Terms and Conditions for Acquisition 1 May 2014 1. Definitions The Order - the Order form and all the documents enclosed therewith as appendices, including these terms and conditions, constituting an integral part of the Order. The Customer - Israel Aerospace Industries Ltd. The Supplier - The person / corporation contracting with the Customer pursuant to this Order. The Subject Matter of the Order anything ordered per this Order, including goods, products, services and know-how. The Website - http://www.iai.co.il The Terms and Conditions of an Order The special terms and conditions together with the general terms and conditions (as those terms are defined hereinafter). The Special Terms and Conditions The terms and conditions appearing on the back of the Order and/or terms and conditions appended to the Order (including all the documents enclosed with the Order by the Customer) and/or a written agreement between the Parties in connection with the Subject Matter of an Order (terms and conditions, appendices and/or agreement as aforesaid, as much as they are). The General Terms and Conditions The terms and conditions detailed hereinafter. 2. Introduction 2.1. The terms and conditions of this Order shall constitute the complete and exclusive agreement between the Parties. Any agreement and/or custom and/or details and/or estimates prepared or that existed or that were given in connection with the engagement which is the Subject Matter of this Order, prior to or following the drafting hereof, including in the framework of the process requesting a price quote, shall not bind the Customer. 2.2. All the terms and conditions of the Order constitute an integral part thereof, and shall be viewed as complementing one another, however: 2.2.1. In the event that both the Special Terms and Conditions and the General Terms and Conditions regulate the relationship between the Parties and their contradictions between the terms and conditions of the Order, the arrangements appearing in the Special Terms and Conditions shall apply with respect for each such contradiction. - 1 -
2.2.2. In any event where there is no express order of preference in the Special Terms and Conditions regarding it and the General Terms and Conditions, the special term or condition shall govern, provided that A term that detracts from the Customer s rights, whether among the Special Terms and Conditions or the General Terms and Conditions shall not bind the Customer, unless it has agreed thereto expressly, in writing, with a handwritten addition that is agreement is intended to alter the terms and conditions of the Order, the Special Terms and Conditions and/or the General Terms and Conditions. 2.2.3. In the event that there is no reference in the Special Terms and Conditions regarding any other contradiction in the terms and conditions of the Order, the term and condition that shall apply shall be pursuant to the Customer s discretion. 2.3. Any term or condition and/or provision appearing in any other document (including documents produced by the Supplier), that detracts from the Customer s rights, shall not bind the Customer, unless has agreed thereto expressly, in writing, with a handwritten addition that its agreement is intended to alter the terms and conditions of the Order. 3. Performance of an Order 3.1. The Subject Matter of the Order to be supplied to the Customer shall be in accordance with the details of the terms and conditions in the Order, including the specifications and/or diagrams and/or blueprints and/or any other document, constituting an integral part of such Order (hereinafter "the Specifications") and shall be identical to the models or samples stipulated in the Order. The Supplier shall not have any right to determine the data of the Specifications itself. 3.2. The Supplier covenants, that the Subject Matter of the Order shall be performed with the best quality, skill and professionalism customary and required, and shall meet any Israeli standard and/or other official binding standard, applicable to the Subject Matter of the Order in completion and/or any part thereof, whether the Specifications stipulated provisions pertaining to quality, material, work description, or other data pertaining to the Subject Matter of the Order, or not. 3.3. The Supplier covenants to ensure availability of all the equipment and/or materials and/or tools (including any designated machinery and spare parts) required to perform this Order, including equipment necessary for its employees, except if expressly stated otherwise in writing in this Order. 3.4. Items and/or raw materials and/or manufacturing tools and/or Know-how, which the Customer has paid for shall be owned by the Customer, from the date of purchase and/or possession and/or development and/or creation thereof by the Supplier and/or anyone acting on its behalf, and Clause 13, which applies to the Customer s assets, shall apply in relation thereto, without detracting from the Supplier s responsibility and liability to act towards them in observance of any applicable law. 2
3.5. Commencement of performance of an Order by the Supplier, or delivery of the Subject Matter of an Order to the Customer, in whole or in part as applicable is deemed the Supplier s consent to accept the Order, complete of all its terms and conditions, even if a copy thereof has not been approved and/or signed by it. 4. Prohibition on Use of Counterfeit Components 4.1. Any other provision in this Order notwithstanding, in the event that a component that is counterfeit and/or suspected as counterfeit (hereinafter: "the Counterfeit Component" and, if more than one, "Counterfeit Components") is found in the system or part of the system supplied per the Order, the matter will be transferred for investigation by the Customer. The Counterfeit Component will be confiscated by the Customer pending the outcome of the investigation and receipt of the findings regarding the Counterfeit Component. Following receipt of the findings as aforementioned, the Counterfeit Component will be returned to the Supplier, subject to any applicable law. The Supplier will immediately replace the Counterfeit Component with another component, which meets the demands of the Customer (hereinafter: "the Alternate Component"). The Supplier will bear all the costs, direct or indirect, involved in finding and/or removing the Counterfeit Component, including its inspection and replacement and installation of the Alternate Component in its place. 