Exhibit 10.8
June 26, 1995
PURCHASE ORDER AGREEMENT
BETWEEN
Tadiran Telecommunications Ltd.
00 Xxxxxxx Xx.
X.X Xxx 000 Xxxxx Xxxxx 00000
ISRAEL
AND
CELERITY SYSTEMS, Inc.
0000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx XX, 00000
FOR THE SUPPLY OF
Video On Demand (VOD) System For Bezeq/Tadiran Field Trial
INDEX
ITEM TITLE
---- -----
Preamble
1 Scope of Agreement/Priority
2 Definitions
3 Seller's Declaration
4 Packing, Shipment and Delivery
5 Inspection and Acceptance
6 Title and Risk of Loss
7 Payments, Taxes, Price Representation
8 Changes, Amendments to Specifications
9 Limited Warranty
10 Patent Identity
11 Default
12 Liquidated Damages
13 Force Majeure
14 Termination for Convenience
15 Stop Work Orders
16 New Material
17 Subcontracting
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18 Quality Assurance
19 Items Furnished by Buyer
20 Approval of Design
21 Insurance
22 Post-Warranty Obligations
23 Long Term Sales Commitment
24 Proprietary Data
25 Procurement from Seller's Sources
26 Confidentiality, Advertising
27 Export Licenses
28 Compliance with Statutes and Regulations
29 Applicable Law; Disputes
30 Options
31 Notices
32 Miscellaneous
ANNEXES
I Statement of Work ("SOW")
II Prices and Terms of Payment
III Options
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AGREEMENT ("AGREEMENT")
BETWEEN
Tadiran Telecommunications Ltd.
00 Xxxxxxx Xx.
X.X. Xxx 000 Xxxxx Xxxxx 00000
ISRAEL
(hereinafter called "Buyer")
AND
Celerity Systems, Inc.
0000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx XX, 00000
XXX
(hereinafter called "Seller")
WHEREAS, Buyer is a company organized and existing under the laws of the
State of Israel, having its principal office at 00 Xxxxxxx Xx., Xxxxx
Xxxxx 00000,
AND WHEREAS, the Seller is a company organized and existing under the laws
of the State of Tennessee, United States of America, having its principal
office at 0000 Xxxxxxxxx Xxxx Xxxxx, Xxxxxxxxx XX 00000 and is engaged in
Interactive Video Systems,
AND WHEREAS, the Seller wishes to furnish and deliver supplies and/or
perform services
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for the VOD System for the Bezeq/Tadiran Field Trial as subcontractor to
Buyer as detailed hereunder, and Buyer wishes to receive said supplies
and/or services from Seller;
NOW, THEREFORE, IT IS HEREBY AGREED BETWEEN BUYER AND SELLER, AS FOLLOWS:
1. SCOPE OF AGREEMENT
a. The preamble and Annexes to this Agreement form an integral part
hereof.
b. Seller agrees to provide Buyer with supplies and services as
detailed in Annex 1, "Statement(s) of Work", attached hereto
(collectively the "Deliverable Items") in accordance with the terms
of this Agreement.
c. This Agreement contains the following Annexes:
Annex I Statement of Work ("SOW")
including: Technical Specification Program Schedule
Annex 11 Prices and Terms of Payment
Annex 111 Options
d. This Agreement will be implemented in whole or in part by Buyer
through the issuance to Seller of printed purchase order(s) (the
"Purchase Order(s)") which shall specify the items ordered and the
funding limitations, if any, and shall reference this Agreement.
Seller shall promptly acknowledge said Purchase Order in writing in
the space provided therefor and return an acknowledgment copy to
Buyer. The Purchase Order shall constitute a contractual document
for purposes of this Agreement, however, unless otherwise
specifically agreed in writing by the parties, the printed terms and
conditions appearing on the reverse side of the Purchase Order shall
have no force and effect.
e. In the event of conflict between the provisions of these Terms and
Conditions and the provisions of the Annexes hereto or the Purchase
Order, the provisions of specific applicable Annexes shall take
precedence over these Terms and Conditions to the extent necessary
to resolve a conflict.
f. Notwithstanding an other term, conditions or implication of this
Agreement and Annexes, Buyer acknowledges that the Deliverable Items
include certain operating software which is the proprietary property
of Seller, title to which remains in the Seller and as to which
Buyer is receiving no other interest other than a license to use
such software in the operation of its Deliverable Items and for no
other purpose. Buyer acknowledges and agrees that it is not entitled
to nor will it decompile, reverse
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engineer or otherwise use or permit the software to be used for this
purpose. Buyer acknowledges Seller's intent to utilize the
limitations of this license to preserve and defend its trade secrets
from disclosure to unauthorized parties and agrees not to allow
access to the software by any third party without Seller's written
consent.
2. DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, for purposes
of this Agreement, the following terms shall have the meanings set forth
below:
a. ACCEPTANCE: "Acceptance" means either "Factory Acceptance" or "On
Site Acceptance" as the circumstances and time frame of the context
in which it is used shall reasonably require.
(1) "Factory Acceptance" means signature by Buyer's representative
on a Certificate of Acceptance or, where specifically
authorized, on a CoC (or by Seller upon successful completion
of the acceptance test in the event Buyer elects not to be
present provided that Buyer receives written notice from
Seller at least thirty (30) days in advance of the Acceptance
Test referenced in the Certificate of Compliance or CoC).
(2) "On-Site Acceptance" means any acceptance by Buyer of
Deliverable Items after installation, integration and
commissioning in accordance with Section 5 hereinafter.
b. "Acceptance Test" shall mean as the context requires either the
tests required / or Factory Acceptance / or "On-Site Acceptance."
c. "ARO" means after receipt of order(s).
d. "Certificate of Acceptance" means the certificate evidencing
successful completion of the Factory Acceptance Test, or On-Site
Acceptance Test for the Deliverable Items undergoing Acceptance, as
the context may require.
e. "COC" means Certificate of Compliance, evidencing compliance of the
Deliverable Items delivered with the Technical Specifications and
that they have successfully passed the Acceptance Test.
f. "Contract Price" means the aggregate price for the Deliverable Items
as set out in Annex 4 hereto, as from time to time adjusted under
articles 8 and 15 of this agreement.
g. "Delivery" means receipt of one or more of the Deliverable Items at
the Delivery Point, following Factory Acceptance of such items.
