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TECHNOLOGY PURCHASE AGREEMENT
by and between
SOFTCHIP ISRAEL LTD.
and
AMERICAN CARD TECHNOLOGY, INC.
Dated as of March 7th, 1998
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TECHNOLOGY PURCHASE AGREEMENT
THIS TECHNOLOGY PURCHASE AGREEMENT ("Agreement") is made and entered into
as of the 7th day of March, 1998, between SOFTCHIP ISRAEL LTD. a corporation
organized under the laws of Israel ("Seller"), and AMERICAN CARD TECHNOLOGY,
INC., a Delaware corporation ("Buyer").
WITNESSETH:
WHEREAS, Seller owns that certain DVK-1 Chip Operating System (the "DVK-1
System") and development environment; and
WHEREAS, Seller desires to sell and assign and Buyer desires to purchase
and acquire the DVK-1 System and development environment; and
NOW THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants, and conditions set forth below, the parties hereby agree as
follows:
(1) CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below.
"Affiliate" shall mean, with respect to any Person, any shareholder,
subsidiary, officer, director or partner of such Person and any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person.
"Agreement" shall mean this Technology Purchase Agreement and all Exhibits
hereto, as the same may from time to time be amended.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement to be held at the offices of Xxxx & Xxxxxxxx P.C., 000 Xxxxx Xxxxxx,
Xxxxxxxx Connecticut, on the Closing Date or in such other place as may be
agreed to by the parties to this Agreement.
"Closing Date" shall mean the earlier of (i) September 15, 1998 or (ii) the
closing of an initial public offering of securities of the Buyer.
"Intellectual Property Rights" shall mean and include all of the Seller's
right, title and interest in and to the DVK-1 System and names "DVK-1," "DVK,"
and any other trade names used by the Seller with respect to the DVK-1 System
and development environment, together with all trademarks, copyrights, patents,
rights of privacy and all other intellectual property owned by the Seller in
connection with the DVK-1 System and development environment.
"Litigation Expense" shall mean any expenses reasonably incurred in
connection with investigating, defending or asserting any claim, action, suit or
proceeding incident to any matter indemnified against under this Agreement,
including, without limitation, court filing fees, court costs, arbitration fees
or costs, witness fees, and fees and disbursements of legal counsel,
investigators, expert witnesses, accountants and other professionals.
"Loss" shall mean any loss, obligation, claim, liability, settlement
payment, award, judgment, fine, penalty, interest charge, expense, damage or
deficiency or other charge, other than Litigation Expense.
"Major Enhancement" shall mean a change to the DVK-1 silicon mask ROM code
that (i) adds functionality, (ii) changes communication protocols or (iii)
involves downloading EEPROM code of over one kilobyte that implements (i) or
(ii) above.
"Minor Enhancement" shall mean (i) any change to the software drivers in
the host computer; (ii) porting host computer software to a different host
computer operating system; (iii) porting host computer software to a different
host computer central processing unit ("CPU"); (iv) downloading EEPROM code of
less than one kilobyte that implements a Major Enhancement; or (v) downloading
any amount of code to EEPROM for technical feasibility tasks, PROVIDED, HOWEVER,
that if such amount is greater than one kilobyte, the intellectual property
rights of such downloaded code shall, unless otherwise agreed to by the parties,
remain those of the Seller, and the results of any such feasibility studies
shall belong solely to the Buyer.
"Minor Mask Release" shall mean porting the DVK-1 silicon mask ROM code to
another chip, either with the same or different CPU type or memory
configuration, provided protocols are preserved and functionality is preserved
or reduced.
"Person" shall mean and include an individual, a corporation, a
partnership, a limited liability company, a limited liability partnership, a
joint venture, a trust, an unincorporated association, a government or political
subdivision or agency thereof or any other entity.
"Purchased Assets" shall mean all of the assets of the Seller described in
Section 3(a) hereof and more specifically set forth in EXHIBIT A hereto.
(2) ACKNOWLEDGEMENTS. Buyer hereby acknowledges that the Seller has
previously provided to Buyer the DVK-1 System which Buyer has fully examined and
has found to be to its full satisfaction. Buyer hereby waives any claim of
unsuitability and acknowledges that the DVK-1 System as delivered is fully in
accordance with all representations of Seller regarding suitability and fully in
keeping with the specifications set out in its accompanying documentation.
(3) SALE OF ASSETS; LIMITATIONS.
