EXHIBIT 10.29
DISTRIBUTION AGREEMENT
This agreement ("THIS AGREEMENT") is made and signed as of the day of February,
2000 by and between ON TRACK INNOVATIONS LTD., a company incorporated under the
laws of the State of Israel, having its principal place of business at X.X.X.
X.X., Xxxx Xxxx 00000, Xxxxxx ("OTI") and SAILOR GROUP LIMITED (to be renamed as
OTI ASIA PACIFIC LTD.), a company incorporated under the laws of the British
Virgin Islands having its registered office at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands
("DISTRIBUTOR");
WHEREAS OTI develops and markets various contactless and
contact/contactless smart card products, as described in ANNEX
A hereto, and is in the process of developing certain
additional contactless and contact/contactless smart card
products which may from time to time be included in ANNEX A by
the agreement of the parties hereto (collectively, the "OTI
PRODUCTS"), and OTI is the sole owner of any and all
intellectual property rights in and to the OTI Products; and
WHEREAS The Distributor desires to become a distributor of the OTI
Products in the Territory (as defined below), on an exclusive
basis, and OTI is willing to appoint the Distributor for such
purposes, all subject to the terms and conditions hereinafter
set forth in this Agreement;
NOW, THEREFORE, THE PARTIES HAVE DECLARED, AGREED AND STIPULATED AS FOLLOWS:
CHAPTER A - INTERPRETATION, REPRESENTATIONS, APPOINTMENT & TERM
1. INTERPRETATION
1.1 In this Agreement:
1.1.1 "CUSTOMERS" - means customers (end users) of the OTI
Products in the Territory, whether existing or potential, as
the case may be.
1.1.2 "DOCUMENTATION" - means all documents associated with the
OTI Products including user's manuals and other printed or
visually-perceptible materials describing the use or design
of the OTI Products as supplied by OTI to Distributor for
Distributor's reference and excludes any documents which
accompany the OTI Products for delivery to Customers.
1.1.3 "OTI PRODUCTS" - means as defined in the preamble above.
1.1.4 "MONTH" - means calendar month.
1.1.5 "OTI INTELLECTUAL PROPERTY" - means all of OTI's proprietary
rights, copyrights, patents, Trade Marks or other industrial
or intellectual property rights relating to the OTI Products
and Documentation, and all applications for any of the
foregoing, whether or not registered in the Territory at the
date hereof or at any later date, all as more particularly
defined in the Shareholders Agreement.
1.1.6 "PRICE LIST" - means the price list attached as ANNEX B
hereto, as reviewed by the parties from time to time,
subject to the provisions of Section 7.1 below.
1.1.7 "QUARTER" - means a calendar quarter (i.e., one of the four
periods of three consecutive Months each, beginning on the
first day of January, April, July and October of each Year,
as the case may be).
1.1.8 "SHAREHOLDERS AGREEMENT" - means the shareholders agreement
dated the date hereof and entered into between OTI, the
Distributor and other parties stated therein.
1.1.9 The "TERM OF THIS AGREEMENT" - means as defined in Section 4
below.
1.1.10 "TERRITORY" - means the countries listed in ANNEX C hereto.
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1.1.11 "THIS AGREEMENT" - means this document together with all the
Annexes attached hereto, as may be amended in writing from
time to time in terms hereof.
1.1.12 "TRADE MARKS" - means OTI's trade marks, trade dress and
trade names set forth in ANNEX D hereto, and such other
trade marks as are used by OTI on or in relation to the OTI
Products at any time during this Agreement, whether or not
registered in the Territory.
1.1.13 "YEAR" - means calendar year (save for the first Year of
this Agreement which shall commence on the date of this
Agreement and end on December 31, 2000).
1.2 The headings in this Agreement are inserted for convenience of
reference only and shall not affect its interpretation.
1.3 The Annexes to this Agreement shall form an integral part of this
Agreement.
2. DECLARATIONS
2.1 Distributor hereby warrants and declares to OTI that:
2.1.1 Distributor is a company, duly registered and validly
existing in its jurisdiction of organization.
2.1.2 There is no hindrance, legal, contractual or otherwise, to
Distributor in entering into this Agreement and performing
its obligations hereunder and Distributor has the full power
and authority to (i) own and operate its properties and to
conduct its business as presently conducted and as proposed
to be conducted and (ii) execute, deliver and perform this
Agreement. This Agreement is the legal, valid and binding
obligation of Distributor.
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2.1.3 In relation to this Agreement, no unlawful payments have
been or will be made directly or indirectly to: (i) any
official or employee of any government, agency or other
instrumentality of any government, (ii) any officer,
director, employee or agent of Distributor, (iii) OTI or any
of its divisions, subsidiaries or affiliates, or, (iv) any
person, firm or corporation at the direction of or by
arrangement with OTI or any of its divisions, subsidiaries
or affiliates.
2.2 OTI hereby warrants and declares to Distributor that:
2.2.1 subject to the provisions of Section 3.3 below, it is not
aware of any rights of any third party which would or might
render the sale of and the service relating to the OTI
Products by the Distributor in the Territory unlawful;
2.2.2 to the best of its knowledge the OTI Products (including the
OTI Intellectual Property comprised therein) do not infringe
any third party's intellectual property rights in the
Territory;
2.2.3 notwithstanding the provisions of Section 3 below and
subject to the provisions of Clause 13.2.2 of the
Shareholders Agreement, third parties who entered into an
OEM, private labeling or similar agreements with OTI, if
any, may have rights to sell within the Territory products
based on OTI Intellectual Property; and
2.2.4 it is the beneficial owner of OTI Intellectual Property
which is free from any encumbrances.
3. APPOINTMENT & EXCLUSIVITY
3.1 Subject to the terms and conditions hereinafter set forth, OTI hereby
appoints Distributor as its distributor of the OTI Products in the
Territory for the Term of this Agreement and Distributor hereby accepts
such appointment.
3.2 Subject to the terms and conditions set forth herein and in Clause 13.2
of the Shareholders Agreement, the appointment of the Distributor
hereunder is exclusive and OTI shall not appoint another distributor
for the OTI Products in the Territory during the Term of this
Agreement.
3.3 OTI hereby assigns to Distributor OTI's current distribution network in
the Territory, including the existing dealership and/or distribution
arrangements with entities operating within the Territory, as listed in
ANNEX E hereto, subject to Distributor being satisfied as to the terms
of such arrangements and assignment. It is acknowledged and agreed by
the parties that OTI is currently engaged with an exclusive distributor
in the Philippines, and that the assignment of such distribution in the
Philippines is subject to the consent of OTI's current exclusive
distributor in the Philippines. In the event OTI is not entitled to
make any assignment of any specific distribution agreement pursuant to
the provisions hereof, it shall see to the prompt termination as soon
as possible of such agreement. Any costs relating to any termination of
an existing distribution agreement shall be borne by OTI. Any costs
relating to the assignment of such agreement and employees of such
distributor to the Distributor shall be borne in such manner as may be
agreed by OTI and Distributor.
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4. TERM OF AGREEMENT
Subject to the rights of earlier termination of this Agreement as
provided for herein below and unless otherwise agreed between the
parties in writing, this Agreement will continue as long as the
Shareholders Agreement is in force. (the "TERM OF THIS AGREEMENT").
CHAPTER B - ORDERS & DELIVERY
5. ORDERS
5.1 Subject to the terms and conditions of this Agreement, OTI shall supply
OTI Products to Distributor in accordance with Distributor's orders as
accepted by OTI. The terms of this Agreement shall apply to all orders
notwithstanding any inconsistent terms included therein by Distributor,
unless specifically approved in writing by OTI.
