Exhibit 4.18
LONG TERM PURCHASING
AGREEMENT
This agreement is entered into
between:
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| Israel Aircraft Industries Ltd. |
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Xxxx Electronic (1992) Technologies Ltd. |
| Commercial Aircraft Group |
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00 Xxxxxxx Xxxxxx, Xxxxxx Xxxxx |
| Production Division |
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Rishon Letzion |
| Xxx Xxxxxx International Airport, |
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Israel |
| 00000, Xxxxxx |
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(hereafter referred to as "Seller") |
| (hereafter referred to as "IAI") |
| 1.1 |
The
purpose of this agreement is to establish a long term agreement between the Parties for
the purchase by IAI of the Parts set forth in Appendix “A” hereto (hereinafter
the “Parts”) for its G200 (Galaxy) and G150 Business Jet Programs
(including all derivatives thereof) and any other programs agreed to between the parties. |
| 1.2 |
The
aim of the parties in this Agreement is to establish a good and efficient working
relationship so as the parties will be able to work by deliveries “Ship to Bins”. |
| 2.2 |
This
Agreement shall become effective upon its signature by both Parties (hereafter referred
to as the “Effective Date”), and shall remain in effect until the
earlier of (a) termination of this Agreement by IAI in accordance with paragraph 9 below,
or (b) 31 December 2008. |
| 2.3 |
Upon
mutual agreement of the parties, this Agreement may be extended until 31 December 2011,
provided that both parties agree in writing on such extension prior to 1 June 2009.
In the event that the parties elect to extend the agreement, the extended agreement shall
be subject to the terms and conditions of this agreement in effect on 31 December 2008,
including the terms and conditions of paragraph 9 below. |
| 3.1 |
During
the term of this Agreement, IAI shall have an irrevocable option, exercisable at IAI’s
discretion at any time, and from time to time, to purchase Parts and/or spares or
replacements therefore, by way of (a) regular purchase orders or (b) “ship to bin”,
as specified in paragraph 8, all to be subject to the terms and conditions of this
Agreement and the Standard Purchase Order Terms and Conditions (hereafter referred to as
the “Standard T & C”) of IAI’s Purchase Orders. No Purchase
Order of IAI shall be binding on Seller if the Seller has rejected such Purchase Order
because of terms inconsistent with the terms of this Agreement in writing, no later than
three (3) Business Days after receipt of the Purchase Order, of Seller’s acceptance
thereof. |
| 3.2 |
The
terms of IAIs Standard T & C shall be incorporated by reference into this Agreement
for all IAI Purchase Orders for Parts. All Parts delivered hereunder shall be subject to
IAI’s quality assurance requirements which shall require, among other things, that:
(a) the manufacturer of the Part shall be included in the list of approved manufacturers,
as detailed and listed in the IAI’s website (the “Approved Manufacturer”),
and (b) the Part shall be detailed with the part number allocated to it by such Approved
Manufacturer, including the date code (“Date Code”), and any related
quality assurance information (collectively, the “Standard Requirements”).
In the event that IAI shall cease working with an Approved Manufacturer, IAI shall afford
Seller reasonable notice period in order for Seller to select and find a suitable
replacement Approved Manufacturer. Seller shall maintain all of the aforesaid Standard
Requirements for all Parts in Sellers buffer inventory, as detailed in paragraph 6 below.