(a) Subject to the terms and conditions set forth in this
Agreement, at the Closing, in consideration of the payment of the Purchase
Price, as defined in Section 4 below, the Seller shall sell, transfer, assign,
convey and deliver to the Buyer, and the Buyer shall purchase, accept and
acquire from the Seller, all of the following assets and properties of the
Seller (collectively, the "Purchased Assets"):
(i) the DVK-1 System and development environment,
including, without limitation, all source code, object code, derivative mask,
and documentation; and
(ii) all Intellectual Property Rights.
(2)
(b) Upon the Closing, Buyer shall have the sole and exclusive
worldwide rights to develop, use, manufacture, modify, upgrade, improve and
enhance, and license, the DVK-1 System (including, without limitation, making
any Minor Enhancements thereto) and Seller shall have no further rights therein.
Notwithstanding the foregoing, Buyer hereby acknowledges and agrees that Buyer
shall not make any Major Enhancement or alter the code of the DVK-1 System in
order to create a derivative mask (other than a Minor Mask Release) which
differs from that embedded in the DVK-1 System.
(c) The Buyer hereby agrees not to convey, transfer, or sell,
(except to a purchaser of all or substantially all of the assets of Buyer other
than a competitor of Seller), the DVK-1 System, Intellectual Property Rights or
DVK-1 source code to any third party without the prior written consent of
Seller, which consent shall not be unreasonably withheld. Withholding of
consent of sale to a competitor of Seller shall not be deemed unreasonable.
4) PURCHASE PRICE. The aggregate purchase price to be paid by the
Buyer for the Purchased Assets (the "Purchase Price") shall be One Hundred
Thousand and 00/100 Dollars ($100,000.00), payable at the Closing in the manner
described in Section 5(b) hereof.
5) INSTRUMENTS OF TRANSFER; PAYMENT OF PURCHASE PRICE; FURTHER
ASSURANCES
(a) SELLER'S DELIVERIES. At the Closing, the Seller shall
deliver the following to the Buyer, each of which shall be in form reasonably
satisfactory to the Buyer:
(i) Xxxx of Sale for the Purchased Assets;
(ii) instruments of transfer reasonably necessary to
transfer to the Buyer all of the Seller's rights to any Intellectual Property
Rights included as Purchased Assets, including any instruments of assignment to
assign Seller's interest in such rights to be filed with the United States
Patent and Trademark Office or the equivalent governmental office of any other
country at Buyer's option;
(iii) Director's Certificate regarding resolutions
authorizing this transaction and the due authority of persons executing
documents on behalf of the Seller;
(iv) legal opinions of the Seller's counsel in form and
substance satisfactory to Buyer and Buyer's counsel;
(v) a Certificate as to the Seller's compliance with
Sections 10(a) and (b) of this Agreement;
(vi) Evidence reasonably satisfactory to the Buyer, of
the Seller's ownership of and authority to convey the Purchased Assets; and
(vii) Such other instrument or instruments of transfer, in
such form as shall be reasonably necessary or appropriate to vest in the Buyer
all of the Seller's right, interest and title to the Purchased Assets.
(3)
(b) BUYER'S DELIVERIES. At the Closing, the Buyer shall deliver
the following to the Seller, each of which shall be in form reasonably
satisfactory to the Seller:
(i) bank checks or wire transfers of immediately
available funds for an aggregate amount equal to the Purchase Price;
(ii) a certificate as to the Buyer's compliance with
Sections 9(a) and (b) of this Agreement;
(iii) Secretary's Certificate regarding resolutions
authorizing this transaction and the due authority of persons executing
documents on behalf of the Buyer; and
(iv) an opinion of counsel to the Buyer in form and
substance satisfactory to Seller and Seller's counsel; and
(v) such further instruments as the Seller may
reasonably request to evidence the consummation of the transactions contemplated
by this Agreement.
(6) REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants to the Buyer as follows:
(a) ORGANIZATION; GOOD STANDING; POWER. The Seller is a duly
organized, validly existing corporation in good standing under the laws of the
State of Israel. The Seller has the corporate power, authority and capacity to
own, lease and operate its properties, and to carry on its business as and where
the same is now being conducted.
(b) AUTHORIZATION; EFFECTIVE AGREEMENT. The Seller has the
requisite corporate power, authority and capacity to enter into this Agreement
and to perform all of its obligations hereunder. All corporate proceedings
required to be taken by the Seller to authorize the execution and delivery of
this Agreement and the performance of the Seller's obligations hereunder have
been duly taken, and this Agreement constitutes the legal, valid and binding
obligation of the Seller, enforceable against it in accordance with its terms.
