-2 MASTER AGREEMENT
THIS RADARSAT-2 MASTER AGREEMENT (this "Agreement") is entered into as of the 31st day of December, 1998, by and among ORBITAL SCIENCES CORPORATION, a
Delaware corporation ("Orbital"), its wholly owned subsidiary MACDONALD, DETTWILER AND ASSOCIATES LTD., a Canadian corporation ("MDA"), and ORBITAL IMAGING CORPORATION, a Delaware corporation ("ORBIMAGE").
WHEREAS, MDA is constructing and will own and operate a synthetic aperture radar (SAR) earth observation satellite system called RADARSAT-2 pursuant to that certain Master Agreement between MDA and the Canadian Space Agency (the "CSA") dated December 18, 1998 (as it may be amended from time to time, the "CSA Contract") under which CSA has committed to provide C$217,585,529 for the purchase of RADARSAT-2 data; and
WHEREAS, MDA and ORBIMAGE desire to enter into this Agreement pursuant to which (i) MDA will grant to ORBIMAGE the right to distribute and market worldwide RADARSAT-2 data received from the RADARSAT-2 satellite ("RADARSAT-2 Data") and products that are derived from, based on or use the RADARSAT-2 Data, subject to the terms and conditions provided herein and (ii) MDA will sublicense to ORBIMAGE certain trademarks, service marks and names.
NOW THEREFORE, in consideration of the agreements and covenants contained herein, the parties hereto agree as follows.
SECTION 1 - GRANT OF LICENSE
1.1. License to Market. MDA hereby grants to ORBIMAGE a ten (10)-year, exclusive worldwide license (the "License") to promote, market, sell, modify and use RADARSAT-2 Data received from the RADARSAT-2 satellite in any form, including products derived from or based on RADARSAT-2 Data for any purposes, including, without limitation, the right to sublicense such rights, provided that ORBIMAGE shall remain liable for its obligations hereunder.
1.2. Sublicense of Marks. MDA hereby grants to ORBIMAGE a ten (10)-year, non-exclusive royalty free and worldwide sublicense to use the mark "RADARSAT" in association with the promotion, marketing, sale and distribution of RADARSAT-2 Data, including promotional products or materials. Notwithstanding anything herein to the contrary, the foregoing sublicense and ORBIMAGE's rights with respect to use of the "RADARSAT" mark are subject in all respects to the CSA Contract, including but not limited to Article 19.
1.3. Ownership Rights in Data. MDA acknowledges that, during the term of the License, all proprietary and ownership rights in the RADARSAT-2 Data shall be the sole and exclusive property of ORBIMAGE, subject to the CSA Contract and the License granted herein. 2
1.4 License Fee. In consideration of the grant of the Licensee hereunder, ORBIMAGE hereby agrees to pay MDA US$60 million (the "Initial Payment") plus C$217,585,529 (the "Subsequent Payment") for the License and sublicense granted under this Section 1. Such payments shall be made in accordance with Schedule 1.4 hereto. The amount of the Subsequent Payment shall be adjusted downward on an equitable basis to the extent MDA purchases less RADARSAT-2 Data from ORBIMAGE than is contemplated by Section 2 below. The Subsequent Payment shall immediately become due and payable upon the complete and total failure of the RADARSAT-2 system.
1.5. License Renewal. At the end of the initial term of the License and the sublicense granted under Section 1.2, ORBIMAGE shall have the option to renew annually both the License and the sublicense for an aggregate fee of US$10,000 per year. Any such renewal shall otherwise be subject to and in accordance with the then current terms and conditions of this Agreement.
SECTION 2 - DATA PURCHASE
MDA hereby agrees to purchase from ORBIMAGE all the RADARSAT-2 Data that MDA is required to deliver under the CSA Contract. ORBIMAGE hereby agrees to cause such data to be delivered to MDA in a timely manner in accordance with the data delivery requirements under the CSA Contract. The purchase price for such data shall be C$217,585,529. MDA shall pay ORBIMAGE the purchase price in twenty-eight (28) equal installments over a period of seven years commencing ten days after the date the RADARSAT-2 satellite is commissioned (as defined in the CSA Contract) and payable on a quarterly basis thereafter. If the RADARSAT-2 system is declared a complete and total failure before all payments have been made under this Section 2, then the unpaid portion of the data purchase price shall become immediately due and payable.
