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Exhibit 10.2
AGREEMENT
Drawn up and signed 16 March 1999
BETWEEN: Orlite Industries (1959) Ltd. of 2 Ben Gurion St., Nes Ziona
(hereinafter: Orlite)
AND: Export Erez Ltd. of Nes Ziona Industrial Zone, Erez Border
Crossing
(hereinafter: Erez)
WHEREAS Orlite is engaged, among other things, in the production of
helmets and it has know-how and reputation in this field (hereinafter: field of
business);
AND WHEREAS: Erez has know-how of the production of textiles, mainly
military textiles;
AND WHEREAS: the parties wish to cooperate in various projects in the
field of business for overseas bodies;
AND WHEREAS: for the purpose of joint activity the parties have agreed
to draw up an agreement and for this purpose they have agreed to establish a
limited partnership;
AND WHEREAS: the parties wish to determine and to define the nature of
the legal relationship between them in the framework of the provisions of this
agreement;
Therefore the parties have stipulated, agreed and declared as follows:
General
1.1. The preamble and attachments to this agreement form an
integral part of it.
1.2. The headings of the articles of this agreement are for
purposes of convenience only and are not to be considered when
interpreting the agreement.
2. Declarations of the parties: Each of the parties declares and confirms
that:
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Exhibit 10.2
2.1. For its part there is nothing to prevent or limit it according
to any law and/or agreement and/or any other cause from
entering into and executing this agreement.
2.2. The relationship according to this agreement, and performance
of all obligations arising out of it have been approved by all
the authorized bodies and no further consent or approval is
required for the purposes of signing this agreement and
carrying out the obligations arising out of it.
2.3. It has the necessary personnel, infrastructure, production
capacity and equipment in order to perform all its obligations
under this agreement, and any approvals and/or licenses
required, if required, and it fulfills all the necessary legal
requirements for the performance of its obligations under this
agreement.
3. Setting up the limited partnership
3.1. The parties hereby unite in a limited partnership subject to
the conditions described in this agreement.
3.2. The name of the limited partnership will be: Erez - Light, or
any other name approved by the Registrar of Partnerships on
application by the parties (heretofore and hereinafter: the
limited partnership).
3.3. Erez will be the general partner in the limited partnership
(hereinafter: the general partner) and Orlite will be the
limited partner in the limited partnership (hereinafter: the
limited partner).
3.4. The provisions of this agreement comprise the regulations of
the limited partnership, and any change in this agreement is
equivalent to a change in the regulations of the limited
partnership.
3.5. As soon after the signing of this agreement as possible, the
parties will prepare and submit all the documents required to
register the limited partnership. The parties undertake to
sign any document that may be required for the purposes of
registering the limited partnership with the Registrar of
Partnerships.
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Exhibit 10.2
4. The shares of the parties in the limited partnership: The share of each
of the partners in the limited partnership - and without limiting
and/or detracting from the generality of the above, including its
capital, assets, reputation and profits, will be as follows:
a. Party A - Orlite: 50%
b. Party B - Erez: 50%
5. Aims of the limited partnership and areas of its business activity
5.1. The aims of the limited partnership will be as follows:
5.1.1. Executing various projects concerning the manufacture
and marketing of helmets for overseas customers.
5.1.2. Executing various projects as decided by the limited
partnership.
5.1.3. Forming a legal association for all legal intents and
purposes.
5.2. Without limiting and/or detracting from the generality of the
provisions of 5.1 above, the limited partnership may execute
the following: enter into contracts, borrow moneys from any
banking organization in Israel and/or from any person or group
of persons, to purchase and/or to hire equipment and/or means
of any kind required in the performance of its activities, to
employ trained staff and/or sub contractors and/or employees -
insofar as such activities, wholly or in part, are required
for the performance of the business activities of the limited
partnership.
5.3. The parties hereby agree that the limited partnership will be
forbidden to enter into relationships, directly or indirectly,
with customers in Israel, including the Defense Establishment,
and will be forbidden to manufacture for the IDF and the
Military helmets of any kind whatsoever.
6. Management of the limited partnership:
6.1. The affairs of the limited partnership will be managed
according to the instructions and under the supervision of the
board of the limited partnership (hereinafter: the board). The
board will appoint 3 members (hereinafter: the members),
unless the partners decide otherwise.