The execution, delivery and performance of this Agreement by the Seller does not
and will not conflict with, violate or result in the breach of any of the terms
or conditions of, or constitute a default under, the Articles of Incorporation
or By-Laws of the Seller or any indenture, mortgage, pledge, note, bond,
license, permit or other agreement, commitment or lease to which the Seller is a
party or by which the Seller or its assets are bound or affected, or any law,
regulation, ordinance or decree to which the Seller or its assets are subject,
except for such violations of any law, regulation, ordinance or decree which
would not have a material adverse effect on the Purchased Assets.
(c) CONSENTS. No permit, consent, approval, or authorization of
any governmental authority or any other Person on the part of the Seller is
required in connection with the execution or delivery by the Seller of this
Agreement or the consummation of the transactions contemplated hereby.
(d) ADEQUACY OF AND TITLE TO PURCHASED ASSETS. The Seller has
good and marketable title to all of the Purchased Assets, none of which are
subject to a mortgage, pledge, lien, security interest, lease, charge,
encumbrance or conditional sale or other title retention agreement.
(4)
(e) INTELLECTUAL PROPERTY RIGHTS. The Seller is the sole and
exclusive owner of any and all intellectual property rights in and to the
Purchased Assets, including, without limitation, any and all trademarks,
patents, copyrights, rights of privacy, and trade secrets. The Seller
acknowledges, however, that the names "DVK-1" and "DVK" are not registered
trademarks. The Seller has the sole and exclusive right to use all such
intellectual property rights, the Seller's use of such intellectual property
rights does not conflict with the intellectual property rights of any other
party, and all such intellectual property rights are fully assignable to the
Buyer without the consent of any third party and, to the best of Seller's
knowledge, without infringing or violating the rights of any third party.
(f) SELLER ACTIONS. The Seller has not sold, assigned,
licensed, transferred, or otherwise conveyed any rights in any of the Purchased
Assets, or entered into any agreements with any third party to do so.
(g) LITIGATION, ETC. There is no suit, action or litigation,
administrative hearing, arbitration, labor controversy, warranty claim,
governmental inquiry, investigation or other proceeding or claim pending or, to
the Seller's knowledge, threatened against or relating to the Seller with
respect to the Purchased Assets. There are no judgments, consent decrees or
injunctions against, affecting or binding upon the Seller with respect to the
Purchased Assets. The Seller is in compliance with all laws, ordinances,
requirements, orders and regulations applicable to it, the violation of which
would have a material adverse effect on the Purchased Assets or on the ability
of the Seller to consummate the transactions contemplated hereby.
(h) DELIVERIES. The Seller has delivered or made available to
the Buyer true, correct and complete copies of the by-laws, articles of
incorporation and organizational documents of the Seller and if embodied in
written form, all Intellectual Property Rights and other information or data
referred to in this Section 7.
(i) INACCURACIES. Neither this Agreement nor any certificate or
statement furnished by or on behalf of the Seller at the Closing in connection
with this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein not misleading; and there is no fact known to the Seller in connection
with this Agreement which might reasonably be expected to materially adversely
affect the ability of the Seller to consummate the transactions contemplated
hereby which has not been set forth herein or in a certificate or statement
furnished to the Buyer at the Closing by the Seller.
(7) REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and warrants to the Seller as follows:
(a) ORGANIZATION; GOOD STANDING; POWER. The Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Buyer has the requisite power, authority and
capacity to own, lease and operate its properties and to carry on its intended
business.
(b) AUTHORIZATION. The Buyer has the requisite power, authority
and capacity to enter into this Agreement and to perform all of its obligations
hereunder. The Buyer has duly taken all necessary action to approve this
Agreement and the performance of its obligations hereunder. This Agreement
(5)
constitutes the legal, valid and binding obligation of the Buyer enforceable
against it in accordance with its terms.
(c) EFFECTIVE AGREEMENT. The execution, delivery and
performance of this Agreement by the Buyer do not and will not (i) conflict
with, violate or result in the breach of any of the terms or conditions of, or
constitute a default under, the articles of organization or operating agreement
of the Buyer, or any contract, agreement, commitment, indenture, mortgage,
pledge, note, bond, license, permit or other instrument or obligation to which
the Buyer is a party or by which the Buyer or its assets are bound or affected,
or any law, regulation, ordinance or decree to which the Buyer or its assets are
subject, or (ii) result in the creation or imposition of any lien, security
interest, charge, encumbrance, restriction or right, including rights of
termination or cancellation, in or with respect to, or otherwise materially
adversely affect, any of the properties, assets or business of the Buyer.
