Exhibit 10.38
Agreement relating to the
Termination of Contracts Outside Greater China and the Transfer of
Certain Business Contracts
THIS AGREEMENT is made this 22nd day of June, 2002.
BETWEEN:
(A) E-SMART SYSTEM Inc. (formerly known as Sailor Group Limited and OTI
Asia Pacific Limited), a company incorporated under the laws of the
British Virigin Islands having its registered office at P.O. Box 957,
Offshore Incorporations Centre, Road Town, Tortola, British Virgin
Islands and/or any of its subsidiaries (e-Smart"); and
(B) ON TRACK INNOVATIONS LIMITED, a company incorporated in the State of
Israel whose registered office is situated at X.X.X. Xxxxxxxxxx Xxxx,
Xxxx Xxxx 00000, Xxxxxx ("OTI")
WHEREAS:
(A) e-Smart is engaged separately and/or together with OTI in contracts
outside the territory of China and Hong Kong, details of which are set
out in the Schedule A-1 hereto (the contracts shall be referred to
hereinafter as the "Contracts" and any of them "the Contract");
(B) e-Smart and/or the parties, as the case may be, will notify the
different counter parties to those Contract ("Counter Parties" and any
of them "the Counter Party") of the termination of such Contracts.
(C) -Smart at the date hereof maintains certain business contracts outside
the territory of the People's Republic of China, Taiwan, Hong Kong and
Xxxxx ("xxx Xxxxxxx Xxxxx") Xxxxx and Hong Kong, details of which are
set out in the Schedule A-2 hereto (the business contracts above shall
be referred to hereinafter as the "Business Contracts").
(D) E-Smart agrees to transfer to OTI all Business Contracts, shall cease
all negotiations with such Business Contacts and shall refrain from
engaging any business with parties whose contracts are being terminated
under this Agreement and/or whose Business Contacts are transferred to
OTI under this Agreement for a period of 12 months following the
execution of this Agreement, save for any existing purchase orders
outstanding, if any.
NOW THIS AGREEMENT WITNESSES as follows:
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1. e-Smart and OTI will jointly issue a termination notice to the Counter
Parties, within 7 days from the date of this Agreement ("Letter of
Termination").
The Letter of Termination shall be in the form substantially the same
as the notice in Schedule B to this Agreement notifying the relevant
Counter Party of the termination of the Contract; asking them to
acknowledge and confirm that as from the date hereof the Contracts are
terminated; and giving an instruction of transfer regarding any
deposits for deliveries of goods and/or services that have been paid in
advance or have been lent to e-Smart by the Counter Party, as the case
may be ("the Instruction").
2. e-Smart will transfer immediately and no later than 14 days any
deposits for deliver of goods and/or services that have been paid in
advance or have been lent to e-Smart by the Counter Party in accordance
with the Instruction given by the relevant Counter Party.
3. e-Samrt hereby transfers to OTI all Business Contracts and undertakes
to cease all negotiations with such Business Contracts. E-Smart shall
make its best efforts in order to assist OTI to receive all the
relevant information regarding the Contracts.
4. For a period of 12 months from the Completion Date, e-Smart or any of
its subsidiaries shall not engage in any business with parties whose
Contracts are being terminated and/or whose Business Contracts are
transferred to OTI under this Agreement.
5. Within a period of 30 days from the date of this Agreement, e-Smart
will transfer to OTI a copy of all relevant information, including but
not limited to quotation, emails and correspondence between e-Smart in
relation to the Business Contracts that exist on every PC in e-Smart.
6. This Agreement shall be binding on and enure for benefit of each
Party's respective heirs, executors, administrators, successors and
assigns (as the case may be).
7. This Agreement shall be governed by and interpreted in accordance with
the laws of the England. The parties hereby agree to submit to the
non-exclusive jurisdiction of the Courts of Hong King.
8. Service of any writ, summons, order, judgment or other notice of legal
process regarding this Agreement shall be delivered to OTI at his
registered address and to the e-Smart at its registered office.
9. This Agreement ay be executed in any number of counterpart, each of
which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
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SCHEUDLE A
Schedule A-1
Contracts
1) TXN (India)
2) CTI (Japan)
3) S! Corporation (Korea)
Schedule A-2
Business Contacts:
1) NETS (Singapore)
2) FUJITSO (Japan)
3) LTA (Singapore)
4) ICIC/HPCL (India)
5) Any other business contacts outside Greater China as they exist on
every PC in e-Smart including but not limited to quotations,
emails and correspondence between e-Smart in relation to the
Business Contracts
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SCHEDULE B
Format of Letter to Counter Parties
Date:___________
To:___(the Counter Party)__
We, e0Smart System Inc. (hereinafter: "e-Smart") (and On Track Innovations Ltd),
hereby terminate the Contract signed between us on _______(hereinafter: "the
Contract").
