Exhibit 10.3
CONTRACT NO. KESHET 002
BETWEEN
SOLTAM SYSTEMS LTD.
AND
VALENTEC SYSTEMS INC.
FOR
PRODUCTION, ASSEMBLY AND SUPPLY OF
RECOILING MORTAR SYSTEMS (RMS6 SYSTEM).
120MM SELF-PROPELLED MORTAR SYSTEMS (TBD)
AND
120MM TOWED MORTAR SYSTEMS (TBD)
1
CONTRACT No. KESHET 002
TABLE OF CONTENTS
PREAMBLE 3
ARTICLE 1 - DEFINITIONS 3
ARTICLE 2 - PREAMBLE, HEADINGS, ANNEXES AND CONTRACT SCOPE 3
ARTICLE 3 - SALE 3
ARTICLE 4 - CONTRACT EFFECTIVE DATE (CED) 3
ARTICLE 5 - SELLER'S REPRESENTATIONS AND OBLIGATIONS 3
ARTICLE 6 - DELIVERABLES AND SCHEDULE 3
ARTICLE 7 - PRICE 3
ARTICLE 8 - PAYMENT 3
ARTICLE 9 - PRICE AND PAYMENT SCHEDULE 3
ARTICLE 10 - NOTIFICATION AND SHIPPING ADVICE 3
ARTICLE 11 - TITLE 3
ARTICLE 12 - RISK OF LOSS 3
ARTICLE 13 - FREIGHT AND PACKING 3
ARTICLE 14 - WARRANTY 3
ARTICLE 16 - BUYER FURNISHED EQUIPMENT ("BFE") AND INFORMATION ("BFI") 3
ARTICLE 17 - BUYER PERSONNEL 3
ARTICLE 18 - QUALITY CONTROL, DELIVERY AND ACCEPTANCE 3
ARTICLE 19 - TERMINATION FOR DEFAULT 3
ARTICLE 20 - TERMINATION FOR CONVENIENCE 3
ARTICLE 21 - SUBCONTRACTORS 3
ARTICLE 22 - APPLICABLE LAW AND ARBITRATION 3
ARTICLE 23 - NEW MATERIALS 3
ARTICLE 24 - PROPRIETARY RIGHTS IN THE SYSTEM 3
ARTICLE 25 - PROPRIETARY DATA AND CONFIDENTIALITY 3
ARTICLE 26 - INTELLECTUAL PROPERTY REPRESENTATION AND INDEMNIFICATIONS 3
ARTICLE 27 - FORCE MAJEURE 3
ARTICLE 28 - TAXES 3
ARTICLE 29 - PERSONNEL DELEGATION 3
ARTICLE 30 - VISAS 3
ARTICLE 31 - HEADINGS 3
ARTICLE 32 - ENTIRE CONTRACT 3
ARTICLE 33 - WAIVER 3
ARTICLE 34 - RELIABILITY 3
ARTICLE 35 - MODIFICATION -- CHANGES 3
ARTICLE 36 - DISCLAIMER OF AGENCY 3
ARTICLE 37 - DECLARATIONS 3
ARTICLE 38 - LANGUAGE OF DOCUMENTS 3
ARTICLE 39 - COMPUTATION OF TIME 3
ARTICLE 40 - ASSIGNMENT 3
ARTICLE 41 - NOTICES 3
ARTICLE 42 - U.S. GOVERNMENT REQUIRED CERTIFICATION AND AGREEMENT 3
ARTICLE 43 - IMOD REQUIRED CERTIFICATION 3
ARTICLE 44 - SECURITY 3
ARTICLE 45 -- STOP WORK ORDERS 3
ANNEX I - STATEMENT OF WORK (SOW) 29
ANNEX II - SYSTEM SPECIFICATION 30
ANNEX III - IRREVOCABLE STANDBYLETTER OF CREDIT 31
ANNEX IV - CONTRACTORS DSCA CERTIFICATION (DRAFT) 3
ANNEX V - FMF GUIDELINES 3
ANNEX VI - CERTIFICATE OF MILESTONE ACHIEVEMENT 3
ANNEX VII - EXCLUSIVE LICENSE AGREEMENT BETWEEN SOLTAM AND VSI 3
ANNEX VIII - BUYER FURNISHED EQUIPMENT (BFE) 3
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CONTRACT No. KESHET 002
ANNEX IX - WORK BREAKDOWN STRUCTURE 3
ANNEX X - RMS PRODUCTION PLAN 3
ANNEX XI - ACCEPTANCE AND SHIPMENT CHECK LIST 3
ANNEX XII - TRANSFER OF TITLES AND BILL OF SALES 3
ANNEX XIII - DRAWING LIST 3
ANNEX XIV - SPARE PARTS LIST 42
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CONTRACT No. KESHET 002
PREAMBLE
This Contract signed the__th day of__________, 2004 is between Soltam Systems
Ltd., a private Israeli company having an address at P.O. Box 13 Yokneam, Israel
20692 (the "Buyer" or SOLTAM) and Valentec Systems Inc. , a private United
States Company having offices at 2618 York Avenue, Minden, L.A.71055 (the
"Seller" or VSI).
WITNESSETH THAT:
1. WHEREAS, Soltam has been awarded by the Israeli Ministry of Defense
(hereinafter referred to as "IMOD") as the prime contractor of the Israeli
Defense Forces (hereinafter referred to as "IDF") 120 mm Mortar System Program
(hereinafter referred to as "the Program"), which will be financed primarily
through United States Foreign Military Financing ("FMF").
2. WHEREAS, SOLTAM granted VSI Exclusive License with respect to the
manufacture and sale of SOLTAM's products and SOLTAM's Know-How in the United
States to the Government of United States of America, the Government of ISRAEL,
and the Foreign Governments directly or under U.S. Government FMF and FMS
programs.
3. WHEREAS, the parties have agreed that VSI will act as the 120mm RMS6
producer, the 120mm Mortar Carrier Integrator, the 120mm Towed Mortar producer
and 120mm Ammunition Carrier IDF Configuration Integrator.
NOW, THEREFORE, in consideration of the terms, conditions and covenants
contained herein, the parties agree as follows:
ARTICLE 1 - Definitions
Whenever used in this Contract, the following terms shall have the meaning
assigned to them as hereunder:
1.1 SYSTEM - 120mm Self-Propelled Mortar System described in Annex II to be
supplied under this Contract.
1.2 CONTRACT - this contract between the Parties.
1.3 DSCA - The U.S. Defense Security Cooperation Agency.
1.4 FMF - Foreign Military Financing provided by the U.S. Government to fund
direct commercial contracts between American contractors and the
Government of Israel.
1.5 GOI - The Government of Israel.
1.6 IDF - The Israeli Defense Forces or any person or entity duly authorized
to represent it.
1.7 BUYER FURNISHED EQUIPMENT/DATA (BFE) - Equipment provided to Seller by the
Buyer within the framework of this Contract, as specified in Annex IX and
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CONTRACT No. KESHET 002
data provided to Seller by the Buyer according to the License Agreement,
free of charge, for the purposes of performing this Contract.
1.8 IMOD - The Israeli Ministry of Defense.
1.9 THE ORDER - IMOD Order No. 15914773-01 issued by IMOD to the Buyer, for
the supply of the Systems.
1.10 LICENSE AGREEMENT - The License Agreement between Buyer and Seller for the
manufacture of the Components, assembly and supply of the System attached
hereto as Annex "VIII".
1.11 PROGRAM - IMOD program for the purchase of the Systems, which is the
subject of Order.
1.12 PROGRAM MANAGER - A member of Buyer's personnel designated by Buyer as the
manager of the Program on its behalf.
1.13 SOW - The statement of work as submitted by Buyer to Seller (attached
hereto as Annex "I") and as may be updated or modified from time to time
pursuant to ARTICLE 35, including any other documents referred to therein.
1.14 SUBCONTRACTORS - Contractors and suppliers of Seller and their respective
employees who shall render goods or services to Seller, for the
performance of this Contract.
1.15 SPECIFICATIONS - The technical specifications as agreed upon by the Buyer
and the Seller (attached hereto as part of Annex "II") and as may be
updated or modified from time to time pursuant to ARTICLE 35, including
any other document referred to therein.
1.16 TECHNICAL DATA PACKAGE - (TDP) - Means the Buyer approved and released
specification and drawings that allow Seller to purchase materials build
and test the system.
1.17 WORK - The work to be performed by Seller according to the SOW.
1.18 BUYER - Soltam Systems, Ltd.
1.19 END USER - Israeli Ministry of Defense
1.20 EXPORT LICENSE - The export license(s), known as DSP-5, is defined as the
license required to export the defense systems to Israel.
1.21 SELLER - Valentec Systems, Inc.
ARTICLE 2 - PREAMBLE, HEADINGS, ANNEXES AND CONTRACT SCOPE
2.1 The preamble to this Contract and the Annexes attached hereto, or the
Annexes and documents incorporated by reference herein shall all form
integral parts of this Contract for all intents and purposes.