6.2. Erez may appoint two of the board members. The third member
who will be appointed chairman of the board, will be appointed
by Erez from a list of names drawn up by
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Exhibit 10.2
Orlite. The chairman will have no additional casting vote in
any vote held by the board of the limited partnership.
6.3. Orlite may appoint an observer who will be present at all
board meetings, but will not participate in voting sessions
held there (hereinafter: the observer).
6.4. The board will meet regularly to conduct the affairs of the
limited partnership, at least once every two months.
6.5. A legal quorum at board meetings will be at least two members,
of whom one will be the chairman, or any two members plus the
observer.
6.6. The board will adopt resolutions by a majority of votes of the
members present at a meeting where there is a legal quorum and
when notification of such meeting was received at least 7 days
in advance.
6.7. Notwithstanding the above, resolutions concerning the
following issues will require prior written consent from
Orlite and will not be valid without receipt of such approval:
6.7.1. Bringing a new member into the limited partnership.
6.7.2. Using money and/or assets of the limited partnership
or using its credit otherwise than for the business
of the limited partnership.
6.7.3. Creating liens in favor of a third party, including a
partial lien of a partner.
6.7.4. Acquiring and/or realizing assets of the limited
partnership.
6.7.5. Changing the purposes of the limited partnership.
6.7.6. Changing the form of the association.
6.7.7. Distribution of profits.
6.7.8. Creating an obligation or investment of the limited
partnership in an amount greater than $5,000.
6.8. Erez will propose a person to be appointed as manager of the
limited partnership, and who will be responsible, among other
things, for the daily management of the limited partnership,
for marketing and purchasing. Orlite may require the
replacement of the
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Exhibit 10.2
manager for reasonable cause of failure in his job. The first
manager of the limited partnership will be Mr. Yosef
Postbinder.
7. Business plan
7.1. The basis for the business activity of the limited partnership
will be a business plan to be prepared by the board of the
limited partnership and approved by the limited partnership.
7.2. On the basis of the business plan, the limited partnership
will prepare annual budgets and detailed activity budgets,
including cash flow, to act as the basis of the business
activity of the limited partnership.
8. Undertakings of the parties
8.1. On signing this agreement, each of the parties will place at
the disposal of the limited partnership equipment as specified
in Attachment A to this agreement. After a period of two years
from the signing of this agreement, the limited partnership
will purchase the above equipment from the side that provided
it for payment of its value as determined by an assessor to be
appointed with the agreement of the parties.
8.2. Erez will place at the disposal of the limited partnership
production staff as required for the activities of the limited
partnership and will supervise their work. In return for the
production staff to be provided by Erez as stated, the limited
partnership will reimburse Erez for the cost of these
employees, including the generally accepted social benefits
provided by Erez.
8.3. The limited partnership will conduct its activities in the
offices of Erez and will receive from it office services, free
of charge. The office services will include, among other
things, allocation of rooms for the activities of the limited
partnership. In return for office equipment to be supplied by
Erez and for book-keeping, post, telephone and other such
services, the limited partnership will pay Erez sums to be
agreed between the parties.
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Exhibit 10.2
8.4. In return for the use of production space placed at the
disposal of the limited partnership by Erez, the limited
partnership will pay Erez a sum to be agreed between the
parties, based on the usual price per square meter in Erez
Industrial Zone.
8.5. Erez will bear the costs of the ongoing management of the
limited partnership, marketing costs and costs of maintaining
the limited partnership's production line. Notwithstanding
this provision, it is clarified that the limited partnership
will bear any extraordinary costs involved in marketing and
maintenance (such as participation in shows, producing
brochures and repairing faults involving considerable sums).
8.6. Orlite will allow the limited partnership to make use of its
accumulated know-how in the area of helmet production and will
provide the limited partnership, at is expense, with
professional training, assistance and technical support on all
aspects of the manufacture of the helmets. In addition, Orlite
will be responsible for and will bear the costs of planning
the production line to be set up by the limited partnership.
It is hereby agreed and clarified that all know-how relating
to helmet production which will accumulate with the limited
partnership and/or with the personnel supplied to the limited
partnership by Erez is and will remain at all stages the
exclusive property of Orlite. Erez and/or the limited
partnership will not be entitled to make any use of this
know-how except in the framework of this agreement. It is also
agreed that this undertaking is fundamental to the agreement
and will continue to be valid even if the agreement is
terminated for any reason whatsoever.
