AGREEMENT

EXHIBIT 10.19

Acquisition Agreement, dated as of January 28, 2000, by and among Softchip
Israel Ltd., Softchip Technologies (3000) Ltd., Xxxx Xxxxx, Xxxxxxx Xxxxx and
the Registrant.

AGREEMENT

Made and signed as of the 28th day of January, 2000

By and between

Softchip Israel Ltd., a private company organized under the laws of the State of
Israel (Reg. No.: 51-162457-9), whose registered office is: 4/4 Frankfurter,
Jerusalem 97225, P.O.B: 23410 at Xxxxx Family ("Softchip Israel") and Softchip
Technologies (3000) Ltd a private company organized under the laws of the State
of Israel (Reg. No.: 51-245048-7), whose registered office is: 38 Nerot Shabat,
Jerusalem 91233, X.X.Xxx 23411 ("Softchip Tech") (Softchip Israel and Softchip
Tech shall be hereinafter referred to as the "Softchip")

of the one part

and

The Companies' founders - Xxxx Xxxxx (ID. No. 01-789046-8) and Xxxxxxx Xxxxx
(ID. Xx. 00-000000-0), xxxx xx 0/0 Xxxxxxxxxxx, Xxxxxxxxx 00000, P.O.B: 23410
(the "Founders")

of the second part

and

On Track Innovations Ltd., a company duly organized and existing under the laws
of the State of Israel (Reg. No.: 52-004286-2), and which its ordinary shares
are registered for trade in the Frankfurt Neuer Markt Stock-Exchange, having its
principle place of business at X.X.X. X.X., Xxxx Xxxx 00000, Xxxxxx ("OTI")

of the third part

Whereas: Softchip provides design services, directly, or as a sub-contractor, of
a wide range of electronic components including chips, smart card's
microprocessors, CPU simulators, as well as design of architecture for
semiconductors products, and develops operating systems for smart
cards, software for power line modems and internet security, which are
all based on proprietary inventions, know-how and technology which to
the best of Softchip's and the Founders' knowledge solely belong to
Softchip, and has worldwide reputation and working relationship with
leading smart card chip manufacturers, and;

Whereas: OTI is a world leader in contactless smart cards and readers
technology, and develops and markets certain proprietary technology
relating to the same and to the development of products based thereon,
and;

Whereas: The Founders, who own the entire outstanding and paid up share capital
of Softchip, wish to transfer to OTI their entire holdings in Softchip
in return for allotment of OTI shares to the Founders, and OTI is
interested to receive such holdings, all subject to the terms and
conditions hereinafter set forth in this Agreement.

NOW THEREFORE, the parties declare, stipulate and agree as follows:

1. The Transaction

1.1. Subject to the terms and conditions hereinafter set forth in this
Agreement, and each party relying on the representations of the other
party contained herein, each of the Founders hereby undertake to
transfer to OTI and OTI hereby undertakes to receive from each of the
Founders such number of ordinary shares of NIS 1.00 n.v. each of
Softchip Israel as listed opposite its name in the second column of the
first table set forth in section 1.3 below, which constitutes such
percentage of the entire outstanding share capital of Softchip Israel as
listed opposite its name in the third column of the first table set
forth in section 1.3 below (the "First Transferred Shares"), and such
number of ordinary shares of NIS 1.00 n.v. each of Softchip Tech as
listed opposite its name in the second column of the second table set
forth in section 1.3 below, which constitutes such percentage of the
entire outstanding share capital of Softchip Tech as listed opposite its
name in the third column of the second table set forth in section 1.3
below (the "Second Transferred Shares") (the First and Second
Transferred Shares shall be collectively called the "Transferred
Shares"), as shares fully paid up non assessable and free and clear of
any pledges, encumbrances, liens or other third party's right
(collectively ("Pledges"), constituting immediately following Closing
(as defined below), 100% of the equity and voting rights in Softchip.

It is recorded by the parties, that OTI receives the Transferred Shares
as "one block" and that failure by any of the Founders to transfer to
OTI its part of the Transferred Shares shall cause this Agreement to
become null and void, without derogating from any of OTI's rights or
remedies.

