EXHIBIT 10.4
SERVICES AGREEMENT
Parties: Orbit-Alchut Technologies, Ltd. ("Alchut")
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00 Xxxxxxx Xxxxxx
Xxxxxxx
Xxxxxx
Orbit/FR, Inc. ("Orbit/FR")
000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
XXX
Orbit/F.R. Engineering, Ltd. ("Engineering")
00 Xxxxxxx Xxxxxx
Xxxxxxx
Xxxxxx
Date: As of January 1, 1997
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Background: Alchut owns all of the issued and outstanding shares of Orbit
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Advanced Technologies, Inc. ("Orbit"), and, together with certain of its other
subsidiaries, Alchut owns all of the issued and outstanding shares of
Engineering. In December, 1996, Alchut incorporated Orbit/FR, Inc. ("Orbit/FR")
and effective as of December 31, 1996, Alchut transferred or caused to be
transferred to Orbit/FR all of the issued and outstanding shares of Orbit and
Engineering, in exchange for shares of Orbit/FR.
Alchut is a supplier of production and administrative services to Orbit,
and Alchut is a subcontractor to Orbit. Orbit has been responsible for
operating the antennae measurement business for Alchut and its subsidiaries
(collectively, the "Alchut Group") and possesses the technical know-how
necessary for the operation of the antennae measurement business.
Alchut previously maintained an antennae measurement division, the
employees of which, although employed by Alchut, worked under the supervision of
Orbit. In contemplation of transferring its antennae measurement business in
Israel to Orbit/FR, Alchut incorporated Engineering for the purpose of
establishing its antennae measurement division as a separate entity. As of
December 31, 1996, Alchut transferred its antennae measurement related fixed
assets, based on the book value as of that date, to Engineering as a
contribution to capital. As of January 1, 1997, Alchut sold its antennae
measurement related receivables, inventory and work in process, for book value
as of that date, to Engineering in return for Engineering's agreement to pay for
the assets as set forth in the Purchase and Assignment Agreement, dated as of
January 1, 1997, between Alchut and Engineering. As of December 31, 1996, Alchut
transferred shares of Engineering and Orbit to
Orbit/FR via a share exchange agreement, whereby Alchut and another member of
the Alchut Group received shares of Orbit/FR in exchange for all of their shares
of Engineering and Orbit. Effective January 1, 1997, the personnel formerly
employed in the antennae measurement division of Alchut are employed by
Engineering.
It is the intention of the parties that (i) Engineering will carry out all
antennae measurement activity in Israel for Orbit/FR, Orbit and Engineering
(collectively, the "Orbit A/M Group"), (ii) the Orbit A/M Group will purchase
certain of its electrical and mechanical production services required in Israel
from Alchut, and (iii) the team of engineers at Engineering will ensure that
those production orders received by Alchut for the Orbit A/M Group are processed
correctly. Among other things, all orders or proposals, marketing policies and
sales policies were subject to the approval of Orbit/FR.
In consideration of the mutual agreements contained herein, and intending
to be legally bound, the parties agree as follows:
SECTION 1: OBLIGATIONS
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1.1 Administrative Services.
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(a) By Alchut to Engineering. For the duration of the term of this
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Agreement (as defined in Paragraph 3.1), Alchut will provide to Engineering the
administrative services described on attached Schedule 1.1(a) ("Administrative
Services"), required by Engineering in Israel that Alchut generally provides for
itself and to its subsidiaries and divisions (the "Alchut Group").
(b) Orbit/FR to Alchut. For the duration of this Agreement,
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Orbit/FR will provide satellite tracking and/or avionics divisions and/or
subsidiaries of the Alchut Group certain Administrative Services required by
such members of the Alchut Group that Orbit/FR generally provides for itself and
to the other members of the Orbit A/M Group.
(c) Standard of Performance. Each party providing Administrative
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Services will perform all such services in conformity with the practices and
standards generally provided to itself and the other members of its group. In
the case of any conflict or potential conflict between the provision by a party
providing Administrative Services and the provision by such party of similar
services on behalf of itself, or other members of its group or third parties,
the provision of the Administrative Services to the other party pursuant to this
Agreement will be provided on an equitable basis.
1.2 Production Services.
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(a) By Alchut to Engineering. For the duration of the term of this
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Agreement, Alchut will provide to Engineering the production services described
in attached Schedule 1.2(a) ("Production Services") that are required by
Engineering in Israel and that are not otherwise
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performed by the Orbit A/M Group or Orbit/FR's other subsidiaries and that
Alchut provided for the antennae measurement business of Alchut Group prior to
this Agreement. ("Production Services").