SECTION 3 - SCOPE OF WORK
3.1. MDA shall furnish the management, labor, facilities,
personnel and materials required for the performance of the following
work (collectively, the "Work"):
3.1.1 RADARSAT-2 System. The parties hereto acknowledge
that MDA shall, pursuant to the terms of the CSA Contract, construct
the RADARSAT-2 system that is capable of meeting RADARSAT-2 Data
requirements set forth in the RADARSAT-2 Statement of Work attached
hereto as Schedule 3 (as it may be amended from time to time, the
"RADARSAT-2 SOW") and the Mission Requirements Specifications that are
part of the CSA Contract, provided, however, that such system is not a
deliverable to ORBIMAGE under this Agreement;
3.1.2. RADARSAT-2 Operations. MDA shall operate the
RADARSAT-2 system in accordance with the RADARSAT-2 SOW;
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3.1.3. RADARSAT-2 Data Reception, Processing and Archiving.
MDA shall provide ORBIMAGE with RADARSAT-2 data reception, processing
and archiving services in accordance with the RADARSAT-2 SOW;
3.1.4 Sensor Model. No more than 90 days prior to the
scheduled launch of the RADARSAT-2 satellite MDA shall, at no
additional cost, license and deliver a copy to ORBIMAGE of all
applicable RADARSAT-2-related software, algorithms and/or models in
the form and of the type that is required for the purpose of
performing image processing and generating value-added products from
(a) level one data and above and (b) raw or zero level data .
Subject to the final sentence of this Section 3.1.4, ORBIMAGE shall
have the right to sublicense and provide copies of such software,
algorithms and/or models to third parties pursuant to a data purchase
agreement that provides, among other things, such person to maintain
such software, algorithms and/or models as confidential and provided
further that ORBIMAGE agrees that it shall not provide any copies to
any entities or persons that are in the business of designing and/or
constructing remote sensing ground stations.MDA's obligation to
deliver software will include code, including source code, if the
delivery of such code to imagery customers and value-added processors
is standard industry practice. With respect to models, software and
algorithms for raw or zero level data processing, on a case by case
basis, with MDA's prior approval, which shall not be unreasonably
withheld, ORBIMAGE shall have the right to provide such items to its
customers for their imagery processing use. MDA hereby consents to
ORBIMAGE's use of raw and level zero models, software and algorithms
for its own internal use and to ORBIMAGE's sublicensing of such items
to U.S. government customers for their own internal use.
3.1.5 Optional U.S. Ground Facility. At ORBIMAGE's option,
MDA shall supply ORBIMAGE with a RADARSAT-2 reception, processing and
archiving facility in the United States for the sole purpose of
enabling ORBIMAGE to meet U.S. government national security customer
requirements for RADARSAT-2 Data and products. In the event ORBIMAGE
exercises this option, MDA shall make customary representations and
warranties regarding the performance and capabilities of the facility.
3.2 Software License.
3.2.1 For the use of ORBIMAGE under the terms identified in Section 3.1.4, MDA hereby grants to ORBIMAGE a perpetual, fully paid non-exclusive license for the software, algorithms and/or models delivered pursuant to Section 3.1.4 (including all modifications and upgrades thereto that are developed by MDA during the term of this Agreement). Maintenance of the software delivered to ORBIMAGE will be provided by MDA pursuant to MDA's standard software maintenance agreement.
3.2.2 For the exclusive use of ORBIMAGE at ORBIMAGE facilities and at the facility identified in Section 3.1.5 above, MDA hereby grants to ORBIMAGE a perpetual, fully paid non-exclusive license for all RADARSAT-2 image processing and archiving software (including all modifications and upgrades thereto that are developed by MDA during the term of this
3 4 Agreement and that are applicable to the installed system). In connection with the delivery of a ground station as contemplated by Section 3.1.5 above, MDA shall deliver one copy of such software (executable and object code) to ORBIMAGE as soon as is practicable after ORBIMAGE requests it, for installation by MDA at said facilities, which software shall be capable of performing the functions contemplated by this Section 3.2. and consistent with the RADARSAT-2 SOW. Maintenance of the software delivered to ORBIMAGE will be provided by MDA pursuant to MDA's standard software maintenance agreement.