5.2 All orders made by Distributor hereunder shall include details
regarding the quantity ordered, the exact identity (including full
name, business address, telephone and facsimile numbers and name of
contact man) of the entity for which such order is made and such other
details as OTI shall reasonably request. All orders placed hereunder
shall be given priority by OTI as it may reasonably give and be subject
to written confirmation of OTI and no order shall be deemed to have
been accepted unless so confirmed, provided however that OTI shall not
refuse to accept any order without first consulting with the
Distributor. OTI shall be entitled to confirm part of an order.
5.3 In order to enable OTI to plan its sales, Distributor shall provide
OTI, by not later than thirty (30) days following signature hereof a 12
Month rolling forecast of its estimated orders from OTI under this
Agreement (the "FORECAST"). Distributor shall update the Forecast prior
to the beginning of each Quarter of the Term of this Agreement,
provided however, that any Forecast shall be binding in respect of the
first Quarter following its submittal, and Distributor shall not be
entitled to change or update the quantities set forth in such Forecast
in respect of such Quarter, without OTI's prior written consent. In
relation to any certain Quarter, OTI shall not be obliged to supply to
Distributor OTI Products in a quantity exceeding the quantities set
forth for such OTI Product in the Forecast for such Quarter except for
any order which has been accepted by OTI under Section 5.2 above.
5.4 All orders supplied by OTI shall be subject to OTI's general terms of
sale attached as ANNEX F hereto.
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5.5 In the event that any new or modified product is introduced by OTI, OTI
agrees to supply to Distributor for a period of at least two years at
competitive prices such new or modified product which shall be
compatible with and in all material respects conform to the
specifications of the old OTI Product which may have been replaced or
modified by the new or modified product.
6. DELIVERY
6.1 Supply and delivery of the OTI Products shall be made within 60 days
from Distributor's order, if such order was included in the Forecast,
and within 90 days from Distributor's order, if not included in the
Forecast, and the supply and delivery schedules shall be established at
the time of the confirmation by OTI of the relevant order. OTI shall
meet the established supply and delivery schedules.
6.2 Supply of the OTI Products and transfer of risk to Distributor will
occur upon delivery of the OTI Products, Ex Works of OTI's premises.
Title to the OTI Products (subject, for the avoidance of doubt to the
provisions of Section 17.1 below) will transfer to Distributor only
upon receipt by OTI of full price for the OTI Products supplied and
until then OTI will maintain its exclusive ownership of such OTI
Products.
CHAPTER C - CONSIDERATION, AUDIT & TAXES
7. CONSIDERATION
7.1 The Ex Works prices of the OTI Products shall be as set forth in the
Price List and subject to its respective terms and conditions (if any)
as stated therein. OTI and Distributor may from time to time meet,
discuss and review the Ex Works prices of the OTI Products. Unless and
until any change in the Ex Works prices of the OTI Products is agreed
by both OTI and Distributor in writing, they shall remain unchanged
provided always that they shall be comparable to the most favourable
prices given to other distributors of similar OTI Products on similar
terms of purchase in the countries other than the Territory. Similarly,
the Ex Works price of any new product to be introduced by OTI and
included as the OTI Products shall be such price which is comparable to
the most favourable price given to other distributors of similar OTI
Products on similar terms of purchase in the countries other than the
Territory and once it is agreed by the parties, it shall form part of
the Price List.
7.2 Except as otherwise specifically agreed to in writing by the parties,
payment in respect of each order shall be made in United States
dollars. Terms of payment of each order shall be agreed between the
parties on a case by case basis, it being agreed that for material
orders there shall be a reasonable down payment with the order, and the
remaining amount shall be secured by irrevocable letter of credit in a
form acceptable to OTI, confirmed by a bank acceptable to OTI. Payments
for partial delivery shall be allowed. Payment in accordance with the
terms agreed shall be a condition precedent to fulfillment by OTI of
orders received from Distributor.
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8. REPORTS & AUDITS
The provisions of this Section 8 shall apply only to sub-distributors
of Distributor appointed pursuant to Section 13 below. Distributor
shall provide in its agreement with any sub-distributor that the
sub-distributor shall during the term of the agreement with the
sub-distributor and for a period of two Years thereafter:
8.1 keep full, proper and up-to-date separate books and accounts showing
clearly all inquiries, transactions and sales relating to the OTI
Products purchased and sold by it and provide OTI, at OTI's request and
costs, with a copy of such books and accounts;
8.2 permit OTI, at its own expense and at all reasonable times, to inspect
and to have such books and accounts audited by a certified public
accountant, nominated by OTI for such purpose.
The provisions of this Section 8.2 shall survive the termination of the
agreement with the sub-distributor.
9. VAT AND SALE TAXES
Unless otherwise expressly set out in this Agreement, the prices, fees
and other amounts set forth in this Agreement are exclusive of VAT or
other sales tax payable by OTI at the country or place or manufacture,
and to the extent that under any applicable law outside the country or
place of manufacture, VAT or other sales tax shall be payable in
respect of such prices, fees or amounts, such VAT or other sales tax
shall be paid by the Distributor.
CHAPTER D -SUPPORT, TRAINING & WARRANTY
10. UPDATES, SUPPORT, AND TRAINING
10.1 During the Term of this Agreement, OTI shall provide Distributor free
of charge:
10.1.1 updates of the software included in the OTI Products, as
updated by OTI from time to time provided that the provision
of such updates following termination of the Warranty Period
(as defined below), may be subject to payment as determined
by OTI from time to time; and
10.1.2 technical assistance by way of telephone, facsimile or
e-mail.
10.2 Without derogating from the Distributor's undertakings pursuant to
Section 12.3 below, OTI shall further provide to the Distributor, at
the Distributor's request from time to time, and at such prices as set
forth in the Price List, or as otherwise agreed between the parties
from time to time, the following services:
10.2.1 on-site support;
10.2.2 integration of OTI Products to third parties equipment;
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10.2.3 engineering services in relation with the adaptation of
firmware and software included in the OTI Products to
specific applications of the Customers; and
10.2.4 other consulting and added value services, as shall be
agreed between the parties.
10.3 OTI shall further supply free of charge up to 15 training days for
Distributor's staff, with regard to their role in the distribution,
marketing and after sales services of the OTI Products. Such training
shall be held in OTI's premises in Israel, or in Distributor's premises
in Hong Kong, as shall be agreed by the parties. The Distributor shall
bear all costs and expenses relating to the travel and accommodation of
OTI's employees for such training.
11. WARRANTY
11.1 OTI hereby warrants the OTI Products will be in good working order and
conform to OTI's official published specifications at the time of their
delivery to Distributor against any defects due to bad design,
workmanship or faulty materials. This limited warranty is given to
Distributor only (as opposed to Customers) and shall not cover any
failure of the OTI Products due to: (i) any accident, abuse or
misapplication and/or modifications which have been made to the OTI
Products by anyone other than OTI or Distributor; (ii) any use in an
environment not as prescribed in OTI's official published
specifications at the time of their delivery to Distributor; or (iii)
any usage in excess of the maximum values (temperature limit, maximum
voltage etc.) defined in OTI's official published specifications, or
other relevant specifications of OTI at the time of their delivery to
Distributor; or (iv) any other default not attributable to OTI. Such
warranty shall be valid for 12 Months of the date of delivery of the
OTI Products to Distributor (the "WARRANTY PERIOD"). Subject to
Sections 2.2 above and 17 below, the warranty and remedies set forth
herein are exclusive and except for and to the extent expressly
provided herein and in the OTI's general terms of sale attached hereto,
OTI makes no other or additional warranty or representation, either
expressed or implied, with respect to the use or performance of the OTI
Products, including its quality, performance, merchantability or
fitness for a particular purpose and that all other warranties given or
implied by any applicable law including any warranty given to Customers
by Distributor, shall be the sole responsibility of Distributor,
without recourse to OTI.