4.2. The Supplier will take the following measures to prevent the supply of Counterfeit Components, and shall apply the following procedures: 4.2.1. It shall use a quality control system to prevent supply and use of Counterfeit Components. 4.2.2. The acceptance inspection protocol customary at the Supplier s facilities shall require an inspection of the COC documents so as to ensure that the components were purchased from the original manufacturer or from some source authorised by the original manufacturer. 4.2.3. It shall purchase only the manufacturer s original components and only from an authorised distributor. 4.2.4. It shall receive from the entity from which it has purchased a component, a certificate with details regarding that component, and shall provide the Customer with a copy thereof, and a document detailing such component s adaptation to the Customer s demands as conveyed to the Supplier. 4.2.5. The Supplier will inspect the components at authorised laboratories as far as required to do so. - 3 -
5. Changes 5.1. The Customer is entitled, from time to time, to issue the Supplier with a demand for changes on any matter related to the Subject Matter of the Order, including changes to the Specifications, the means of transport, packing, place of delivery, quantities of the Subject Matter of the Order and timetable for delivery of the Subject Matter of the Order. The Supplier will be obliged to perform the required changes, subject and pursuant to the stipulations in this clause. 5.2. Any request for changes shall be made in writing, and signed by an authorised representative of the Customer. In the event that the Supplier receives a request for changes otherwise than the foregoing manner, it must notify the Customer thereof within two days from receipt of the request. 5.3. The Supplier shall notify the Customer, within 7 days from receiving a demand for changes, and whether as a result of the required changes, changes to the terms and conditions of the Order are expected, and if so, shall produce details of the new data, including an estimate for the new price for the Order, if applicable, or a timetable for delivery. For the avoidance of doubt, it is clarified, that the Supplier shall note, as applicable, also any reduction in price and/or shortening of the timetable as a result of the changes. The Customer will be entitled to inspect the Supplier s books to ensure its demands are met. However, the Customer is entitled to postpone the contractual delivery date by up to 6 months without any costs to the Customer. In the event that the Customer requested a postponement of more than 6 months, the postponement over and above 6 months shall be deemed a change, and the provisions of this sub-clause above shall apply thereto. The Customer is moreover entitled to shorten the timetable for delivery, without any costs to the Customer. Such shortening of the timetable shall be performed strictly if the date fixed for the Order does not fall within two months from the date of notice to the Supplier. The Customer will be entitled to request a change shortening the timetable otherwise than pursuant to this paragraph, and in such event the provisions of sub-clause 5.3 above as relating to production of details, etc. shall apply. 5.4. The Customer is entitled to demand of the Supplier, and the Supplier covenants, to commence performance of the changes, even before the Parties have agreed to an adaptation of the price of the Order, and/or the timetable for delivery as aforementioned. 6. Quality Control 6.1. The Supplier will maintain and keep all throughout the duration of performance of the Subject Matter of this Order, a quality control system, and shall perform control procedures to ensure quality to the Customer s satisfaction, pursuant to the highest standards of quality control customary in Israel and in the Supplier s country. 6.2. The Supplier covenants and acknowledges that the goods and/or work components, to be supplied pursuant to this Order shall be new and not renewed and/or repaired. 4
7. Supervision 7.1. The Customer is entitled, at any time, to visit any place where work is being carried out, in connection with the Subject Matter of the Order, and to conduct inspections, so as to ensure that the control processes meet the Customer s requirements, that the Order is being performed pursuant to the stipulations therein, including inspection of manufacturing processes, levels of planning and manufacturing, quality of materials and pace of performance of the work, and to be present at all tests and experiments. The Supplier will provide the Customer with full assistance, so that the latter may conduct the tests, including production of specifications, as well as any information regarding processes, quality control, preservation and packing, related to the Order. 7.2. The Supplier will make available to the Customer, if required to do so, an appropriate place in the factory, which has the appropriate conditions and equipment, which shall be required by the Customer s representative, so as to facilitate their performance of the inspection and supervision properly. 7.3. Nothing in this Clause 7 and/or in any inspection and/or supervision and/or assistance carried out/provided by the Customer to the Supplier, shall detract from any obligation and/or responsibility of the Supplier, or impose any obligation and/or responsibility on the Customer. 7.4. The Supplier will produce to the Customer, once per quarter, update reports regarding the progress the Supplier is making in performance of the Subject Matter of this Order. 7.5. The Supplier covenants that in any event the Supplier opines, that it is not meeting, or expects that it may not meet any of the terms and conditions of this Order (quality, dates, etc.),it shall notify the Customer thereof forthwith, and shall report to the Customer of its actions to prevent the expected breach. 8. Packing 8.1. Packing the goods which are the Subject Matter of this Order, loading them and transporting them are the responsibility of the Supplier, and shall be performed by it and at its expense. If no other express provision regarding the manner of packing exists, the Supplier will pack items per the customary standard for packing items of that type, and in the absence of a standard, as is commercially customary in relation to those items. The Supplier will ensure that packing is performed so that the internal parts of the goods which are the Subject Matter of the Order shall not be harmed during transport by any means of transport, to Israel and/or in Israel and during the time they are stored. 8.2. The Supplier will pack the goods which are the Subject Matter of the Order in packaging, marked by the Order number, and a number for each container. Each package shall have attached to it a list of the goods packed in it. The shipping bill from the Supplier to the Customer shall include the Order number, the quantity of items and a description thereof, confirmation of inspection of the items prior to packing them, including a report of tests - 5 -