Sincerely Yours
----------------------- ----------------------------------
e-Smart System Inc. On Track Innovations Ltd.
To: e-Smart System Inc. and On Track Innovations Limited
We, _________(Counter Party) acknowledge the above termination notice and will
have no further rights and/or claims against each of you in connection with the
Contract.
(We hereby instruct e-Smart to transfer immediately an amount of US$________to
On Track Innovations Ltd./Counter Party.)
-----------
Director
For and on behalf of
(Counter Party)
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SUPPLEMENTAL SHAREHOLDERS AGREEMENT
In respect of e-Smart System Inc.
THIS SUPPLEMENTAL AGREEMENT is made the 22nd day of June 2002.
BETWEEN:
1. Ocean Wonder Limited, a company incorporated in the British Virgin
Islands whose registered office is situated at X.X.Xxx 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Island
("CK-X");
2. On Track Innovations Limited, a company incorporated in the State of
Israel whose registered office is situated at X.X.X. Xxxxxxxxxx Xxxx,
Xxxx Xxxx 00000, Xxxxxx ("OTI");
3. e-Smart System Inc. (formerly known as Sailor Group Limited and OTI
Asia Pacific Limited), 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 ("the Company"); and
4. The persons listed in Schedule A of the Shareholders Agreement
(hereinafter defined) (hereinafter together referred to as the
"Controlling Parties" and each a "Controlling Party")
WHEREAS:
(1) On 2nd February 2000, CK-X, OTI, the Company and Controlling Parties
entered into a Shareholders Agreement (the Shareholders Agreement") to
govern the relationship between CK-X and OTI as shareholders of the
Company and to set out the basis on which the business and affairs of
the Company and all members of the Group (as defined in the
Shareholders Agreement) would be managed and controlled and to provide
for the rights and duties of the parties thereto and other matters
therein set outs.
(2) On 2nd February 2000, OTI and the Company entered into a Distribution
Agreement (the "the Distribution Agreement"_) whereby the Company was
appointed as the exclusive distributor of the OTI Products in 14
countries. The parties hereto have agreed to amend certain provisions
in the Shareholders Agreement and the Distribution Agreement.
(3) The parties hereto have agreed to amend the Shareholders Agreement and
enter into this Supplemental Agreement subject to the terms and
conditions herein contained.
IT IS HEREBY AGREED as follows:
1. Unless otherwise defined herein, the terms used in this Supplemental
Agreement will have the same meanings set out in the Shareholders
Agreement and the rules and principles of interpretations used in the
Distribution Agreement shall apply to this Supplemental Agreement.
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2. The parties agree to amend the Shareholders Agreement as provided
herein to give effect the following amendments.
(a) The two Officers that OTI is entitled to appoint to the
Company, namely the President and the CEO are to be appointed
by CK-X from the date of this Supplemental Shareholders
Agreement.
(b) The Territory comprising the 14 countries in which the Company
has exclusive distribution rights of the OTI products will be
reduced and changed to four countries and areas, namely the
People's Republic of China, Taiwan, Hong King and Xxxxx ("xxx
Xxxxxxx Xxxxx").
(b) In lieu of the remaining amount of US$330,000 payable by the
Company to OTI under Clause 4.16.2 of the Shareholders
Agreement, the Company will pay an amount of US$165,000 to OTI
within 7 days after the signing of this Supplemental
Shareholders Agreement.
This Supplemental Shareholders Agreement shall have a term for 2 years
commencing from the date hereof. The term will be automatically renewed for a
period of 2 years unless agreed otherwise by the parties.
3. Subject to Clause 2 above, the parties agree to amend the Shareholders
Agreement as provided herein.
4. Clause 1.1 of the Shareholders Agreement
The definition of "Exclusive Territory" in clause 1.1 is deleted and
replaced by the following:-
"Exclusive Territory" the countries and areas listed in Annex c-1 to
the Distribution Agreement where the Company shall be appointed
exclusive distributor and retain exclusive distribution rights under
the Distribution Agreement."
A new definition will be added to Clause 1 of the Shareholders
Agreement as follows:-
"Other Territory" means the countries and areas listed in Annex C-2 to
the Distribution Agreement."