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h. "Delivery Point" means Ben-Gurion (Tel-Aviv) International Airport.
i. "Delivery Date" means a thirty (30) day period to be specified by
Buyer and agreed to by Seller during which any portion of the
previously undelivered Deliverable Items under the Program Schedule
will be subject to final Delivery at the Delivery Point.
3. SELLER'S DECLARATION
Seller declares that it has the skill, judgment, capability, means,
facilities and personnel to properly, timely and fully perform this
Agreement in accordance with all of its terms and conditions, and
acknowledges that the Buyer, in reliance upon such express declaration,
has entered into this Agreement.
4. PACKING, SHIPMENT AND DELIVERY
a. Unless otherwise specified in this Agreement, all Deliverable Items
shall be delivered CIF the Delivery Point. Buyer's Purchase Order
numbers and symbols, with prefix and Buyer's Part Number must be
plainly marked on all invoices, packages, bills of lading, airway
bills and packing lists. Packing lists must accompany each invoice.
Buyer's inspection shall be final and conclusive on shipments not
accompanied by packing lists.
b. Upon each shipment Seller shall notify Buyer immediately by fax of
the identity of the carrier and expected time of arrival to the
Delivery Point.
c. Not later than five (5) days prior to an intended shipment Seller
shall fax to Buyer the COC for each component of the Deliverable
Items to be sent under such shipment pursuant to the Program
Schedule. In the event Buyer did not sign the COC, than Seller shall
also concurrently supply the test data on which such COC is based
and Buyer shall have five days thereafter within which to notify
Seller that such test results are unacceptable. If the test results
are unacceptable, then the Program Schedule shall be modified to
reflect a new shipment date which in no event shall be later than
the Delivery Date and Seller shall retest the Deliverable Items in
question for the purpose of resubmission under this Article 4(c).
d. Acceptance of a late Delivery after the Delivery Date shall not be
deemed a waiver of Buyer's right to hold Seller liable for any loss
or damage resulting therefrom. Seller's liability in such case will
be limited to the total contract value.
e. Seller shall not be entitled to make Delivery on dates different
from those established herein unless Buyer, in its sole discretion,
consents thereto in writing on terms to be agreed between the
parties. In the absence of such consent and in the event of delay in
Delivery past the Delivery Date, then, in addition to any rights
Buyer may have, Buyer shall have the right to direct Seller to make
shipment to the Delivery Point set
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forth in this Agreement by the most expeditious means, and the total
cost of such expedited shipment and handling shall be borne by
Seller.
5. INSPECTION AND ACCEPTANCE
a. All Deliverable Items (which term throughout this Article includes
without limitation, raw materials, components, intermediate
assemblies, and end products) shall be subject to inspection and
test by Buyer, its authorized representatives to the extent
practicable at all times and places including the period of
manufacture, and in any event prior to On-site Acceptance. Unless
otherwise provided herein, final inspection and Factory Acceptance
shall take place at Seller's premises before Delivery. Seller shall
give Buyer at least fifteen (15) days prior written notice of the
commencement of the Acceptance Test for each article of Deliverable
Items to be delivered hereunder. Acceptance shall be performed in
accordance with the applicable provisions contained or referenced in
the SOW. Upon successful completion of the Acceptance Test for each
article of the Deliverable Items, Buyer will execute a Certificate
of Acceptance (or in the event that Buyer elects not to be present
for such Acceptance Test, Seller will sign Certificate of Compliance
therefor) which shall evidence Factory Acceptance.
b. All Deliverable Items for which there is a Factory Acceptance and
which Buyer shall not have rejected under Article 4(c) are deemed to
be prima facie in conformity with the requirements of the Agreement
subject to only to (i) rejection by Buyer because of shipping damage
and to (ii) the subsequent On-Site Acceptance. Inspection for
shipping damage shall be made and reported to seller within fifteen
days of delivery. In case any Deliverable Items or lots of
Deliverable items fail to obtain Factory Acceptance, Buyer shall
have the right either to reject them or to require their correction.
In the event of shipping damage, Deliverable Items or lots of
Deliverable Items which have been rejected or required to be
corrected, shall be shipped to the place of repair, to be corrected
or replaced and returned to Buyer at Seller's expense; or Seller may
at its option, cause such Deliverable Items to be corrected in
place. Such Deliverable Items which do not obtain Factory Acceptance
or incur shipping damage shall not thereafter be tendered for
Acceptance unless Buyer agrees thereto in writing or the former
rejection or requirement of correction is withdrawn by Buyer or its
authorized representative.
c. If Seller fails to act in commercially reasonable manner prior to
the Delivery Date to correct promptly materially defective
Deliverable Items or lots of Deliverable Items which are material to
overall performance and use required to be corrected in accordance
with sub- Article (b) above, or promptly replace such Deliverable
Items or lots of Deliverable Items, Buyer may:
(1) Delete the subject Deliverable Items from this Agreement and
replace or correct such Deliverable Item and charge to Seller
the net costs of such
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correction or replacement but in no event more than 110% of
the stated value of the item under the terms of this
agreement; or
(2) Cancel this Agreement for default as provided in the Article
of this Agreement entitled "Default". Unless Seller corrects
or replaces such Deliverable Items by the Delivery Date, Buyer
may require the Delivery of such Deliverable Items at a
reduction in price which is equitable under the circumstances.