required. The Supplier will be responsible and liable for any damage caused to the goods as a result of faulty packing. Every parcel shall contain a bar-code marking pursuant to the Customer s guidance on the website. 9. Delivery 9.1. Transfer of the Subject Matter of the Order and/or any part thereof to the possession of the Customer, in good condition, and the Customer s confirmation of receipt thereof, shall be deemed delivery and transfer of ownership in them to the Customer. Confirmation of the Order does not constitute confirmation that the quality of the Subject Matter of the Order meets the Customer s satisfaction. 9.2. The Supplier will deliver the Subject Matter of the Order at the Customer s premises, and/or any place noted in the Order, and on the date(s) stipulated in the Order. 9.3. The Supplier is responsible and liable for any loss and/or damage, if such is caused to the Subject Matter of the Order, until it is delivered to the Customer in accordance with clause 9.2. 9.4. Items shall be delivered to the Customer plus a shipping bill and invoice, which shall detail the Order number and the number of items supplied. 10. Change and/or Delay in the Delivery Date 10.1. The Supplier must meet the timetable stipulated, including deployment of equipment and manpower. 10.2. Any change to the date of delivery (including bringing it forward), that is not caused as a result of a change in the Order by the Customer, shall be done strictly with the Customer s prior written consent. 10.3. In the event that the Supplier foresees that it will not meet the delivery date stipulated, it shall notify the Customer of the expected delay, shall detail the reasons therefor, and this so as to receive the Customer s confirmation of a later date. The Supplier must update the Customer as to the progress of the Subject Matter of the Order. The Customer s confirmation does not detract from the Supplier s obligation to pay liquidated damages for the delay as described hereinafter. 10.4. The Customer is entitled to demand of the Supplier, at any date prior to the passage of half the time stipulated for supply of the last shipment of items and/or work and/or service, an increase to the ordered quantity by a rate of up to 20% from the quantity stipulated in the Order, and this without any change to the price of the items and/or work and/or services ordered. All other terms and conditions of the Order shall remain without change, and shall apply to the additional quantity ordered per this clause 10.4. 6
11. Agreed Compensation for Delay in Delivery 11.1. Without detracting from the Supplier s obligations, and from the remedies available to the Customer at law and/or hereunder, in any event of delay in meeting the timetable stipulated between the Parties for the supply of the Subject Matter of the Order, the Customer shall be entitled to off-set, on account of every week of delay and/or any part thereof, fixed and agreed compensation in the amount of 0.5% of the value of the Subject Matter of the Order in delay, and up to a maximum of 10% of the value of the Order in its entirety. Such amounts shall not be deemed penalties but shall be deemed liquidated damages to account for the damages incurred by the Customer in the event of delay where capable of being increased at this time. 11.2. It is clarified, that in the matter of delay, a part of a week shall be deemed a week. The count of weeks shall commence from the beginning of the week following the week in which the date stipulated for delivery happens to fall. Delay of up to one week / four (4) weeks 1, shall not be considered delay (hereinafter: "the Grace Period"). If the supplier is late by more than one week / four (4) weeks, the Grace Period shall count in the counting of days of delay. 11.3. The Customer s right to such liquidated damage, is in addition to any remedy and/or relief available to it per these terms and conditions and/or by operation of any law, and such compensation shall not detract from any remedy and/or relief available to him as aforesaid. 12. Acceptance Inspections 12.1. The Customer is entitled to inspect the Subject Matter of the Order, and to accept or reject the Subject Matter of the Order following its inspection. Even if the Customer has accepted the Subject Matter of the Order following inspection, such does not detract from its right to reject the Subject Matter of the Order at a later date, if it transpires that the Subject Matter of the Order and/or any part thereof failed to meet the requirements of the Order, including the Specifications, and such failure was not discovered during the inspection of the Subject Matter of the Order. Accepting or rejecting the Subject Matter of the Order does not detract from any other right available to the Customer per the Order and/or at law. 12.2. In the event that a defect is discovered in the Subject Matter of the Order and/or any part thereof (hereinafter: "the Defective Item") during the acceptance inspection, the Customer is entitled to take the following measures and/or any one of them: The Supplier will fix the defect or replace the Defective Item, at its own expense, and to the Customer s satisfaction. The Customer is entitled to fix the Defective Item itself, and/or with the agency of a third party, and the Supplier will bear the costs of repair. 1 The value one week is for engagements of delivery of up to one year, the value 4 weeks is for engagements of delivery of more than one year. - 7 -
