Exhibit 10.4
AGREEMENT
This Agreement is made and entered into as of March 26, 2007 (the
"EFFECTIVE DATE") by and between TAT TECHNOLOGIES LTD., a company registered
under the Law of the state of Israel ("TAT"), and its wholly-owned subsidiary,
LIMCO AIREPAIR INC, a Delaware corporation ("LIMCO"). TAT and Limco are
hereinafter referred to as the "PARTIES".
WHEREAS, the Parties desire to enter into this arm's length agreement
in order to establish a more specific commercial relationship, including terms
governing the provision of items and services by one Party to the other, all as
set forth in this Agreement.
NOW THEREFORE, in consideration of the premises and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by both parties,
intending to be legally bound hereby the parties hereto agree as follows:
1. GENERAL
1.1. The preamble to this Agreement constitutes an integral part
thereof.
1.2. The headings of the sections are for convenience only and
shall not control or affect the meaning of any provision of
this Agreement.
1.3. In this Agreement the following terms shall have the
meaning ascribed to them:
1.3.1. "MRO SERVICES" - the supply of maintenance, repair
and/or overhaul services of Heat Exchangers.
1.3.2. "OEM WORK" - the manufacture and supply of new
Heat Exchangers and air conditioning systems as
well as any component thereof.
1.3.3. "THE CORE" - The fin and plate core of a Heat
Exchanger and such other cores as agreed upon by
the Parties
2. MRO WORKS
2.1. All MRO Services ordered by an existing or new customer of
the Parties ("CUSTOMER") will be referred to and performed
by Limco, except under the following circumstances (the
"MRO EXCEPTIONS"):
2.1.1. The Customer is an Israeli entity or authority.
2.1.2. The Customer of TAT demands that the work be
performed by TAT.
2.1.3. If TAT is the OEM manufacturer of the Heat
Exchanger or component which is the subject of the
MRO Service, except with respect to customers in
North America for which Limco is appointed as the
exclusive MRO licensee for the term of this
Agreement.
2.1.4. If Limco is not qualified to perform the MRO
Service or its plant(s) is not capable of
performing such MRO Service.
2.2. All the Cores required by Limco in connection with its MRO
Services business shall be purchased from TAT, unless
otherwise provided in this Section 2.2. or in Section 3.1
below.
2.2.1. The prices and other terms of such purchase shall
be based on the price chart attached hereto as
Exhibit A, such prices shall be subject to an
annual increase to reflect any increase in the CPI
in Israel as published by the Government of Israel
and shall be subject to a pass-through increase
for any increase in costs of the raw materials
incorporated in the Cores. In the event that TAT
develops any new types of Cores, the sales price
shall be competitive.
2.2.2. TAT may not sell its Cores fir use in the MRO
market to any third-party in North America, except
with the consent of Limco.
2.2.3. Notwithstanding the above, Limco shall be
permitted to manufacture new Cores for its own use
and may purchase Cores manufactured by Xxxxxxxx
Sunstrand Corporation in furtherance of its
agreement with Xxxxxxxx Sunstrand Corporation. In
the event Limco desires to manufacture certain
cores that are produced by TAT or ordered by Limco
from TAT, it shall be required to obtain the prior
written consent of TAT.
2.2.4. In the event that TAT is unable to deliver any
Cores that are required by Limco for its MRO
Services, Limco may purchase such Cores from a
third party with the consent of TAT, which consent
shall not be unreasonably withheld.
2.2.5. Any Core designed by Limco for use by TAT may not
be sold to a third party without the consent of
Limco.
2.3. TAT is entitled to perform MRO Services in its plant on
fuel systems and/or pneumatic equipment and/or other such
systems that are not
manufactured or serviced by Limco at present ("SPECIAL
SYSTEMS").For avoidance of any doubt, such Special Systems
shall not include any fuel heaters, oil coolers and similar
products manufactured by Limco.
3. OEM WORK
3.1. All OEM Work ordered by any Customer will be referred to
TAT, except under the following circumstances (the "OEM
EXCEPTIONS"):
3.1.1. The Customer requests that the OEM Work be
performed in the U.S. or due to U.S. federal or
state regulations the OEM Work must be performed
within the U.S. (i.e. "Buy American" or similar
regulation).
For the avoidance of doubt, if the Customer
requests that the direct contractor of the OEM
Work be a U.S. entity, but does not object to the
provision by a non-U.S. entity of part of the
components, the relevant components will be
purchased by Limco from TAT, and the Parties will
negotiate the price and other terms at arm's
length.
3.1.2. TAT determines that the OEM work is not
economically suitable for the Israeli plant, or
TAT determines that due to political or other
anticipated long-term relations with the Customer
or any other reason that it is preferable that the
OEM Work will be performed by Limco.