(d) CONSENTS. No permit, consent, approval or authorization of,
or designation, declaration or filing with, any governmental authority or any
other Person on the part of the Buyer is required in connection with the
execution or delivery by the Buyer of this Agreement or the consummation of the
transactions contemplated hereby, except where the failure to obtain such
consent would not materially adversely affect the Buyer's ability to consummate
the transactions contemplated by this Agreement.
(e) SHAREHOLDERS. Attached hereto as EXHIBIT B is a list
setting forth the names of shareholders of the Buyer. The Buyer agrees to give
the Seller notice of any changes to such list within thirty (30) days of the
effective date of any such changes, PROVIDED, HOWEVER, that Buyer's obligation
to provide such information to the Seller terminates upon the closing of an
initial public offering of securities of the Buyer.
(f) LITIGATION. There is no suit, action or litigation,
administrative hearing, governmental inquiry, investigation, arbitration or
other proceeding pending or, to the Buyer's knowledge, threatened against or
relating to the Buyer. There are no judgments, consent decrees or injunctions
against, affecting or binding upon the Buyer. The Buyer is in compliance with
all laws, ordinances, requirements, orders and regulations applicable to it, the
violation of which would have a material adverse effect on its ability to
consummate the transactions contemplated by this Agreement, and the Buyer has
not received notice of any claimed violation with respect to any of the
foregoing, and none of the foregoing will be affected by the consummation of the
transactions contemplated by this Agreement.
(8) USE OF NAME. The Seller agrees that from and after the Closing
Date, neither the Seller nor any person under the control of the Seller shall
use the name "DVK-1" or "DVK" for any computer chip operating system or software
source documents, or any devices otherwise used in computer systems.
Notwithstanding the foregoing, Seller may acknowledge that Seller created the
DVK-1 System in advertisements and promotional material to which Buyer has given
its prior written consent, which consent shall not be unreasonably withheld.
(9) CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER. All
obligations of the Seller under this Agreement are subject to the fulfillment,
at or prior to the Closing Date, of each of the following conditions, which
conditions may be waived only by the Seller:
(6)
(a) The representations and warranties of the Buyer herein
contained shall be true and correct as of the date hereof.
(b) The Buyer shall have performed or complied with all the
obligations, agreements and covenants of the Buyer herein contained to be
performed by it prior to or as of the Closing Date.
(c) The Seller shall have received a certificate of the Buyer as
to compliance with paragraphs (a) and (b) of this Section 9.
(d) No action, suit or proceeding by or before any court or any
governmental or regulatory authority shall have been commenced or threatened,
and no investigation by any governmental or regulatory authority shall have been
commenced or threatened, seeking to restrain, prevent or change the transactions
contemplated hereby or seeking judgments against the Seller or the Buyer
awarding substantial damages in respect of the transactions contemplated hereby.
(e) All deliveries required to be made under this Agreement to
the Seller at or before the Closing Date shall have been received by the Seller.
(10) CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER. All
obligations of the Buyer under this Agreement are subject to the fulfillment, at
or prior to the Closing Date, of each of the following conditions, which
conditions may be waived only by the Buyer.
(a) The representations and warranties of the Seller herein
contained shall be true and correct as of the date hereof.
(b) The Seller shall have performed or complied with all the
obligations, agreements and covenants herein contained to be performed by them
prior to or as of the Closing Date.
(c) The Buyer shall have received a certificate from the Seller
as to compliance with paragraphs (a) and (b) of this Section 10.
(d) No action, suit or proceeding by or before any court or any
governmental or regulatory authority shall have been commenced or threatened,
and no investigation by any governmental or regulatory authority shall have been
commenced or threatened, seeking to restrain, prevent or change the transactions
contemplated hereby or seeking judgments against the Seller or the Buyer
awarding substantial damages in respect of the transactions contemplated hereby.
(e) All deliveries required to be made under this Agreement to
the Buyer on or before the Closing Date shall have been received by the Buyer.