2.2 The headings of the Articles in this Contract are provided for convenience
only, and shall not affect the interpretation of this Contract.
2.3 The following Annexes (the "Annexes") are attached hereto, and form
integral parts hereof:
Page 5 of 41
CONTRACT NO. KESHET 002
Annex 1 - Statement of Work (SOW)
Annex II - System Specification
Annex III - Irrevocable Standby Letter of Credit
Annex IV - Contractors DSCA Certification (DRAFT)
Annex V - FMF Guidelines
Annex VI - Certificate of Milestone Achievement
(or Certificate of Completion)
Annex VII - Exclusive License Agreement Between Soltam and VS1
Annex VIII - Buyer Furnished Equipment (BFE)
Annex IX - Work Breakdown Structure
Annex X - RMS Production Plan
Annex XI - Acceptance and Shipment Check List
Annex XII - Transfer of Title and Bill of Sale
Annex XIII - Drawing List
Annex XIV - Spare Parts List
ARTICLE 3 - SALE
3.1 VALENTEC SYSTEMS INC. agrees to sell and SOLTAM agrees to buy a quantity
of:
1. Eighty-two (82) each RMS System and supporting System
2. Spare Parts as defined in Annex XIV.
ARTICLE 4 - CONTRACT EFFECTIVE DATE (CED)
4.1 The date of the last to occur of the following shall be the effective date
of this Contract:
A. Execution of the Contract by the parties hereto;
B. Receipt by VALENTEC SYSTEMS INC. of the advance payment as set out
in Articles 5 and 10;
C. VALENTEC SYSTEMS INC. receipt of Defense Security Cooperation
Agency, (hereinafter referred to as "DSCA") approval of IMOD'S
funding request for this Contract. VALENTEC SYSTEMS INC. shall
promptly notify SOLTAM in writing of the IMOD's receipt of the
required DSCA approval after it receives notice of such approval
from the IMOD.
ARTICLE 5 - SELLER'S REPRESENTATIONS AND OBLIGATIONS
5.1 Seller hereby represents and warrants that it possesses and its
Subcontractors possess the necessary ability, fitness, know-how,
professional expertise, resources and, in general, the capability and
ability required to manufacture and supply the Components and the System,
in the quantities requested and required, and to perform all of its
obligations pursuant to this Contract.
5.2 The Seller shall manufacture and supply the Systems in accordance with
Soltam released Technical Data Package in accordance with Annex X, and the
terms and provisions of this Contract and shall use qualified personnel
and suitable materials and tools in the performance of its obligations
hereunder.
5.3 The Seller shall not sell, either directly or indirectly, or offer to sell
the System or any part thereof, to any third party, without receiving
prior written consent from the Buyer.
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CONTRACT NO. KESHET 002
ARTICLE 6 - DELIVERABLES AND SCHEDULE
6.1 The Seller shall deliver the Systems, hardware, software, data and
services in accordance with the Delivery Schedule and the other terms and
conditions of this Contract. The foregoing shall not limit Seller's
obligation to deliver hardware, software, data and services in addition to
those set forth in the Delivery Schedule or to modify any items listed in
the Delivery Schedule, if required for the Systems to meet the
Specifications or other Contract requirements. In the event Seller is
required to modify any item listed in the Delivery Schedule, Seller shall
modify any corresponding spares for such item so as to be completely
interchangeable with such modified item, at no additional cost to Buyer.
ARTICLE 7 - PRICE
7.1 It is agreed by and between the parties hereto that the total firm, fixed
price of this Contract (or "Total Price") shall be U.S. Dollars $
16,745,271.00 (Sixteen million seven hundred forty-five thousand two
hundred seventy-one and zero cents, U.S. Dollars.)
7.2 Payment for defense items delivered hereunder shall be EX-WORKS VALENTEC
SYSTEMS INC. Minden, Louisiana, U.S.A. The pricing of the eighty two (82)
RMS6 and supporting Spare Parts shall be on a firm-fixed price basis
payable as set forth in the Article 9.
7.3. Prices are based on the drawing list in Annex XIII.
7.4 Above price does not include the following (WBS) items. Prices for these
(WBS) items will be submitted when adequate data is available from Soltam
Systems Inc.
1.2.1 - Integration into the vehicles
2.2.4 - Packaging of the Spare Parts and Mortar Carrier
4.2.3.1.3 - Transporting the Mortar Carriers from Anniston to Minden, LA
and from Minden, LA to the port of export
5.2.3.2 - IDF Kit, changes and improvement Manufacturing and Integration
6.2.3.3 - Changes and Improvements
7.3.0 - Towed trailers
10.1.2.2.2 & 1.2.3.2; 1.2.2.3 & 1.2.3.3, 2.4 - Freight to Soltam and
Packaging
11. Special Tooling for Mortar and MortarCarriers
ARTICLE 8 - PAYMENT
8.1 The Contract Price shall be paid by IMOD, in accordance with this
Contract, which shall make payment to the Seller in U.S. Dollars according
to the corresponding Milestones set forth in Article 9, the Price and
Payment Schedule.
8.2 Upon completion of all activities required for completion of a milestone,
the Seller shall deliver a signed Certificate of Milestone Achievement in
the form set forth in Appendix VII, further accompanied by all the
documents specified in Article 9 to the Buyer's Program Manager. The
Buyer's Program Manager shall review and approve the Milestone material
within seven (7) days. The Buyer will deliver the signed Certificate to
IMOD and the Seller within fifteen (15) days after their receipt by the
Buyer. The Buyer will telefax/email a copy of the countersigned
certificates to the Seller at the time the Certificate is sent to the
IMOD. The Seller shall submit to the Buyer a copy of each invoice and the
associated Milestone material. The Seller shall submit to the IMOD six (6)
copies of each invoice, each copy accompanied by a copy of the Certificate
of Milestone Achievement. IMOD shall make payment to Seller within thirty
(30) days of receipt of Seller's invoice accompanied by a Certificate of
Page 7 of 41
CONTRACT NO. KESHET 002
Milestone Achievement signed by the Seller and the Buyer and the
appropriate documents as specified in Article 6. If the Seller is not paid
by net 45, then interest, at the U.S. Prime Rate, will accrue on the
invoice amount. Prime rate is defined as the interest rate at which the
U.S. Federal Reserve Bank lends to its best customers.
8.3 When sending an invoice relating to this Contract, the Seller shall
indicate the applicable reference number from the Price and Payment
Schedule. Failure to do so will prevent the processing and payment of the
invoice. In the event a Milestone payment applies to more than one (1)
reference number, the Seller shall submit a separate invoice for each
reference number, which covers a portion of such payment. In addition,
Seller's invoices must as a minimum contain the relevant information
required by the FMF Guidelines, which are attached hereto as Appendix VI
and Seller's Certification to the DSCA, including the following
certification: "(Full Name of Seller) acknowledges that U.S. Government
funds are being used by the Government of Israel to finance this Contract
and certifies that the invoice(s) submitted with respect thereto are free
from any material false statement or misrepresentation and do not omit any
material facts."
8.4 Payment shall be made by wire transfer as follows:
Payee: VALENTEC SYSTEMS INC.
Mail to: VALENTEC SYSTEMS INC.
2618 YORK AVENUE
MINDEN, LOUISIANA, 71005 U.S.A.
Payable to: BANK NAME: BANK ONE
ROUTING NUMBER: 065400137
ACCOUNT NUMBER: 1591964588
ACCOUNT NAME: VALENTEC SYSTEMS, INC.
8.5 The Milestones and corresponding payments and letter of credit amounts
shall be as set forth in the Price and Payment Schedule.
8.6 IMOD's obligation to make the payments pursuant to Milestones shown in the
Price and Payment Schedule is conditioned upon receipt by the Buyer of the
Appendix III Irrevocable Standby Letter of Credit.
8.7 All Milestones must be performed in full. Notwithstanding the Seller's
successful completion of its obligations under a particular Milestone,
neither the Buyer nor IMOD will have any payment obligation for such
Milestone unless the Milestone has been successfully completed. All tasks
within a Milestone must be successfully completed in order for the
Milestone to be considered as having been successfully completed.
8.8 However, minor non-conformities (those that do not affect the system's
form, fit and function), such as minor chips in the system's paint or a
misplaced decal on the exterior of a system, will not be the basis for
refusing to accept a subsequent Lot/Milestone, so long as VALENTEC SYSTEMS
INC. gives assurances of a timely correction of the minor non-conformity
and IMOD reasonably believes VALENTEC SYSTEMS INC. has made reasonable
progress in effecting the promised corrections by the scheduled delivery
date of the subsequent lot/Milestone. Where Soltam/IMOD has rejected a
RMS6 System because of minor non-conformities, VALENTEC SYSTEMS INC. may
substitute a replacement RMS6 System, in kind, for the rejected RMS6
System, and VALENTEC SYSTEMS INC. may then later deliver the rejected RMS6
once corrected.