8.7. Planning the technical activities of the limited partnership
and examining quotations submitted to the limited partnership
will be carried out by both parties.
8.8. The limited partnership will bear the cost of all payments to
be paid to the sub contractors with which it works. The method
of dividing between the parties the remaining costs of the
limited partnership not expressly determined in this agreement
will be decided between the parties.
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Exhibit 10.2
8.9. Each of the parties will have the right of first refusal for
executing certain works for the limited partnership and/or for
supplying services to the limited partnership, whether
directly or by means of an associate, at the discretion of
that party and at a competitive price, and on condition that
is offer is the best offer for the limited partnership
according to the criteria and regulations to be determined by
the parties, or at most, up to 10% higher than the price of
other offers.
8.10. If the limited partnership is interested in purchasing raw
materials manufactured by Erez, Erez must supply these raw
materials to the limited partnership at cost plus 10%. Erez
will submit to Orlite, at Orlite's request, confirmation from
an accountant concerning the cost prices of the said raw
materials.
9. Investments of the parties
9.1. On its establishment, the limited partnership will open a bank
account in a branch to be determined by the board.
9.2. Any investment in the limited partnership will be effected by
the parties according to the share of each party in the
limited partnership, whether as an investment or as a loan, as
decided by the board.
9.3. On opening the account, each party will place at the disposal
of the limited partnership the sum of NIS50,000 as owner's
loans, linked to the consumer price index, to be repaid within
two years.
9.4. The parties and/or their employees will not be entitled to
debit the limited partnership, to act in its name or to
represent it in any way except according to the provisions of
this agreement and/or with the explicit written and signed
agreement of the parties. In the event that either of the
parties or their representatives act in such a way as to cause
a breach of the provisions of this clause, the party in breach
will compensate the limited partnership or the other party for
any damage or loss or expense arising out of such breach.
10. Distribution of profits of the limited partnership:
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Exhibit 10.2
10.1. The limited partnership will distribute, in each financial
year in which the limited partnership has a profit, only after
repayment of the owners' loans given to the limited
partnership as provided in clause 9.3 above, all the
distributable profits for that year, unless the parties agree
otherwise.
10.2. It is hereby clarified that the cost of manufacturing the
helmets will be determined according to standard production
times for helmets to be agreed between the parties, according
to the actual cost of the raw materials used in helmet
production and indirect and overhead costs as agreed between
the parties. In the event of a disagreement between the
parties on any matter relating to determination of helmet
production costs, each of the sides may ask to have the matter
referred for decision to the offices of Accountant
Somech-Chaikin as sole final arbitrator, and his decision will
be as binding on the parties as an arbitrator's decision. This
arbitration will be subject to the provisions of the First
Addition to the Law of Arbitration, 5728- 1968, but the
arbitrator must decide according to the substantive law and
laws of evidence, and must give reasons for his decision.
11. Limited partners
11.1. Any limited partners will not participate in the management of
the limited partnership or in the management of its business
and will not carry out any legal activity in the name of the
limited partnership.
11.2. Any limited partners will not be responsible for the debts of
the limited partnership over and above the sums they invested
in the limited partnership.
12. Terms of trust and honesty between the parties: The parties will be
frank, open and loyal to each other, will give each other full and true
information on all matters concerning the affairs of v and will avoid
any action against the interests of the company and/or the interests
and/or the good of the other party.
13. Duration of the limited partnership: The parties agree that the limited
partnership between the parties is for an unlimited period.
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Exhibit 10.2
14. Confidentiality: The parties hereby undertake to preserve
confidentiality and not to disclose or reveal in any way, to any person
or other entity any information that it has or will have in its
possession concerning the business of the limited partnership, its
plans or the business of the other party, apart from information that
is already public knowledge. Also, each party to this agreement
undertakes to make every reasonable effort to prevent such information
reaching third parties. This provision will not apply if one party is
required to disclose such information to a qualified authority
according to law. In such case, the disclosing party will inform the
other party.