(11) INDEMNIFICATION; SURVIVAL
(a) INDEMNIFICATION BY THE BUYER. The Buyer shall indemnify and
save harmless the Seller, officers and directors of the Seller and their
respective successors and assigns from, against, for and in respect of:
(7)
(i) any Loss incurred or required to be paid because of
the breach of any representation, warranty, covenant or agreement of the Buyer
in this Agreement; and
(ii) any Litigation Expense incurred or required to be
paid in connection with any matter indemnified against in Section 11(a)(i)
hereof.
(b) INDEMNIFICATION BY THE SELLER. The Seller shall indemnify
and save harmless the Buyer, the Affiliates of the Buyer, employees, officers,
and directors of the Buyer, and their respective successors and assigns from,
against, for and in respect of:
(i) any Loss incurred or required to be paid because of
the breach of any representation, warranty, covenant or agreement of the Seller
in this Agreement;
(ii) any claims raised between the date of Closing and
five years thereafter, to the extent they are based upon any claimed
infringement or violation of any third party's copyright, patent, trademark or
other property right by any of the Purchased Assets, except to the extent the
claim is a result of the combination of the Purchased Assets with other software
or equipment which is not included in the Purchased Assets. In the event that
Buyer receives notice of any such claim, Buyer shall (i) promptly notify Seller
of the claim, (ii) permit Seller to assume the defense of such claim or any
negotiations related thereto at Seller's expense (though no settlement of such
claim may be entered into without Buyer's approval which shall not be
unreasonably withheld), and (iii) provide such information and assistance as is
requested by Seller in connection with the defense of such claim. In addition
to defending such claim as provided in the foregoing (regardless of the
outcome), Seller will pay any amount finally awarded in a proceeding to the
extent based upon such a claim (including attorney's fees, if any, in such
award), provided that such award is based upon a finding that Seller knew or
should have known of the infringement or violation of such third party's rights.
Should any such claims be made or brought to the attention of the parties or
either of them prior to the Closing, either party shall have the option to
cancel this Agreement by written notice to the other prior to Closing, in which
case the parties shall have no further obligations whatsoever to each other
hereunder. If neither party elects to so cancel, Seller shall be obligated to
act in accordance with this Section.
(iii) any Litigation Expense incurred or required to be
paid in connection with any matter indemnified against in Section 11(b)(i) or
Section 11(b)(ii) hereof.
(c) SURVIVAL. The representations, warranties, covenants and
agreements of the parties hereto (including indemnification obligations of the
parties hereunder with respect to all Losses and Litigation Expense incurred or
required to be paid) shall survive the execution and delivery of this Agreement.
(d) NOTICE. The indemnified party shall use its best efforts to
give prompt written notice to the indemnifying party or parties of any claim or
event known to it which does or may give rise to a claim by the indemnified
party against the indemnifying party or parties based on this Agreement, stating
the nature and basis of said claims or events and the amounts thereof, to the
extent known.
(e) DEFENSE OF CLAIMS OR ACTIONS. In the event any claim,
action, suit or proceeding is made or brought by third parties with respect to
which a party may be entitled to indemnity hereunder, the
(8)
indemnified parties shall given written notice of such claim, action, suit or
proceeding and a copy of the claim, process and all legal pleadings with respect
thereto to the indemnifying parties within ten (10) business days of being
served with such claim, process or legal pleading. Such notice shall not be a
condition precedent to any liability of the indemnifying parties under this
Agreement unless the failure to give such notice results in any prejudice to the
indemnifying parties. The indemnifying parties shall have the right to assume
the defense of any such claim or action. If the indemnifying parties wish to
assume the defense of such claim or action, such assumption shall be evidenced
by written notice to the indemnified parties. After such notice, the
indemnifying parties shall engage independent legal counsel of reputable
standing selected by them to assume the defense and may contest, pay, settle or
compromise any such claim or action on such terms and conditions as the
indemnifying parties may determine. If the indemnifying parties assume the
defense of any such claim, action, suit or proceeding, the indemnified parties
shall have the right to employ their own counsel, at their own expense, and if
the indemnified parties shall have reasonably concluded and specifically
notified the indemnifying parties either that there may be specific defenses
available to them which are different from or additional to those available to
the indemnifying parties or that such claim, action, suit or proceeding involves
or could have a material adverse effect upon them with respect to matters beyond
the scope of the indemnity provided hereunder, then the counsel representing
them, to the extent made necessary by such defenses, shall have the right to
direct such defenses of such claim, action, suit or proceeding in its behalf at
the indemnified party's expense. In the event that the indemnifying parties
shall not agree in writing to assume the defense of such claim or action, the
indemnified parties may engage independent counsel of reputable standing
selected by them to assume the defense and may contest, pay, settle or
compromise any such claim or action on such terms and conditions as the
indemnified parties may determine; PROVIDED, HOWEVER, that the indemnified
parties shall not settle or compromise any claim or action without the prior
consent of the indemnifying parties (which consent shall not be unreasonably
withheld). The fees and expenses of such counsel shall constitute Litigation
Expenses. The indemnified parties and the indemnifying parties shall cooperate
in good faith in connection with such defense, and all such parties shall have
the right to employ their own counsel; but, except as provided above, the fees
and expenses of their counsel shall be at their own expense. The indemnified
parties or the indemnifying parties, as the case may be, shall be kept fully
informed of such claim, action, suit or proceeding at all stages thereof,
whether or not they are represented by their own counsel.