THE FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, CONDITIONS
OR TERMS EXPRESS OR IMPLIED BY STATUTE OR COMMON LAW.
11.2 OTI may extend the Warranty Period in relation to the OTI Products, for
additional periods of 12 Months each, subject to payment to OTI of such
amounts as shall be determined by OTI in OTI's Price List (ANNEX B).
11.3 Subject to Sections 2.2 above and 17 below and OTI's general terms of
sale attached hereto, the parties hereby expressly agree that the
liability of OTI on the use or performance of the OTI Products will be
limited to the repair or replacement (including the cost of return) of
the OTI Products or, at OTI's choice, return of their price, and that
OTI will bear no other liability toward Distributor, Customers, or any
third party for any indirect, consequential, incidental, punitive,
special or exemplary damages or losses arising out of the use or
performance of the OTI Products, even if it has been advised of the
possibility thereof.
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CHAPTER E -MARKETING, SUB DISTRIBUTION, MANUFACTURING RIGHTS
12. MARKETING AND AFTER SALES SERVICE
12.1 Distributor hereby undertakes to use its best endeavors to promote the
sale of the OTI Products throughout the Territory.
12.2 It is hereby agreed and recorded that Distributor acknowledges OTI's
policy to provide Customers with good and efficient after sales
services, in order to keep Customers satisfied with the OTI Products
and enable them to properly and efficiently use the OTI Products as
well as to receive all updates and new versions of the OTI Products.
12.3 Distributor shall be solely responsible for providing installation,
integration, support and maintenance services to the Customers in
respect of the OTI Products, by sufficiently competent and experienced
staff, and for satisfying the requirements of the local licensing
authorities pertaining to after sales service.
13. APPOINTMENT OF SUB- DISTRIBUTORS
13.1 Distributor shall be entitled to appoint sub-distributors for the OTI
Products in the Territory, provided however that each sub-distributor
shall have signed and delivered to OTI an undertaking towards OTI in
the form attached as ANNEX G hereto prior to any engagement in the
distribution of OTI Products. Such undertaking shall contain:
13.1.1 a confidentiality undertaking by the sub-distributor in the
form included in ANNEX G;
13.1.2 the sub-distributor's agreement to the provisions of
Sections 8 and 11 above and Sections 13.2, 15.2, 16, 17, 19
and 22 below, to act in accordance therewith, and that such
provisions may be enforced against it directly by OTI;
13.1.3 the sub-distributor's agreement that termination of this
Agreement, for any reason, shall cause the immediate
termination of any agreement between the Distributor and the
sub-distributor in respect of the OTI Products;
13.1.4 the sub-distributor's agreement that, in any event, OTI
shall not be deemed to have any direct contractual
relationship with such sub-distributor, and such
sub-distributor shall not have any claim or demand or any
other right towards OTI in any matter whatsoever.
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13.2 The Distributor agrees that OTI shall be entitled to request
Distributor to terminate, the engagement of any sub-distributor of the
OTI Products, by Distributor sending a 60 days prior written notice to
such effect to the sub-distributor.
13.3 The Distributor shall not be liable per se to OTI for wrongful acts of
any sub-distributor.
14. MANUFACTURING RIGHTS
14.1 Following January 1, 2001, Distributor shall have the right, by sending
a written notice to OTI to that effect (the "MANUFACTURING RIGHTS
NOTICE"), to manufacture (or subcontract for manufacture) smart cards
(for example, the plastic of the multi-card and antennae, if required)
("SMART CARDS") utilising any or all of OTI Intellectual Property, to
the extent it relates to such manufacture, for sale of the Smart Cards
within the Territory (the "MANUFACTURING Rights"). The Manufacturing
Rights shall be subject to the use and embeddment in the Smart Cards of
any one or more of OTI's modules supplied by OTI (such as those set out
in ANNEX A as the Smart Card Modules). The Manufacturing Rights shall
be exclusive to Distributor in the Territory and shall continue during
the Term of this Agreement but shall not in any way limit OTI's right
to manufacture OTI Products in the Territory which are sold in or
imported into areas outside the Territory. For avoidance of doubt,
Distributor shall not be entitled at any time to receive Manufacturing
Rights of the OTI modules included in the Smart Cards.
14.2 Within thirty (30) days following receipt by OTI of the Manufacturing
Rights Notice, OTI will deliver to Distributor such information, which
is necessary for Distributor to manufacture the Smart Cards. Subject to
the Manufacturing Rights granted to Distributor herein, all right,
title and interest in all OTI Intellectual Property in the Smart Cards,
including without limitation, the OTI modules embedded in the Smart
Cards, shall at all times remain the property of OTI.
14.3 For the purpose of manufacturing the Smart Cards, Distributor shall
purchase from OTI, and not from any other third party, modules to be
included in the Smart Cards, for the prices of such modules set forth
in the Price List.
14.4 In the event that Manufacturing Rights shall be granted hereunder, OTI
shall have the right to order at any time from Distributor, or, in the
event that Distributor elects to exercise the Manufacturing Rights by a
sub-contractor, to order directly from such sub-contractor, Smart Cards
for sale by OTI or by its other distributors, while abiding
Distributor's exclusive distribution rights in this Agreement, at
prices which shall not be higher than the most favorable prices granted
by Distributor (or such sub-contractor of the Distributor) to Customers
for similar volume of Smart Cards at the time. Distributor shall abide
by such OTI orders, subject to reasonable payment terms and delivery
schedule to be agreed.
14.5 For grant of the Manufacturing Rights hereunder OTI shall be entitled
to such reasonable royalties at such rates not exceeding market rates
for similar Smart Cards and as shall be agreed between the parties at
the time of grant of the Manufacturing Rights.
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CHAPTER F- NON COMPETITION & ADDITIONAL UNDERTAKINGS OF DISTRIBUTOR
15. NON COMPETITION
Distributor undertakes as follows:
15.1 during the Term of this Agreement and for a period of one (1) year
after its termination for any reason whatsoever it shall not, without
OTI's prior written approval, sell, promote the sale, distribute,
manufacture or develop, or represent or agree to represent in the
Territory any third party in respect of any products competing with or
similar to the OTI Products, or technologies competing with or similar
to OTI Intellectual Property save and except pursuant to this Agreement
and the Shareholders Agreement;
15.2 during the Term of this Agreement and subject to the provisions of
Section 14 above, not to obtain or otherwise purchase OTI Products for
resale from any person, firm or company, other than OTI; and not to
market or sell OTI Products not directly purchased from OTI.
15.3 During the Term of this Agreement, it will not seek customers,
establish any branch or maintain any distribution depot for the OTI
Products in any country which is outside the Territory or perform a
sale of OTI Products in the Territory knowing that the products shall
be sold out of the Territory without obtaining OTI's prior written
consent.
16. ADDITIONAL UNDERTAKINGS OF DISTRIBUTOR
16.1 Distributor hereby undertakes, at its sole cost and expense and during
the Term of this Agreement:
16.1.1 to comply with all legal requirements from time to time
relating to the importation, distribution and sale of the
OTI Products in the Territory and shall, without limitation,
obtain from the relevant local authorities in the Territory
any and all licenses, permits and/or approvals, necessary or
required, in order to import, distribute and service the OTI
Products, maintain and renew such licenses, permits and/or
approvals in full force and effect and otherwise fulfill its
undertakings in accordance with the provisions of this
Agreement;
16.1.2 to provide OTI within 30 days from signature hereof the
Distributor's price list of OTI Products to Customers, and
to provide to OTI any amended price list at least 30 days
prior to effective date of such amendment;
16.1.3 to provide OTI, on a regular basis, with Customers'
"feedback" on the OTI Products and their use and from time
to time consult with OTI's representatives for the purpose
of assessing the conditions of the market for the OTI
Products in the Territory;
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16.1.4 to refrain from any act or omission which might be
detrimental to OTI's name and reputation, and to provide the
Customers with fair and efficient service relating to the
marketing, sale and after sales service of the OTI Products.