In the event that the Customer elects to keep the Defective Item, and not to return it to the Supplier, the Customer will pay a reduced price for such item. Nothing in the foregoing is to detract from the Supplier s duty to bear all the costs, direct and/or indirect, caused to the Customer on account of a Defective Item. 12.3. Delivery of the Subject Matter of the Order shall not be deemed complete and valid without the Customer confirming that the acceptance inspection was properly carried out, and the Subject Matter of the Order is to the Customer s satisfaction. 12.4. Performance of any payment whatsoever on account of the consideration, prior to carrying out the acceptance inspection and/or quality control, does not constitute confirmation on behalf of the Customer that the items are in order, and/or a waiver on behalf of the Customer of performance of the acceptance inspections and/or quality control and/or other tests and/or any other right granted to it per the Order and/or by operation of any law. 13. Supplier Responsibility and Warranty for Subject Matter of Order / for Work 13.1. The Supplier shall be responsible and liable for any damage caused to the items of the Customer s property, including, without limitation, any material, leftovers, and/or equipment and/or device and/or drawing and/or know-how and/or invention and/or any other tangible and/or intangible asset, conveyed to the Supplier by the Customer and/or anyone on its behalf in connection with performance of the Order (hereinafter: "the Customer s Assets"), present in the possession and/or under the control of the Supplier and/or anyone on its behalf. The Supplier shall ensure that all of the Customer s Assets shall be held separately, marked as the Customer s Assets and shall perform thereon proper, timely and suitable maintenance and preventative care. 13.2. The Supplier covenants not to use, and not to suffer any other person whatsoever to use, any item of the Customer s Assets, except for the Customer and in the setting of this Order. The Supplier further covenants not to sell the Customer s Assets, not to mortgage them, and not to remove them in any other way from the Customer s ownership. The Supplier shall not impart any information pertaining to the Customer s Assets, and shall ensure that such information does not reach the knowledge of any other person in any way whatsoever. 13.3. The Supplier is responsible for any spoilage and/or non-compatibility and/or defect that may be discovered in the Subject Matter of the Order and/or any part thereof, and/or in the Services Ordered or any part of them, including those that arise from the quality of the materials from which they were manufactured, or the quality of performance of the Work or Service and/or from their failure to be compatible with the quality required in the Order, or from planning the Subject Matter of the Order, if planned and/or designed by the Supplier and/or a third party, all per the Customer s determination, and all for a period of no less than twelve (12) months from receipt of the Subject Matter of the Order by the Customer. 8
13.4. In the event that a defect cannot be discovered by a reasonable inspection, no time limit shall apply, and the Supplier s warranty shall continue to apply, and no other provision limiting the Customer s rights in the event of failure to inspect or notify as aforementioned shall apply. 13.5. Without detracting from any other right of the Customer per this Order or by force of any law, the Supplier covenants to repair, at its own expense, any spoilage, or to replace on the Customer s demand, and at the Supplier's own expense, any item/work or part thereof, in which a defect was discovered, and to compensate the Customer on account of the full damages or losses caused or that will be caused to it as a result of such defect. 13.6. In the event that the Supplier fails to perform the repair or replacement pursuant to this clause, within the time frame as stipulated by the Customer in a notice to the Supplier (and which, in any event, shall not be more than two (2)weeks from provision of the notice to the Supplier, until receipt of the repaired and/or replacement item/work by the Customer), the Customer will be entitled per its discretion, to perform the repair himself or with the agency of another supplier, and the Supplier will be obligated to indemnify the Customer on account of all the expenses of the repair and the losses caused to it thereby. The Supplier will be responsible for transporting the goods from the Customer to the Supplier and returning them (in the event such is required). The Supplier will bear all the expenses involved therewith, and will compensate the Customer on account of all the expenses and losses caused to it as a result of the defect/impairment. 13.7. Exercising the right of warranty by the Customer shall extend the period of warranty by an additional period equal to the period of time from the Customer s notice to the Supplier regarding the existence of the defect/impairment and until the return of the item(s) and/or work following repair/replacement, to the Customer. The remaining period of warranty shall not be less than twelve (12) months. 13.8. The documents to be supplied by the Supplier together with the goods/work shall be updated, accurate and without any flaw and/or mistake, and shall allow the Customer to operate and maintain the goods as detailed in the Order. Upon receipt of notice from the Customer, the Supplier shall correct any flaw and/or mistake in the documents within 30 days. 13.9. The provisions of Sub-clause 13.3 above notwithstanding, when the goods are intended for a client of the Customer s, the period of warranty shall commence upon delivery of the goods to such client. 13.10. The provisions in this clause do not detract from the Customer s right vis-à-vis the Supplier pursuant to this Order, or by operation of any law. 14. Consideration and Payments 14.1. The price stipulated in the Order is fixed, and in consideration for all the Supplier s obligations. No addition or increment will be paid, including, but not limited to the following: price increases; changes in the exchange rate; changes due to cost of living - 9 -