Failure to agree to such reduction will be a dispute
concerning a question of fact within the meaning of the
Article of this Agreement entitled "Disputes" without
derogation from the other rights of Buyer under this Agreement
or at law.
d. If any inspection or test is made by Buyer, on the premises of
Seller, then Seller, without additional charge shall provide all
reasonable facilities and assistance for the safety and convenience
of the inspectors in the performance of their duties. Buyer reserves
the right to charge to Seller any additional cost of inspection and
test when Deliverable Items are not ready at the time of such
inspection or test or when re-inspection or re-test is necessitated
by prior rejection. Seller reserves the right to charge Buyer any
costs incurred by Seller because of Buyer's failure to make an
inspection as and when agreed upon.
e. Inspection, test and Certificate of Compliance (COC) shall not
relieve Seller from properly fulfilling any and all contractual
responsibilities for defects in the Deliverable Items and other
contractual requirements otherwise required.
6. TITLE AND RISK OF LOSS
a. Unless this Agreement specifically provides for earlier passage of
title, title to Deliverable Items covered by this Agreement shall
pass to Buyer upon On-Site Acceptance.
b. Unless this Agreement specifically provides otherwise, risk of loss
of or damage to Deliverable Items shall remain with Seller until
passage to Buyer upon Delivery.
7. PAYMENTS, TAXES, PRICE REPRESENTATION
a. Buyer shall make payments due to Seller under this Agreement to
Seller's account No. 0000000 at Third National Bank of East
Tennessee, within thirty (30) days after Buyer's receipt of invoices
from Seller therefor, or within thirty (30) days following the
successful completion of the relevant payment milestones, whichever
is the later, in accordance with the payment schedule set out in
Annex II.
b. Any payments made for Deliverable Items delivered prior to Factory
Acceptance or On-Site Acceptance shall not constitute Acceptance of
said Deliverable Items for
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those purposes.
c. Invoices shall be submitted by Seller in triplicate (original and
two copies) for each shipment. Delays in receiving invoices, as well
as errors and omissions thereon, will be considered just cause for
withholding payment without losing any discount privileges set forth
in this Agreement or creating any interest payment liability.
Invoices covering Deliverable Items shipped in advance of the
Delivery dates specified in this Agreement will not be paid nor
deemed received until their normal maturity after the specified
dates of Delivery, unless accelerated deliveries are specifically
agreed to by Buyer in writing.
d. In order to further secure the performance of Celerity hereunder:
(1) Celerity and Tadiran agree to cause an Escrow Fund to be
created equal to 25% of the Total Purchase Order, $261,001,
funded in two installments: (i)15% of the total Purchase Order
funded from the First Milestone Payment required under the
Purchase Order Agreement to be paid by Tadiran to Celerity
(when as and if such Milestone Payment is made), and (ii) 10%
of the Total Purchase Order funded from the Second Milestone
Payment required under the Purchase Order Agreement to be paid
by Tadiran to Celerity (when, as and if such milestone payment
is made). Such installments shall be in the form of retention
by Tadiran in an Escrow Fund held by Tadiran.
(2) Tadiran agrees to invest the Escrow Fund monies in short-term
US Treasury Bonds (or in other investment that will yield same
interest) having maturities approximating the anticipated date
of completion of final "on-site acceptance" under the Purchase
Order for Milestone #4 in the SOW/Exhibit 1 (the completion of
the on site acceptance for Milestone No. 4 is referred to as
Escrow Termination).
(3) At the Escrow Termination, all amounts then held therein,
including accrued interest shall be paid over to Celerity.
(4) In the event that any time prior to the Escrow Termination,
Tadiran shall deliver to Celerity a written statement to the
effect that Celerity has engaged in material breach of the
terms and conditions of the Purchase Order Agreement which has
(have) not been cured to Tadiran's satisfaction (hereinafter
the "Notice to Pay"), then on the third business day following
Celerity's Receipt of Notice to Pay, Tadiran shall pay over to
itself from the Escrow Fund so much of the Escrow Fund as the
amount set forth in its Notice to Pay states is needed to
compensate itself for such breach.
(5) In the event that prior to the Escrow Termination Celerity
becomes (i) insolvent, (ii) has filed voluntary petition of
bankruptcy, or reorganization, or
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for the appointment of a receiver, or (iii) there has been an
involuntary petition to have Celerity declare bankruptcy or
subject to receivership which has not been vacated within 30
days of its original filing, or (iv) Celerity has executed for
the benefit of creditors, Tadiran may pay over to itself all
of the sums, including interest, then on deposit in the Escrow
Fund.
(6) In the event Tadiran receives from Celerity or Tadiran a Final
Order from an Arbitration Panel established by Article 29 of
the Purchase Order Agreement directing the payment of any sum
in the Escrow Fund to either of them or to any third party, it
shall promptly make such payments as directed therein and
otherwise comply with such Final Order to its best ability.
8. CHANGES, AMENDMENTS TO SPECIFICATIONS
a. Buyer may at any time, by a written order, make changes within the
general scope hereof in any one or more of the following: (i)
quantities; (ii) method of shipment or packing; and/or (iii) place
and/or time of delivery, which requests Seller shall not
unreasonably reject taking into account its other commitments and
financial status. If any such change causes an increase or decrease
in the cost of or the time required for performance of this
Agreement, whether changed or not by any such order, an equitable
adjustment shall be made in the Agreement Price or Program Schedule,
or both, and the Agreement shall be modified accordingly. Any claim
by Seller for adjustment under this Article must be asserted within
thirty (30) days from the date of notification of the change;
provided, however, that Buyer, if it decides that the facts justify
such action, may receive and act upon any such claim asserted at any
time prior to final payment under this Agreement. Where the cost of
Deliverable Items made obsolete or excess as a result of a change is
included in Seller's claim or adjustment, Buyer shall have the right
to prescribe the manner of disposition of such Deliverable Items.