3.2. If for any reason Limco does not manufacture in its plant
the OEM part or component under one of the OEM Exceptions,
it will remain at TAT's discretion as to the relevant
assignee of the OEM Work and under which terms TAT and/or
Limco will contract for its production.
3.3. If required under the OEM Exception, the Core needed for
the OEM Work will be produced in Limco's plant and may not
be subcontracted to a third-party.
However, if Limco is not capable of producing the Core, TAT
shall be given the right of first refusal to provide such
Core to Limco in accordance with the terms of this
Agreement.
4. ENGINEERING AND PRODUCTION SERVICES
4.1. Notwithstanding the provisions of Sections 2 and 3 above -
4.2. Each Party will grant the other Party a right of first
refusal regarding sub-contracting the production of Core
Related Components. The right of first
refusal will be based on price quotations and other terms
to be requested from other first class manufacturers.
4.3. In the event that either of the Parties shall require
Engineering Services from the other, such services shall be
provided at an hourly rate of $60.00 per hour and shall be
subject to an annual increase equal to the increase in the
CPI in Israel or in Oklahoma.
4.4. In the event a new product is developed by one of the
Parties on behalf of the other Party, the developing Party
shall receive a 5% royalty on all sales of such product.
5. SALES LEADS
In the event that a Party provides the other Party with an introduction
to a potential customer that results in the sale of a product or service by the
other Party to such customer, the Introducing Party shall be entitled to a
commission of 5% from any sale of a product or service arising from such
introduction.
6. AGREEMENT TERM
This Agreement will be effective for 10 years from the date hereof, but
may be terminated immediately by either Party in the event of:
6.1. A default in a material provision of this Agreement, which
default is not cured within 30 days of the receipt of
written notice by the other Party.
6.2. A liquidation, receivership and/or any other proceedings of
insolvency by a Party.
7. DISPUTE RESOLUTION
In the event of a dispute arising out of the terms of this Agreement
(a "Dispute"), the laws of the State of Delaware shall apply and the parties
will attempt to resolve the Dispute as follows:
7.1. If a Dispute is not resolved in the normal course of
business at the operational level, the Parties first shall
attempt in good faith to resolve such dispute by
negotiation between executives who hold, at a minimum, the
office of Chief Executive Officer or Chief Financial
Officer of the respective Parties prior to exercising
remedies pursuant to Section 7.2. Either Party may initiate
the executive negotiation process by providing a written
notice to the other (the "Initial Notice"). Within fifteen
(15) days after delivery of the Initial Notice, the
receiving party shall submit to the other a written
response (the "Response"). The Initial Notice and the
Response shall include (i) a statement of the Dispute and
of each party's position, and (ii) the name and title of
the executive who will represent that party and of any
other person who will accompany the executive. Such
executives will meet in person or by telephone within
thirty (30)days of the date of the Initial Notice to seek a
resolution of the Dispute.
7.2. If a Dispute is not resolved by negotiation as provided in
Section 7.1 within thirty (30) days from the delivery of
the Initial Notice, then either
party may submit the Dispute for resolution by arbitration
as provided in Section 7.3
7.3. Any arbitration that will be initiated under Section 7.2
will be conducted in New York City before the American
Arbitration Association pursuant to its Commercial Rules of
Practice before three arbitrators. Each Party will bear its
own attorneys' fees and costs incurred in connection with
the resolution of any Dispute.
8. MISCELLANEOUS
8.1. All other terms of sale, including shipment, payments,
quality, insurance, warranty and liabilities will be as
customary between the Parties, and in absence of prior
experience, upon commercially standard terms.
8.2. The terms and provisions of this Agreement will be binding
upon and inure to the benefit of the parties hereto and
their respective successors, assigns, personal
representatives, heirs and estate, as applicable.
8.3. Neither this Agreement nor any right or obligation of
either Party hereunder may be assigned to a third party,
unless such assignment has been approved in advance in
writing by the other Party.
8.4. In the event the Parties determine to enter into a joint
venture or such other relationship as not provided for in
this Agreement, such terms shall be approved by the
independent audit committees of each Party.
9. NOTICES
All notices and other communications hereunder shall be made in writing
and in English (by letter or fax) and shall be sent as follows:
9.1. If to Tat Technologies Ltd.:
Fax:
Attention: Dov Zeelim
Fax:
9.2. If to Limco Airepair Inc.:
Fax:
Attention: Xxxxx Xxxx
Fax:
10. EFFECTIVENESS
Every notice or other communication sent in accordance with Section 9
shall be effective upon receipt by the addressee; PROVIDED, HOWEVER, THAT any
such notice or other communication which would otherwise take effect after
4.00 p.m. on any particular day shall
not take effect until 10.00 a.m. on the immediately succeeding business day in
the place of the addressee.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THE AGREEMENT ON THE DATE
HEREOF.
/s/ Dov Zeelim /a/ Xxxxx Xxxx
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TAT Technologies Ltd. Limco Airepair Inc.