8.9 The Seller shall not deliver items prior to the dates set forth in the
Delivery Schedule without first obtaining the prior written permission of
the Buyer. Failure to obtain such
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CONTRACT NO. KESHET 002
permission shall give the Buyer and IMOD the right to delay processing and
payment of the applicable invoice until the date set forth in the Price
and Payment Schedule (with no interest accruing thereon). This Article is
in no way intended as authorization for late delivery. Failure to meet the
schedule as set forth in this Contract shall entitle the Buyer to all of
its rights and remedies under this Contract, at law and in equity.
8.10 The Seller hereby confirms that the IMOD assumes no responsibility towards
this contract. The Seller agrees that under no circumstances shall IMOD be
made a party to any dispute between the Buyer and the Seller, regardless
of the nature of such dispute.
ARTICLE 9 - PRICE AND PAYMENT SCHEDULE
9.1 The contract provides for the direct payment of the Contract Price by the
IMOD Mission to the United States to VALENTEC SYSTEMS INC., in accordance
with DSCA FMF Guidelines.
9.2 Payment by direct wire transfer will be made NET 45 days to VALENTEC
SYSTEMS INC. in United States Dollars to VALENTEC SYSTEMS INC., Account
No. 1591964588, Routing No. 065400137 at Bank One.
9.3 The IMOD shall pay to Valentec Systems Inc. in accordance with the
following Milestone Payment Schedule:
9.3.1 Upon placement of contract by Soltam Systems to Valentec Systems
Inc. an advance payment, not exceeding 15% of the contract value,
shall be made by IMOD to Valentec Systems Inc. This advance payment
shall be made against the Irrevocable Stand by Letter of Credit, as
outlined in Annex III, from an IMOD approved bank in USA. Valentec
System will submit the Irrevocable Standby Letters of Credit in
accordance with the need of the advance payment which may be in
multiple installments.
9.3.2 This irrevocable standby letter of credit (the "Letter of Credit"),
equal to the amount of the advance payment, will be provided by VSI
to SOLTAM within thirty (30) days after the Contract Effective Date.
This Letter of Credit will be increased accordingly by the amount of
the Article advanced payments. The value of the Letter of Credit
will be reduced at the time of RMS6 delivery in proportion to the
value of the item being invoiced.
9.3.3 This Letter of Credit will expire at the time of completion of the
final contract hardware deliveries. The Letter of Credit shall be
payable to the United States Government in accordance with Article
37 in the event SOLTAM is entitled to draw on the Letter of Credit
in accordance with its terms.
9.3.4 In the event that the scheduled date for completion of the final
contract hardware deliveries is revised, VSI shall cause the
expiration date of the Letter of Credit to be extended to a date one
hundred twenty (120) days following the latest of such revised
completion date. VSI shall cause the amount of the Letter of Credit
to be increased as appropriate on account of any changes made
pursuant to Article 28 hereof, Modification Changes.
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CONTRACT NO. KESHET 002
9.3.5 Payment Milestones
SCHEDULE
MILESTONE MILESTONE CED PLUS PRODUCTION SPARE MILESTONE PRICE
NUMBER# DESCRIPTION MONTHS QTY QTY ACHIEVEMENT (US $)
- --------- ----------- -------- ---------- ----- ----------- -----
1 Machined Cradle Sets CED + 7 41 4 Ship In Place 1,057,476
2 Saddle Assembly CED + 8 20 1 Ship In Place 361,160
3 Main Bearings CED + 8 20 2 Ship In Place 269,938
4 Assembly of the Mortar
(without the EFW MFCS Kit) CED + 9 12 0 Ship In Place 488,907
5 Saddle Assembly CED + 10 15 1 Ship In Place 275,169
6 Machined Cradle Sets CED + 10 41 4 Ship In Place 1,057,476
7 Assembly of the Mortar
(without the EFW MFCS Kit) CED + 10 12 0 Ship In Place 488,907
8 Main Bearings CED + 11 62 8 Ship In Place 858,858
9 Assembly of the Mortar
(without the EFW MFCS Kit) CED + 11 12 0 Ship In Place 488,907
10 Saddle Assembly CED + 12 15 1 Ship In Place 275,169
11 Barrel Forgings CED + 12 82 20 Delivery 782,251
12 Assembly of the Mortar
(without the EFW MFCS Kit) CED + 12 12 0 Ship In Place 488,907
13 Spare Parts CED + 13 na ** Delivery 1,045,371
14 Assembly of the Mortar
(without the EFW MFCS Kit) CED + 13 12 0 Ship In Place 488,907
15 Saddle Assembly CED + 14 16 0 Ship In Place 275,069
16 Completed Mortar
Assemblies with EFW Kit CED + 14 12 0 Delivery 1,005,556
17 Assembly of the
Mortar (without the
EFW MFCS Kit) CED + 14 12 0 Ship In Place 488,907
18 Completed Mortar
Assemblies with EFW Kit CED + 15 12 0 Delivery 1,005,556
19 Assembly of the
Mortar (without the
EFW MFCS Kit) CED + 15 10 0 Ship In Place 407,422
20 Saddle Assembly CED + 16 16 0 Ship In Place 275,189
21 Completed Mortar
Assemblies with EFW Kit CED + 16 12 0 Delivery 1,005,556
22 Completed Mortar
Assemblies with EFW Kit CED + 17 12 0 Delivery 1,005,556
23 Completed Mortar
Assemblies with EFW Kit CED + 18 12 0 Delivery 1,005,556
24 Completed Mortar
Assemblies with EFW Kit CED + 19 12 0 Delivery 1,005,556
25 Completed Mortar
Assemblies with EFW Kit CED + 20 10 0 Delivery 837,965
TOTAL 16,745,271
** Note: The US Dollars shown in the "PRICE" column above is the value of
the Production Quantity items only. The Spare Quantity shown is for
reference only. The value of the total Spare Quantities is shown in
Milestone Number 13.
CED (Contract Effective Date) - The payment milestone schedule shown above
is based on the Buyer furnishing the Seller the Keshet Master Production
Plan for RMS per Annex X. Any delay in furnishing the approved TDP may
result in a delay to the schedule. Seller's costs associated with the
delay, or any expedite charges authorized by Buyer shall be treated as
"change" under Article 35 - Modification-Changes of this contract.
ARTICLE 10 - NOTIFICATION AND SHIPPING ADVICE
10.1 Shipping advice shall be telefaxed to SOLTAM, fifteen (15) days prior to
the first scheduled shipment from VALENTEC SYSTEMS INC., Minden, LA.,
containing such information as the contract number and a brief description
of the commodities to be shipped.
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CONTRACT NO. KESHET 002
ARTICLE 11-TITLE
11.1 Title to the assembled RMS6 System shall remain with the IMOD. Title to
all Spare Parts shall pass from VALENTEC SYSTEMS INC. to SOLTAM upon
delivery, EX WORKS (INCOTERMS 2000).
ARTICLE 12 - RISK OF LOSS
12.1 The RMS6 System shall be delivered to SOLTAM EX WORKS, VALENTEC SYSTEMS
INC., 2618 York Avenue, Minden, L.A 71055. Risk of loss or RMS6 Systems
damage to or deterioration of the System from whatever cause arising shall
be borne by VALENTEC SYSTEMS INC. prior to delivery.
ARTICLE 13 - FREIGHT AND PACKING
13.1 IMOD shall pay for all freight charges to point of destination and shall
have the right to designate the means of transportation and routing. A
U.S. Carrier must be used. VALENTEC SYSTEMS INC. shall arrange for inland
transportation on behalf of IMOD to port of exportation, if requested.
13.2 Spare parts shall be packed in accordance with best commercial practices
for overseas shipment. The cost of such packing is not included in the
total price of this Contract.
ARTICLE 14 - WARRANTY
14.1 Seller warrants that the Systems and all Software, hardware, data and
documentation delivered hereunder shall be free from manufacturing errors
and errors, deficiencies and defects in materials and workmanship, and
shall conform to the Specifications and other provisions of this Contract.
This warranty is limited (i) to the prompt correction of errors,
deficiencies and defects in the System and its sub-systems/components,
data and documentation, and (ii) to the prompt repair, replacement or
modification, at Seller's option, of defective goods or parts, and any
parts damaged by reason thereof, returned to Seller at Seller's plant,
provided that written notice of the defect shall have been given to Seller
within one hundred twenty (120) days of final delivery of the System in
accordance with Article 10 hereof; and provided further, that any
warranties made by subcontractors that extend beyond the term of this
warranty shall inure to the benefit of the Buyer. Transportation charges
to Seller's plant in connection with items returned to Seller shall be at
Buyer's expense. Return transportation charges for repaired, modified or
replacement items shall be paid by Seller if Seller is responsible for
repair, modification or replacement under the terms of this warranty and
such items shall be shipped by a mode of transportation to reach Buyer's
plant no later than 45 days after shipment from Seller's plant. Repaired,
modified or replacement items shall be warranted for the unexpired portion
of this warranty applicable to the original item plus the period from
notice to Seller of the defect until return of the item (including
software) on-site.