Failure to agree to any adjustment which Seller claims or asserts
which is less than 5% of the Contract Price shall not excuse Seller
from proceeding with this Agreement as changed.
b. Whether made pursuant to this Article or by mutual agreement,
changes shall not be binding upon Buyer, until agreed in writing by
Buyer. The issuance of information, advice, approval or instructions
by Buyer's technical personnel or other representative shall be
deemed expressions of personal opinions only and shall not affect
Buyer's and Seller's rights and obligations hereunder unless the
same is in writing expressly stating that it constitutes an
amendment or change to this Agreement. Any changes or modifications
to this Agreement shall not become effective until duly signed by
Buyer's and Seller's authorized representatives.
c. Seller shall notify Buyer immediately of any amendments to
specifications of the Deliverable Items which Seller wishes to
implement thereto. Such implementation shall not take place without
having first received Buyer's written approval which shall
11
not be unreasonably withheld.
9. LIMITED WARRANTY
a. Seller, notwithstanding the Article of this Agreement entitled
"Inspection and Acceptance", warrants that all items of Deliverable
Items to be delivered thereunder, shall be fit for the intended use,
free from defects in and malfunctions arising from workmanship,
material and design and shall conform to the requirements of this
Agreement. If Buyer shall give Seller notice of any defect,
deficiency or non-conformance within 360 days from the date of
On-Site Acceptance of such item under this Agreement, Seller shall,
at no cost to Buyer and within the "Turn-Around Time" as defined
below, repair or furnish replacements for all such defective,
deficient or non-conforming items or parts thereof.
b. "Turn-Around Time" for the purposes of this Article means 15 days
from the date on which such defective item, or defective, deficient
or non-conforming part thereof, is furnished to Seller at port of
entry for repair or replacement until the date on which such
replaced or repaired item is returned to the Delivery Point or to
such other location as will be specified by Buyer. Seller will
provide "Hot Line" technical support 5 days a week, 24 Hours a day
for the duration of the Warranty period provided for 9.a above.
c. Seller shall bear shipment costs of the deficient, repaired or
replaced item as well as the risk or loss or damage to the item or
its replacement throughout the period between the shipment of the
defective item and the receipt by Buyer of the repaired or replaced
item. Repaired or replaced items shall be fully warranted in
accordance with this Article for the remainder of original warranty
period or 6 months, whichever is longer.
d. Seller will send replacement part as soon as possible after faxed
notification of failure of part, buyer is expected to ship
replacement part back to Seller immediately after notification. If
failed part is not resumed within 15 days, then Seller has the right
to xxxx buyer for the then current sales price of the item. This
item is intended to promote fast replacement, and to encourage
concurrent shipment of both the failed part by the buyer, and the
replacement part by the seller.
e. The above warranties shall be in addition to any other rights,
remedies or warranties available to Buyer under contract or at law.
10. PATENT INDEMNITY
a. Seller agrees to indemnify and hold harmless Buyer, against any
claims, demands, liability or suit of any nature, including costs
and expenses for or by reason of any actual or alleged patent,
trademark, or copyright infringement arising out of the
12
design, development, manufacture, use, sale or disposal of any item
of the Deliverable Items furnished hereunder in Israel provided,
however, in no event shall Seller's obligation under this indemnity
or other indemnity exceed the total contract value.
b. Should Buyer be prevented as a result of such claims, actions, or
suits regarding infringement from utilizing the item of Deliverable
Items in question, then Seller shall, at Seller's sole option and
expense, either substitute a fully-equivalent non-infringing item,
or modify the item so that same no longer infringes but remains
equivalent, or obtain for Buyer the right to continue use of the
item in accordance with the terms of this Agreement or refund full
or, with consent of Buyer for appropriate part of contract value.
c. In the event of Buyer being obliged to defend any litigation arising
under or in connection with an actual or alleged infringement as
aforesaid, Seller will defend such action in Buyer's name, at
Seller's expense, and will bear all damages, under any judgment
whether final, appealable or not, awarded against Buyer, provided
that in no event shall seller be liable for or required to expand
under this article 10c. and 10d. below more than the total value of
the contract. Seller will obtain Buyer's advance written approval
with respect to the identity of all counsel appointed to represent
Buyer, and with respect to any public disclosures or notices issued
by Seller or on its behalf concerning the litigation and all and any
settlements reached with the plaintiff.
d. Seller shall have no obligation hereunder with respect to any
proceeding or claim of infringement based on Buyer's modification of
the Deliverable Items or the combination, operation or use of such
Deliverable Items with program(s) and products not furnished by
seller if such infringement claim would have been avoided in the
absence of such modification, combination or operation or use with
program(s) not furnished by Seller.
11. DEFAULT
a. Buyer may cancel for Seller's default all or any part of the
undelivered portion of this Agreement if Seller breaches any one or
more of the material terms hereof, including, but not limited to,
Seller's failure to make Delivery within the time specified herein
and/or Seller's failure to comply with Acceptance requirements as
set out in Annex I. Buyer shall also have the right to cancel this
Agreement or any part hereof for default in the event of the
occurrence of any of the following:
(1) Insolvency of Seller;
(2) Seller's filing of a voluntary petition in bankruptcy, or
reorganization, or for the appointment of a receiver;
(3) Filing of an involuntary petition to have Seller declared
bankrupt, or subject
13
to receivership, provided it is not vacated within thirty (30)
days from the date of filing; or
(4) The execution by Seller of any assignment for the benefit of
creditors.
(5) In the event of defaults as aforesaid Buyer shall have the
right to return any part of Deliverable Items, and be entitled
to an immediate refund of all amounts paid therefor and/or to
collection of funds from the Escrow account per Article 7d. in
the event of default other than I to IV above Seller shall
have 30 days from the receipt of notice of default provided
for in subarticle (e) below to effect a cure to the
satisfaction of Buyer.
b. If this Agreement is canceled in whole or in part pursuant to this
Article, Buyer, in addition to any other rights provided by law or
in this Agreement, may require Seller to transfer title and deliver
to Buyer, in the manner and to the extent directed by Buyer (1) any
completed Deliverable Items, and (2) such partially completed
Deliverable Items specifically acquired for the performance of such
part of this Agreement as has been terminated; and Seller shall
protect and preserve property in its possession in which Buyer has
an interest. Payment for completed Deliverable Items delivered to
and accepted by Buyer shall be at the Contract Price therefor.