16.2 During the Term of this Agreement, Distributor shall not, without
obtaining OTI's prior written consent:
16.2.1 incur any liability whatsoever on behalf of OTI, or in any
way bind or purport to bind OTI;
16.2.2 solicit any customer which is outside the Territory and
shall promptly refer to OTI all inquiries concerning the OTI
Products received by it from such customers.
CHAPTER G - OTI INTELLECTUAL PROPERTY & CONFIDENTIALITY
17. OTI INTELLECTUAL PROPERTY
17.1 Distributor recognizes and acknowledges that all of OTI Intellectual
Property, including without limitation, all updates and new versions,
improvements and development, belong solely to OTI which is and shall
remain its sole owner, and it is hereby expressly agreed that nothing
in this Agreement shall constitute or be considered as constituting a
transfer or license of OTI Intellectual Property or any part thereof by
OTI to Distributor. The provisions of this Section shall survive the
termination of this Agreement. For avoidance of doubt it is clarified
that the sale of OTI Products constitutes a worldwide royalty-free and
perpetual license to use the OTI Intellectual Property comprised in
such OTI Products for only such purpose for which such OTI Products
were purchased by Distributor and/or Customers.
Distributor shall not challenge OTI's Intellectual Property rights in
any way, including without limitation, by filing to any court, patent
or other authority, a claim, opposition or request for cancellation
against such rights.
17.2 Distributor shall sell the OTI Products under such trade names and
using such trade marks as shall be agreed between the parties from time
to time; it being agreed that the Trade Marks shall appear on the OTI
Products, in the manner as shall be agreed between the parties, from
time to time. Distributor shall adhere to all reasonable instructions
given to it by OTI regarding the use of any of the Trade Marks in such
manner so as to afford reasonable protection of the Trade Marks and
associated goodwill to OTI.
17.3 Distributor shall forthwith notify OTI in writing of any infringement
or threatened infringement, unauthorized use, manufacture or sale,
enjoyment, duplication or replication of the OTI Products and/or OTI
Intellectual Property in the Territory of which it shall become aware
at any time during the Term of this Agreement. In such event OTI shall
be entitled to take any and all legal action it deems appropriate in
order to protect its rights, and the Distributor shall provide OTI, at
OTI's cost and expense, with all reasonable assistance required by OTI
for such purpose.
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17.4 If any of the events under Section 17.3 above occurs and OTI does not
take any legal action promptly upon notification by Distributor
thereunder, Distributor may notify OTI that it wishes to take legal
action on its part and to join OTI with Distributor in taking steps to
end such infringement or act including legal proceedings in the
parties' joint names. The parties may agree, in writing, as to the
steps and proceedings to be taken and the proportions in which they
shall share the costs thereof. Failing such agreement, each party shall
be free to act independently provided it shall notify the other party,
from time to time of the steps to be taken by it. Irrespective of the
failure to reach such agreement each party shall give the other party,
at the other party's request and costs, all reasonable assistance
required by such other party in respect of the legal steps taken by it.
In the event of joint proceedings being taken and damages being awarded
in favour of OTI and Distributor, the costs of the proceedings so far
as not recoverable in the proceedings shall be shared by the parties in
the same proportion as they are awarded damages.
17.5 Where the parties differ in their view as to the advisability of
instituting legal proceedings either party may call for a joint case to
be put to legal counsel well versed in the laws of the country by which
any legal proceedings will be determined and also legal counsel well
versed in the laws of the country in which the infringement is alleged
and they shall cooperate to provide counsel promptly with all relevant
ascertainable facts and, where appropriate, a technical expert's
opinion on the matter. In such event the parties agree to act according
to the advice of such legal counsel.
18. CONFIDENTIALITY
18.1 Each party hereby undertakes towards the other party to hold as fully
confidential and not to disclose to others, and not to use, directly or
indirectly, any and all Confidential Information of such other party,
including without limitation, trade secrets, strategic plans and price
calculations. For the purposes hereof "Confidential Information" shall
include but not be limited to all information marked by a party as such
but shall exclude all information which was already or became public
knowledge through no fault of the using party.
18.2 Not later than the date of signature hereof, the parties shall have
signed and executed the confidentiality agreement in a form attached as
ANNEX H hereto, which signature and execution is a condition precedent
to the coming into force of this Agreement.
18.3 Distributor shall require each of its employees and/or agents employed
in providing services in relation to the OTI Products to execute an
undertaking of confidentiality, in a form approved by OTI, and
incorporating, inter alia, the provisions of this Section 18 and of
Section 17.1 above.
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CHAPTER H - INSURANCE & FORCE MAJEURE
19. INSURANCE
19.1 Distributor shall maintain at its own expense, and shall provide OTI,
at OTI's request, with insurance certificates showing, coverage for
general liability and for product liability, having reasonable terms
commonly acceptable in similar cases, insuring against claims arising
out of or related to this Agreement and Distributor's activities
pursuant to fulfilling its undertakings in accordance with the terms of
this Agreement. Each policy shall be maintained with an insurance
carrier acceptable to OTI and shall provide that it may not be
cancelled or modified without at least thirty (30) days prior written
notice from the insurance carrier to both parties at their respective
addresses.
19.2 Each party agrees to promptly notify the other of any and all product
liability claims within the Territory relating to the OTI Products
coming to its attention.
20. FORCE MAJEURE
Neither party shall be responsible or liable for any delay or failure
in performance under this Agreement arising as a result of any
occurrence or contingency beyond its reasonable control, including but
not limited to, accident, act of God, acts of the public enemy,
earthquake, fire, flood, explosion, labor disputes, strikes, riots,
civil commotion, war (declared or not), requirements or acts of any
government or agency thereof, and failure or delays in transportation.
The delayed party shall send written notice of the delay and the reason
therefor to the other party as soon as possible after the party delayed
knew of the cause of delay in question. If, however, a circumstance of
Force Majeure continues over an uninterrupted period of more than three
Months, then the party against which Force Majeure has been invoked has
the right, if no other agreement is reached before the end of such
three Month period, to forthwith terminate this Agreement by delivering
to the other party a written notice to that effect.
CHAPTER I- TERMINATION AND REMEDIES
21. TERMINATION AND REMEDIES
21.1 Without prejudice to any remedy or right of either party under this
Agreement or by law, either party shall have the right to forthwith
terminate this Agreement by serving the other party with a written
notice to that effect if:
21.1.1 the other party commits a breach of its obligations under
this Agreement and, in the event such breach is other than
the violation of or non-compliance by a party of the
provisions of Section 23, fails to remedy such breach within
30 days after receipt of a written notice from the
non-defaulting party describing such failure, in whole or in
part, will entitle the other party to forthwith terminate
this Agreement save and except where Distributor fails to
pay any price for OTI Products which has become due in
accordance with this Agreement, OTI may forthwith terminate
this Agreement upon giving Distributor not less than 7 days'
prior written notice; or
13
21.1.2 the other party is placed into liquidation, insolvency or
other similar proceedings or a liquidator or receiver is
appointed with respect to the other party or a substantial
part of its assets or the other party makes any voluntary
arrangement with its creditors.