15. No competition
15.1. Erez undertakes for the period of activity of the limited
partnership and for 3 years thereafter not to engage directly
or indirectly in the field of business as defined in this
agreement, except in the framework of the limited partnership,
and in any similar and/or competing business and/or whose
subject is the aims and business of the limited partnership
and/or to establish and/or to be a partner in the
establishment and/or active management of any entity whose
purposes are the same as those of the limited partnership, as
long as it is a limited partner in the limited partnership.
Notwithstanding the above, Orlite declares that it does not
intend to carry out export deals for helmets, apart from
special cases (such as the export of UHMWPE helmets).
15.2. In order to remove all doubt, it is hereby clarified that
nothing in this agreement is intended to prevent Orlite
engaging in the field of business and in any other activity
that it may decide on outside the framework of the limited
partnership.
16. Absence of employer- employee relationship: There is no employee-
employer relationship between the staff supplied by Erez to the limited
partnership and Orlite, and between each of the parties to this
agreement and the other, or between either of the parties to this
agreement and anyone employed by the other party to the agreement. Each
of the parties is responsible for arranging all matters concerning the
employee-employer relationship between it and its employees. If in
spite of the foregoing,
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Exhibit 10.2
and in opposition to the explicit intention of the parties, it is
determined that Orlite is the employer of Erez employees or of anyone
employed by the limited partnership or acting on its behalf in the
performance of the agreement, Erez undertakes to compensate Orlite
immediately for all costs and damages caused to Orlite for this reason.
17. Dissolution of the limited partnership
17.1. The limited partnership will be dissolved by a resolution
adopted unanimously by all members of the board.
17.2. Without detracting from the right of each party to any remedy
according to this agreement or according to any law, it is
agreed that each party may request the dissolution of the
limited partnership and termination of this agreement in each
of the following circumstances:
17.2.1. If foreclosure is imposed on the share in the limited
partnership of one of the parties, and not canceled
within 90 days.
17.2.2. If a liquidation order is given against one of the
partners, or if one of the partners takes a decision
of voluntary liquidation, unless such voluntary
liquidation is for the purposes of re-organization.
17.3. In the case of dissolution of the limited partnership the
parties will work together to liquidate and divide the assets
of the limited partnership in the most efficient way.
17.4. The parties hereby agree that in the event of dissolution of
the limited partnership as stated, the parties will act
according to the following order of priorities:
17.4.1. The limited partnership will continue to exist for 3
months from the date of the dissolution decision.
17.4.2. A general and full accounting will be made of the
assets, inventory, credits, debits and obligations of
the limited partnership.
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Exhibit 10.2
17.4.3. The assets, equipment and inventory will be realized,
subject to the provision that each party will have
right of first refusal to purchase the equipment and
inventory placed at the disposal of the limited
partnership by the other party.
17.4.4. The debts will be paid, obligations will be released,
and the costs of dissolving the limited partnership
will be paid.
17.4.5. The limited partnership will repay loans given by the
parties and/or either of them.
17.5. Any balance remaining will be divided between the parties
according to their share of the limited partnership.
18. General
18.1. Each party undertakes to indemnify the other party for any
damage caused to it due to any action and/or omission contrary
to the provisions of this agreement.
18.2. The accountant of the limited partnership will be the
Somech-Chaikin Accounting Offices or any other firm, as chosen
by Orlite.
18.3. All the costs of this agreement, including related documents,
stamping and registration of the limited partnership at the
Registrar of Partnerships will be borne by the partners in
equal parts.
18.4. Erez and/or the limited partner will act to obtain the "Sigat"
permits required for producing the helmets.
18.5. This agreement expresses the full agreement between the
parties concerning the subjects and matters dealt with herein,
and it replaces and cancels any exhibit, agreement,
negotiation, procedure, memorandum, statements of principle,
offers, summaries, letters of intention and/or undertakings,
and any other document, unless specifically included in this
agreement or its attachments, or adopted by or referred to in
this agreement or its attachments.
18.6. Any correction, change or addition to this agreement will only
be valid when drawn up in writing and signed by all the
parties to the agreement.
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Exhibit 10.2
18.7. Any notification under this agreement will be in writing and
delivered to its addressee in person or sent by registered
mail to the address in the preamble to the agreement, and then
will be considered to have reached its destination within 72
hours of being handed in for delivery.
IN WITNESS WHEREOF, the parties have set their hands
Orlite Industries (1959) Ltd. Export Erez Ltd.