Payment for partially completed deliverables delivered to and
accepted by Buyer and for the protection and preservation of
property shall be in an amount agreed upon by Seller and Buyer.
Failure to agree to such amount shall be a dispute concerning a
question of fact within the meaning of the Article of this Agreement
entitled "Disputes".
c. In the event of Default Buyer may withhold from amounts otherwise
due to the Seller for such completed Deliverable Items or partially
completed deliverables such sum as Buyer determines to be necessary
to protect Buyer against loss because of outstanding liens or claims
of former lien holders on the Deliverable Items and/or partially
completed deliverables as aforesaid.
d. Buyer has a right of lien over all such Deliverable Items or
partially completed deliverables as aforesaid, and the provisions of
this Article shall not prejudice and shall not be prejudiced by the
Buyer's right of lien or its exercise thereof where the items have
been paid for, no lien for items not yet paid for will be accepted.
e. Cancellation for Seller's default shall be effected by delivery of
written notice thereof to Seller, and after the expiration of the
"cure period" during which no cure satisfactory to the Buyer was
effectuated. Buyer shall have no obligation with respect to the
incomplete portion of this Agreement. If after notice of
cancellation of this Agreement for default and expiration of the
cure period it is determined for any reason that Seller was not in
actual default, such notice shall be deemed to have been issued
pursuant to the Article hereof entitled "Termination for
Convenience".
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f. The rights and remedies of Buyer provided in this Article shall not
be exclusive and are in addition to any other rights and remedies
provide in law, equity, or under this Agreement.
12. LIQUIDATED DAMAGES
[intentionally left blank]
13. FORCE MAJEURE
a. Neither party shall be in default on account of the interruption of
its performance under this Agreement by extraordinary natural
disturbances, acts of God, acts of a government in its sovereign
capacity, any civil commotion, riot, insurrection or hostilities, or
any other causes beyond the reasonable control of such party, that
arise without the fault or negligence of such party, and that result
in delay of performance hereunder. Any such delay resulting from
such events shall be referred to herein as a "Force Majeure" and
shall entitled the delayed party to a corresponding extension of the
Program Schedule. The party whose performance will be delayed by
such events will use its best efforts to notify the other within
three (3) days after the occurrence of such an event, as well as the
cessation thereof.
b. With respect to delays in performance of Seller's subcontractors or
suppliers, such delays shall be deemed excusable delays with respect
to Seller only if such subcontractor's performance is prevented by a
cause set forth in sub-Article a. above, and when Seller could not
have obtained the supplies or services from other sources in
sufficient time to prevent interruption of its performance of this
Agreement.
c. If a Force Majeure results in the extending of any delivery under
this Agreement by more than sixty (60) days, Buyer may terminate
this Agreement in whole or in part on account of such excusable
delay, in accordance with the Article hereof entitled Termination
for Convenience, except that Seller shall not be entitled to any
profit.
14. TERMINATION FOR CONVENIENCE
a. The performance of work under this Agreement may be terminated, in
whole, or from time to time in part, by Buyer in accordance with
this Article. Termination of work hereunder shall be effected by
delivery to Seller of a notice of termination in writing specifying
the extent to which performance of work under the Agreement is
terminated, and the date upon which such termination becomes
effective (hereinafter "Notice of Termination").
b. After receipt of a Notice of Termination and except as otherwise
directed by Buyer, Seller shall promptly do all of the following:
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(1) stop work under the Agreement on the date and to the extent
specified in the Notice of Termination;
(2) place no further orders or subcontracts for materials,
services, or facilities except as may by necessary for
completion of such portions of the work under the Agreement as
may not be terminated;
(3) terminate all orders and subcontracts to the extent that they
relate to the performance of any work terminated by the Notice
of Termination;
(4) assign to Buyer in the manner, and to the extent directed by
Buyer all of the rights, title and interests of Seller under
the orders or subcontracts so terminated after Seller received
the applicable payment.
(5) settle all outstanding liabilities and all claims arising out
of such termination of orders and subcontracts subject to the
approval or ratification of Buyer, to the extent Buyer may
require, which approval or ratification shall be final for all
the purposes of this Article.
(6) Subject in any event to the final Payment and the provision of
Article 14.e; transfer title and deliver to Buyer in the
manner, to the extent, and at the times directed by Buyer (i)
the fabricated or unfabricated parts, work in progress,
completed work, Deliverable Items and other material produced
as a part of, or acquired in connection with the performance
of the work terminated by the Notice of Termination; and (ii)
the completed or partially completed plans, drawings, which if
the Agreement had been completed, would be required to be
furnished to Buyer;
(7) if Buyer should so direct, Seller shall use its best efforts
to sell in the manner, to the extent at the time, and at the
price or prices directed or authorized by Buyer any tangible
used in Fabricating the Deliverable Items which was acquired
for this Agreement and which does not require it to license
the incorporated software and further; provided, however, that
(i) Seller shall not be required to extend credit to any
purchaser, (ii) may acquire any such property under the
conditions prescribed by and at a price or prices approved by
Buyer, and (iii) the proceeds of any such transfer of
disposition shall be applied in reduction of any payment to be
made by Buyer to Seller under this Agreement or shall
otherwise be credited to the price or cost of the work covered
by this Agreement or paid in such other manner as Buyer may
direct;
(8) complete performance of such part of the work as shall not
have been terminated by the Notice of Termination; and
(9) take such action as may be necessary or as Buyer may direct
for protection
16
and preservation of the property related to this Agreement
which is in the possession of Seller and in which Buyer has or
may acquire an interest.
c. Pay all milestones to date, plus:
d. a prorata portion of the next milestone equal to the % of the work
completed which is subject to such next milestone, plus:
e. all termination costs and penalties payable by seller to third
parties as a result of cancellation, net of any credits which might
be secured, plus:
f. a penalty equal to 25% of all of the above or 25% of the entire
contract, whichever is greater.