In the event of a conflict between the Standard T & C and the terms of this
Agreement, the terms of this agreement shall be deemed to prevail. |
| 3.3 |
For
the sake of clarity, if the event of that IAI decides to issue a purchase order by way of
“ship to bin” as specified in paragraph 8, then IAI shall issue a Purchase
Order/s that shall only cover IAI’s due payments to Seller prior thereto. This
Purchase Order/s shall not create or form any liability from IAI to Seller. Therefore, if
for any reason this Agreement shall be terminated prior to delivery by Seller to IAI
under the “ship to bin” purchase order, then IAI shall not be liable for the
Purchase Order but only for the Parts consumed by Seller to meet the “ship to bin”purchase
order, as specified in accordance with paragraph 9. |
| 3.4 |
The
monthly delivery rate for each Purchase Order issued by IAI pursuant to this Agreement
shall be determined and specified by IAI in such Purchase Order. IAI shall not be
obligated to any minimum or maximum monthly rate of delivery. Seller shall only be
obligated to deliver in accordance with the Purchase Orders it has not rejected in
accordance with Section 3.1 above. |
| 3.5 |
There
shall be no minimum or maximum quantities requirement for any Purchase Orders for
parts by IAI. |
| 3.6 |
IAI
may, at no additional cost and on giving two (2) weeks written notice to Seller prior to
the scheduled delivery date of any Part on order, accelerate the delivery date of such
Part. |
| 3.7 |
IAI
may, at no additional cost and on giving one (1) week written notice to Seller prior to
the scheduled delivery of any Part on order, stretch-out the delivery date of such part. |
| 4. |
SPECIAL
BUSINESS PROVISIONS |
| 4.1 |
IAI
shall be entitled, at any time subsequent to the Effective Date and on providing written
notice to Seller, to add Parts to Appendix “A”, as well as to change the
quantity of any Part required per shipset. The purchase and sale of any Parts added to
Appendix “A” shall be subject to the terms and conditions of this Agreement in
effect as at the date of such addition. The unit price of any Part added to Appendix
“A” shall be negotiated by the Parties in good faith prior to such addition
provided that the prices will not exceed the prices Seller grants to its most favored
customers for the same Parts, and shall be added to Appendix A. |
| 4.2 |
In
the event of a reduction in the quantity of any Part required per shipset, IAI shall
provide Seller at least thirty (30) days prior written notice and thereafter shall be
entitled, at no additional cost, to reduce the quantity of such Part/s, provided that IAI
pays any amounts due on any outstanding Purchase Orders. |
| 5. |
PRICES
AND TERMS OF PAYMENT |
| 5.1 |
The
price for each Part is set forth in Appendix “A” hereto. Subject to IAI’s
right to terminate this Agreement, as detailed paragraph 9 below, the prices listed in
Appendix “A” shall remain valid for deliveries through 31 December 2008 (and
through 31 December 2011, if the parties elect to extend this Agreement as per Article 2
hereabove), and will not be subject to increase during this period. |
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The
prices mentioned above DDP per Incoterms 2000 and include all costs for delivery and
insurance to IAI’s line station bins and/or plant receiving dock as per IAI’s
requirement. |
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For
the sake of clarity, Title and risk of loss for any Parts delivered, shall pass on to IAI
only after the Parts are delivered in accordance with IAI’s instructions to the
required delivery place. |
| 5.2 |
For
Ship To Bin deliveries in accordance with paragraph here under, Invoices shall be
provided by Seller to IAI on a monthly basis. Seller shall invoice IAI only with respect
to those bags that have already been delivered in accordance with paragraph 5.1 above.