(b) Standard of Performance. Alchut will perform all Production
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Services in conformity with the practices and standards generally provided to
the Alchut Group. In the case of any conflict or potential conflict between the
provision by Alchut of the Production Services and the provision by Alchut of
similar services on behalf of itself, its affiliates or third parties, the
provision of the Production Services to the Orbit A/M Group will be provided on
an equitable basis other services.
1.3 Lease of Office Space.
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(a) By Alchut to Engineering. For the duration of the term of this
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Agreement, or if shorter, the term of the lease for the main office facility
leased by Alchut in Israel (the "Alchut Premises"), Alchut will lease to
Engineering such office space at the Alchut Premises as may be agreed upon from
time to time by Alchut and Engineering (the "Engineering Office Space").
(b) For the duration of the term of this Agreement, or if shorter,
the term of the lease for the main office facility leased by Orbit/FR in
Horsham, Pennsylvania (the "Orbit/FR Premises"), Orbit/FR will lease to the
satellite tracking and/or avioncs divisions and/or subsidiaries of the Alchut
Group such office space at the Orbit/FR Premises as may be reasonably required
from time to time by Alchut (the "Alchut Office Space").
1.4 Other Obligations in Performing the Administrative and Production
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Services.
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(a) Each party providing Services hereunder will hire and/or retain
as employees of itself or its subsidiaries such persons as may be reasonably
necessary to provide the Administrative Services and Production Services
(collectively, the "Services") required to be provided by it. Each party will be
responsible for the management and supervision of all of its personnel
performing the Services, all decisions relating to the retention of such
personnel, all compensation, expenses and benefits of such personnel, and all
employment, payroll, withholding and other taxes relating to such personnel.
(b) Each party providing Services hereunder will maintain all office
facilities and equipment (including telecommunications equipment, computer
equipment and software, office and production and manufacturing equipment)
necessary to provide the Services under this Agreement.
(c) Each party providing Services hereunder will maintain complete
and accurate books, records and information relating to all the Services
provided under this Agreement and will furnish the other party and the relevant
members of the other party's group with such information as any such party
and/or member(s) may reasonably request.
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(d) Each party providing or receiving services hereunder will (i)
comply with all applicable laws, rules and regulations of all governmental,
administrative and industry authorities relating to its business and its
performance under this Agreement, and (ii) maintain in full force and effect all
licenses, permits certificates and authorizations of all governmental,
administrative and industry authorities necessary for its business and its
performance under this Agreement.
(e) Each party providing services hereunder will maintain, with
reputable and financially sound insurers, comprehensive general liability
insurance with such limits and in such form and substance as is currently
maintained by such party and will have the other party and the relevant members
of the other party's group as co-insureds under such insurance policy.
SECTION 2: COMPENSATION
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2.1 In consideration of the provision of the Services and leased spaced
described in this Agreement, the party providing the services shall receive the
following compensation:
(a) Alchut's Administrative Services to Engineering. As
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compensation for its provision of the Administrative Services, during the
calendar year 1997, Engineering shall pay to Alchut Three Hundred and Sixty
Thousand Dollars ($360,000). Such amount shall be payable in equal monthly
installments of $30,000 on the first day of each month with respect to the
Services received during the prior month. In the event that an amount shall not
be paid within thirty (30) days, the amount shall accrue interest at an annual
rate equal to the prime rate of UMB Ltd. in NIS, plus 2%. The amount to be paid
by Engineering for such Services in each calendar year after 1997 shall be
agreed upon by the parties prior to the end of the preceding calendar year.
(b) Orbit/FR's Administrative Services to Alchut. As compensation
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for its provision of Administrative Services, during the calendar year 1997,
Alchut shall pay to Orbit/FR the cost of such administrative services actually
provided by Orbit/FR to Alchut. Such amount shall be payable each month with
respect to the Services received during the prior month. In the event an amount
shall not be paid within thirty (30) days, the amount shall accrue interest at
an annual rate of the prime rate of PNC Bank in U.S. dollars, plus 2%. The
amount to be paid by Alchut for such Services shall be reviewed by the parties
prior to the end of the first year of this Agreement.
(c) Alchut's Production Services to Engineering. As compensation
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for its provision of Production Services Engineering shall pay to Alchut an
amount equal to the cost of providing such services, plus 5%. Alchut shall issue
invoices for such Services on a monthly basis which such invoice shall show the
costs for such Services for the prior month, plus 5%. Such invoice shall be paid
within 30 days after receipt of such invoice.