15. STOP WORK ORDERS
a. Buyer may, at any time, by written order to Seller, require Seller
to stop all, or any part of the work called for by this Agreement
(the "Stop Work Order") for periods of up to thirty-five (35) days
after the Stop Work Order is delivered to Seller, not to exceed an
aggregate of more than one hundred (100) days per annum and for any
further period to which the parties may agree. Any such order shall
be specifically identified as a Stop Work Order issued pursuant to
this Article. Upon receipt of such an order, Seller shall forthwith
comply with its terms and take all reasonable steps to minimize the
incurrence of costs allocable to the work covered by the order
during the period of work stoppage. Within a period of up to
thirty-five (35) days after a Stop Work Order is delivered to
Seller, or within any extension of that period to which the parties
shall have agreed, Buyer shall either -
(1) cancel the Stop Work Order, or
(2) terminate the work covered by such order by reason of Seller's
default or as provided in the Article hereof entitled
"Termination for Convenience", as appropriate.
b. If a Stop Work Order issued under this Article is canceled or the
period of the order or any extension thereof expires, and Buyer has
not terminated this Agreement pursuant to sub-Article a. above,
Seller shall promptly resume work. An equitable adjustment shall be
made in the Program Schedule Delivery Date or Contract Price, or all
of these and the Agreement shall be modified in writing accordingly,
if
(1) the Stop Work Order results in an increase in the time
required for, or in Seller's cost in the performance of any
part of this Agreement, and
(2) Seller asserts a claim for such adjustment within thirty (30)
days after the end
17
of the period of work stoppage; provided that Buyer shall
promptly review in good faith the facts which Seller asserts
justify such claim and promptly act upon such claim prior to
final payment under this Agreement.
(3) Buyer understands and agrees that this Agreement causes Seller
to make a substantial commitment of resources and capacity and
that a Stop Work Order may cause a substantial dislocation and
out-of-pocket expense which will be taken into account in
determining an equitable adjustment. If the parties fail to
reach agreement on such adjustment within sixty (60) days, it
shall be a Dispute subject to Article 29 of this Agreement
with respect to any sums in excess of those Buyer proposes to
pay in good faith but shall not operate to defer Buyers time
to pay the amount it has in the interim determined to be
appropriate.
16. NEW MATERIAL
Except as to any Deliverable Items and components which the Technical
Specifications or the SOW(s) specifically provides need not be new, Seller
represents that the Deliverable Items and components thereof to be
provided under this Agreement are new (not used or reconditioned, and not
of such age or so deteriorated as to impair their usefulness or safety).
If at any time during the performance of this Agreement Seller believes
that the furnishing of Deliverable Items or components thereof which are
not new is necessary or desirable, it shall notify Buyer immediately in
writing including the reasons therefor and proposing any consideration
which will flow to Buyer if authorization to use such Deliverable Items is
granted.
17. SUBCONTRACTING
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18. QUALITY ASSURANCE
a. Seller shall provide a Quality Control System acceptable to Buyer
and Buyer's Customer for the Deliverable Items covered herein. The
Quality Control System shall be in accordance with acceptable
industrial quality standards and procedures applicable MIL-Q-9858A
(or equivalent commercial standard), and shall be maintained by the
development implementation of a Buyer approved program which
periodically and systematically audits all quality aspects of the
Deliverable Items.
b. Seller shall provide with each Delivery a copy of final
inspection/test results, and a COC endorsed by a designated
representative of Seller's organization.
c. Seller shall prepare and submit a detailed Quality Assurance Plan to
Buyer not later than one (1) month ARO, that includes all applicable
elements of applicable quality
18
specifications imposed by this Agreement. The plan shall be based on
the technical and manufacturing aspects required as a result of the
engineering design and the materials and production requirements for
the Deliverable Items to be furnished.
d. The Quality Assurance Plan shall be maintained to reflect current
Quality Assurance policies, practices and procedures throughout the
life of the Agreement. All changes shall be submitted to Buyer for
approval prior to implementation.
19. ITEMS FURNISHED BY BUYER (If applicable)
a. If Buyer furnishes to Seller any material for use in connection with
and under the terms of this Agreement, Seller agrees (i) not to
substitute any other material in such use without Buyer's prior
written consent; (ii) that title to such materials shall be deemed
to remain with Buyer and shall not be affected by incorporation in
or attachment to any other property; and (iii) that all such
material (except that which becomes normal industrial waste or is
replaced at Seller's expense) will be returned in the form of end
items or used material.
b. Seller shall not be required to use any materials provided by Buyer
that does not comply with system requirements as set in the
applicable specifications, if such material would impair the
operation and reliability of the Deliverable Items.
c. Seller agrees that Seller will use all designs, tooling, patterns,
drawings, information and equipment, title to which is with Buyer as
provided in sub-Article a. above or otherwise, including, without
limitation, Deliverable Items in the possession of Seller or its
appointees for repair at any time following Delivery, only in the
performance of this Agreement and not otherwise unless Buyer's prior
written consent has been obtained. Seller assumes all risk of loss
of or damage to such property while in the custody or control of
Seller or its appointees and will immediately notify Buyer of loss
of or damage to such property. Upon completion or termination of
this Agreement, Seller shall receive from Buyer shipping
instructions or other authorized disposal instructions prior to the
return of any such items furnished by Buyer under this Agreement,
and shall immediately act in accordance with such instructions.
d. Seller shall maintain and administer in accordance with sound
industrial practice a program for the maintenance, protection and
preservation of the property so as to assure its full availability
and usefulness for the performance of this Agreement.
e. Buyer and/or any person designated by Buyer shall at all reasonable
times have access to the premises wherein any Buyer furnished items
within the meaning of this Article is located, for the purpose of
inspection of the property.
f. If Buyer is required to provide services to Seller hereunder, Seller
shall assist Buyer in obtaining all necessary permits and security
clearances to enable Buyer's employees
19
to perform any work or services required under this Agreement in
Seller's country.