14.2 Any other provisions of this contract to the contrary notwithstanding,
this warranty, except as to title, is in lieu of all other warranties,
express or implied, including merchantability or fitness for any
particular purpose, whether arising by law, custom, conduct or usage of
trade, and the rights and remedies provided herein are exclusive and in
lieu of any other right or remedies.
ARTICLE I5 - LEFT BLANK INTENTIONALLY
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CONTRACT NO. KESHET 002
ARTICLE 16 - BUYER FURNISHED EQUIPMENT ("BFE") AND INFORMATION ("BFI")
16.1 Buyer shall furnish to Seller for use only in connection with this
Contract the information and materials set forth in Annex X at the time
and locations stated therein. Titles to said materials and information
shall at all times remain in Buyer. Seller shall keep and maintain said
materials in accordance with the same practices it uses with respect to
its own materials of like quality, and shall maintain control records with
respect to Buyer furnished materials and information, which materials,
information and records shall be subject to Buyer's inspection upon
Buyer's request. Seller shall be responsible for any loss or damage to
Buyer furnished materials from the time of delivery to Seller until their
return to Buyer. Seller agrees to return said materials in the same
conditions as delivered by Buyer, reasonable wear and tear excepted. Upon
completion of this Contract or at such time as specified elsewhere in this
Contract, Seller shall pack and prepare for shipment and deliver EX Works
Minden, LA all Buyer furnished materials not consumed in the performance
of this Contract or not previously delivered to Buyer, all in accordance
with directions given by Buyer. The Seller will maintain insurance
covering its liabilities and risks under this ARTICLE as provided in
ARTICLE 13. If any BFE requires repair, the Seller will notify the Buyer,
who will perform the repair or authorize the Seller to perform the repair.
ARTICLE 17 - BUYER PERSONNEL
17.1 Buyer's personnel shall be entitled to conduct in-process monitoring and
inspection of Contract performance (including all in-process testing) at
Seller's facilities where the Work is being performed (hereinafter
referred to as the "Seller's Plant") and at the facilities of Seller's
major subcontractors (as defined in the SOW). This shall include access to
Seller's quality assurance program. Also, the Seller will use its
reasonable best efforts to enable the Buyer's personnel to conduct
in-process monitoring and inspection of Subcontractors' performance at
Subcontractor's plants. Subject to ARTICLE 17.3, the Seller shall provide
the Buyer with access to drawings, designs, diagrams and specifications
for the System and all portions thereof. The Seller shall enter into
appropriate agreements with its Subcontractors and vendors to provide for
the foregoing.
17.2 The Buyer shall give the Seller at least thirty (30) days prior written
notice of the visit date to the Seller's Plant and its Subcontractors.
17.3 The Seller's obligations set forth in Articles 17.1 and 17.2 above are
conditioned on the Seller obtaining all necessary approvals from the U.S.
Government including the U.S, Department of State, and the Buyer complying
with the applicable U.S. Government laws and security regulations and
seller's Plant rules and escort requirements.
17.4 The Buyer's personnel mentioned in this Contract may include
representatives of the IMOD and IDF who will have the same rights as the
Buyer's personnel.
17.5 Without derogating from the aforesaid, the Program Manager has the right
to visit at the Seller's Plant from time on a non-interference basis
during the term of this Contract and is authorized to execute Acceptance
Forms, Certificates of Milestones Achievement and Certificates of
Approvals or issuing comments in respect to technical documents requiring
the Buyer's approval. The Program Manager shall have no authority to make
Contract changes or to grant approvals which require Contract changes,
such approvals to be made on the Buyer's behalf only in writing signed by
the authorized signatories of the Buyer, as stipulated in ARTICLE 18.2.
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CONTRACT NO. KESHET 002
17.6 The Seller agrees to provide the Program Manager, with normal furnished
office space; reasonable access to office equipment, including, but not
limited to, photocopying equipment; supplies, secretarial services; local
and long distance domestic telephone services, at Seller's expense while
staying at Seller's facilities.
ARTICLE 18-QUALITY CONTROL, DELIVERY AND ACCEPTANCE
18.1 Seller shall perform interim production, quality control, and final tests
in accordance with the Statement of Work, schedule and procedures and to
the standards specified in this Contract. All deliverable items hereunder
shall be delivered in accordance with the Delivery Schedule, which sets
forth deliverable items by name, quantity and delivery date relative to
the effective date of the Contract.
18.2 All acceptance tests shall be conducted pursuant to acceptance test plans
and acceptance test procedures ("ATP") as set forth in the SOW. The
Buyer's and IMOD's representatives may witness all tests set forth in the
SOW. The Seller shall give the Buyer at least sixty (60) days prior
written notice of the commencement date of each lot of the acceptance
tests, the Buyer shall respond and notify the Seller within forty-five
(45) days of receipt of the said notice, if the Buyer and/or IMOD
representatives intend to attend the relevant test. Upon a determination
that the acceptance test results comply with the applicable ATP and pass
the criteria specified therein, the Buyer and the Seller shall sign
Certificates of Completion with respect to such acceptance tests. If the
Buyer elects not to attend the acceptance tests, or if Buyer attends the
acceptance tests but does not act upon Seller's request for signature
within fourteen (14) days of receipt of said request. Seller shall be
authorized to sign the Certificate of Completion so long as the acceptance
test results comply with the applicable ATPs and pass the criteria
specified therein. The form for the Certificate of Completion shall be as
set out in Annex VI attached hereto.
18.3 The delivery of the Systems shall be Ex-Works (INCOTERMS 2000), Seller's
facilities at 2618 York Avenue, Minden, Louisiana, USA 71055. The Buyer
(or IMOD) shall furnish the Seller with shipping instructions within a
reasonable time following execution by Buyer of the Certification of
Completion for each lot of Systems. Such shipping instructions will set
forth the date(s) by which ocean freight containers are to be loaded by
Seller. Seller shall provide ninety (90) days temporary storage at its
facilities at no cost to Buyer, pending loading of the containers. Systems
not shipped within ninety (90) days may incur storage costs. Buyer agrees
to pay the storage costs, if any are imposed by the U.S. Army or their
designated representatives.
18.4 Neither the provisions of this Article 18, nor actions taken pursuant
hereto, nor any approvals or comments by Buyer with respect to Seller's
work shall affect or diminish the full and absolute responsibility of
Seller to comply with the requirements of this Contract.
18.5 Without derogating from any right or remedy available to Buyer under any
law or Contract, it is hereby specifically clarified that any delay or
expected delay in the delivery dates as set forth in the timetable of the
SOW shall be notified in writing by Seller to Buyer immediately upon
Seller's becoming aware of such delay. Seller shall specify in its notice
the reasons for the delay and the expected date of delivery.
18.6 Each System or lot of Systems delivered by Seller to Buyer shall be
accompanied by a certificate confirming the following:
(a) That each of the Systems were built and examined in strict accordance
with the final and approved technical documentation (Specifications
and the production file);
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CONTRACT NO. KESHET 002
(b) That each of the Systems were examined and successfully passed the
qualification acceptance tests as specified in the Specifications,
the SOW and the mutually approved specifications; and
(c) That all of the Systems as a whole were examined and successfully
passed the mutually agreed upon Acceptance Tests.
ARTICLE 19 - TERMINATION FOR DEFAULT
19.1 It is agreed by and between the parties hereto that in the event VALENTEC
SYSTEMS INC. fails to make delivery of any items within ninety (90) days
after notice of default or any extension thereof the Performance
Guarantee shall vest with SOLTAM, unless the price of the item defaulted
is less than the value of the Letter of Credit, at which case, the price
of the item(s) shall be paid to SOLTAM in lieu of the full value of the
Letter of Credit.
19.2 However, if there is a dispute between SOLTAM and VALENTEC SYSTEMS INC.
concerning the alleged default of the Contract such dispute shall be
settled under the Arbitration Article 22. Under a dispute situation, the
Performance Guarantee, or a less amount as mentioned above, would not
vest in SOLTAM unless the Arbitration Board decided the dispute in favor
of SOLTAM.
19.3 Except for defaults of subcontractors at any tier, the Seller shall not
be liable for any excess costs if the failure to perform the contract
arises from causes beyond the control and without the fault or negligence
of the Seller. Examples of such causes include (1) acts of God or of the
public enemy, (2) fires, (3) floods, (4) epidemics, (5) quarantine
restrictions, (6) strikes, (7) freight embargoes, and (8) unusually
severe weather. In each instance the failure to perform must be beyond
the control and without the fault or negligence of the Seller.