21.2 Upon termination of this Agreement for any reason and without prejudice
to any remedy or right of either party accrued prior to such
termination under this Agreement or by law, the following provisions
shall apply:
21.2.1 the Distributor shall cease to market and sell the OTI
Products and shall return to OTI all Documentation relating
to the OTI Products then in possession of the Distributor;
21.2.2 the Distributor shall, at OTI's request (if made within one
month), resell to OTI or to its order all inventory of OTI
Products (or any part thereof requested by OTI) then in
possession of the Distributor for the price at which they
were purchased from OTI in terms hereof and any OTI Products
then in possession of the Distributor not resold to OTI
pursuant to this Section may be sold by Distributor to any
third party in the Territory at any time; and
21.2.3 if OTI shall be the terminating party pursuant to this
Section 21, all Manufacturing Rights shall expire at the
date of such termination, and if Distributor shall be the
terminating party pursuant to this Section 21, all
Manufacturing Rights shall expire at the termination of a
six month period commencing upon such termination of this
Agreement or such shorter period as may from time to time be
notified by Distributor to OTI, all without prejudice to
OTI's right to receive royalties in respect of the Smart
Cards manufactured under the Manufacturing Rights,
Provided that notwithstanding any such termination of this Agreement
and/or expiration of the Manufacturing Rights,
(i) Distributor shall be entitled to retain any inventory
of OTI Products and Documentation and/or order and
purchase any additional OTI Products from OTI and/or
manufacture Smart Cards in order to meet any
outstanding commitments, obligations or arrangements
to or with Customers or relating to any projects; and
(ii) in relation to such outstanding commitments,
obligations or arrangements, the parties shall also
to the extent permissible attempt to negotiate in
good faith with the Customers a novation thereof on
terms mutually satisfactory to the parties and the
Customers whereby OTI may assume the obligation to
supply OTI Products to and/or manufacture Smart Cards
direct for Customers and Distributor be fully
discharged from such supply to or manufacture for
Customers.
21.4 Any amount owed by one party to the other which is not timely paid
shall bear default interest at the rate of LIBOR plus 3% (for 6 Month
loans) for the period of default.
14
CHAPTER J- MISCELLANEOUS
22. NO AGENCY
22.1 OTI and Distributor are acting hereunder as independent contractors and
it is hereby expressly declared and agreed that this Agreement in no
way establishes any principal - agent, employer - employee, or
partnership relationship between the parties.
22.2 Nothing in this Agreement shall be construed as granting either party
the right, power or authority to act for or on behalf of the other
party, to create any undertakings on behalf of the other party, or to
bind or commit the other party in respect to any such undertakings,
except as set forth herein or as otherwise agreed to in writing between
the parties prior to such act.
23. ASSIGNMENTS
23.1 In Section 23.2 below, a person shall be deemed to have "EFFECTIVE
CONTROL" of the Distributor if he exercises, or is able to exercise or
is entitled to acquire, control, whether direct or indirect, over the
Distributor's affairs, and in particular, but without prejudice to the
generality of the above, if he possesses, or is entitled to acquire, or
control the voting of at least 50% of the outstanding share capital or
voting power in the Distributor. Where two or more persons together
satisfy such condition, they shall be taken to have together Effective
Control of the Distributor.
23.2 The appointment of the Distributor under this Agreement is personal,
and except as provided under this Agreement, the Distributor may not
assign or otherwise transfer or pledge its rights and undertakings
under this Agreement without the prior written consent of OTI; any
assignment for which consent was not obtained will not be considered
valid. A transfer in Effective Control of the Distributor shall be
deemed an assignment of rights and undertakings under this Section.
23.3 OTI may assign its rights under this Agreement, by serving a written
notice to the Distributor.
24. LAW AND JURISDICTION
24.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of England. Each party hereto irrevocably
agrees that the courts of Hong Kong shall have non-exclusive
jurisdiction to hear and determine any suit, action or proceeding, and
to settle any disputes which may arise out of or in connection with
this Agreement and for such purposes irrevocably submits to the
non-exclusive jurisdiction of such courts.
24.2 Nothing contained in this Section 24 shall limit the right of any party
hereto to take legal or other proceedings against any other party in
any court of competent jurisdiction, nor shall the taking of
proceedings in one or more jurisdictions preclude the taking of
proceedings in any other jurisdiction, whether currently or not to the
extent permitted by the law of such other jurisdiction.
15
24.3 OTI hereby appoints FIRMLEY COMPANY LIMITED of21st Xxxxx, Xxxxxxxxx
Xxxxx , Xxx Xxxxxxxx, Xxxxxxx, Xxxx Xxxx (Attention: MR. XXXX XXXX) and
Distributor hereby appoints XXXXXX KONG CAPITAL LIMITED of12th Floor,
Xxxxxx Kong Center, 0 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx (Attention: XX.
XXX XXXX XXX) respectively as its agent to receive and acknowledge on
its behalf service of any writ, summons, order, judgment or other
notice of legal process in Hong Kong. If for any reason any agent named
above (or its respective successor) no longer serves as agent of its
principal for this purpose the relevant party shall promptly appoint a
successor agent and notify the other parties hereto thereof. Each party
agrees that any such legal process shall be sufficiently served on it
if delivered to its agent for service at its address for the time being
in Hong Kong whether or not such agent gives notice thereof to its
principal.
25. WHOLE UNDERSTANDING AND AMENDMENTS
25.1 This Agreement and the Annexes hereto constitute the entire
understanding of the parties and supersede all oral or written
representations or agreements, privileges or understandings between the
parties.
25.2 This Agreement may only be modified by an agreement in writing duly
signed by both parties hereto, or their respective successors or
assignees.
26. SEVERABILITY
If any condition, term or covenant of this Agreement shall at any time
be held to be void, invalid or unenforceable such condition, covenant
or term shall be construed as severable and such holding shall attach
only to such condition, covenant or term and shall not in any way
affect or render void, invalid or unenforceable any other condition,
covenant or term of this Agreement, and this Agreement shall be carried
out as if such void, invalid or unenforceable term were not embodied
herein.
27. WAIVER
The failure at any time of either party to enforce any of the terms or
conditions or any right or to exercise any option of this Agreement,
will in no way be construed to be a waiver of such terms, conditions,
rights or options, or in any way to affect the validity of this
Agreement.
28. NOTICES
Any notice authorized or required to be given in accordance with the
terms of this Agreement, may be given by facsimile, (with receipt of
proper transmission) or by registered or certified mail. Such notice
shall be deemed properly given two business days after having been sent
by facsimile and ten days after being posted by registered or certified
mail to the address of the parties listed below:
16
If to OTI: X.X.X. X.X., Xxxx Xxxx 00000, Xxxxxx
fax: 00-000-0-0000000
Attention: Xx. Xxxxxx Xxxxxx
If to Distributor: x/x Xxxxxx Xxxx Xxxxxxxxxxxxxx Xxxxxxxx Xxxxxxx,
00/X, Xxxxxx Xxxx Center,
0 Xxxxx'x Xxxx Xxxxxxx,
Xxxx Xxxx
fax: (000) 0000 0000
Attention: Xx. Xxx Xxxx Xxx
IN WITNESS WHEREOF, THE PARTIES HAVE SET THEIR SIGNATURES AS OF THE DAY FIRST
ABOVE WRITTEN AND HAVE HEREBY CAUSE THIS AGREEMENT TO BE EXECUTED.
------------------------- ---------------------------------
On Track Innovations Ltd. Sailor Group Limited
(to be renamed OTI Asia Pacific Ltd.)