20. APPROVAL OF DESIGN
When the Deliverable Items to be furnished hereunder are to be fabricated
or when services to be furnished hereunder are to be provided in
accordance with Seller's design, plans or drawings, or when a
preproduction or pilot production sample is required to be submitted to
Buyer for approval by Buyer of such design, plans, drawings or samples,
this shall in no way relieve Seller from the obligation of complying with
the specifications and other requirements incorporated herein, and Buyer
by such approval, in no way assumes any part of Seller's responsibility
for the satisfactory operation of the Deliverable Items to be delivered
for the purposes intended.
21. INSURANCE
a. Indemnification and Insurance
1. Indemnification:
Seller shall save and keep harmless and indemnify the Buyer,
its officers, agents and employees against liability claims
and the costs of whatsoever kind and nature arising or alleged
to arise for injury including personal injury to or death of
any person or persons, and for loss or damage to any property,
occurring in connection with or in any way incident to or
arising out of the occupancy, use, service, operation or
performance or work in connection with this Agreement
resulting in whole or in part from the acts, errors or
omissions of the Seller, any subcontractor, or any employee,
agent or representative of the Seller or subcontractors.
In addition, the Seller shall be liable for and hold the buyer
harmless against loss of or damage to the Deliverable Items,
Sellers Own Equipment, Property Constructed or otherwise
handled by the Seller in terms of this agreement and Work
carried out by the Seller, until Delivery (see article 6). The
term "Buyer" shall include any SubContractor or Agent of the
Buyer.
2. For the avoidance of doubt neither the procurement nor the
maintenance of any type of insurance by the Buyer, Seller or
any other party shall in any way be construed or be deemed to
limit, discharge, waive or release the Seller from any of the
obligations and risks assumed or accepted by the Seller by the
Agreement or at law to be a limitation on the nature of extent
of said obligations and risks.
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22. POST WARRANTY OBLIGATIONS
a. Seller agrees that after the expiration of the warranty period
provided in Article 9 for a period of five years thereafter, Seller
will provide, at Buyers expense, support and maintenance services
for the Deliverable Items as specified in Annex I to the Agreement
(The Maintenance Period). In addition, it will retain at its offices
as designated to Buyer from time to time, a staff of technical
personnel who are expert in the design, manufacture and
troubleshooting of Seller's Deliverable Items supplied under this
Agreement. This staff will be available to render assistance to
Buyer upon request and will respond to Buyer's need for special
technical assistance regarding the Deliverable terms. This technical
service, which will be limited to assistance by telecopier or
correspondence, shall be supplied to Buyer at no charge and shall be
available during Seller's normal business hours.
b. Furthermore, Seller undertakes to repair the Deliverable Items, or
any part thereof, during five year Maintenance Period.. Seller will
perform such repairs on terms to be agreed but which in any event
shall be no higher than 30% than the prices set out in Annex "2" to
this Agreement. Seller will maintain the capability to perform such
repairs throughout the aforesaid period.
c. During the Maintenance Period, Seller will notify Buyer, at least
six months ahead of implementation, of any significant improvements
or innovations which Seller shall make or cause to be made to the
Deliverable Items and which affect form, fit or function and shall
make such improvements or innovations available to Buyer at terms no
less favorable than those granted to its favored clients. In the
event that Buyer decides not to purchase such improvement or
innovation, Seller shall continue to provide the support,
maintenance and repair services set out in Annex I.
d. During the Maintenance Period, Seller undertakes to supply Buyer
with spare parts for the Deliverable Items as Buyer may from time to
time require during said five (5) year period, at prices which are
fair and reasonable considering prevailing market prices at the time
said Items are ordered and which in no event exceed the prices
charged by Seller to its most-favored customers purchasing the same
or similar items in like or similar quantities. Seller further
undertakes that the total prices for all spare parts which together
comprise a complete deliverable unit shall never exceed the
then-current price to Buyer for production units of such complete
deliverable unit. All spare parts ordered by Buyer shall be
delivered to Buyer in accordance with the provisions of the Article
hereof entitled "Delivery, Packing and Shipment", and shall be
accompanied by a serviceable tag or other suitable marking
indicating that same have successfully passed Seller's acceptance
tests for said parts.
23. LONG TERM SALES COMMITMENT
a. For a period of one ) year after Delivery of the first production
items hereunder,
21
subject to existing capacity and taking in account all existing
orders and commitments, Seller hereby agrees to supply to Buyer any
and all quantities of said item of the Deliverable Items, beyond the
quantities provided for in this Agreement at a price which shall not
exceed the prices set forth in Annex II hereof. Notwithstanding the
above, in the event of significant number price reductions, the
price of such Deliverable Items shall be reduced accordingly.
b. If Seller elects not to continue the production line for the items
mentioned in sub-paragraph a. above at any time after the expiration
of the aforesaid five (5) year period, Seller shall notify Buyer at
least six (6) months prior to the date upon which Seller seeks to
stop work and shall offer a "last time to purchase" for all items in
the system, in order for the buyer to purchase needed spare parts to
continue the use of the system for the desired period of time. The
pricing will be as set forth in paragraph a above.
c. Any items purchased by Buyer pursuant to this Article shall be
subject to all of the other terms and conditions set forth in this
Agreement.
24. PROPRIETARY DATA
a. All specifications, technical data and information furnished by one
party to the other in writing prior to or during the course of this
Agreement shall be deemed proprietary data of the disclosing party
and will not be disclosed by recipient to third parties. Recipient
shall not be liable for disclosure of such data which: (1) is or
becomes available to the public from a source other than recipient
before or curing the period of this Agreement, (2) is released in
writing by disclosing party without restriction as to its use or
disclosure, (3) is lawfully obtained by recipient from a third party
or parties, or (4) recipient proves to disclosing party's reasonable
satisfaction was known by recipient prior to such disclosure.
b. Buyer and Seller shall not disclose to any third party any
information, data, know-how or specifications with which it is
furnished by one to the other under this Agreement or which it
develops with the other's assistance without the other's prior
written approval.
c. All data specifically generated by Seller for the purpose of
performing this Agreement shall remain seller's property but shall
be deemed licensed to Buyer in accordance with Article 1.f.
d. Buyer and Seller agree to return to each other upon conclusion or
termination of this Agreement all proprietary data and material
which may have been exchanged between them.