(d) Alchut's Lease of Space to Engineering. As compensation for its
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provision of the Engineering Office Space in the Alchut Premises, Engineering
will pay to Alchut $22.80 for
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each square foot per year of Engineering Office Space, which amount shall
include the provision by Alchut of all taxes, utilities, maintenance, security
and cleaning.
(e) Orbit/FR's Lease of Space to Alchut. As compensation for its
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provision of the Alchut Office Space in the Orbit/FR Premises, Alchut will pay
to Orbit/FR $2,000 for each month, which amount shall include the provision
and/or payment by Orbit/FR of all taxes, utilities, maintenance, security and
cleaning.
SECTION 3: DURATION AND TERMINATION
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3.1 Term of Services. The party providing Services hereunder will
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provide such Services for a term of one (1) year beginning on the date hereof,
and will continue to provide such Services thereafter unless terminated as
follows:
(a) A party may terminate this Agreement in its entirety or the
provisions relating to the Administrative Services or the Production Services,
after the completion of the initial one (1) year term by giving 90 days prior
written notice of termination to the other parties;
(b) If and whenever a party fails to perform or satisfy any of its
obligations under this Agreement for a period of ninety (90) days after the non-
defaulting party gives written notice of such failure to the defaulting party,
the non-defaulting party may immediately terminate this Agreement in its
entirety or the provisions relating to the Administrative Services or the
Production Services by giving written notice to the defaulting party; and
(c) If and whenever a party is in Default (as defined in Section
3.2), the non-defaulting party may immediately terminate this Agreement by
giving written notice of termination to the defaulting party.
3.2 Default of Services. The occurrence of any one or more of the
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following events will constitute a "Default" under this Agreement by the party
involved:
(a) The commencement of bankruptcy, reorganization, arrangement,
insolvency, dissolution, or liquidation proceedings by or against a party, if
such proceedings are not dismissed within 30 days following commencement
thereof;
(b) The appointment of a trustee, receiver, conservator, liquidator,
or other judicial representative for a party, or for a material part of the
property of a party;
(c) The suspension, dissolution, liquidation, or other cessation of
all or any material part of the business of a party; or
(d) The insolvency or bankruptcy of a party.
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3.3 Procedure Upon Termination. Upon termination of this Agreement in
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its entirety or the provisions relating to the Administrative Services or the
Production Services for any reason:
(a) Each party will promptly return to the other party all copies of
the other party's Proprietary Information and all other materials and documents
supplied by the other party to such party or its affiliates, and all use of the
other party's Technology and Trademarks (as defined below) by such party or its
affiliates will immediately cease;
(b) Alchut will promptly provide the Orbit Group with a summary of
the status of all work in progress for or on behalf of Engineering and in
accordance with the instructions of the Orbit Group, Alchut will either complete
all work in progress for or on behalf of any member of the Orbit Group or
provide the Orbit Group or its designee with all information and documentation
necessary or desirable to properly complete such work in progress;
(c) Each will cooperate with the other party during such transition;
and
(d) Each party will pay to the other party all amounts owing to the
other party as of the date of termination within a commercially reasonable time.
3.4 Survival. The provisions of Paragraphs 3.3, 3.4, 4,5, and 6, will
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survive any termination of this Agreement.
SECTION 4: PROPRIETARY PROPERTY, COPYRIGHTS AND TRADEMARKS
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4.1 Confidentiality. Each party acknowledges and agrees that (i)
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another party's Proprietary Information is a trade secret and confidential and
proprietary property of another party, (ii) neither it nor any of its affiliates
is acquiring title to any Proprietary Information or the right to use any
Proprietary Information of another party, except the right to use specific
Proprietary Information in connection with the provision of the Services in the
manner and for the purposes specified in this Agreement, (iii) Proprietary
Information in its or its affiliates' possession, whether or not authorized,
will be held in strict confidence, and (iv) all times during and after the term
of this Agreement, except as specifically authorized by this Agreement, no party
nor any of its affiliates will, directly or indirectly, communicate or disclose
any Proprietary Information of another party to any Person, or permit any Person
to have access to or possession of any Proprietary Information of another party,
or make or retain any copy of any Proprietary Information of another party.
Each party will take all actions reasonably necessary to preserve the
confidentiality of another party's Proprietary Information and to safeguard
against unauthorized disclosures of another party's Proprietary Information.