3.3. Insurance. At ORBIMAGE's expense, MDA or Orbital shall procure launch, satellite checkout and on-orbit insurance as requested by ORBIMAGE, subject to availability of such insurance and ORBIMAGE's agreement to the price, terms and conditions of such insurance.
SECTION 4 - CONSIDERATION
4.1 Consideration. The price for the Work and other items deliverable under Section 3 is as follows:
- ------------------------------------------------------------------------------------------------------------ CLIN PRICE - ------------------------------------------------------------------------------------------------------------ 0001 RADARSAT-2 Operations (3.1.2) Cost-reimbursable at MDA's standard Canadian
Government pricing rates not to exceed US$10
million per year, with a target of US$8 million
per year. This service shall commence, and
payments relating thereto shall become payable,
three (3) months prior to launch, provided,
however, that if the launch is delayed, no
further pre-launch payments beyond these three
(3) months shall be required. The pre-launch
payment shall be included in the calculation of
the maximum amount payable during the first year
of operations. - ------------------------------------------------------------------------------------------------------------ 0002 RADARSAT-2 Data Reception, Processing and 12% of annual net revenues recognized by
Archiving (3.1.3) ORBIMAGE from sales of RADARSAT-2 data
(excluding revenues under the CSA Contract)
commencing upon the commissioning of the
RADARSAT-2 system. Under this CLIN, ORBIMAGE
and MDA acknowledge that they will further
negotiate the appropriate compensation based on
data volumes and level of processing. - ------------------------------------------------------------------------------------------------------------
4 5 - ------------------------------------------------------------------------------------------------------------ 0003 Sensor Model (3.1.4) No charge - ------------------------------------------------------------------------------------------------------------ 0004 U.S. Ground Facility (3.1.5, option) Cost-reimbursable plus 10% fee - ------------------------------------------------------------------------------------------------------------ 0005 Data Processing and Archiving Software License No charge
(3.2) - ------------------------------------------------------------------------------------------------------------ 0006 Software Installation Cost-reimbursable at MDA's standard Canadian
Government pricing rates - ------------------------------------------------------------------------------------------------------------ 0007 Software maintenance Cost-reimbursable at MDA's standard Canadian
Government pricing rates - ------------------------------------------------------------------------------------------------------------ 0008 Insurance Cost-reimbursable - ------------------------------------------------------------------------------------------------------------ 0009 Marketing Services (Sec. 5.1.2) Cost-reimbursable plus 10% fee, starting upon
the commencement of marketing activities in
accordance with Section 5.1 below. - ------------------------------------------------------------------------------------------------------------
4.2. Audit Rights. ORBIMAGE shall have the right to audit on a reasonable basis, from time to time (under a duty of confidentiality) MDA's records for the purpose of confirming any amounts payable under this Section 4 and Section 5, by giving fifteen (15) days written notice to MDA. MDA shall have the right to audit on a reasonable basis, from time to time (under a duty of confidentiality) ORBIMAGE's records for the purpose of confirming any amounts payable under CLIN 0003, by giving fifteen (15) days written notice to ORBIMAGE. The audit shall be carried out by auditing party or its representatives. The audited party shall make its records available to the auditing party during normal business hours no later than thirty (30) days after audited party's receipt of the auditing party's request. The auditing party shall complete its audit within fifteen (15) days of obtaining access to such records, and shall deliver its results to the other within thirty (30) days of the completion of the audit. The costs of the audit shall be borne by the auditing party unless it is determined that the audited party has overcharged by more than five percent (5%), in which case the audited party shall pay for the cost of the audit. Any amounts overpaid by either party shall be credited against the other party's next payments owed hereunder. This Section 4.2 shall survive for one (1) year following termination of this Agreement.
4.3 Invoicing. MDA shall invoice ORBIMAGE for the milestones set forth in Schedule 1.4, part 1 upon completion of each event and receipt of payment from CSA. MDA shall invoice ORBIMAGE for all other deliverables under this Agreement within ten (10) days of the end of each month. Except as otherwise set forth in Schedule 1.4, ORBIMAGE shall pay invoices within ten (10) days of receipt.
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4.4 Taxes. The Price does not include any federal, state, provincial 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. MDA 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 ORBIMAGE. The Price shall not, however, include any taxes on property owned by the Canadian Government, or any Canadian, U.S. or foreign federal, state, provincial or local income taxes imposed on MDA, which shall be the sole liability of MDA.