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26. CONFIDENTIALITY, ADVERTISING
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27. EXPORT LICENSE
Buyer's and Seller's obligations are conditional upon Seller obtaining
valid Export License(s) from its government for shipment of the
Deliverable Items to Israel. If such licenses are not obtained within
sixty (60) days ARE, or revoked prior to Delivery, Buyer or Seller has the
right to terminate this Agreement and all advance or progress payments
will be refunded within thirty (30) days together with interest thereon
from the date each such payment was made until the date of its repayment
in full. Buyer shall, if requested by Seller, reasonably cooperate in
efforts to obtain such export license(s).
28. COMPLIANCE WITH STATUTES AND REGULATIONS
Seller warrants and certifies that, in the performance of its obligations
under this Agreement, Seller will comply with all applicable statutes,
rules, regulations, orders and other instruments, statutory or otherwise,
having the force of law, of Seller's country, and, of the State of Israel
which are known to Seller, and agrees to indemnify Buyer against any loss,
cost, damage, or liability by reason of Seller's knowing violation of such
statutes, rules, regulations and/or orders and/or other instruments,
statutory or otherwise, having the force of law.
29. APPLICABLE LAW; DISPUTES
a. The parties agree that any dispute or claim arising out of or
relating to this Agreement shall be submitted in good faith to
mediation in the City of London, England, in accordance with the
Rules and Procedures of the International Chamber of Commerce. Fees
for the mediation will be shared equally by the parties to the
mediation or otherwise as the parties agree. Settlement reaches in
mediation are not binding until the parties signed a written
settlement agreement. If an agreement is not signed within ten (10)
days of mediation, or if no agreement is reached in mediation, the
parties shall, on demand of either party, submit their disputes or
claim to arbitration in the City of London, England. One arbitrator
shall be appointed: one arbitrator shall be appointed by Buyer, one
arbitrator shall be appointed by Seller, and one shall be appointed
by the two so appointed. The determination in writing of such
arbitrators, signed by at least two (2) of them, shall be final and
finding on the parties. Such determination shall be made as soon
practicable after the reference of the claim to arbitration. The
arbitrators shall be governed by the rules of the London Court of
Arbitration then in effect and which have full power to make such
regulation (including without limitation choice of law) and to give
such orders and direction in all respects as they hall deem
expedient, as well as in respect to the claim and differences
referred to them, and also with respect to the mode and times of
executing and performing any of the acts or things which may be
awarded or directed to be
23
done, Buyer and Seller shall each bear the fees and expenses of the
arbitrators appointed by it, and one-half of the fees and expenses
of any arbitrator jointly appointed. The parties agree that the
decision of the arbitrators shall be enforceable by the court of any
jurisdiction in the United States and Israel and hereby waive the
benefit of any law or regulation which would otherwise prevent or
impede such enforcement.
b. Buyer, Seller each hereby nominates the address appears on the title
page of this Agreement as its address for the purpose of service of
court documents: for the purpose of enforcing the determination of
the arbitrators.
c. Pending final decision of a dispute hereunder, Seller and Buyer
shall proceed diligently with the performance of the Agreement in
accordance with its terms.
30. OPTIONS
[intentionally left blank]
31. NOTICES
All notices and other communications required or authorized hereunder
shall be given in writing by personal delivery, registered air mail,
telecopier, or cable, and shall be addressed to the respective party as
follows, unless such address is changed by written notice to the other
party:
To Seller: 0000 Xxxxxxxxx Xxxx Xxxxx To Buyer: 00 Xxxxxxx Xx
Xxxxxxxxx XX 00000 Xxxxx-Xxxxx
Xxxxxx
Telecopier No: (000) 000-0000 Telecopier No. 000-0-000000
Attention: Xxxxxxx Xxxxxxxx Attention: Xxxxxxx Leviuik
32. MISCELLANEOUS
a. Assignment
(1) Seller may not assign this Agreement in whole or in part, or
any rights thereunder, except that claims for money due or to
become due hereunder may be assigned by Seller to a bank,
trust company or other financial institution. Seller shall
supply Buyer immediately with two (2) copies of such
assignment and shall indicate on each invoice to whom payment
is to be made.
(2) Buyer is entitled to freely assign all or any part of this
Agreement to any parent, subsidiary or associated company,
provided that it furnishes Seller with written notice thereof
and Buyer remains a Guarantor of payments due
24
to Seller hereunder.
b. Nature of Agreement
Nothing in this Agreement shall be construed as creating a
relationship of principal and agent or of employer and employee
between Buyer and Seller. Furthermore, nothing in this Agreement is
intended to constitute, create, give effect to or otherwise
contemplate a joint venture, partnership, or formal business entity
of any kind and the rights and obligations of a party shall not be
construed as providing for a sharing of profits or losses arising
out of the efforts of either of the parties except as may be
provided for in any future contracts. The parties shall not incur
any liability on behalf of the other.
c. Waiver
No waiver by either party of any breach of this Agreement shall be
held to be a waiver of any other or subsequent breach. No waiver or
time extension given by either party shall have effect unless made
expressly and in writing.
d. Entire Agreement
This Agreement constitutes the entire agreement between the parties,
supersedes and cancels any previous understandings or agreements
between both parties relating to the provisions hereof, and
expresses the complete and final understanding of the parties in
respect thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
at Knoxville, Tennessee, USA and at Tel Aviv, Israel, by their duly authorized
representatives, as of this 26 day of June, 1995.
BUYER SELLER
By(Name): By(Name): Xxxxxxx Xxxxxxxx
Title: President Title: President
Signature: /s/ Xxxxxxx Leviuik Signature: /s/ Xxxxxxx Xxxxxxxx
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