(f) COOPERATION. The parties hereto agree to render to each
other such assistance as they may reasonably require of each other and to
cooperate in good faith with each other in order to ensure the proper and
adequate defense of any claim, action, suit or proceeding brought by any third
party. Where independent counsel has been selected by the indemnifying parties
or by the indemnified parties pursuant to Section 11(e) hereof, the indemnifying
parties or the indemnified parties, as the case may be, shall be entitled to
rely upon the reasonable advice of such counsel in the reasonable conduct of the
defense, and no indemnifying party shall be relieved of liability hereunder by
reason of such reliance or the defense conducted by such counsel.
(g) THE BUYER'S RIGHT OF OFFSET. Without limiting in any way
the rights of the Buyer to be indemnified under this Section 11 for Losses and
Litigation Expense (or the measure of amounts of loss and Litigation Expense for
which the Buyer may be entitled to indemnification), the Buyer shall have a
right to offset against the amounts due under Section 5 hereof and against the
amounts due under Section 11 hereof for the amount of any Loss or Litigation
Expenses incurred by the Buyer.
(9)
(12) RESTRICTIVE COVENANTS. The parties hereto acknowledge that (i) the
Seller has developed trade secrets and confidential information concerning the
Purchased Assets, and (ii) in the course of dealing with each other, the parties
have acquired confidential information about the business, activities,
operations, technical information, and trade secrets of each other, and (iii)
the agreements and covenants contained in this Section 12 are essential to
protect each of the parties following the consummation of the transactions
contemplated hereby or in the event (i) of a failure to consummate such
transactions, or (ii) this Agreement is terminated for any reason. Accordingly,
each party covenants and agrees as follows:
(a) CONFIDENTIAL INFORMATION. Each party shall keep secret and
retain in strictest confidence, and shall not use, in competition with or in a
manner otherwise detrimental to the interests of the other, for the benefit of
itself or others other than the other party hereto, any confidential
information, including, without limitation, any confidential technology,
"know-how," trade secrets, processes, designs, specifications, inventions,
methods, developmental work, improvements, unpublished patent applications,
development tools, software programs, software source documents, licenses,
customer lists, customer personnel information, details of client or consultant
contracts, pricing policies, operational methods, marketing plans or strategies,
or product development techniques or plans related to the Purchased Assets or
the other party hereto ("Confidential Information"). Notwithstanding the
foregoing, nothing herein shall prohibit Buyer from using the Purchased Assets
in any manner whatsoever so long as such use is not in violation of this
Agreement. The term "Confidential Information" does not include, and there
shall be no obligation hereunder with respect to, (i) information concerning
either Seller or Buyer that becomes generally available to the public other than
as a result of a disclosure by the other party or any agent or other
representative thereof after the Closing Date, and (ii) general business methods
applicable to the Purchased Assets. The parties shall have no obligation
hereunder to keep confidential any of the Confidential Information to the extent
disclosure of any thereof is required by law, or determined in good faith by the
disclosing party to be necessary or appropriate to comply with any legal or
regulatory order, regulation or requirement; PROVIDED, HOWEVER, that in the
event disclosure is required by law, the disclosing party shall use best efforts
to provide the other party with prompt advance notice of such requirement so
that the other party may seek an appropriate protective order.