4.2 Copyrights, Trademarks and Technology. Each party acknowledges and
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agrees that (i) the Copyrights, Trademarks and Technology of the other party are
and will remain the sole property of that other party, (ii) such party will use
those Copyrights, Trademarks and Technology
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only in the manner and for the purposes the owner of the Copyright, Trademark or
Technology may direct, and (iii) each such other party reserves the right to
direct such party to modify or discontinue use of any such Copyright, Trademark
or Technology at that other party's discretion. No party nor any of its
affiliates will, directly or indirectly, do anything, or assist any other Person
to do anything, which would infringe upon, impair or contest any other party's
rights in any of its Copyrights, Trademark or Technology or any other or such
similar rights. Each party will cooperate fully in any action any other party
may take relating to any claim of improper use, infringement of any of its
Copyrights, Trademarks or Technology or unfair competition.
4.3 Enforcement. Each party acknowledges that a breach by it of any of
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the provisions of this Paragraph 4 could result in irreparable injury to the
other, non-breaching party for which money damages would not adequately
compensate. In the event of such breach, the non-breaching party will be
entitled, in addition to all other rights and remedies which it may have at law
or in equity, to have a decree of specific performance or an injunction issued
by a court of competent jurisdiction, requiring the breach to be cured or
enjoining all Persons involved from continuing the breach. The existence of any
claim or cause of action which the breaching party or any other Person may have
against the non-breaching party will not constitute a defense or bar to the
enforcement of any of the provisions of this Paragraph 4.
SECTION 5: LIMITATION OF LIABILITY
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Notwithstanding any other provision of this Agreement, no party will have
any liability to any other party or any affiliates of another for (i) any delay
in performing or failure to perform its obligations under this Agreement as a
result of any event or circumstance which is beyond such party's reasonable
control, including any act of God, act of governmental authority, change of law,
rule or regulation, loss of key employee, labor disturbance, unavailability of
supplies, power failure, weather condition, fire, flood, or similar type of
event; or (ii) any damages measured by lost revenues, profits, business or
business expectancy, or for any other indirect, incidental or consequential
damages, whether or not foreseeable, or for any special or punitive damages.
SECTION 6: GENERAL PROVISIONS
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6.1 Notices. All notices, consents or other communications required or
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permitted to be given under this Agreement will be in writing and will be deemed
to have been duly given (i) when delivered personally, (ii) seven business days
after being mailed by first class certified mail, return receipt requested,
postage prepaid, or (iii) three business days after being sent by a reputable
overnight delivery service, postage or delivery charges prepaid, to the parties
at their respective addresses stated on the first page of this Agreement.
Notices may also be given by prepaid telegram or facsimile and will be effective
on the date transmitted if confirmed within 72 hours thereafter by a signed
original sent in the manner provided in the preceding sentence. Any party may
change its address for notice and the address to which copies must be sent by
giving notice of the new addresses to the other parties in accordance with this
Paragraph 6.1.
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6.2 Relationship Between Parties. Except as specifically authorized in
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writing, no party has any authority to bind any other party in any manner, and
no party will be liable in any manner for the debts, liabilities or obligations
of another party.
6.3 Entire Understanding. This Agreement states the entire
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understanding among the parties with respect to the subject matter hereof, and
supersedes all prior oral and written communications and agreements, and all
contemporaneous oral communications and agreements, with respect to the subject
matter hereof. No amendment or modification of this Agreement will be effective
unless in writing, authorized in writing by the parties effected by the
amendment or modification.
6.4 Parties in Interest. This Agreement will bind, benefit, and be
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enforceable by and against each party hereto and, to the extent permitted
hereby, its successors and assigns. No party will assign any of its rights or
obligations under this Agreement to any other Person, whether by operation of
law or otherwise, without the prior written consent of the effected party.
6.5 No Waivers. No waiver with respect to this Agreement will be
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enforceable unless in writing and signed by the party against whom enforcement
is sought. No failure to exercise or partial exercise of any right or remedy by
any party, and no course of dealing among any of the parties, will constitute a
waiver of, or will preclude any other or further exercise of the same or any
other right or remedy.
6.6 Severability. If any of the provisions of this Agreement are for
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any reason be held to be invalid, illegal or unenforceable, the remaining
provisions of this Agreement will not be affected thereby and will be
enforceable without regard thereto. If any provision of this Agreement is held
to be invalid, illegal or unenforceable under the laws of a particular
jurisdiction, it is the intention of the parties that all of the provisions of
this Agreement will remain in full force and effect in all other jurisdictions.
6.7 Counterparts. This Agreement may be executed in any number of
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counterparts, each of which when so executed and delivered shall constitute an
original hereof, and it shall not be necessary in making proof of this Agreement
to produce or account for more than one original counterpart hereof.
6.8 Section Headings. The section and subsection headings in this
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Agreement are for convenience of reference only, do not constitute a part of
this Agreement, and will not affect its interpretation.