increases; and changes in taxation and mandatory duties, unless otherwise agreed to in writing by Customer and Supplier. The price stipulated in the Order also includes consideration on account of receipt of ownership of tangible and intangible assets (including Know-how, inventions and copyright) ordered pursuant to this Order. 14.2. Payments to the Supplier will be made on the payment dates customary at Israel Aerospace Industries, Ltd. at the time of supply, and which presently is 90 days following the end of the calendar month in which all the following conditions have been met: 14.2.1. The Subject Matter of the Order, on account of which an invoice has been issued and delivered to the Customer, has met Customer s satisfaction, prior to issuance of the invoice. 14.2.2. The documents described in Sub-clause 14.3below have been received. 14.2.3. The Subject Matter of the Order has not been rejected based on the Subject Matter s failure to pass the acceptance tests as stipulated in Clause 12 above. 14.3. The Supplier will input the invoice for the Subject Matter of the Order into the Customer s computerised system for receipt of invoice. The Supplier will enclose a shipping bill with the goods, and in the event of an Order to perform Services, shall attach a performance report to the invoice, per the Customer s requirements, signed by the relevant supervising party on behalf of the Customer. Both the shipping bill and packaging shall contain the Order and invoice numbers. The line items listed in the invoice shall be in the same order as appearing in the Order. Moreover, the Supplier will note in the shipping bill and on the packaging, the Customer s full name and the name of the Customer s factory, the Customer s company registration number and that of the Supplier himself In the event that the Supplier used materials belonging to the Customer, he shall attach a report detailing the use made of such materials. Be aware, that Israel Aerospace Industries, Ltd., has an Israeli issued conditional exemption from Israeli purchase tax the Supplier will attach to the Subject Matter of the Order an original invoice and two additional copies, and shall detail the price of the Subject Matter of the Order and the rate of Israeli purchase tax included, if any. 14.4. The Supplier is aware that the Customer will deduct from any and every payment, paid by him in connection with this Agreement, taxes and/or mandatory payments and/or other duties, at the rates which the Customer is obligated to deduct at source according to Israeli law, unless the Supplier produces, prior to commencement of any such payment, lawful written instructions, from a competent authority, regarding a reduction and/or exemption from such aforesaid deductions. 15. Cancellation of Order by Customer 15.1. Any right pursuant to law and/or this Order notwithstanding, the Customer is entitled to cancel an Order, entirely or partially, in the event of any one of the following: 10
15.1.1. The Supplier fails to meet the deadline for delivery and/or any other timetable stipulated in the Order. 15.1.2. The Supplier fails to meet the terms and conditions of the Order, whether such failure was discovered by the Customer at any stage during performance of the Order, or during any delivery/partial delivery testing of the Subject Matter of the Order. 15.1.3. Commencement of liquidation and/or bankruptcy proceedings against the Supplier, that were not voided within seven days from commencement and/or the filing of a voluntary winding up petition and/or complete and/or material cessation of the Supplier s business operations and/or delay in payment of salaries and/or any part of the salaries of the Supplier s employees by the Supplier, for a period of time exceeding seven days. 15.1.4. The Customer is entitled to cancel an Order at any time and for any reason, per his exclusive discretion, and the Supplier will have no claim and/or demand whatsoever in connection therewith. 15.2. The provisions of any law notwithstanding, cancellation of the Order by the Customer under sub-clauses 15.1.1, 15.1.2, 15.1.3, 15.1.4 of this clause: 15.2.1. Shall not entitle the Supplier to any compensation, enforcement and/or other remedy whatsoever. 15.2.2. Shall authorize the Customer to order, at the Supplier s expense, performance of the Order, or any part thereof, with another supplier, all as applicable, and/or perform the Order himself, and to claim and/or setoff from the sum due and/or that will be due to the Supplier per the Order, the sum of the Order with the other supplier and/or the costs of performance of the Order, and other expenses and losses caused to the Customer as a consequence thereof. 15.2.3. The Supplier will be obligated to assign to the Customer, per the Customer s demand, all the contracts he has with his sub-contractors and/or suppliers in connection with this Order. 15.3. In the event that the Supplier breaches a material term of the Order, and the Customer cancelled the Order as a consequence, the Customer will be entitled to an agreed and predefined compensation in the amount of 10% of the price of the Order, without having to prove his damages. Additionally, the Customer has the right to return any part of the Order already delivered, and receive re-payment for such returned items, plus customary interest and indexing applied to the principal, for the period that Supplier held such Customer payment amounts. 15.4. In the event that the Customer cancels the Order under clause 15.1.4 above, upon receipt of the notice, the Supplier will act in accordance with the stipulations in such notice. The Supplier will act to mitigate his expenses as a consequence of cancellation of the Order, - 11 -
in whole or in part. The Supplier will return the Customer s property and his Know-how to him. The Supplier will transfer to the Customer, per Customer demand, those items completed or partially completed at the time of cancellation. 15.5. The provisions of any law notwithstanding, cancelation of the Order under clause 15.1.4 above will not grant the Supplier any remedy, except for the right to receive a refund of the expenses he incurred plus a profit margin in an amount equal to the pro rata share of the value of the item, at the point his work was cancelled. In any event the total sum that the Supplier receives will not be higher than the consideration to which he would have been entitled per the Order, had it been performed to conclusion per the terms and conditions of the original engagement. 15.6. In the event of a Customer cancellation of the Order-due to a Supplier Force Majeure, the Customer will only be obligated to pay the pro-rata contract price for all delivered items received prior to such cancellation. In no event shall Customer be obligated to pay the Supplier in excess of such contract price. 