17
LIST OF ANNEXES
A OTI Products
B Price List
C Territory
D Trade Marks and Trade Names
E Current Distribution Network
F General Terms of Sale
G Sub-distributor's undertaking
H Mutual Confidentiality Agreement
18
AGREEMENT BETWEEN OTI AND OTIP
DATED FEBRUARY 2000
ANNEX A
OTI PRODUCTS
This Annex is based on the products that are available in January 2000 . The
Annex will be updated once every 6 month commencing 1 January 2000.
SMART CARD MODULES:
------------------------------------ ----------------------------------
Type Memory Capacity
------------------------------------ ----------------------------------
Contactless Only 1K
------------------------------------ ----------------------------------
4K
------------------------------------ ----------------------------------
8K
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Contact & Contactless 1K
------------------------------------ ----------------------------------
4K
------------------------------------ ----------------------------------
8K
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Antenna Module 1K
------------------------------------ ----------------------------------
4K
------------------------------------ ----------------------------------
8K
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Multi Antenna Module 1K
------------------------------------ ----------------------------------
4K
------------------------------------ ----------------------------------
8K
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Wrist Watch Module 1K
------------------------------------ ----------------------------------
4K
------------------------------------ ----------------------------------
SMART CARDS:
------------------------------------ ----------------------------------
Contactless Only 1K
------------------------------------ ----------------------------------
4K
------------------------------------ ----------------------------------
8K
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
MultiCard 1K
------------------------------------ ----------------------------------
4K
------------------------------------ ----------------------------------
8K
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Combination Module Card 1K
------------------------------------ ----------------------------------
4K
------------------------------------ ----------------------------------
8K
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Uni Card 1K
------------------------------------ ----------------------------------
4K
------------------------------------ ----------------------------------
8K
------------------------------------ ----------------------------------
19
------------------------------------ ----------------------------------
Power Card 1K
------------------------------------ ----------------------------------
4K
------------------------------------ ----------------------------------
8K
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Wrist Watch 1K
------------------------------------ ----------------------------------
4K
------------------------------------ ----------------------------------
READERS & ACCESSORIES:
[ ] SCI 5 OEM Board
[ ] Int5
[ ] Host Reader
[ ] Multi reader
[ ] XXX for Reader
SOLUTIONS:
[ ] Gasoline Management Solution
[ ] Medical Application Solution
[ ] E-purse for closed campus
20
AGREEMENT BETWEEN OTI AND OTIP
DATED FEBRUARY 2000
ANNEX B
PRICE LIST
---------------------------------------------------------- --------------------------------------------------------
PRODUCT PRICE IN US$ (EX FACTORY)
---------------------------------------------------------- --------------------------------------------------------
---------------------------------------------------------- --------------------------------------------------------
---------------------------------------------------------- --------------------------------------------------------
---------------------------------------------------------- --------------------------------------------------------
---------------------------------------------------------- --------------------------------------------------------
SPECIFIC TERMS
Prices of OTI Products shall be comparable to the most favorable prices given to
other distributors of similar OTI Products on similar terms of purchase in
countries other than the Territory ("MFC TERMS").
PRICE OF SERVICES (SECTION 10.2)
To be determined by agreement of the parties on a case by case basis on MFC
Terms
ADDITIONAL WARRANTY CHARGE (SECTION 11)
To be determined by agreement of the parties on a case by case basis but in no
event more than 12% of price to customer. Additional warranty shall relate only
to Reading Devices
21
AGREEMENT BETWEEN OTI AND OTIP
DATED FEBRUARY 2000
ANNEX C
TERRITORY
1. China
2.
Hong Kong
3. Taiwan
4. Singapore
5. Xxxxxxxxx
0. Xxxxx Xxxxx
7. Japan
8. The Philippines
9. Malaysia
10. Indonesia
11. Thailand
12. India
13. Vietnam
14. New Zealand
22
AGREEMENT BETWEEN OTI AND OTIP
DATED FEBRUARY 2000
ANNEX D
TRADE MARKS
TRADEMARKS Trademark applications have been filed in Israel for the name "OTI"
"Easy Park(TM)" and the xxxx "EYECON(TM)" as well as "OTI Insight". The Company
is filing priority applications for use of these trademarks in the United States
and Europe.
Table I:OTITM
--------------------------------------------------------------------------------------------------------
APPLICATION Registered
COUNTRY NUMBER DATE NUMBER DATE STATUS
--------------------------------------------------------------------------------------------------------
USA Registered
--------------------------------------------------------------------------------------------------------
Table II: Easy ParkTM
--------------------------------------------------------------------------------------------------------
APPLICATION Registered
COUNTRY NUMBER DATE NUMBER DATE STATUS
--------------------------------------------------------------------------------------------------------
Canada 72844-84 854249 12/8/99 Granted
--------------------------------------------------------------------------------------------------------
23
AGREEMENT BETWEEN OTI AND OTIP
DATED FEBRUARY 2000
ANNEX E
CURRENT OTI'S DISTRIBUTION AND DEALERSHIP NETWORK IN THE TERRITORY
----------------------------------------------------- ---------------------------------------------------
Country DISTRIBUTOR
----------------------------------------------------- ---------------------------------------------------
China OTI China Ltd.
----------------------------------------------------- ---------------------------------------------------
Hong Kong City Smart Ltd.
----------------------------------------------------- ---------------------------------------------------
Philippines E.L. Enterprises
----------------------------------------------------- ---------------------------------------------------
South Korea Focus Ltd.
----------------------------------------------------- ---------------------------------------------------
India Pace Automation
----------------------------------------------------- ---------------------------------------------------
Indonesia PT. Triomega
----------------------------------------------------- ---------------------------------------------------
Taiwan Innovision Ltd.
----------------------------------------------------- ---------------------------------------------------
24
AGREEMENT BETWEEN OTI AND OTIP
DATED FEBRUARY 2000
ANNEX F
GENERAL TERMS & CONDITIONS OF SALE OF OTI
1. ORDERS, PRODUCTS AND SOFTWARE*
Unless otherwise stated in a written agreement signed by
On Track
Innovations Ltd. (hereafter called "VENDOR"), the terms and conditions
herein shall apply to sales made by the Vendor. Notwithstanding
anything to the contrary stated in Buyer's conditions of purchase,
Buyer agrees that Vendor's acceptance in writing or by electronic mail
or by EDI (when either system has been agreed by Vendor for the
purposes hereof) of Buyer's order constitutes Buyer's acceptance of the
conditions set out herein. Where Software is supplied by Vendor to
Buyer, whether or not in combination with products, Buyer acknowledges
that use of that Software is governed by Vendor or third party software
license terms and conditions applicable to that software. All the
conditions herein included shall also apply to the supply of Software
so long as they are not inconsistent with the applicable third party
software license terms and conditions.
2. PRICE AND PACKAGING
The price is Ex-Works, excluding any applicable tax, customs duty
and/or levy imposed by any public authority in the Territory, for which
Buyer shall be liable directly and additionally be liable to pay to
Vendor if Vendor has made payment. The cost of non standard packaging
is not included. Reasonable instructions of the Buyer concerning non
standard packaging, weight and customs shall be abided by Vendor
provided that Buyer has given precise instructions with reasonable
prior notice. The corresponding additional costs shall be charged to
Buyer.
3. DELIVERIES
3.1 In the event of any default by Buyer, Vendor may decline to make
further shipments or may elect to continue to make shipments
notwithstanding such default.
3.2 Orders accepted by the Vendor are firm and non cancellable by the Buyer
except (1) upon Vendor's default which shall not have been corrected
within 7 days from Buyer's notice to such effect and shall be subject
to appropriate indemnification by Vendor for costs and loss of profit
incurred by Buyer or (2) upon Vendor's written agreement, which shall
only be considered on a case by case basis and shall be subject to
appropriate indemnification by Buyer for costs and loss of profit
incurred by Vendor.