6.9 References. All words used in this Agreement will be construed to
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be of such number and gender as the context requires or permits. Unless a
particular context clearly provides otherwise, the words "hereof" and
"hereunder" and similar references in this Agreement refer to this Agreement in
their entirety and not to any specific section or subsection hereof of thereof.
For the purposes of this Agreement, "including" means "including but not limited
to."
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6.10 Controlling Law and Arbitration. This Agreement is made under, and
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shall be construed and enforced in accordance with, the laws of Israel, without
giving effect to principles of conflicts of law. The parties agree that, except
with respect to an action for equitable relief, all disputes or differences
arising under this Agreement shall be determined by arbitration in Israel. The
parties agree that such arbitration shall be conducted by one arbitrator
selected by the parties, but if the parties are unable to agree upon one
arbitrator, the arbitrator shall be selected by the President of the Israeli Bar
Association. The arbitrators shall determine the procedures and rules of
evidence in the arbitration, but the substantive laws of Israel shall govern the
decision. This section constitutes an arbitration agreement.
6.11 No Third Party Beneficiaries. No provision of this Agreement is
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intended to or shall be construed to grant or confer any right to enforce this
Agreement, or any remedy for breach of this Agreement, to or upon any Person
other than the parties hereto.
6.12 Definitions.
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(a) "Copyright"means any and all rights associated with the
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expression of an idea as they are defined and protected by any and all
applicable copyright laws.
(b) "Person" means any individual, sole proprietorship, joint
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venture, partnership, corporation, association, trust, estate, governmental
agency, regulatory authority, or any other entity.
(c) "Proprietary Information" means all information and materials
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which are confidential or proprietary to a party or its affiliates, or to a
party's clients, whether or not designated as such by such party, and whether or
not reduced to writing or other tangible documentation, including (i) all trade
secrets, know-how, inventions, and computer software (and all modifications,
enhancements and improvements thereof), whether or not a patent or copyright
application has been filed on such, (ii) all user and operator manuals,
production and manufacturing procedures and techniques, (iii) all testing and
research data, including such that would be generated by quality control and
research and development, (iv) all pricing policies, business strategies and
operations, marketing plans and methods, management policies and procedures,
financial information, accounting records, training techniques and manuals, and
other business and financial records (including all information furnished by
such party pursuant to the Agreement), and (v) all information relating to such
party's clients, suppliers, employees, agents or representatives and the terms
of any agreement, arrangement or understanding to which such party or any of its
affiliates is a party. Notwithstanding the foregoing, Proprietary Information
does not include any information of a party which (a) is currently or
subsequently becomes part of the public domain through no fault of the other
party or any of its affiliates, (B) is independently developed or created by the
other party, (C) is disclosed to the other party by any Person who is not then
bound by a confidentiality obligation, or (D) is known by the other party at the
time of disclosure.
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(d) "Technology" means all computer software programs developed,
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being developed, and/or owned by a party or its affiliates and all
modifications, enhancements, improvements, updates and new releases thereof.
(e) "Trademarks" means all trademarks, trade names, service marks,
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service names and other similar or related rights and property owned or used by
a party or its affiliates and all derivations or modifications thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement through their duly authorized representatives, as of the day and
year first above written.
ORBIT-ALCHUT TECHNOLOGIES, LTD. ORBIT/FR, INC.
By: /s/ Xxxxxx Aviv By: /s/ Xxxxx Xxxxxxxx
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Name: Name:
Title: Chairman Title: President
ORBIT/FR ENGINEERING, LTD.
By: /s/ Xxxxx Pinkasy
---------------------------------
Name:
Title: Chief Executive Officer
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SCHEDULE 1.1(a)
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ALCHUT'S ADMINISTRATIVE SERVICES
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1. Accounting, costing and budgeting support; accounts receivable, including
billing, processing and tracking; collection and application of receipts
including deposits to Engineering's bank account, accounts payable including
processing and payment of invoices, payroll; supply information for tax returns,
management reports, and financial statements; internal auditing services.
2. Management information systems, including provision of all required
computer systems, computer system backup, accounting systems, word processing
and management reports.
3. Other services and support, including office services, general
administration, facsimile, telephone, mail and common purchasing.
4. Production support, including, purchasing, inventory, drawing, packaging,
shipping, quality control, administration and monitoring of warehousing,
importing of product and parts, arranging for and monitoring transportation of
product (domestic and international).
5. Legal, directorship services and internal auditing services.
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SCHEDULE 1.2(a)
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ALCHUT'S PRODUCTION SERVICES
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Electrical and mechanical services.
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