"Supplemental Agreement" means the supplemental shareholders agreement
dated 22nd June 2002 entered into by the parties hereto to amend this
Agreement."
"Supplemental Distribution Agreement" means the supplemental
distribution agreement dated 22nd June 2002 entered into between OTI
and the Company to amend the Distribution Agreement."
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5. Clauses 13.2.1 of the Shareholders Agreement
Clause 13.2.1 shall be subject to the new Claus 3.3 of the Distribution
Agreement (as amended by the Supplemental Distribution Agreement dated
22 June, 2002).
6. Clauses 4.6 of the Shareholders Agreement
Clause 4.6 is deleted and replaced as follows:
"4.6 Convening a meeting
The Board shall meet at such place or time as the business of
the Company requires or as the Directors think fit. Board meetings may
be conducted by way of meeting, telephone conference or
video-conference. Any Board meeting may be convened by the Chairman or
the Deputy Chairman. Not less that 7 Business Days' prior written
notice of each meeting of the Board specifying the date, time and place
of the meeting and the business to be transacted therat shall be given
to each Director (other than a meeting reconvened following an
adjournment, in respect of which no further notice shall be required),
unless short notice is consented to or notice is waived by such
Director. There will be four Board meeting in the first year if
necessary."
7. The management will present to the Board a draft Annual Business Plan
with a detailed monthly financial budget in respect of year 2002 within
sixty days after the execution of this Supplemental Shareholders
Agreement.
8. Clauses 5.12 of the Shareholders Agreement
Clause 5.12 is deleted and replaced as follows:
"5.12 All back accounts of and contracts to be concluded by any member
of the Group shall be operated or signed by: (i) two Officers, or (ii)
two Directors appointed by CK-X jointly, or (iii) one Director
appointed by OTI together with one Director of CK-X."
9. Within 30 days after the execution of this Supplemental Shareholders
Agreement, each of CK-X and OTI shall be entitles to appoint two
Committee Members, The Management Committee meetings shall be
physically held in Hong Kong, or by way of telephone or video
conferencing.
10. Upon the execution of this Supplemental Shareholders Agreement, the
Shareholders Agreement shall be deemed to be read and construed in
conjunction with this Supplemental Agreement and as if the
modifications to the Shareholders Agreement contained herein were
incorporated therein as from the date of this Supplemental Shareholders
Agreement and, save as is expressly amended hereby the Shareholders
Agreement shall continue I full force and effect and that all
references in the Shareholders Agreement to this Supplemental
Shareholders Agreement shall accordingly be read and construed as if
they were references to the Shareholders Agreement as amended by this
Supplemental Shareholders Agreement.
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11. Each of the parties hereto agree that:
(a) notwithstanding the aforesaid amendments, nothing herein shall
prejudice or adversely affect any right, power, authority or
remedy or discharge, release or otherwise affect any liability
or obligation, accrued or arising under the Shareholders
Agreement (as amended by this Supplemental Shareholders
Agreement); and
(b) it is bound by and will perform all its obligations under the
Shareholders Agreement (as amended by this Supplemental
Shareholders Agreement).
12. If there is any conflict or inconsistency between the terms and
conditions of the Shareholders Agreement and any provisions in the
Supplemental Agreement, the terms and conditions of this Supplemental
Shareholders Agreement shall prevail.
13. This Supplemental Shareholders Agreement and the rights and obligations
of the parties hereunder shall be governed by, and construed in
accordance with the laws of Hong Kong.
IN WITHESS WHEREOF the parties hereto have caused this Supplemental Agreement to
be executed by their respective duly authorized officers, and have caused their
respective corporate names to be signed as of the day and year hereinbefore
written.
The Shareholders
SIGNED by )
for and on behalf of )
Ocean Wonder Limited )
In the presence of:- )
SIGNED by )
for and on behalf of )
ON TRACK INNOVATIONS )
LIMITED )
In the presence of:- )
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The Company
SIGNED by )
for and on behalf of )
e-Smart Systems Inc. )
In the presence of:- )
The Controlling Parties
SIGNED by )
for and on behalf of )
ON TRACKINNOVATIONS )
LIMITED )
In the presence of:- )
SIGNED by )
for and on behalf of )
XXXXXX KONG )
INFRASTRUCTURE )
HOLDINGS LIMITED )
In the presence of:- )
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SUPPLEMENTAL DISTRIBUTION AGREEMENT
THIS SUPPLEMENTAL AGREEMENT is made the 22nd day of June 2002
BETWEEN
On Track Innovations Limited, 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
e-Smart System Inc. (formerly known as Sailor Group Limited and OTI Asia Pacific
Limited), a company incorporated under the laws of the British Virgin Islands
having it registered office at P.O. Box 957, Offshore Incorporations Centre Road
Two, Tortola, British Virgin Island ("Distributor").