(b) RIGHTS AND REMEDIES UPON BREACH. In the event a party
breaches, or threatens to commit a breach of, any of the provisions of this
Section 12 or Section 3(c) hereof (the "Restrictive Covenants"), the
non-breaching party may have the Restrictive Covenants specifically enforced by
any court of competent jurisdiction, it being agreed that any breach or
threatened breach of the Restrictive Covenants would cause irreparable injury to
the non-breaching party and that money damages would not provide an adequate
remedy to the non-breaching party. Such rights and remedies, shall be
independent of any others and severally enforceable, and shall be in addition
to, and not in lieu of, any other rights and remedies available to the
non-breaching party at law or in equity.
(c) SEVERABILITY OF COVENANTS. Each party acknowledges and
agrees that the Restrictive Covenants are reasonable and valid in geographical
and temporal scope and in all other respects. If any court determines that any
of the Restrictive Covenants, or any part thereof, are invalid or unenforceable,
the remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect, without regard to the invalid portions.
(10)
(d) ENFORCEABILITY IN JURISDICTIONS. The parties hereto intend
to and hereby confer jurisdiction to enforce the Restrictive Covenants upon the
courts of the State of Georgia, U.S.A. (and the Buyer and the Seller hereby
consent to the jurisdiction of such courts).
(13) TERMINATION; BREACH. Notwithstanding anything to the contrary
herein, this Agreement may be terminated and the transactions contemplated
hereby may be abandoned:
(a) by the Buyer if there exists a breach of any material
representation, warranty, covenant or agreement made to the Buyer under this
Agreement (which breach cannot be cured or is not cured upon fifteen (15) days'
written notice);
(b) by the Seller if there exists a breach of any
representation, warranty, covenant or agreement made to the Seller under this
Agreement (which breach cannot be cured or is not cured upon fifteen (15) days'
written notice);
(c) by the Seller or the Buyer, provided that the terminating
party is not then in breach of any of its material representations, warranties,
covenants or agreements set forth in this Agreement, if the Closing has not been
consummated by the earlier of (i) September 15, 1998 or (ii) the closing of the
initial public offering of securities of the Buyer, or such extended date as may
be agreed to in writing by the parties.
Upon the termination of this Agreement under Section 13(c), no
party hereto shall have any further liability or obligation to any other party
hereunder, except for the obligation of each party to pay its own expenses as
set forth in Section 16 hereof and (ii) return to the Seller the DVK-1 System
previously provided to Buyer, together with all modifications, upgrades,
improvements and enhancements thereof made by Buyer or on Buyer's behalf. Upon
the termination of this Agreement under Sections 13(a) or 13(b), the terminating
party shall be entitled, in addition to pursuing other remedies, to recover its
actual damages (including costs of enforcement and reasonable attorneys' fees),
arising from the breach by the non-terminating party. In the event of a breach
by the Seller of any material representation, warranty, covenant or agreement
made by the Seller under this Agreement, the Buyer may, in lieu of exercising
its right to terminate the Agreement, bring an action to enforce the terms of
this Agreement by decree of specific performance, it being agreed that the
property to be conveyed hereunder is unique and not readily available in the
open market and, in any such event, the Seller hereby further agrees to waive
any and all defenses against any such action for specific performance on the
grounds that there is an adequate remedy for money damages available.
(14) LIMITATION ON LIABILITY. Notwithstanding any provision of this
Agreement, the liability of the Seller for damages, for any cause whatsoever,
shall be limited to an amount equal to the amount which Seller has actually
received in payment under the terms of this Agreement, provided, however that
the foregoing limitation shall not apply with respect to damages resulting from
any fraud, willful misconduct or intentional misrepresentation by Seller, and
further provided that, in the event of indemnification of the Buyer pursuant to
Section 11(b)(ii) hereof, Seller shall make pay annual payments in advance to
the Buyer, amortized over a five-year period.
(11)
(15) AMENDMENTS. This Agreement may be amended, modified and
supplemented only by written agreement of the parties hereto at any time prior
to the Closing Date with respect to any of the terms contained herein.
(16) EXPENSES. Except as otherwise provided in this Agreement, each
party hereto shall bear all of its own expenses, including, without limitation,
the fees and disbursements of its counsel.
(17) NOTICES, ETC. All notices, consents, demands, requests, approvals
and other communications which are required or may be given hereunder shall be
in writing and shall be deemed to have been duly given (a) when delivered
personally, (b) if sent by facsimile, when receipt thereof is acknowledged at
the facsimile number below, (c) the second day following the day on which the
same has been delivered prepaid to a national air courier service, or (d) three
(3) business days following deposit in the mails registered or certified,
postage prepaid, in each case, addressed as follows:
if to the Seller: Softchip Israel Ltd.