Each invoice shall be accompanied by a diskette with sale information broken down by Part
Number, price, quantities and any other criterion, as required by IAI. Such information
may be provided by Seller to IAI via Fax or email. |
| 5.3 |
The
terms of payment for any Purchase Order issued pursuant to the terms and conditions of
this Agreement shall be net ninety (90) days from the date IAI receives an invoice and
the goods ordered in accordance with the relevant delivery date. Payment will be effected
in accordance with IAI’s payment schedule, namely the 15th of the month if the date
IAI receives an invoice or the goods is on or before the 15th, or, the last day of the
month if the date IAI receives an invoice or the goods is after the 15th. |
| 6.1. |
Throughout
the duration of this agreement and notwithstanding the existence or not of any
open IAI Purchase Orders, Seller will maintain, at no additional cost to IAI, a
buffer inventory of the Parts set forth in Appendix “A” in order to
support IAI’s production line in the event: |
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of
stoppages on IAI’s production line arising from rejected and/or damaged and/or lost
and/or scrapped Parts; |
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that
IAI increases its required monthly rate of delivery; or |
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that
Seller's normal production schedule is interrupted due to unforeseen / uncontrollable
events arising. |
| 6.2. |
The
said buffer Inventory shall be comprised of sufficient shipsets of each Part
set forth in Appendix “A” to support IAI’s required
delivery rate for three (3) months (as at the date of signature hereof
IAI’s monthly delivery rate for G200 is two (2) shipsets and for the G150
– [TBD]). |
| 6.3. |
Seller
will be required in writing to adjust its buffer inventory in accordance with
any notification of change in IAI’s required monthly rate of delivery and
/ or any change in the quantity of any Part required per shipset. |
| 6.4. |
Seller
shall be required to update its buffer inventory to the latest configuration at
all relevant times and shall replenish such inventory whenever same is depleted
for any reason as soon as possible but no later than four (4) weeks after such
depletion. |
| 6.5. |
Seller’s
buffer inventory shall be available for shipment to IAI within one (1) Business
Day of Seller’s receipt of IAI’s request therefor via facsimile or
e-mail. |
| 6.6. |
Seller
shall provide IAI, on IAI’s request in writing and discretion, at any
time, a full status report of all Parts in Seller’s buffer inventory. |
| 6.7. |
On
giving Seller reasonable written notice, IAI’s representatives shall be
granted access to Seller’s premises in order to inspect the status of
Seller’s buffer inventory and to review Seller’s quality assurance
procedures. |
| 7.1 |
Seller
warrants that all Parts delivered to IAI under this Agreement will conform to the
specifications in the relevant Purchase Order for such Parts, shall be free from any
defects in material, workmanship, design and will be fit for the purpose intended. The
aforesaid warranty shall apply to any defect discovered within eighteen (18) months of
delivery of any Part to IAI. |
| 7.2 |
If
any Parts as delivered do not comply with the Warranty set forth in 7.1 above, Seller
shall, at IAI’s option, replace such Part, repair such Part, or pay IAI’s or IAI’s
customer’s costs required to repair or replace such Part. |
| 7.3 |
Seller
shall have no obligation to provide such warranty if the material defect or substantial
non-compliance with the specifications in the relevant Purchase Order was caused (i)
through fault of IAI or otherwise through misuse of the Parts, or (ii) by modification of
the Parts other than by Seller or not as specifically authorized by Seller. |
| 7.4 |
The
foregoing warranties are the sole and exclusive warranties pertaining to the Parts.
Except as provided above, the Parts are delivered “as is”, without any other
warranty, whether express or implied, including, without limitation, any implied warranty
of merchantability or fitness for a particular purpose, and of any other obligation on
the part of Seller. Seller does not make, and IAI hereby waives, any other warranty,
express or implied. |
| 7.5 |
SELLER
SHALL NOT, UNDER ANY CIRCUMSTANCES, BE LIABLE TO IAI OR ANY THIRD PARTY FOR ANY SPECIAL,
INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES ARISING IN ANY WAY UNDER THIS AGREEMENT OR
FROM DEFECTS IN THE PARTS UNDER ANY THEORY OF LIABILITY, EVEN IF SELLER IS INFORMED IN
ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES. |
| 7.6 |
In
the event of non-compliance of any Part with any of the warranties set forth above,
Seller shall replace said Part within one (1) Business Day of IAI’s written notice
to Seller. |
| 7.7 |
In
the event that Seller has not delivered a Part to IAI on-time or has delivered a Part
with unsuitable Quality, and Seller has not rectified such within a grace period of seven
(7) business days, then IAI shall be entitled to purchase such Part from other sources
and Seller shall compensate IAI for the difference between the agreed prices per
Attachment A and the actual purchase price for such Part up to a limit of an additional
100% over the agreed prices per Attachment A. |
| 8.1 |
All
deliveries of Parts shall be made to line station bins. Seller shall provide personnel
and institute procedures (to be approved by IAI), such as periodic plant checks, to
insure an interrupted flow of Parts at IAI station bins and, as applicable, at all times.