1.2. In consideration for the Transferred Shares and against their transfer
to OTI as set forth in section 1.1 above, OTI shall allot to each of the
Founders and Founders hereby undertakes to acquire and receive by way of
allotment from OTI, at the Closing (as defined below), the number of
ordinary shares of NIS 0.01 n.v. each of OTI, as listed in the fourth
column of the first table set forth in section 1.3 below (the "First
Allotted Shares"), which constitutes such percentage of the First
Allotted Shares as listed opposite its name in the fifth column of the
first table set forth in section 1.3 below, and the number of ordinary
shares of NIS 0.01 n.v. each of OTI, as listed in the fourth column of
the second table set forth in section 1.3 below (the "Second Allotted
Shares"), which constitutes such percentage of the Second Allotted
Shares as listed opposite its name in the fifth column of the second
table set forth in section 1.3 below, (the First and Second Allotted
Shares shall be collectively called the "Allotted Shares"), as shares
fully paid up, non assessable and free and clear of any pledges.

1.3.

--------------------------------------------------------------------------------------------
Name No. of Percentage of No. of shares Percentage of
Softchip Softchip Israel's allotted the First Allotted
Israel's shares outstanding share Shares
transferred capital
--------------------------------------------------------------------------------------------

Xxxx Xxxxx 901 45.05% 27,297 45.05%
--------------------------------------------------------------------------------------------
Xxxxxxx Xxxxx 1099 54.95% 33,295 54.95%
--------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------
Name No. of Percentage of No. of shares Percentage of
Softchip Softchip Tech's allotted the Second
Tech's shares outstanding share Allotted Shares
transferred capital
--------------------------------------------------------------------------------------------

Xxxx Xxxxx 10 10% 6,059 10%
--------------------------------------------------------------------------------------------
Xxxxxxx Xxxxx 90 90% 54,544 90%
--------------------------------------------------------------------------------------------

1.4. The Allotted Shares constitutes the full, final and absolute
consideration for the Transferred Shares.

1.5. Following the allotment of the Allotted Shares, OTI, at its own expense,
will effect as soon as possible and to the possible extent within 75
days of the Closing (as defined hereunder) the registration of the
Allotted Shares with the proper authorities and list such Allotted
Shares on the Frankfurt Neuer Markt Stock-Exchange.

2. Lock-Up

The Founders hereby undertake not to sell any of the Allotted Shares during
the period commencing at signature hereof and ending 2 (two) months
thereafter (the "First Lock-Up Period"). At the end of the First Lock-Up
Period, the founders shall be entitled to sell up to 1/3 of the Allotted
Shares. The remaining 2/3 of the Allotted Shares shall continue to be
locked-up for another 10 months period commencing at the end of the First
Lock-Up Period (the "Second Lock-Up Period"). At the end of the Second
Lock-Up Period the Founders, subject to the provisions of section 9 below,
shall be entitled to sell up to 1/3 of the Allotted Shares. The remaining 1/3
of the Allotted Shares shall continue to be locked-up for another 12 (twelve)
months period commencing at the end of the Second Lock-Up Period (the "Third
Lock-Up Period"), at the end of which, the Allotted Shares, subject to the
provisions of section 9 below, shall be free of the Lock-Up. OTI, at its sole
discretion may shorten any Lock-Up Period by written notice to the Founders.
For the Avoidance of doubt, subject to the provisions of section 9 below the
Founders are entitled to transfer the Allotted Shares during the Lock-Up
Periods to a company fully owned by them, subject to such company's
undertaking to abide with the provisions set in this section 2, and provided
that such company shall remain fully owned by them for the duration of the
Lock-Up Periods.

3. Conditions Precedent

The obligations of OTI to close the transactions contemplated by this
Agreement are subject to the following conditions, any or all of which may be
waived by OTI in writing, provided, however, that no such waiver of a
condition shall constitute a waiver by OTI of any of its other rights if any
of Softchip or Founders, as the case may be, shall be in default of any of
their representations and warranties under this Agreement.

3.1. All representations and warranties of any of Softchip, or the Founders,
as the case may be, to OTI, contained herein, shall be true and correct
at the time of the Closing as though made again at that time.