000/0 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxx
Attention: Mr. Xxxxxx Xxxxx
with a copy to: Wine, Misheiker & Ernstoff Law Offices
12 Xxxxx Xxxx Xxxxxx
00000 Xxxxxxxxx, Xxxxxx
Attention: Xxxxx X. Wine, Advocate
if to the Buyer: American Card Technology, Inc.
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxxx 000, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: President
with a copy to: Xxxx & Xxxxxxxx P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx,
Xx., Esq.
or to such other Person or Persons at such address or addresses as may be
designated by written notice hereunder.
(18) ASSIGNMENT. No party may assign or convey this Agreement or any of
their respective rights or obligations hereunder to any other party.
Notwithstanding the foregoing, the Buyer may assign its rights and obligations
hereunder to any purchaser of all or substantially all of its assets.
(19) APPLICABLE LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of Georgia without
giving effect to conflict of laws principles thereof.
(20) CURRENCY. All sums of money payable hereunder are to be paid in
U.S. dollars.
(12)
(21) ENTIRE AGREEMENT. This Agreement and all Exhibits hereto embody
the entire agreement and understanding of the parties hereto and supersede any
prior agreement or understanding between the parties.
(22) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
(23) HEADINGS. Headings of the Sections in this Agreement are for
reference purposes only and shall not be deemed to have any substantive effect.
(24) BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
administrators, executors, successors and assigns; PROVIDED, HOWEVER, that
nothing in this Agreement, expressed or implied, is intended to confer on any
Person other than the parties hereto or their respective successors and assigns,
any rights and remedies, obligations or liabilities under or by reason of this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first above written.
SELLER:
SOFTCHIP ISRAEL LTD.
By /s/ Xxxxxxx Xxxxx
---------------------------
Its Authorized Signatory
BUYER:
AMERICAN CARD TECHNOLOGY, INC.
By /s/ Xxxxxxx Xxxxxxx, Xx.
---------------------------
Its President
(13)
TABLE OF CONTENTS
(1) CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . .(1)
(2) ACKNOWLEDGEMENTS. . . . . . . . . . . . . . . . . . . . . . . .(2)
(3) SALE OF ASSETS; LIMITATIONS . . . . . . . . . . . . . . . . . .(3)
(4) PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . .(3)
(5) INSTRUMENTS OF TRANSFER; PAYMENT OF PURCHASE PRICE;
FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . .(3)
(6) REPRESENTATIONS AND WARRANTIES OF THE SELLER. . . . . . . . . .(4)
(7) REPRESENTATIONS AND WARRANTIES OF THE BUYER . . . . . . . . . .(6)
(8) USE OF NAME . . . . . . . . . . . . . . . . . . . . . . . . . .(7)
(9) CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER . . . . .(7)
(10) CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER. . . . . .(8)
(11) INDEMNIFICATION; SURVIVAL . . . . . . . . . . . . . . . . . . .(8)
(12) RESTRICTIVE COVENANTS . . . . . . . . . . . . . . . . . . . . (11)
(13) TERMINATION; BREACH . . . . . . . . . . . . . . . . . . . . . (12)
(15) AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . (13)
(16) EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . (13)
(17) NOTICES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . (13)
(18) ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . (14)
(19) APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . . . (14)
(20) CURRENCY. . . . . . . . . . . . . . . . . . . . . . . . . . . (14)
(21) ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . (14)
(22) COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . (14)
(23) HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . (14)
(24) BINDING EFFECT; BENEFITS. . . . . . . . . . . . . . . . . . . (14)
(i)
EXHIBIT A
PURCHASED ASSETS
(1.) DVK-1 Chip Operating System.
EXHIBIT B
SHAREHOLDERS
Xxxxxx Xxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxxxx Xxxxxxxxx
Xxxxxxx Group LLC
Xxxxx X. Xxxxx and Xxxxxxxx X. Xxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxxxxx, Xx.
Xxxx Xxxxxxxxx
Xxxxxxx Xxxxxx
Xxxx Xxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxxxx X. Perl
The 1994 Perl Trust Indenture
Xxxxxx Xxxxxxxxx
The Xxxxxxxxx Family Trust
Xxxxxxx X. Xxxxxxx
Xxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxx
Xxxxx Xxxxxxx
Xxxxxx Xxxxxxxx