25
3.3 Any claim regarding non-conformity of product with specifications will
be accepted by Vendor only if each of the following three conditions
have been met:
3.3.1 The Buyer's claim must be submitted in writing to Vendor
within nine months after the delivery date. After such
nine-month period has expired, all products shall be deemed
accepted. After submitting the claims to Vendor, Buyer shall
return the whole batch of non-accepted products. Each
allegedly non-conforming batch of products must be accompanied
by a written statement of the Buyer containing the precise
reason for rejection and the corresponding test report and
proof of purchase,
3.3.2 The return must be made at the Buyer's cost which shall be
reimbursed by the Vendor if the Buyer's claim is justified;
and
3.3.3 Products must not have been modified by the Buyer.
4. PRODUCTS SPECIFICATIONS
Specifications for products shall be Vendor's specifications as
existing in the official published data sheet at the time of the order
acknowledgment, except if particular specifications are given by Buyer
and accepted by Vendor.
Except as otherwise specifically agreed in writing by Vendor, Vendor
reserves the right to change at any time the specifications of any
product manufactured by Vendor (including all statements and data
appearing in Vendor's catalogues, data sheets and advertisements) with
30 days' prior written notice to Buyer which shall then be applicable
to products thereafter purchased from Vendor.
5. RESERVATION OF TITLE
TITLE IN THE PRODUCTS SHALL REMAIN WITH VENDOR UNTIL IT HAS RECEIVED
FULL PAYMENT FOR SUCH PRODUCTS NOTWITHSTANDING DELIVERY TO BUYER. Upon
Buyer's failure to make payment by the due date, Vendor may take back
possession of the products delivered and to that end, Buyer hereby
grants Vendor or anyone designated by him access to the premises where
the products are stored.
6. WARRANTY
Vendor's products are not designed nor are they authorized for use in
life supporting devices or systems. Vendor expressly disclaims any
responsibility for such usage which shall be made at Buyer's sole risk,
even if Vendor has been informed in writing of such usage.
26
7. INTELLECTUAL PROPERTY RIGHTS
In the event that a third party makes a claim alleging that products
delivered to Buyer infringe such third party's intellectual property
rights, Vendor undertakes at its option and charge to defend the claim
or seek a compromise; if an unfavorable and final judgment is rendered
against Vendor, it shall at its option take out a license from the
above mentioned third party or shall modify the products in such a way
as to avoid infringement. If such a solution shall be impracticable for
economic and/or technical reasons, Vendor shall accept the return of
the products supplied and shall indemnify and keep indemnified Buyer
and any customer of Buyer from all reasonable loss, liability, damage
and claim made by any third party, and cost and expense in connection
with any such claim. The preceding indemnification shall only be due by
the Vendor provided that Buyer (1) promptly notifies Vendor in writing
of the claim of infringement and (2) allows Vendor to control and
cooperates with Vendor in the defense and any related settlement
action. Furthermore, such indemnification of Vendor does not apply to
any claims of infringement involving products made, provided or
modified by Vendor in compliance with the requirements or
specifications of Buyer, from the combination or use of products
supplied with any other products or from any modification to the
programming of products made other than by Vendor for which Buyer
agrees to indemnify Vendor against all damages and costs resulting from
any such claims of infringement made against Vendor. The above
provisions constitute the entire undertaking of Vendor towards Buyer in
the event of any intellectual property right claim of a third party
with regard to products supplied by Vendor.
8. GENERAL
8.1 EXPORT CONTROL LAWS. Buyer undertakes to comply with all applicable
laws, regulations, decrees and ordinances, related to the Buyer's use,
sale or transfer of the products supplied thereunder.
8.2 SOFTWARE. (1) Title to Software (as referred to in Clause 1) including
without limitation copyright, is owned by Vendor or third party
licensors and no title is transferred to Buyer. (2) Buyer shall not
copy, modify, translate, disassemble or decompile the Software. Buyer
or its customer shall have the right to use the Software in connection
with any product supplied by Vendor and not otherwise. The right to use
the Software may only be transferred when the product to which it
relates is transferred.
8.3 NO LICENSES. No license under any intellectual property right of Vendor
is granted herein except the right to use or resell any product sold by
Vendor to Buyer for the purposes for which it was sold.
27
AGREEMENT BETWEEN OTI AND OTIP
DATED FEBRUARY 2000
ANNEX G
SUB -DISTRIBUTOR'S UNDERTAKING
On Track Innovations Ltd.
Z.H.R. I.Z., Rosh Xxxx 12000
ISRAEL
Gentlemen,
I, the undersigned, wishing to be appointed as sub-distributor of OTI Asia
Pacific Ltd. (the "Distributor") of certain OTI Products (the "OTI PRODUCTS")
of
On Track Innovations Ltd. ("OTI"), do hereby undertake towards OTI as
follows:
1. I shall hold as fully confidential and not to disclose to other or
others, and not to use, directly or indirectly, all Confidential
Information of OTI, including without limitation, technical
information, technology and trade secrets, strategic plans and price
calculations. For the purposes hereof "Confidential Information" shall
include all information marked by OTI as such but shall exclude all
information which was already or became public knowledge through no
fault of mine.
2. I shall require each of my employees and/or agents employed in
providing services in relation to the OTI Products to execute the
undertaking of confidentiality set forth in Section 1 above.
3. I am aware of the provisions of Sections 8, 11, 13, 15.2, 16, 17, 19,
22 and 23 of the agreement between OTI and the Distributor (the
"
DISTRIBUTION AGREEMENT"), which were provided to me by the
Distributor. I shall act as if I were the Distributor in accordance
therewith mutatis mutandis, and such provisions may be referred against
me directly by OTI.
4. I am aware and agree that termination of the
Distribution Agreement,
for any reason, shall cause the immediate termination of any agreement
between me and the Distributor in respect of the OTI Products.
5. I agree that, subject to the provisions of Section 3 above, in any
event OTI shall not be deemed to have any direct contractual
relationship with me, and I shall not have any claim or demand or any
other right towards OTI in any matter whatsoever.
6. I am aware and agree that OTI shall be entitled to terminate forthwith
my engagement in the distribution of the OTI Products, by sending a 60
days' prior written notice to such effect to me.
Sincerely yours,
Signature: ________________
Name: ________________
Address: ________________
Fax No.: ________________
Tel. No.: ________________
Distributor: ________________
28
AGREEMENT BETWEEN OTI AND OTIP DATED
FEBRUARY 2000
ANNEX H
MUTUAL CONFIDENTIALITY AGREEMENT
Made and signed as of the ______ day of February, 2000
BETWEEN
ON TRACK INNOVATIONS LTD., of X.X.X. - Xxxxxxxxxx Xxxx, Xxxx-Xxxx 00000 Xxxxxx
("OTI")
AND
XXXXXX KONG INFRASTRUCTURE HOLDINGS LIMITED of 12/F, Xxxxxx Kong Center,
0 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx ("CKI")
AND
SAILOR GROUP LIMITED (to be renamed as OTI ASIA PACIFIC LTD.), of P.O. Box 957,
Offshore Incorporations Centre, Road Town,
Tortola, British Virgin Islands ("OTIP")
WHEREAS OTI has developed and is the sole owner of certain proprietary
technology relating in particular to contact/contactless and
contactless smart cards and readers of which it is the sole
owner ("OTI'S TECHNOLOGY") as described in paragraph (c) in
the definition of "OTI INTELLECTUAL PROPERTY" in Clause 1.1 of
the Shareholders Agreement relating to OTip dated the date
hereof (the "SHAREHOLDERS AGREEMENT"); and -
WHEREAS CKI is the sole owner of certain trade secrets relating to its
business ("CKI'S TRADE SECRETS") as described in the
definition of "CK GROUP PROPRIETARY INFORMATION AND RIGHTS" in
Clause 1.1 of the Shareholders Agreement; and -
WHEREAS CKI and OTI have established OTip and are its existing
shareholders, and OTip has entered into a
distribution
agreement with OTI dated the date hereof, (the "
DISTRIBUTION
AGREEMENT") pursuant to which it shall act as a distributor of
OTI in the Asia Pacific region; and -
WHEREAS CKI and OTI, as shareholders of OTip shall be exposed to
confidential information of OTip, and OTip, as a distributor
of OTI, shall be exposed to confidential information of OTI;
29
NOW THEREFORE THE PARTIES HAVE AGREED AS FOLLOWS:
1. In this Agreement:
1.1 The term "DISCLOSER" means a party to this Agreement disclosing
Confidential Information to any of the other parties.