15.7. Cancellation of the Order, entirely or partially, by the Customer does not absolve the Supplier form his responsibility for that part of the Subject Matter of the Order that had been delivered by him prior to the said cancellation. 15.8. The Customer is entitled to delay payments due to the Supplier per this clause until receipt of the items, the Customer s property and the Customer s Know-how that the Supplier must transfer to the Customer. 15.9. For the avoidance of doubt it is hereby emphasised, that the Supplier will not be entitled to any compensation or additional payment owing to cancellation of the Order, in whole or in part, except for the payments stipulated in this clause. 15.10. The Supplier will refund the Customer any payment paid by him on account of the items and/or the work and/or the services that were not supplied, plus interest and linkage differentials that are customary in the marketplace at that time. 16. Customer -Stop Work / Delaying Work 16.1. The Customer will be entitled to demand of the Supplier, per his exclusive discretion, by written notice, to stop work under this Order, for a period of up to 90 days from the date of delivery of the notice to the Supplier, and for any additional period of time, as agreed between the Parties (hereinafter: "the Stop Work Period"). The Stop Work Period will not change the stipulated supply date. 16.2. During the Stop Work Period, the Customer will be entitled, inter alia, and per his exclusive discretion, to cancel the Stop Work Period, by providing written notice to the Supplier, or to cancel the Order pursuant to the stipulations in these Terms and Conditions described above. 12
In the event that the Customer cancels the Stop Work Period, or alternatively, should the Stop Work Period conclude, the Supplier will renew performance of the Order as stipulated herein and in the Order. 17. Customer s Property 17.1. "Know-How" for the purposes of these terms and conditions, is any technological, commercial or other information, commercial secrets, other proprietary rights, which may include, the generality of the foregoing notwithstanding, inventions, patents (whether registered or not), patent requests, licenses, designs (whether registered or not), discoveries, techniques, methods, data, engineering information, chemical and biological information, information pertaining to manufacturing processes, manufacturing processes, testing methods, specifications, diagrams, blueprints, printouts, part lists, news, plans, passwords, symbols, codes, improvements, refinements, information inventions, ideas, trade names, details and any other information, whether the information is written, oral or in any printed, optical, electronic or other media. "Background Know-how" Know-how that belonged to one of the Parties to the Order prior to the issuance of the Order, or Know-how that such party acquired, received or developed not related to such Order. "Foreground Know-how" Know-how that the Supplier developed in the course of this Order and/or as a consequence hereof. "Intellectual Property" "IP" Intellectual Property in all its various forms, including know-how, ideas, inventions (whether patentable or not), patents, patent requests, copyright, designs, trademarks, etc. 17.2. 17.2.1. Any Background Know-how that was conveyed by the Customer to the Supplier shall remain the property of the Customer. Any Background Know-how of the Supplier s shall remain owned by the Supplier. The Supplier shall be responsible and liable to the Customer for preservation of the Customer s Know-how, and its orderly maintenance. 17.2.2. All the rights, including the IP rights, in Foreground Know-how, shall belong exclusively to the Customer. For the avoidance of doubt it is clarified that the Customer will be entitled to use same, as he deems fit, and without any limitations whatsoever, including to copy, alter, distribute and permit use thereof. The Supplier has no, and will have no, right and/or demand and/or action of any and every type in connection with the rights, including IP rights, in the Foreground Know-how and/or the Customer s Background Know-how The Supplier waives any of its rights to, and assigns and transfers to the Customer, without additional consideration over and above the consideration to be agreed on between the Parties, all the rights in the Foreground Know-how, in - 13 -
as much as he may have such rights, including various IP rights, in as much as they are connected with the Subject Matter of this Order and/or its designation and/or the use that the Customer will make of the Subject Matter of this Order and/or the relevant project and its components. 17.2.3. Any item and/or part of an item that is left over as surplus, for any reason whatsoever, as a result of changes that were demanded in the course of performance of the Customer s Order, shall be the exclusive property of the Customer. 17.2.4. The Supplier shall report to the Customer of any Know-how accumulated by him in the course of performance of the Order. The Supplier shall assist the Customer in any way to transfer to him the said rights. The Supplier will mark the Background Know-how and the Customer s Foreground Know-how, as the "Customer s Property" and shall preserve it as detailed in Clause 18 below. The Supplier will be entitled to make use of the Customer s Background Knowhow and Foreground Know-how strictly for the purposes of performance of the Order and not for any other reason. 17.3. The Supplier will grant the Customer a non-exclusive license to use the Supplier s Background Know-how in the Subject Matter of the Order and anything arising from the Order, to utilize the products of the Order, in any field whatsoever, including development, manufacture, marketing and selling of Customer products and/or technology. The license is irrevocable, unlimited in time, transferable to a third party and it is permitted to assign sub-licenses to other parties. 18. Confidentiality Preserving Customer s Information 18.1. The Supplier is liable to the Customer for the protection of the Customer s Know-how described in Clause 17 above, and for its orderly maintenance. 18.2. The Supplier shall maintain the confidentiality of the Customer s Know-how described in Clause 17 above, as well as any information and documents connected to the performance of this Order, that reach him in the course of, or as a consequence of, the performance thereof. The Supplier covenants not to use the said Know-how, documents, or any part thereof, otherwise than for the purpose of this Order. 18.3. The Supplier s attention is directed hereby to Section 118 of the Israeli Penal Code 1977-5737 (hereinafter: "the Penal Code") regarding disclosure in breach of contract and to Section 119 of the Penal Code regarding disclosure in breach of trust and to the fact that breach of the provisions of Sub-clause 18.2 above could constitute an offence under these sections. 18.4. The Customer is authorized, at any time, to give the Supplier instructions regarding security protocol or security arrangements, to ensure the fulfilment of the foregoing. 14