19.4 If the failure to perform is caused by the default of a subcontractor at
any tier, and if the cause of the default is beyond the control of both
the Seller and subcontractor, and without the fault or negligence of
either, the Seller shall not be liable for any excess costs for failure
to perform, unless the subcontracted supplies or services were obtainable
from other sources in sufficient time for the Seller to meet the required
delivery schedule.
19.5 The Buyer shall pay contract price for completed supplies delivered and
accepted. The Seller and Buyer shall agree on the amount of payment for
manufacturing materials delivered and accepted and for the protection and
preservation of the property. Failure to agree will be a "dispute" under
Article 22-Applicable Law and Arbitration clause of this contract.
19.6 If, after termination, it is determined that the Seller was not in
default, or that the default was excusable, the rights and obligations of
the parties shall be the same as if the termination had been issued for
the convenience of the Buyer.
19.7.1 It is agreed by and between the parties that the remedies available to
VALENTEC SYSTEMS INC. and SOLTAM as set forth above are the sole and
exclusive remedies, recourse and liability to each of the parties under
this Article of this Contract. Under no circumstances shall SOLTAM or
VALENTEC SYSTEMS INC. be liable under this Article or any other provision
of this Contract to a cumulative liability greater than that set forth in
this Article.
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CONTRACT NO. KESHET 002
ARTICLE 20 - TERMINATION FOR CONVENIENCE
20.1 Buyer shall have the right, at its convenience and discretion, to
terminate this Contract, in whole or from time to time in part, by
delivery to Seller of a notice of termination for convenience, specifying
the extent to which the performance of the Program under this Contract is
terminated, and the date upon which such termination shall become
effective, which termination shall be subject to the terms set forth in
Paragraph 52.249-2 of the September 1996 edition of the Federal
Acquisition Regulation of the United States Government, with Buyer being
substituted for the "Contracting Officer" and the "Government" and Seller
being substituted for "Contractor", except that any disputes in connection
herewith shall be resolved in accordance with ARTICLE 22 hereunder. Costs
included in Seller termination claim may be verified by DCAA.
ARTICLE 21 - SUBCONTRACTORS
21.1 Seller shall notify Buyer the identity of its Subcontractors who may take
part in the performance of Seller's obligations and undertakings pursuant
to this Contract and in addition, the types of work in which they shall be
engaged.
21.2 Seller shall cause, that all the required provisions of this Contract,
shall be included in each agreement between Seller and any of its
Subcontractors, mutatis mutandis, and shall ensure that each of its
Subcontractors shall adhere to the provisions of this Contract. Provided
that the aforesaid will apply only to the Subcontractors whose contract
price is above US$ 500,000 (five hundred thousand U.S. Dollars).
21.3 Notwithstanding the above provisions, nothing in this Contract creates
contractual relations between Buyer and the Subcontractors or shall impose
on Buyer any financial obligation towards the Subcontractors and/or
diminishes Seller's responsibilities and liabilities, undertakings and
obligations to perform this Contract as it is written, and according to
its provisions.
ARTICLE 22 - APPLICABLE LAW AND ARBITRATION
22.1 Applicable Law and Enforcement
It is agreed by and between the parties hereto that this Contract shall be
construed and interpreted in accordance with the laws of New York
(excluding conflict of laws principles). Any arbitration award shall be
based on and accompanied by findings of fact and conclusions of law, and
shall be conclusive. Any award shall be confirmable by any U.S. District
Court having jurisdiction over the parties and action.
22.2 Arbitration Required
All disputes and/or claims between the parties hereto based upon any
alleged breach of any of the obligations created hereunder shall be
finally settled by an arbitrator appointed pursuant to the then rules and
regulations of the American Arbitration Association.
22.3 Language of Arbitration
The arbitration proceeding shall be conducted in accordance with the rules
of the American Arbitration Association then in force and shall be in the
English language. The arbitration shall take place in New York, New York,
U.S.A.
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CONTRACT NO. KESHET 002
22.4 Confidentiality
The parties agree that any arbitration proceedings hereunder shall be
conducted on a confidential basis, and subject to the security provisions
of this Contract.
22.5 Costs
Each party shall be responsible for its respective costs incurred in
arbitration, except that costs and fees imposed by the arbitrator for his
fees and expenses shall be borne equally by the parties.
22.6 Scope of Awards
The award of the arbitrator may be, alternatively or cumulatively, for
monetary damages, an order requiring performance of non-mandatory
obligations (including specific performance or an obligation to cease and
desist) or any other appropriate order or remedy; however, under no
circumstances shall the arbitrator be authorized to award, nor shall the
arbitrator award, consequential damages, punitive damages or multiple
damages. The arbitrator may issue interim awards and order any provisional
measures that should be taken to preserve the respective right of either
party.
ARTICLE 23 - NEW MATERIALS
23.1 Seller warrants that the supplies and components to be provided by Seller
under this Contract are new, not used or reconditioned (except to the
extent that such supplies and components must be used or modified in the
performance hereof), and that at the time of System delivery, none of such
supplies and components shall be of such age or so deteriorated as impair
their usefulness or safety.
ARTICLE 24 - PROPRIETARY RIGHTS IN THE SYSTEM
24.1 Buyer owns and will continue to own the proprietary rights in the System.
Seller will be entitled to manufacture, assemble, test and deliver the
System under this Contract pursuant to the license, which will be granted,
to it under the License Agreement (Annex VII) and according to its terms.
ARTICLE 26 - PROPRIETARY DATA AND CONFIDENTIALITY
25.1 All specifications, technical data and information furnished to Seller by
Buyer in writing prior to the date of this Contract and all
specifications, technical data; and information to be furnished to Seller
by Buyer in the course of this Contract which are clearly and
conspicuously marked Proprietary Data will not be disclosed by Seller to
third parties other than the U.S. Government (and with respect to such
disclosure to the U.S. Government only if required to do so by law or
regulation).
25.2 Each of the Parties shall keep confidential, shall not to disclose, or
allow to be disclosed and shall not expose or allow to be exposed, all or
any part of any information which it will be, or may be exposed to, or
will obtain or will have access to, directly or indirectly, regarding the
other Party's respective intellectual property, work techniques,
technologies, any financial or commercial information, cost information,
customer and/or client lists, suppliers, subcontractors, prices on any
other information regarding the other Party's business or affairs
(hereinafter the "Confidential Information") and not to make use of the
Confidential Information in any manner, for any purpose other than for
the purpose of performing its respective undertakings and obligations as
provided herein, and not to transfer any of the
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CONTRACT NO. KESHET 002
Confidential Information to any third party. IMOD will not be regarded as
a third party with respect to the limitations under this ARTICLE.
25.3 The provisions in ARTICLEs 25.1 and 25.2 hereinabove shall not apply to
Proprietary Data aforementioned or Confidential Information that the
receiving Party can provide by documentary evidence that such Confidential
Information:
25.3.1 Has already been known to the receiving Party not in connection
with this Contract before being disclosed to it by the disclosing Party;
25.3.2 Has become generally known to the public through no breach of the
receiving party's undertakings herein by such Party or on its behalf.
25.3.3 Has been rightfully received by the receiving Party from a third
person who did not breach any restriction of disclosure or obligation of
confidentiality;
25.3.4 Has been independently developed for the receiving Party, by its
employees (who, at no time, have been exposed to the Confidential
Information) without use, directly or indirectly of the Confidential
Information received from the other Party or on its behalf. '
25.4 Notwithstanding anything to the contrary contained herein, in the event
that either Seller or Buyer shall be required to provide their
Subcontractors with any of the other Party's Confidential Information, in
order to fulfill its undertakings and obligations in connection to the
performance of this Contract, it shall:
25.4.1 Ensure that its Subcontractors sign a Confidentiality Undertaking
similar to its undertaking, pursuant to this Contract, mutatis mutandis;
and
25.4.2 Receive back from its Subcontractors, any and all such Confidential
Information, promptly upon such Subcontractors concluding performing their
respective undertakings related to the Confidential Information.
25.5 Each of the Parties undertakes to ensure that all of their respective
employees, consultants, officers, directors, shareholders, subsidiaries
and anyone else affiliated or related in any way to either of the Parties,
shall abide with the above undertaking. Each Party acknowledges its
liability for any breach of the above undertaking made by one or more of
the persons or entities referred to above.
25.6 The provisions of this ARTICLE 25 shall survive any termination or
expiration of this Contract.
ARTICLE 26- INTELLECTUAL PROPERTY REPRESENTATION AND INDEMNIFICATION
26.1 Seller represents that to the best of its knowledge, the items, data,
information, drawings or any other material delivered by Seller hereunder
are free from infringement from any patents or claim of other third party
proprietary rights, and that Seller has not granted to any third party an
exclusive license to manufacture or sell the same in Israel, and knows of
no such grant.
26.2 Seller shall, without limitation, at its sole cost and expense, indemnify
and hold Buyer harmless from, and defend any claims, suits or proceedings
arising out of, any infringement or claimed infringement of:
(a) Any letters patent; or
(b) Any other proprietary rights.