4.4.1 In cases where MDA and/or ORBIMAGE 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, MDA shall take all necessary steps to facilitate such
exemption or relief by:
(a) Using reasonable efforts to bring about the
exemption or relief before submitting the invoices to ORBIMAGE;
and
(b) Complying with all formalities necessary to
enable ORBIMAGE to claim reimbursement with respect to taxes that
have been paid. For this purpose, MDA shall comply with the
reasonable instructions given to it by ORBIMAGE and provide in due
time the information that ORBIMAGE reasonably requires.
4.4.2. If any such tax is determined to be legally due from
either MDA or ORBIMAGE, ORBIMAGE shall pay it separately. ORBIMAGE
shall pay, or reimburse MDA, for all reasonable out-of-pocket expenses
incurred in connection with the activities contemplated by Section
4.4.1.
4.4.4 Notwithstanding anything herein to the contrary, no
party shall be obligated to gross up any payments owed to the other
party to take into account amounts deducted or withheld for taxes,
contributions or otherwise.
4.5 Duty. All customs or import/export duties required by law shall be paid by MDA.
SECTION 5 - DUTIES OF MDA
5.1. Appointment of MDA as Distributor. Subject to the terms and conditions of this Agreement, ORBIMAGE hereby appoints and authorizes MDA to act as its exclusive worldwide distributor of RADARSAT-2 Data, and MDA accepts such appointment. In connection with such appointment, ORBIMAGE hereby grants to MDA an exclusive, unrestricted worldwide license, (including the right to sublicense ) to promote, market and sell RADARSAT-2 Data and Basic Products, and a non-exclusive license to modify, sell and use RADARSAT-2 Data, and value-added products. "Basic Products" are defined as data sets generated by the RADARSAT-2 system and the following products produced from such data sets: (i) system-corrected products (radiometrically and geometrically-corrected satellite data using ephemeris data), (ii) precision-
6 7 corrected products using external ground control data, and (iii) ortho imagery using digital elevation models.
5.1.1 Marketing. The RADARSAT-2 marketing operations will
be performed by MDA or an affiliate of MDA established for the
purposes of marketing RADARSAT imagery and will be overseen by the
RADARSAT-2 VP of Marketing and Sales who shall be based in Richmond,
British Columbia. The RADARSAT-2 VP of Marketing and Sales shall be
responsible for coordinating between ORBIMAGE and MDA to develop all
marketing and sales policies, strategies (including but not limited to
strategies relating to value-added applications and opportunities),
targets, resources and budgets. All marketing and sales policies
(including subdistributorships), strategies, targets and resources and
budgets shall be approved and periodically monitored by ORBIMAGE.
ORBIMAGE and MDA shall promptly commence negotiations to develop
within the next six months a detailed marketing plan that is designed
to maximize RADARSAT-2 market penetration. The parties hereto
acknowledge and agree that pursuant to the license granted in Section
5.1 above, MDA has and other third parties shall have the right to
develop, at their expense, value-added products using RADARSAT-2 Data
and to resell such products in accordance with the terms of the
detailed marketing plan and strategies to be developed under this
Section 5.1.1, provided, however, that the terms governing resales of
such value-added products, including but not limited to, compensation
payable to ORBIMAGE in connection therewith, shall be negotiated by
ORBIMAGE and MDA with each other or with the other third party
reseller, as applicable, on a case-by-case basis, consistent with the
terms of the CSA Contract
5.1.2 Compensation. ORBIMAGE shall pay MDA for the
services provided under this Section 5.1 (CLIN 0010) on a
cost-reimbursable basis plus 10%. As part of the development of a
marketing strategy, ORBIMAGE and MDA will negotiate the proper
strategy with respect to the execution of RADARSAT-2 customer
contracts. To the extent that MDA enters in RADARSAT-2 data sales
agreements directly with RADARSAT-2 customers, MDA will remit or
assign 100% of the payments it receives for such sales to ORBIMAGE.