18.5. The Supplier shall bring the foregoing to the attention of each one of his employees, including sub-contractors, and he shall be responsible and liable that they maintain confidentiality as described in this clause. 18.6. The Supplier shall not publish any information and/or detail connected with this Order and/or any document connected to the Order and/or arising therefrom, without receiving the Customer s prior written consent. 19. Information Security 19.1. The Customer reserves the right to direct the Supplier as to the utilization of information security measures and information security controls pertaining to the information that belongs to the Customer and which is in the possession of the Supplier, and/or to which the Supplier has access. The Supplier authorizes the Customer to perform inspections to verify Supplier implementation of the information security as directed by the Customer as noted, at any time, and even without prior notice. 19.2. The Supplier shall correct all the non-compliances with Customer s directions described herein, in as much as such are discovered in the course of these inspections, or upon the Customer becoming aware of such non-compliances in any other way, and this within the time frame stipulated by the Customer. The Supplier will report the corrections he has performed and will receive the Customer s confirmation of his satisfaction regarding the manner in which information security is performed by the Supplier regarding materials of any and every type belonging to the Customer which are in his possession, as abovementioned. 20. Patent and Copyright 20.1. The Supplier declares, that use of the items and/or Know-how developed by him in the course of the Work, do not infringe patent rights and/or copyright and/or trade secrets and/or any other proprietary right of a third party, and that Supplier is the owner or license holder, or that he has all the rights to make use of all the patents and/or copyrights and/or trade secrets and/or any other proprietary right, required for the purpose of performance of the Work and/or the Order. 20.2. The Supplier will compensate the Customer and his clients, on account of any expense and/or damage and/or loss of any and every kind (including legal costs and attorney fees) which they bear as a result of a breach of one or more of Supplier s obligations set forth in Sub-clause 20.1 above. 20.3. The Customer will be entitled to appoint counsel who will conduct his defence in the event of an action against the Customer as set forth in this clause, and the Supplier will bear the costs, including counsels fees. 20.4. The foregoing notwithstanding, the Supplier will assist the Customer at Supplier s expense in any legal proceedings in which the Customer is a party on account of a breach of rights as mentioned in Clause 20. - 15 -
20.5. If, as a result of an action as set forth in this clause, the Customer and/or his clients are prevented from using the Subject Matter of the Order or any part thereof, and/or from being the owner thereof and/or from selling same, the Supplier will act (aside from his other obligations pursuant to these General Terms and Conditions) as follows: He will ensure that the Customer and his clients shall have the right to continue to make use of, possess and sell the Subject Matter of the Order; or will replace the infringing Subject Matter of the Order with an identical Subject Matter of Order, or will change the Subject Matter of the Order so that the use thereof shall not constitute any infringement, and shall compensate the Customer. 21. Open Code Limitations 21.1. The Supplier covenants that the Subject Matter which he will supply to Israel Aerospace Industries, Ltd., will not include any open code software, whether in the product or in its components, and will not be subject to the terms and conditions of an open code license. Moreover, the Supplier covenants, that he will take any action that will cause the Product he is supplying to Israel Aerospace Industries, Ltd., not to be subject to the terms and conditions of an open code license and/or that any Product of the Customer s will not be subject to the terms and conditions of an open code license. 21.2. The foregoing notwithstanding, in any event in which the Supplier wishes to include in a Product a component containing open code he will update the Customer forthwith, and seek Customer s written consent. 21.3. For the purpose of this clause, "Open Code" is software code which is offered as source code and/or code open for general use and/or that the users thereof receive rights of use therein without payment, subject to the terms and conditions of a license. 22. Returning Customer Assets and Know-how 23. Setoff Upon conclusion of performance of the Order or upon cancellation of the Order and/or any part thereof, for any reason, or upon the demand of the Customer, whichever is earlier, the Supplier will return to the Customer, at Supplier s own expense, immediately, all as applicable, at the time and place to be determined by the Customer, and without the Supplier having any right of set-off or lien, all the Customer s property and the Customer s Know-how that were conveyed to Supplier and/or are in Supplier s possession, same being serviceable and in working condition. 23.1. The Customer is entitled to setoff any sum which the Supplier and/or an affiliate company of the Supplier s shall owe the Customer and/or an affiliate company of the Customer s, against any sum that the Customer paid the Supplier and/or an affiliate company of the Supplier s per the Order and/or by virtue of any other agreement and/or by force of law. The Supplier, upon receipt of this Order, hereby waives receipt of a setoff notice. 16