All deliveries of Parts shall be bar coded with the ordering IAI bar code information. A
delivery receipt may, at IAI’s discretion, be signed by a representative of the
ordering IAI plant for each Part delivered to the receiving dock and production line
bins. |
| 8.2 |
Upon
Seller’s request, on 1 January and 1 July of each calendar year during the term of
this Agreement, IAI shall provide Seller with a reasonable forecast of its usage of Parts
for the next six (6) month period, based on bona fide reasonable assumptions of IAI in
good faith for the next six (6) months period. IAI shall not be bound to any quantity of
Parts forecasted. IAI shall furthermore be entitled to change its forecasts when
necessary and for any reason. On receiving any forecast from IAI, including any changes
to a forecast, Seller shall coordinate with its suppliers in order to ensure that they
effect an appropriate allocation of their production time and material resources to
provide for the said forecast. |
| 8.3 |
Seller
shall survey all line station bins and loading dock facilities each two (2) weeks. Seller
shall replenish all line station bins and loading dock facilities one (1) week after each
such survey. The quantity of stock Seller shall maintain in each line station bin, will
conform with IAI’s monthly rate of production (as at the date of signature hereof IAI’s
monthly delivery rate for G200 is two (2) shipsets and TBD per year for the G150
program). |
| 8.4 |
Deliveries
shall be effectuated through a “two bag” system, whereby (a) two shipsets of
Parts shall be included in each bag, and (b) Seller shall ensure that there are always
two bags, one open and one closed, of each Part in the station bins. |
| 8.5 |
Seller
shall send to IAI’s Security Department a list of Seller’s workers that will
deliver the Parts into IAI’s facilities. This list will be subject to the approval
of IAI’s Security Department. IAI’s Security Department is the only body that
can approve any entrance of Seller’s workers into IAI. |
| 8.6 |
IAI’s
Standard T & C’s shall apply to this paragraph 8. In the event of a conflict
between the Standard T & C and the terms of this paragraph, the terms of this
paragraph shall be deemed to prevail. |
| 8.7 |
For
sake of clarity, in order to continue the smooth flow of Parts to IAI and whereas IAI has
inventory of all Parts at the date of signing this agreement, the parties agree that IAI
shall continue to consume all its inventory before using any Parts from the station bins. |
| 8.8 |
The
parties shall agree to and create a flow chart of activities and procedures that shall
detail the flow of work and payment between the parties. |
| 9. |
CANCELLATION
FOR CONVENIENCE TERMINATION OF AGREEMENT |
| 9.1 |
IAI
may at any time, cancel this Agreement or a Purchase Order or a portion of a Purchase
Order or any Part on the attached Appendices. In such event, IAI shall pay Seller for all
Parts delivered to IAI and for Sellers buffer inventory in Israel for such cancelled
Parts in accordance with sub-paragraph 6.2 for all Parts that Seller has not succeeded in
diverting to other customers and has given IAI written confirmation of its efforts to
this effect. |
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In
the event of termination of any program, then IAI’s sole liability shall be for all
Parts delivered to IAI and for not more than 60% of Sellers buffer inventory in Israel for
such cancelled Parts in accordance with sub-paragraph 6.2 for all Parts that Seller has
not succeeded in diverting to other customers and has given IAI written confirmation of
its efforts to this effect. Seller shall also invest all efforts to support IAI with
Selling all the Parts delivered to IAI. |
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For
the sake of clarity, IAI’s above liabilities shall not exceed the then current rate
of delivery in accordance with Sub-paragraph 6.2. |
| 9.2 |
This
Agreement may be terminated by a party upon the occurrence of any of the following: |
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(1) |
The
other party has not cured a breach within forty-five (45) days after having
received written notice of such breach from the other party; |
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(2) |
The
other party ceases doing business or commences dissolution and winding up of
its affairs; or |
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(3) |
The
other party is unable to fulfill its obligations under this Agreement for
more than ninety (90) days due to a Force Majeure event as defined in
paragraph 11.3 below. |
With regard to any ship to bin
orders, Seller undertakes to abide by all of the Quality Assurance requirements, including
but not limited to CAG9000.