Page 17 of 41
CONTRACT NO. KESHET 002
26.3 Seller shall pay any judgments entered, or any settlements made with
Seller's prior written approval, with respect to the suits or proceedings
referred to in ARTICLE 26.2 above. Such defense and payments under this
ARTICLE 26 are conditioned on the following:
A. Buyer shall promptly notify Seller in writing of any notice of such
claim;
B. Seller or its nominee shall have control of the defense of any
action on such claim and all negotiations for its settlement or
compromise; provided, however, that if the Buyer is a named
defendant Buyer shall have the right to approve counsel and to
cooperate in such defense; and
C. Buyer shall give Seller assistance reasonably required in connection
with such defense or negotiations.
26.4 ARTICLEs 26.2 and 26.3 shall have no application if:
A. The infringement or claimed infringement results from compliance
with specific written instructions by Buyer directing a change in
the supplies to be delivered or in the materials or equipment to be
used; or
B. The infringement results from the addition to, or change in, the
supplies or services furnished, which addition or change was made
subsequent to delivery or performance by Seller.
26.5 Should the use of any item in the System be enjoined, or in Seller's
opinion be likely to become enjoined, or in the event Seller desires to
minimize its liabilities hereunder, Seller will, at its option, either
substitute a fully equivalent, non-infringing product, modify such item so
that it no longer infringes but remains functionally equivalent or obtain
for Buyer, at the expense of Seller or its nominee, the right to continue
use of the item.
ARTICLE 27 - FORCE MAJEURE
27.1 A delay in the performance hereunder by a party shall only be excused when
said delay in performance is caused by an event beyond the reasonable
control of that party and which could not have reasonably been anticipated
and was without the party's default or neglect, including but not limited
to acts of God, war, strikes, explosions, hijacking, accidents, Government
acts including limitations on travel and export limitations, VALENTEC
SYSTEMS INC. self-imposed restrictions on travel based on US State
Department travel advisories, act of the public enemy, and failure or
inability of subcontractors to perform due to any such causes as above
unless the parties otherwise agree that subcontract commodities to be
furnished under the contract are procurable in the open market. The
foregoing provision shall not, however, release a party claiming force
majeure from using its best efforts to avoid or diligently remove such
circumstances. When a party is excused from performance of any of the
above-mentioned circumstances, that party shall resume performance with
utmost dispatch as soon as such circumstances are removed. A party
claiming such an excusable delay, in order for it to be recognized, shall
promptly give written notice verified by the appropriate Chamber of
Commerce.
ARTICLE 28 - TAXES
28.1 The Contract Price includes all United States federal, state or local
taxes, levies and duties imposed on the Seller, its Subcontractors or
employees. The Contract price does not include any amounts for Israeli
value added tax, custom duty, stamps or any other taxes, charges or fees
that may be levied in Israel on the System to be
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CONTRACT NO. KESHET 002
supplied by the VALENTEC SYSTEMS INC. Notwithstanding the aforesaid,
Israeli income tax, if due, on VALENTEC SYSTEMS INC.'s employees working
in Israel pursuant to this Contract or on VALENTEC SYSTEMS INC.'S
Subcontractors' employees working in Israel will not be borne by VALENTEC
SYSTEMS INC. and will be reimbursed by IMOD or SOLTAM.
28.2 Any export tax, fee or other charges of any nature now existing or which
may hereafter be imposed by the U.S. Government shall be paid by VALENTEC
SYSTEMS INC.
ARTICLE 29 - PERSONNEL DELEGATION
29.1 It is understood and agreed that all technical specialists whose services
are furnished to assist SOLTAM as contemplate herein shall operate under
the direction of VALENTEC SYSTEMS INC., but VALENTEC SYSTEMS INC. shall
assure that such persons are fully responsive to SOLTAM requirements. It
is understood and agreed that employees of one party, while visiting the
plant of the other, shall not be considered to be employees of the other,
and that their salaries, traveling expenses, and living costs, as well as
an liability for workmen's compensation, accident and health insurance or
other benefits, shall be borne by their own employer which shall assume
all responsibility with respect thereto. VALENTEC SYSTEMS INC. shall not
be liable for any injuries or death or for any loss or damage to property
arising out of or caused by their performance of this Contract or use of
the equipment furnished hereunder unless due to willful misconduct or
negligence of VALENTEC SYSTEMS INC., Such employees shall abide by all of
the plant rules and regulations of the plant that they are visiting or at
which they are resident. Each party shall make its own best efforts to
obtain compliance therewith.
ARTICLE 30 - VISAS
30.1 If required, SOLTAM shall assist VALENTEC SYSTEMS INC. in obtaining Visa
for VALENTEC SYSTEMS INC. personnel sent to Israel under this Contract.
30.2.1 If required, VALENTEC SYSTEMS, INC. shall assist SOLTAM in obtaining Visa
for SOLTAM personnel sent to the U.S. under this Contract.
ARTICLE 31 - HEADINGS
31.1 The articles and paragraphs headings contained herein are for convenience
and reference only, and are not a part of this Contract, nor shall they in
any way effect the interpretation thereof.
ARTICLE 32 - ENTIRE CONTRACT
32.1 This Contract contains and constitutes the entire understanding and
agreement between the parties hereto respecting the subject matter hereof
and supersedes and cancels all previous negotiations, agreements,
commitments and writing in connection therewith.
ARTICLE 33 - WAIVER
33.1 Any waiver by either party of a breach or default shall not constitute a
waiver of any other breach or default subsequently occurring.
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CONTRACT NO. KESHET 002
ARTICLE 34 - RELIABILITY
34.1 The parties agree that if any portion of this Contract shall be held to be
illegal and/or unenforceable, the parties will provide notice of such fact
to each other and will active at the solution by mutual agreement. The
remaining portions of this Contract shall continue to be binding and
enforceable provided that the affectivity of the remaining portion of this
Contract would not defeat the overall intent of the parties, or give one
party any substantial financial benefit to the detriment of the other
party.
ARTICLE 35 - MODIFICATION- CHANGES
35.1 Buyer may at any time, by written order make changes within the general
scope of this contract in any one or more of the following:
(1) Drawings, designs, or specifications
(2) Content of Seller scope of work
(3) Buyer Furnished Equipment
35.2 If any such change causes an increase or decrease in the cost of, or the
time required for, performance of any part of the work under this
contract, the Buyer shall make an equitable adjustment in the contract
price, the delivery schedule, or both, and shall modify the contract.
Seller shall assert its right to an adjustment under this clause within 30
days from the date of receipt of the written order. Seller shall provide
Buyer with a proposal for equitable adjustment no later than 90 days after
asserting its right. Buyer and Seller recognize that reductions in
Seller's scope of work may impact Seller's indirect cost rates, including
but not limited to Overhead, Fringe and G&A. In those situations, Buyer
and Seller agree that Seller's claim shall be adjusted to reflect the
changes in rates as allowed in the latest edition of the Federal
Acquisition Regulation of the United States Government, with Buyer being
substituted for the "Contracting Officer" and the "Government" and Seller
being substituted for "Contractor". DCAA shall be the audit authority for
any claim. If Seller's proposal includes the cost of material made
obsolete or excess by the change, the Buyer shall have the right to
prescribe the manner of the disposition of the material. Failure of Buyer
and Seller to agree to any adjustment shall be a considered a "dispute"
under Article - 22-Applicable Law and Arbitration of this contract.
35.3 No change altering price, payment terms or Program Schedule shall be
effective unless accompanied by an amendment signed by the authorized
representatives of SOLTAM and VALENTEC SYSTEMS INC. VALENTEC SYSTEMS INC.
shall not proceed with the change request pending the Contract amendment.
If VALENTEC SYSTEMS INC. does proceed with the change despite not having
received a signed amendment to this Contract, all costs associated with
such change shall be deemed to be covered by the firm fixed price of this
Contract and will not be reimbursed by SOLTAM or IMOD.
35.4 Any amendment to this Contract is subject to the prior written consent of
VALENTEC SYSTEMS INC., IMOD and DSCA.
35.5 VALENTEC SYSTEMS INC. shall use reasonable efforts to reduce delays agreed
upon by the Parties in the timetable, as a result of the performance of
any Changes.
35.6 No change altering any technical or other contractual requirement shall be
effective unless accompanied by an amendment signed by the authorized
representatives of SOLTAM and VALENTEC SYSTEMS INC. VALENTEC SYSTEMS INC.
shall not proceed with any such change request pending the Contract
amendment.
Page 20 of 41
CONTRACT NO. KESHET 002
ARTICLE 36 - DISCLAIMER OF AGENCY
36.1 The parties to this Contract are independent legal entities. There is no
relationship existing of principal and agent. Therefore, neither party
shall have authority to accept on behalf of the other any order,
agreement, or contract, or to create any claim, guarantee, debt,
obligation, expense or liability of any kind on behalf of the other
party.