23.2. The Customer is entitled to delay payment of funds to the Supplier, that are credited to the Supplier from time to time in the Customer s account, if the Supplier fails to meet his obligations pursuant to this Order or any other agreement between the Parties. The Customer shall not be obligated to pay o linkage differentials and/or interest as a result of such delay. 23.3. The Supplier will have no right of setoff, lien, mortgage and/or pledge of any kind and ranking, for any reason whatsoever, over the Subject Matter of the Order and/or any part thereof. 24. Prohibition of Assignment of Obligations and/or Rights The Supplier is not entitled to assign the Order, totally or partially, directly or indirectly, to another Supplier, and furthermore, the Supplier is not entitled to sub contract with another supplier pertaining to the performance of the Order, totally or partially, without receiving therefore the Customer s prior written consent. Such consent, if granted, will not create direct contractual relations between the Customer and the other supplier, and the Supplier will remain responsible and liable vis-à-vis the Customer for performance of the Order. In the event that Israel Aerospace Industries, Ltd., approves any subcontract, the Supplier will include, in such subcontract, all the terms and conditions of this Agreement, connected and/or ancillary to the performance of the Order and the manner of such performance, including, but not limited to supervision by the Customer, Order cancellation, non-waiver of rights, preservation of confidentiality, prohibition from using counterfeit components, the Customer s property, information security, patents and copyright, open code limitations and return of Customer property. 25. Tortious Liability 25.1. The Supplier will exclusively bear all the responsibility and liability for any loss and/or expense and/or personal injury and/or damages to property that are caused to the Supplier and/or his employees and/or any other person acting on his behalf and/or to the Customer and/or his employees and/or any third party, on account of any act and/or omission of the Supplier s and/or his employees and/or any other person, including the Customer and/or the Customer s employees, provided that there is a connection and/or link and/or relation between the loss and/or expense and/or personal injury and/or damages to property, as set forth above, and the Supplier s Works and/or the Services per this Order, including on account of the place of performance of the works and/or Services and/or employees and/or anyone on behalf of the Supplier who performs the Services, whether the aforementioned damages were caused as a consequence of the Supplier s exclusive and absolute fault and/or that of his employees, or whether the damages were caused by the fault of the Supplier and/or his employees together with the fault of other entities. All the stipulations in this clause are intended to supplement and not detract from the Supplier s legal liability. 25.2. Even in the event that the Customer delivers to the Supplier hazardous substances and/or hazardous parts and/or in the event that the Subject Matter of the Order requires performance of dangerous work and/or a hazardous process, all the responsibility and liability connected therewith shall apply to the Supplier. - 17 -
25.3. For the avoidance of doubt it is clarified, that the Customer has no duty to compensate the Supplier and/or his employees and/or his agents and/or any third party, on account of any damage caused as a consequence of performance of the Order, and such liability shall apply solely to the Supplier. The Supplier shall indemnify the Customer for any damage that the Customer is forced to bear and/or for any action filed against Customer, and which the Supplier is liable as aforementioned. 25.4. Notwithstanding the above, in any event in which the Customer is sued for damages, on account of damage caused as a consequence of the Subject Matter of the Order, he shall notify the Supplier thereof, who shall assist him in the conduct of the defence. The Supplier covenants to indemnify the Customer for all the expenses of conducting the defence, and to compensate him on account of any sum he is charged to pay, whether pursuant to a judgement or a settlement. 26. Insurance 26.1. In order to secure performance of the Supplier s obligations per Clause 25 above, and without limiting Supplier s legal responsibility and liability and any additional obligation per this Order, the Supplier will insure the Customer s property to its full value, against all risks, at Supplier s own expense, in the event that such property becomes subject to Supplier s control, and/or supervision and/or the control and/or supervision of anyone on his behalf,,. The Customer will be listed as the first loss payee up to the value of his property. The Supplier will moreover insure his liability above with appropriate liability insurances and such insurances shall contain a cross-liability clause. In these insurances, the insured parties, in addition to the Supplier, shall be the Customer, the Customer s employees and the persons acting on his behalf. 26.2. In the event that performance of the Subject Matter of the Order shall obligate the Supplier or his employees or his agents to work on the Customer s premises, the Supplier covenants to insure himself, his employees, his agents, and any third party against any personal injury and/or damage to property that could occur on the Customer s premises, as a consequence of performance of the Subject Matter of the Order as aforementioned. In these insurances, which shall contain a cross-liability clause, the insured parties, in addition to the Supplier, shall be the Customer, the Customer s employees and the persons acting on his behalf. 26.3. Without derogating from the Supplier s responsibility or liability, the Customer is entitled to demand that the Supplier, prior to his entering into any insurance contract as set forth in Clause 26.1 above, obtain the Customer s consent for the amount of the insurance and the remaining terms and conditions of such insurance contract. Moreover, and the generality of the foregoing notwithstanding, the Customer shall be entitled to demand that in the insurance of the Customer s property, the policy shall contain a statement, that all the payments due thereunder shall be paid directly to the Customer. The Supplier will provide to the Customer, at his first demand, the insurance contract and the receipts of payment of the ongoing insurance premiums. 18