WHEREAS:
(1) Pursuant to a Distribution Agreement dated 2nd February 2000 entered
into between OTI and the Distributor ("Distribution Agreement"), OTI
had appointed the Distributor as an exclusive distributor of the OTI
products in the Territory for so long as the Shareholders Agreement
dated 2nd February 2000 entered into between OTI, the Distributor and
other parties is in force.
(2.) The parties hereto have agreed that the Territory defined in Annex C to
the Distribution Agreement shall be changed in accordance with the
terms of this Supplemental Distribution Agreement.
IT IS HEREBY AGREED as follows:-
1. Unless otherwise defined herein, the terms used in the Supplemental
Distribution Agreement will have the same meanings set out in the
Distribution Agreement and the rules and principles of interpretation
used in the Distribution Agreement shall apply to this Supplemental
Agreement.
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2. Both parties agree to amend the Distribution Agreement as provided
herein.
3. Clause 1 of the Distribution Agreement
3.1 The definition of the term "The Territory" will be deleted and replaced
as follows:
"1.1.10 "The Territory means the countries and areas listed in Annex
C-1 hereto."
3.2 A new definition will be added to Clause 1 of the Distribution
Agreement as follows:
"1.1.14 "Other Territory" means the countries and areas listed in
Annex C-2 hereto."
4. Annex C of the Distribution Agreement
Annex shall be deleted and substituted by the following:
Annex C-1
The Territory
1. The People's Republic of China.
2. Hong Kong.
3. Taiwan,
4. Macau.
Annex C-2
Other Territory
----------------
1. Singapore.
2. Australia.
3. South Korea.
4. Japan.
5. The Philippines.
6. Malaysia.
7. Indonesia.
8. Thailand.
9. India.
10. Vietnam.
11. New Zealand.
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5. Clauses 3.2 and 3.3 of the Distribution Agreement
Clauses 3.2 and 3.3 of the Distribution Agreement are deleted and
substituted by the following:-
"Appointment and Exclusivity
3.2 Subject to the terms and conditions set forth herein the
appointment of the Distributor hereunder is exclusive and OTI
shall not appoint another Distributor in the Territory.
3.3 Without derogating from the Distributor's rights under Clause
3.2, any business opportunity OTI encounters within the
Territory shall be offered in writing to the Distributor and
any business opportunity the Distributor encounters within the
Other Territory shall be offered in writing to OTI. In the
event that OTI or the Distributor, as the case may be, has
rejected in writing the offer to be engaged in such business
opportunity or does not reply to such offer within 7 Business
Days, the other party shall be entitles to be engaged in such
business opportunity and in such cases Clauses 15.3 and 16.2.2
to the Distribution Agreement shall not apply.
6. Upon the execution of this Supplemental Distribution Agreement, the
Distribution Agreement shall be deemed to be read and construed in
conjunction with this Supplemental Agreement and as if the modification
to the Distribution Agreement contained herein were incorporated
therein as from the date of this Supplemental Distribution Agreement
and, save as is expressly amended here by, the Distribution Agreement
shall continue in full force and effect and that all references in the
Distribution Agreement to "this Agreement" shall accordingly be read
and construed as if they were references to the Distribution Agreement
as amended by this Supplemental Distribution Agreement.
7. Each of the parties hereto agree that:
(a) notwithstanding the aforesaid amendments, nothing herein shall
prejudice or adversely affect any right, power, authority or
remedy or discharge. Release or otherwise affect any liability
or obligation, accrued or arising under the Distribution
Agreement (as amended by this Supplemental Distribution
Agreement); and
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(b) it is bound by and will perform all its obligations under the
Distribution Agreement (as amended by this Supplemental
Distribution Agreement).
8. If there is any conflict or inconsistency between the terms and
conditions of the Distribution Agreement and any provisions in the
Supplemental Agreement, the terms and conditions of this
Supplemental Distribution Agreement shall prevail.
IN WITNESS WHEREOF the parties hereto have caused this Supplemental Distribution
Agreement to be executed by their respective duly authorized officers, and have
caused their respective corporate names to be signed as of the day and year
hereinbefore written.
SIGNED by )
for on behalf of )
On Track Innovations Limited )
in the presence of:- )
SIGNED by )
for and on behalf of )
e-Smart System Inc. )
in the presence of:- )