[****Omitted and Filed Separately With the Commission Pursuant
to a Request for Confidential Treatment.]
Exhibit 10.2
Amendment
to VLU Production Agreement
This Amendment to VLU Production Agreement dated September 6, 1996
("Amendment") is made as of May 28, 1997 by and between Tadiran Ltd. ("Seller"
or "Tadiran") and Teletrac Inc. ("Buyer" or "Teletrac").
Whereas, due to interference with proper function of the VLU caused by
unrelated third parties (the "Interference"), Specifications of the VLU Exhibit
"A" to the Agreement have to be modified; and
Whereas, in order to resolve the above problem, Teletrac requested
Tadiran, in accordance with the Agreement, to change the Specifications of the
VLU and develop a modified VLU (the "Modified VLU"); and
Whereas, the Parties wish to cooperate in order to resolve the above
problem.
The Parties hereby agree as follows:
1. Terms used in this Agreement shall have the same meaning as
defined in the Agreement.
2. Based on data and information provided by Teletrac and
independently confirmed by Tadiran, Tadiran shall make all
reasonable efforts to develop a Modified VLU which shall provide
technical solution to the Interference. Joint teams of Tadiran
and Teletrac (the "Joint Team") shall cooperate in definition of
the changes. Upon development of the Modified VLU the Joint Team
shall perform laboratory and field tests in order to determine
the suitability of the technical solution. Should the solution
be found acceptable, it shall be approved by the Joint Team.
3. The Parties hereby acknowledge that the above development shall
require joint efforts of both Parties. If the proposed technical
solutions are not successful, despite their efforts, the Parties
[****Omitted and Filed Separately With the Commission Pursuant
to a Request for Confidential Treatment.]
shall coordinate further steps in order to resolve the problem of
Interferences.
4. Upon approval of the Joint Team, the Specifications shall be
changed in writing in accordance with the approved technical
solution (the "Revised Specifications"), which shall be signed by
both Parties. The Parties hereby undertake to make reasonable
efforts to approve the Revised Specifications and to instruct
their members of the Joint Team to promote the approval of the
technical solution in the speediest and most efficient manner.
5. Upon approval of Revised Specifications, Tadiran shall submit to
Teletrac a proposal for retrofit costs (excluding R&D) and for
adjustment of the price for all new VLU Units to be ordered under
the Agreement.
5.1. It is hereby agreed that the retrofit costs shall not exceed
US $**** per Unit if **** has to be replaced and US $****
per Unit, if **** have to be replaced. The Parties shall
add the retrofit costs to the VLU price defined in the
Agreement for all retrofit Units.
5.2. It is hereby agreed that the price for all new VLU Units to
be ordered under the Agreement shall be adjusted but shall
not exceed US $**** per Unit, if **** has to be replaced or
US $**** per Unit, if **** have to be replaced.
5.3. The above "not to exceed" estimates are based on assumption
that the cost of **** to Tadiran shall not exceed US $****.
If the cost of **** exceeds US $****, the difference shall
be added to the above "not to exceed" estimates.
5.4. As soon as production facilities could be readjusted and the
prices be agreed upon (the "Modification Effective Date"),
all Units ordered under the Agreement shall be Modified VLUs
and manufactured in accordance with the Revised
Specifications.
2
[****Omitted and Filed Separately With the Commission Pursuant
to a Request for Confidential Treatment.]
6. In order to preserve the production capacity established under
the Agreement and within the framework of mutual cooperation, the
Parties hereby agree to the following changes in the on-going
production of the VLUs:
6.1. from the date of execution of this Amendment until
Modification Effective Date, the VLU's shall be manufactured
without components which require modification and without
final acceptance tests. These VLUs shall be delivered to
bonded warehouse in Thailand and upon such delivery the
title to these VLUs shall pass to Teletrac ("Warehouse
VLUs"). Tadiran represents and Teletrac shall have the
right to verify that the storing conditions in the bonded
warehouse are adequate. Teletrac shall have the right to
inspect the bonded warehouse from time to time.
The cost of storage and insurance premium for the duration
of the storage in the bonded warehouse (up to four months)
shall be paid by Tadiran. If by the end of the four-month
period the Revised Specifications have not been approved,
Tadiran shall complete the manufacture of the Warehouse VLUs
and shall ship them to Teletrac, unless the Parties agree to
continue their joint development effort.
6.2. Starting with the Modification Effective Date, all Warehouse
VLUs shall be modified according to Revised Specifications
and delivered to Teletrac in accordance with the Agreement
at a minimum monthly rate of **** Units a month (in addition
to regular deliveries as per section 6.3 below). Warranty
for Warehouse VLUs shall begin upon actual delivery to
Teletrac in accordance with the Agreement.
6.3. For the duration of the development of the Modified VLUs
until Modification Effective Date, the monthly delivery rate
defined in the Agreement may be decreased to **** VLUs. For
the purpose of determination of the monthly delivery rate,
delivery to the bonded
3
[****Omitted and Filed Separately With the Commission Pursuant
to a Request for Confidential Treatment.]
warehouse shall be considered a "delivery." On Modification
Effective Date the monthly delivery rate of regular
deliveries shall be raised to a minimum of **** Units a
month.
6.4. Notwithstanding the above, it is hereby agreed that payments
for Warehouse VLUs shall be made in the following manner:
****% of the payment due for each delivery shall be paid
upon delivery to the bonded warehouse and the other ****%
plus retrofit costs shall be paid upon shipment of the
Modified VLUs in accordance with the Agreement. For
avoidance of doubt these terms of payment shall apply to
Warehouse VLUs only and terms of payment for any other VLUs
shall be in accordance with the Agreement.
The Letter of Credit issued under the Agreement in favor of
Tadiran shall apply to all payments under the Agreement and
under this Amendment.
7. All other provisions of the Agreement unless amended specifically
herein shall remain intact and Teletrac shall remain importer of
record of all VLUs and Modified VLUs.
/s/ Xxxx X. Xxxx /s/ Xxxx Xxxxx
------------------------------ ----------------------------------
Teletrac Tadiran
Xxxx X. Xxxx Xxxx Xxxxx
Vice President - Finance and President and CEO Tadiran
Corporate Development Telematics
4