5.2. Regulatory Approvals. MDA shall use commercially reasonable efforts to obtain and maintain all material licenses, consents, approvals or authorizations of and declarations or filings ("Regulatory Licenses") with any Canadian or United States governmental authority required to be obtained or maintained by MDA in order to perform its obligations under this Agreement and to permit the launch and operation of the RADARSAT-2 satellite including, without limitation, allocation by the International Telecommunications Union or the U.S. Federal Communications Commission of the appropriate frequencies necessary to launch, operate and receive data from the RADARSAT-2 satellite as contemplated by the CSA Contract. So long as the RADARSAT-2 satellite is operational, as determined by ORBIMAGE, MDA shall not, without the express written consent of ORBIMAGE, which in the case of clause (a) shall not be unreasonably withheld, (a) amend, or modify, or (b) cancel or surrender, any of said Regulatory Licenses if such action will have a material adverse effect on ORBIMAGE's rights under this Agreement, and shall prior to the expiration of any such Regulatory License extend or renew
7 8 same. Each party covenants and agrees that if and to the extent any modifications or amendments are reasonably requested by the other party with respect to such Regulatory Licenses, they shall cooperate with each other in connection therewith.
5.3. CSA Contract.
5.3.1 Generally. The parties hereto acknowledge and agree
that the terms and conditions of this Agreement, including all
licenses or sublicenses granted hereunder, are subject to all rights
of the CSA and MDA's obligations or rights pursuant to the CSA
Contract, which shall take precedent. Notwithstanding the foregoing,
any disputes between ORBIMAGE and MDA regarding the interpretation of
the CSA Contract and MDA's rights or obligations thereunder in the
context of this Agreement shall be considered a dispute subject to
Section 11 of this Agreement.
5.3.2. Maintenance of CSA Contract. MDA agrees to maintain
in full force and effect the CSA Contract and shall not, without the
express written consent of ORBIMAGE, assign the CSA Contract to any
person other than an affiliate of Orbital or MDA.
5.3.3 ORBIMAGE Review and Approval Rights. Whenever
practicable, MDA shall coordinate in advance with ORBIMAGE any
material changes to the CSA Contract that impact ORBIMAGE's rights
contemplated by this Agreement, including but not limited to the
RADARSAT-2 Mission Requirement Specifications, Product Specifications,
Concept of Operations, System Integration Verification and Test Plan
and Commissioning Plan, the Data Policy and Data Supply Agreements
that are part of the CSA Contract. ORBIMAGE and MDA shall negotiate in
good faith an equitable adjustment to the license fee set forth in
Section 1.4 above if MDA and CSA amends the CSA Contract without
ORBIMAGE's prior consent and such changes have a material adverse
impact on (a) ORBIMAGE's ability to receive RADARSAT-2 Data that
conforms with the specifications set forth in the RADARSAT-2 SOW
regarding capacity, resolution and appropriate image quality
parameters, or (b) the commercial viability of ORBIMAGE's RADARSAT-2
program. Failure to agree on an equitable adjustment shall be a
dispute settled in accordance with Section 11 below. Notwithstanding
anything herein to the contrary, under no circumstances shall MDA's
failure to obtain prior approval, review or concurrence of any items
requiring such actions in the RADARSAT-2 SOW constitute a default that
gives rise to termination rights under Section 7 of this Agreement.
5.3.4 Access to Data. If CSA's usage of the RADARSAT-2
satellite under the CSA Contract exceeds 10% of its imaging capacity
over a two-month period and such usage has a material adverse impact
on the commercial viability of the RADARSAT-2 program, then the
parties shall negotiate an equitable adjustment to the license fee set
forth in Section 1.4 above.
SECTION 6 - FUTURE RIGHTS
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MDA and Orbital each hereby agrees that to the extent either party obtains unencumbered commercial distribution rights on any follow-on RADARSAT project or any other synthetic aperture radar imaging satellite project prior to June 30, 2003, MDA or Orbital (as appropriate) shall offer to ORBIMAGE the exclusive right to be the commercial distributor of satellite imagery from such project, subject to mutual agreement between the parties regarding consideration and other material terms.
SECTION 7 - TERMINATION; LIMTATION OF LIABILITY
7.1. Termination by ORBIMAGE for Default. ORBIMAGE may terminate this Agreement at any time after the occurrence of any of the following events of default:
7.1.1 MDA fails to pay any amount due hereunder and such failure shall remain uncured for a period of thirty (30) days after the due date thereof.
7.1.2 MDA or Orbital breaches the representations and warranties made under this Agreement.
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