1.2 The term "RECIPIENT" means any party to this Agreement receiving
Confidential Information from any of the other parties.
1.3 The term "CONFIDENTIAL INFORMATION" means any and all information
relating to the Discloser's proprietary technology or business made
available by the Discloser to the Recipient including, without
limitation, information, data, know-how, formulae, tests, drawings,
specifications, applications, designs and trade secrets, information
and data relating to the Discloser's products, design methodology,
engineering and manufacturing processes and related equipment,
suppliers, sales, customers, business operations and plans, financial
situation, members, employees and investors and any notes, memoranda,
summaries, analyses, compilations or any other writings relating
thereto prepared by the Discloser or the Recipient or on such party's
behalf, provided that such information is in writing or other tangible
form and is clearly marked as "proprietary" or "confidential" when
disclosed to the Recipient; or if such information is not in tangible
form, that (i) such information is identified as "proprietary" or
"confidential" when disclosed and summarized in a written document
which is marked "proprietary" or "confidential" and is delivered to the
Recipient within 30 (thirty) days after date of disclosure; or (ii) is
deemed "proprietary" or "confidential" if such information is known or
reasonably should be known by the Recipient to be "confidential" or
"proprietary". Without derogating from the generality of the above, all
information, data and know-how relating to OTI's Technology shall be
deemed Confidential Information of OTI, and all information, data and
know-how relating to CKI's Trade Secrets shall be deemed Confidential
Information of CKI.
2. Recipient undertakes to maintain as secret and fully confidential:
2.1 all the Discloser's Confidential Information obtained by the Recipient
pursuant to this Agreement and prior to and in contemplation of it, and
not to disclose, divulge or use same, directly or indirectly, save
exclusively for the purposes for which it was disclosed to the
Recipient.
2.2 OTI's and CKI's shareholding in OTip and the existence of this
Agreement or of any other agreement between the parties, or any details
relating to the Discloser, its business or its Confidential
Information, or the fact that negotiations or discussions between the
parties have taken or are taking place, or the terms and conditions on
which any possible arrangements or agreements between the parties may
take or might have taken place, unless otherwise agreed in writing
between the parties.
3. The restrictions of use and disclosure set forth in this Agreement
shall not apply to any Confidential Information which, based on proof
by the Recipient,
3.1 the Discloser has approved for disclosure in advance and in writing;
3.2 was already known to the Recipient at the time such information was
received from the Discloser;
30
3.3 was already or became available to the general public, through no
breach of any confidentiality undertaking towards the Discloser;
3.4 was at any time lawfully obtained by the Recipient from any other
person, firm or company having no obligation not to disclose it.
3.5 is required to be disclosed by the Recipient by applicable law,
regulation or court order, or pursuant to any rules imposed by or
agreements entered into with any relevant stock exchange or the
securities commission; provided that the Recipient shall first give
prior prompt written notice to the Discloser of the requirement for
such disclosure and co-operate through all reasonable and legal means,
at the Discloser's expense, in any attempts by the Discloser to protect
or otherwise restrict disclosure of such Confidential Information.
4. In order to secure the confidentiality of the Confidential Information
the Recipient shall:
4.1 procure that its respective subsidiaries, holding company and
affiliated companies and their directors, employees, agents and
consultants shall maintain secret and confidential the Confidential
Information of the Discloser;
4.2 safeguard the Confidential Information of the Discloser with at least
the same degree of care as it uses for its own Confidential
Information, and without derogating from the generality of the above,
shall keep the Confidential Information in a safe and separate place;
4.3 limit access to the Confidential Information only to those of the
Recipient's directors, employees, agents and consultants to whom
disclosure is necessary for the purposes hereof provided that all such
directors, employees, agents and consultants which may have access to
the Confidential Information are under a confidentiality undertaking
towards the Recipient to maintain the Confidential Information as fully
confidential and not to disclose, divulge or use same, directly or
indirectly, but for the purposes of carrying out their duties towards
the Recipient. At the Discloser's request, the Recipient shall provide
the Discloser with an accurate list of all of its directors, employees,
agents and consultants which had or have access to the Confidential
Information. For avoidance of doubt, the Recipient will assume
responsibility for any breach of the terms of this Agreement by the
Recipient's directors, employees, agents and consultants, to whom
disclosure of the Confidential Information is permitted and made by the
Recipient under this Agreement.
5. At the Discloser's request, Recipient shall forthwith return to the
Discloser all Confidential Information in tangible form and not retain
any copies of it, including copies made by electronic forms save and
except to the extent where it is necessary for the Recipient to perform
its obligations under the Shareholders Agreement and
Distribution
Agreement.
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6. The disclosure of Confidential Information or its use hereunder shall
not be construed in any way as granting any party any right or license
with respect to the Confidential Information (or, in particular, to
OTI's Technology or CKI's Trade Secrets) other than the right to use
Confidential Information strictly for the purposes set forth in the
preamble of this Agreement.
7. Each party hereto reserves all rights in any inventions, patents,
copyrights, designs, and any other intellectual property invented or
devised by it in relation to Confidential Information of such party.
8. This Agreement shall survive the termination of the Shareholders
Agreement or
Distribution Agreement (whichever shall later occur) and
shall be valid for a period of five years after such termination.
9. It is agreed that the unauthorized disclosure or use of any
Confidential Information will cause immediate or irreparable injury to
the Discloser, and that the Discloser cannot be adequately compensated
for such injury in monetary damages. Each party therefore acknowledges
and agrees that, in such event, the Discloser shall be entitled to any
temporary or permanent injunctive relief necessary to prevent such
unauthorized disclosure or use, or threat of unauthorized disclosure or
use.
10. No party shall be entitled to assign its rights and obligations
hereunder without the other parties' prior written approval.
11. If any condition, term or covenant of this Agreement shall at any time
be held to be void, invalid or unenforceable, such condition, covenant
or term shall be construed as severable and such holding shall attach
only to such condition, covenant or term and shall not in any way
affect or render void, invalid or unenforceable any other condition,
covenant or term of this Agreement, and this Agreement shall be carried
out as if such void, invalid or unenforceable term were not embodied
herein.
12. The laws of England shall govern this Agreement.
-------------------------------- --------------------------------------------
On Track Innovations Ltd. Xxxxxx Kong Infrastructure Holdings Limited
by: __________________ by: __________________
title: _________________ title: _________________
Sailor Group Limited (to be renamed
OTI ASIA PACIFIC LTD.)
by: __________________
title: _________________
* "Software" means computer programs, software and firmware whether in printed
or machine readable form, including software on magnetic tape, disc or in a
ROM forming part of the product.
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