ARTICLE 37 - DECLARATIONS
37.1 It is agreed by and between the parties that they shall render one to the
other whatever assistance is deemed appropriate in obtaining any
Governmental approvals for this Contract, if required.
ARTICLE 38 - LANGUAGE OF DOCUMENTS
38.1 All documents such as shipping documents, shipping advice, markings,
drawings, instruction manuals, guarantees, letters, telegrams, telefaxes,
etc., in connection with the contract shall be in English, unless
otherwise authorized by VALENTEC SYSTEMS INC.
ARTICLE 39 - COMPUTATION OF TIME
39.1 Time, if stated in number of days, will include Saturday, Sunday and
Holidays.
ARTICLE 40 - ASSIGNMENT
40.1 Except as otherwise expressly provided herein, neither party shall assign
or in any manner transfer its rights and/or obligations or any part
thereof under this Contract without express prior written consent of the
other party, which consent shall not be unreasonably withheld.
40.2 Subject to any required governmental licensing approvals or restriction,
either party may, without the other party's consent, assign its rights
and/or obligations hereunder to (i) its parent company, if any; (ii) any
complete successor in interest in the event of change in corporate name,
merger, acquisition or consolidation of its parent or itself, or (iii) a
wholly owned subsidiary of its parent or itself.
ARTICLE 41 - NOTICES
41.1 Any and all notices hereunder shall be sent by registered airmail or cable
as follows:
TO SOLTAM:
SOLTAM Systems Ltd.
P.O.B. 13
Yokneam 20692
Israel
Attention: Mr. Binyammin Zeagdone
Program Manager
Telephone: 972-4-9896566
Telefax: 972-4-9896232
E-Mail: bennie_z@sollam.com
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CONTRACT NO. KESHET 002
TO VALENTEC SYSTEMS INC.:
Notices on all contractual matters for the Program shall be addressed to:
VALENTEC SYSTEMS INC.,
2618 York Avenue
Minden,LA 71055
Attention: Ronald M. Mackey
Contracts & Purchasing Manager
Telephone: (318) 459-5143
Telefax: (318)459-5129
E-Mail: rmackey@valentec.net
A copy of all notices on all technical matters for the Program shall
be addressed to:
P.T. Asher
Program Manager
Telephone: (318) 459-5218
Telefax: (318)459-5129
E-Mail: ptasher@valentec.net
All airmail notices shall be effective and deemed given one week after
posted, and all email / fax notices seventy-two (72) hours after delivery
to the email / fax address, unless the party can confirm receipt
otherwise.
ARTICLE 42 - U.S. GOVERNMENT REQUIRED CERTIFICATION AND AGREEMENT
42.1 Contractor's Certification - In order for SOLTAM/IMOD to obtain approval
of the U.S. Defense Security Cooperation Agency ("DSCA") (formerly Defense
Security Assistance Agency) to use Foreign Military Financing ("FMF")
credit funds for this procurement, VALENTEC SYSTEMS INC. agrees to
complete, execute in duplicate and furnish SOLTAM for transmittal to the
DSCA the form entitled "Contractors Certification and Agreement with
Defense Security Cooperation Agency", hereinafter referred to as
"Contractors Certification", in the form attached hereto as Appendix V (or
such modified form as may be required by DSCA). VALENTEC SYSTEMS INC.
agrees that any breach of any of its obligations under said Contractors
Certification shall constitute a breach of VALENTEC SYSTEMS INC.'s
obligation to SOLTAM/IMOD under this Contract.
42.2 FMF Guidelines - VALENTEC SYSTEMS INC. acknowledges receipt of the
Guidelines for Foreign Military Financing of Direct Commercial Contracts -
Israel, dated August 2001 (the "FMF Guidelines"), a copy of which is
annexed hereto as Appendix VI. VALENTEC SYSTEMS INC. agrees to observe the
FMF Guidelines. VALENTEC SYSTEMS INC. will not make any changes to the
U.S. content / non - US content identified in its Certification without
the prior written authorization of SOLTAM/IMOD.
42.3 Payments to the U.S. Government - In accordance with Paragraph 18 of the
FMF Guidelines and Paragraph 19 of the Contractors Certification, VALENTEC
SYSTEMS INC. and SOLTAM agree that all payments to the U.S. Government
must be made payable to the United States Treasury and remitted (1)
directly by check to the DSCA
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CONTRACT NO. KESHET 002
or (2) by wire transfer to the U. S. Treasury's account. Checks shall be
made payable to "United States Treasury" and mailed to:
Defense Finance and Accounting Service (DFAS-DE/IADD)
6760 E. Irvington Place
Denver, CO 80279-5000
The check shall be accompanied by a letter of explanation identifying
Israel as the purchasing country. Wire transfer payments shall be
transferred as follows:
United States Treasury
New York, New York
021-030-004
DFAS-DE/IADD
Agency Code 3801
Refund from VALENTEC SYSTEMS INC., for purchases made by the Government of
Israel under GOI Contract/Purchase Order No.
VALENTEC SYSTEMS INC. shall furnish to SOLTAM concurrently with any
transmittal to the U.S. Government, copies of any check, wire transfer,
letter of explanation or other relevant correspondence, which is sent to
U.S. Government.
42.4 DCMA and DCAA Administrative Services - As a condition of FMF funding of
the Contract, VALENTEC SYSTEMS INC. agrees that Defense Contract Audit
Agency (DCAA) contract audit services will be performed to ensure that
VALENTEC SYSTEMS INC. is in compliance with the Defense Security
Cooperation Agency (DSCA) contractor's certification. DCAA will perform
contract audit services in accordance with the contractor's certification.
To ensure contractor compliance, DCAA contract audit services will be
provided over the life of the Contract and will be coordinated with the
Defense Contract Management Agency.
ARTICLE 43 - IMOD REQUIRED CERTIFICATION
43.1 VALENTEC SYSTEMS INC. agrees that by signing this Contract it is
certifying that throughout the conduct of the solicitation leading to this
Contract no officer, director employee, representative or agent of
VALENTEC SYSTEMS INC. offered, promised or discussed with SOLTAM/IMOD
personnel involved in this Contract 1) the future employment of (or
business opportunity with) any SOLTAM/IMOD personnel, 2) the transfer of
any money, gratuity or other thing of value to any SOLTAM/IMOD personnel,
and/or 3) the transfer by any SOLTAM/IMOD personnel to VALENTEC SYSTEMS
INC. of any proprietary or source selection information regarding this or
any other procurement. For purposes of the preceding sentence (and only
for purposes of such preceding sentence), SOLTAM/IMOD shall be defined so
as to include officers in the Israeli Defense Forces or employees of
SOLTAM. The prohibited conduct described above shall continue to be
prohibited following the award of this Contract. VALENTEC SYSTEMS INC.
further certifies that except as disclosed to SOLTAM/IMOD prior to
VALENTEC SYSTEMS INC.'s signature of this Contract, VALENTEC SYSTEMS INC.
does not currently employ any individual or retain any agents who at any
time within the past two years were 1) employed by the Government of
Israel Ministry of Defense (including, but not limited to, its Mission to
the U.S.) or 2 officers on active duty in the Israel Defense Forces. Any
breach by VALENTEC SYSTEMS INC. of the certifications set forth above
shall constitute a breach of VALENTEC SYSTEMS INC.'s obligations to
SOLTAM/IMOD under this contract. Such breach shall entitle SOLTAM/IMOD to
terminate this Contract without any SOLTAM/IMOD liability to VALENTEC
SYSTEMS INC. (including the right to return items already delivered for a
refund of amounts already paid).
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CONTRACT NO. KESHET 002
ARTICLE 44 -- SECURITY
44.1 The Program covered by this Contract is [unclassified].
44.2 Except as required by U.S. and Israeli law, neither VALENTEC SYSTEMS INC.
nor its Subcontractors shall release any publicity as to SOLTAM's identity
or other information concerning this Contract (including publication in
internal or trade newsletters) without the prior written consent of
SOLTAM.
44.3 The furnishing of any classified information and materials to VALENTEC
SYSTEMS INC. by SOLTAM in connection with this Contract requires the prior
written consent of IMOD. IMOD's consent may be conditioned upon execution
of an agreement between VALENTEC SYSTEMS INC. and SOLTAM on procedures
governing the treatment of such information and materials.
44.4 SOLTAM agrees not to disclose or present the Program (or any part thereof)
to any third party excluding the U.S. Government and VALENTEC SYSTEMS
INC.'S Subcontractors on a need to know basis, without the prior written
consent of VALENTEC SYSTEMS INC.'S Security Department.
44.5 The disclosure, transmittal, use, storage, distribution and disposition of
all information, data, documentation and equipment produced or exchanged
by either Party under the terms of this Contract shall be in accordance
with the procedure utilized by VALENTEC SYSTEMS INC. for the protection of
U.S. Government wort.