Seller shall invest all it’s
best efforts to complete all Quality Assurance requirements in order to provide Parts by
way of Ship to Bin Per Paragraph 8, no later than four (4) months after signature of this
contract.
In the event that any Part is
delivered by Seller to IAI without the required documentation then Seller shall pay IAI
$150 per each Part, provided Seller has not rectified such within seven (7) business days.
| 11.1 |
Reporting.
Seller shall provide IAI with any reports required by IAI that shall include any
information associated with the delivery of all Parts, for example Sellers stock, Seller’s
orders to manufacturers, delivery dates to Sellers facility and etc. Such information
shall be supplied to IAI in written format approved by IAI. |
| 11.2 |
Kit
to Floor. In the event that IAI shall request to work by way of “Kit to Floor” meaning
that Seller shall provide IAI with Kits (a set/group of Parts in accordance with a
defined and quantified list that is to be supplied as one lot), then Seller shall be
entitled to an additional two percent (2%) to the Part prices and the parties shall agree
on the procedure and method to implement such Kit to Floor. |
| 11.3 |
Force
Majeure. The performance by either party of its obligations under this Agreement
shall be suspended for a period that is reasonable under the circumstances if the failure
or delay thereof is caused by Approved Manufacturer’s default or delay, strike,
riot, fire flood, natural disaster, or similar cause beyond such party’s reasonable
control. The party wishing to claim relief by reason of force majeure shall notify the
other party in writing without delay of such event and of any cessation thereof. In event
of force majeure, the parties shall continue to perform their respective obligations that
are not affected by such force majeure. |
| 11.4 |
Confidentiality.
Each party shall treat as confidential all confidential information of the other party,
shall not use such confidential information except as set forth herein, and shall not
disclose such confidential information to any third party. Each party shall promptly
notify the other party of any actual or suspected misuse or unauthorized disclosure of
the other party’s confidential information. This provision shall also apply to each
of the parties’ agents, affiliates, employees, consultants, subcontractors and
distributors. |
| 11.5 |
Modifications.
This Agreement may be modified only by a written document duly signed by an authorized
officer of both parties which references this Agreement. |
| 11.6 |
This
Agreement, including the Appendixes, constitute the entire agreement between the parties
with respect to the subject matter hereof and supersedes all representations,
undertakings and agreements previously made between the parties with respect to the
subject matter of this Agreement. |
| 11.7 |
This
Agreement shall be subject to the laws of the state of Israel, and the competent courts
of the Xxx Xxxx Xxxxxxxx Xxxxx, Xxxxxx shall have exclusive jurisdiction over any dispute
arising thereunder. |
| 11.8 |
Seller
will act as an independent contractor under the terms of this Agreement. There shall be
no employer/employee or agency relationship between Seller and IAI. |
| 11.9 |
This
Agreement may be executed in any number of counterparts, each of which shall be deemed an
original and enforceable against the Parties actually executing such counterpart, and all
of which together shall constitute one and the same instrument. |
THIS AGREEMENT IS NOT VALID UNLESS
AND UNTIL DULY EXECUTED BY IAI MANAGEMENT.
SIGNED ON THIS 19TH DAY
OF SEPTEMBER 0000
Xxxxxx Aircraft Industries Ltd.
/s/ X. Xxxxxxx
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By: Xxxxx Xxxxxxx
Title: Director of procurement & logistics |
Xxxx Electronic (1992) Technologies Ltd.
/s/ X. Xxxxxx
——————————————
By: Xxxxx Xxxxxx
Title: Managing director |
/s/ J.
Vistanetzky
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By: J. Vistanetzky
Title: Group Director Finance |
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