44.6 All of VALENTEC SYSTEMS INC.'S personnel, who are to perform services
under this Contract in Israel, if any, shall be subject to Israeli
security requirements. SOLTAM supplied questionnaires (Soltam to furnish
form) shall be completed by VALENTEC SYSTEMS INC. personnel who are to
perform services in Israel, if there are any, and submitted to the
Director of SOLTAM's Security Department at least thirty (30) days prior
to planned departure from the U.S.
44.7 VALENTEC SYSTEMS INC. agrees to insert security provisions, which conform
to requirements of this Article in all subcontracts awarded to
Subcontractors.
44.8 VALENTEC SYSTEMS INC. shall comply with U.S. security procedures at its
plant inter alia, in order to implement the above security requirements
upon the signing of this Contract and shall inform all employees and
agents connected with the Contract of the provisions of this ARTICLE.
44.9 Buyer and IMOD personnel shall be subject to the Visit Request procedures
of the U.S. Government, Seller and Subcontractors.
44.10 Notwithstanding any provisions in this Contract to the contrary, in no
event shall SOLTAM deny VALENTEC SYSTEMS INC. consent to disclose
information relating to this Contract to U.S. Government, if such
disclosure is required by U.S. law or regulations.
44.11 The Parties' authorized representatives concerning all security matters
relating to the performance of this Contract are as follows
SOLTAM: Head of Security of SOLTAM and
Director of Security
Government of Israel
Ministry of Defense
Mission to the United States
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CONTRACT NO. KESHET 002
VALENTEC SYSTEMS INC.
Security Chief - Mr. John Billips
Valentec Systems, Inc.
2618 York Avenue
Minden, LA 71105
Telephone: (318)459-5014
Telefax: (318)-459-5691 E-mail:jbillips@valentec.net
ARTICLE 45 - STOP WORK ORDERS
45.1 Buyer may, by written order to Seller at any time, require Seller to stop
all, or any part, of the work called for by this Contract for a period of
up to ninety (90) days after the stop work order is delivered to Seller
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
cost allocable to the work covered by the order during the period of work
stoppage. Within a period of ninety (90) days after a stop work order is
delivered to Seller, or within any extension of that period to which the
parties have mutually agreed to an extension, Buyer shall either:
(i) Cancel the stop work order; or
(ii) Terminate the work covered by such order by reason of Seller's
default or as provided in ARTICLE 20, Termination for
Convenience.
45.2 If a stop work order issued under this ARTICLE is cancelled or the period
of the order or any extension thereof expires, Seller shall resume work.
An equitable adjustment shall be made in the delivery schedule or Contract
Price, or both, and the Contract shall be modified in writing accordingly,
if:
A. The stop work order results in an increase in the time required for,
or in Seller's cost properly allocable to, the performance of any
part of this Contract; and
B. Seller asserts a claim for such adjustment within thirty (30) days
after the end of the period of work stoppage;
ARTICLE 46 - FIELD PRICING SUPPORT
46.1 Seller agrees to the requirement for field pricing support as stipulated
hereunder. This support will be provided by Defense Contract Management
Command (DCMC) and Defense Contract Audit Agency and will normally include
technical and cost analysis of Seller's proposal. IMOD shall request field
pricing support through the DCMC International Logistics Office in New
York, NY. Field pricing support will include an audit review by the
cognizant contract audit activity before concluding negotiation of the
Contract or any modification. Seller will submit cost or pricing data in
connection with the pricing of this Contract or any modification to this
Contract which affects the price of the Contract.
46.2 The U.S. Government (USG) representatives shall have the right to examine
and audit all of Seller's books, records, documents, and other data,
related to proposing, negotiating, pricing, or performing this Contract,
in order to evaluate the accuracy, completeness, and currency of the cost
or pricing data. The right of examination shall extend to all documents
necessary to permit adequate evaluation of the cost or pricing data
submitted, along with the computations and projections used. Seller
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CONTRACT NO. KESHET 002
shall make available at its office at all reasonable times the materials
described above for examination, audit, or reproduction, until 3 years
after final payment under the Contract. General access to Seller's books
and financial records shall be limited to USG representatives. The USG
representatives shall verbally notify the IMOD immediately of data
provided that is so deficient as to preclude review, or where Seller has
denied access to records or to cost or pricing data considered essential
to the performance of a satisfactory review. This verbal notification
shall be promptly confirmed in writing to the IMOD describing the
deficiency or the denial of access to data or records. Seller failure to
provide adequate cost and pricing data may disqualify the Contract from
consideration for FMF approval.
46.3 Field pricing support is intended to give the IMOD a detailed analysis of
the proposal for use in the Contract negotiations to determine a fair and
reasonable price. It normally includes an audit review by the cognizant
audit activity and a technical analysis by DCMC. Seller has no objection
that Buyer will receive from IMOD the results and conclusions of said
audit.
A. Cost analysis will include, as appropriate:
1. Verification of cost or pricing data and evaluation of cost
elements.
2. Evaluating the effect of Seller's current practices on future
costs to ensure that the effects of inefficient or
uneconomical past practices are not projected into the future.
B. Comparison of cost proposed by Seller for individual cost elements
with:
1. Actual costs previously incurred by Seller;
2. Previous cost estimates from Seller or from other offers for
the same or similar items;
3. Other cost estimates received in response to the IMOD's
request;
4. Independent cost estimates by technical personnel;
5. Forecasts or planned expenditures.
C. Verification that Seller's cost submissions are in accordance with
U.S. DOD contract cost principles and procedures and, when
applicable, the requirements and procedures of the Cost Accounting
Standards.
D. Review to determine that all cost or pricing data necessary to make
Seller's proposal accurate, complete, and current has been either
submitted or identified in writing by Seller.
E. Analysis of the results of any make-or-buy program reviews, in
evaluating Seller costs.
46.4 Technical analysis will include, at a minimum, a review and assessment of
the quantities and kinds of material proposed; the need for the number and
kinds of labor hours and the labor mix; any special tooling and facilities
proposed; reasonableness of proposed scrap and spoilage factors; and any
other data that may be pertinent to the cost or price analysis.
46.5 Any subcontracts meeting the $750,000.00 or more threshold will be subject
to the same surveillance as Seller.
ARTICLE 47 - Miscellaneous
47.1 No cancellation, modification, amendment, deletion, addition or other
change in this Contract or any provision hereof, or waiver of any right or
remedy herein provided, shall be effective for any purpose unless
specifically set forth in a writing signed by
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CONTRACT NO. KESHET 002
the party to be bound thereby. No waiver of any right or remedy in respect
of any occurrence or event on one occasion shall be deemed a waiver of
such right or remedy in respect of such occurrence or event on any other
occasion.
47.2 This Contract supersedes all other agreements, oral or written, heretofore
made with respect to the subject hereof and the transactions contemplated
hereby, and contains the entire agreement of the parties, except to the
documents references in this Contract which were executed prior to this
Contract coming into effect.
47.3 Seller shall not assign this Contract or its obligations under this
Contract or any part of them without the prior written consent of Buyer,
which consent shall not be unreasonably withheld, subject to provisions as
may be determined by Buyer.
47.4 Any change, modification or amendment of this Contract shall be made in
writing, shall be signed by the duly authorized representatives of the
Parties and shall be subject to and shall have no force and effect without
the previous written consent of IMOD and DSCA.
47.5 In no event shall either party be liable for indirect, incidental or
consequential damages.
47.6 Any provision hereof prohibited by, or that is unlawful or unenforceable
under, any applicable law of any jurisdiction, shall as to such
jurisdiction be ineffective without affecting any other provisions of this
Contract; provided, however, that if the provisions of such applicable law
may be waived, they are hereby waived, to the end that this Contract be
deemed to be a valid and binding agreement enforceable in accordance with
its terms.
47.7 The provisions of this Contract shall be binding upon and inure to the
benefit of Buyer and Seller and their respective successors and assigns,
but this provision shall not be deemed to expand or otherwise affect the
limitation on assignment and transfers set forth above, and no party is
intended to or shall have any right or interest under this Contract,
except as provided above.
47.8 This Contract may be executed in several counterparts in the English
language, each of which shall be deemed to be an original and all such
counterparts together shall constitute but one and the same instrument.
End of Articles
(Signature page follows)
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CONTRACT NO. KESHET 002
IN WITNESS WHEREOF, the authorized representatives of the parties hereto have
executed this Contract on the dates set forth below
SOLTAM SYSTEMS LTD. VALENTEC SYSTEMS, INC.
By: /s/ Benyammin Leagdone By: /s/ Steve Shows
--------------------------- -----------------------------
Benyammin Leagdone Steve Shows
Title: Mortar Systems Program Mgr. Title: Vice Pres. & G.M.
By: By: /s/ Ronald M. Mackey
----------------------------- ------------------------------
Ronald M. Mackey
Title: Title: Contracts & Purchasing Mgr.
Date: Date: Feb. 10, 2007
---------------------------
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