3.2. Softchip shall have prepared unaudited financial statements for December
31st, 1999 and the year ended at such date (the "1999 Financial
Statements"). It is agreed that should Softchip not meet with the above
undertaking by the Closing, the unaudited financial statements for
October 31st, 1999 shall be enclosed as part of Annex H and the 1999
Financial Statements will be prepared and attached to this Agreement by
no later than February 15th, 2000 and shall form an integral part
thereof. It is recorded that Founders' representations and undertakings
under section 5.17 hereunder shall apply both to the unaudited financial
statements for October 31st, 1999 and to the 1999 Financial Statements.

3.3. Softship shall have signed a confidentiality, non-competition, and
assignment of Intellectual Property Rights agreement with Xxxxxx Xxxxxx
to the complete satisfaction of OTI.

3.4. Softchip shall have paid any current and former employees of Softchip,
all payments which are due for the period ending on the Closing
(including, but not limited to, severance pay, salaries and all
contributions to each benefit plan - as defined below). Founders
undertake to complete by no later than the Closing, all necessary
contributions required under any applicable law in connection with
Softchip's employees and their employment with Softchip, for the period
ending on the Closing.

Immediately following signature hereof, Softchip and the Founders shall take
all necessary action in order to complete, as soon as possible, performing
the actions and obtaining the approval described above, including without
limitation duly summoning a meeting of Softchip Israel's and Softchip's
Tech's Board of Directors (collectively the "Board") to the date and time of
Closing.

4. Closing

The Closing of the transactions contemplated under this Agreement shall take
place at the offices of Bach, Arad, Xxxxxx & Co. (the "Attorneys") at 2
Hashalom Rd., Tel-Aviv on January 22nd, 2000, or such deferred date as shall
be agreed by the parties (respectively "Closing" and "Closing Date"). At the
Closing and immediately thereafter the parties or their authorized
representatives shall perform the actions specified in Annex A hereto and in
the Order set thereto.

5. Founders' representations

Founders, jointly and severally, hereby represent and undertake towards OTI
that:

5.1. Organization

Softchip Israel

5.1.1. Softchip Israel was incorporated on November 25th, 1991 under the
name Softchip Israel Ltd. as a private company, limited by
shares, under Reg. No. 00-000000-0.

5.1.2. Softchip Israel's registered share capital as at the date hereof
is NIS 17,600 divided into 17,600 Ordinary Shares of NIS 1.00
n.v. each. The Company's outstanding share capital is as set
forth in Part 1 of Annex B hereto.

5.1.3. Founders are the sole directors of Softchip Israel at the date
hereof. The signatures of any of Xxx. Xxxx Xxxxx and Mr. Xxxxxxx
Xxxxx, separately or jointly with or without Softchip Israel's
stamp binds Softchip Israel for any purpose.

Softchip Tech

5.1.4. Softchip Tech was incorporated on February 17th, 1997 under the
name Softchip Technologies (3000) Ltd. as a private company,
limited by shares, under Reg. No. 00-000000-0.

5.1.5. Softchip Tech's registered share capital as at the date hereof is
NIS 30,000 divided into 30,000 Ordinary Shares of NIS 1.00 n.v.
each. The Company's outstanding share capital is as set forth in
Part 3 of Annex B hereto.

5.1.6. Founders are the sole directors of Softchip Tech at the date
hereof. The signatures of any of Xxx. Xxxx Xxxxx and Mr. Xxxxxxx
Xxxxx, separately or jointly with or without Softchip Tech's
stamp binds Softchip Tech for any purpose.

Softchip

5.1.7. True copies of the certificate of incorporation, memorandum and
articles of association as at the date hereof of Softchip are
contained in Annex C hereto.

5.1.8. There is no person or entity (including Softchip's shareholders)
holding any right whatsoever to receive shares, or other
securities or rights, in Softchip, whether by virtue of options
or by virtue of the holdings of convertible securities or by
virtue of any other rights whatsoever.

5.1.9. Softchip do not own or control, directly or indirectly, shares or
other securities or interests in any other corporation,
association, business or other legal entity.

5.1.10. Softchip Israel and Softchip Tech have been autonomous during the
period of two years before the initiation of the transaction
contemplated hereunder. Notwithstanding the generality of the
above, Softchip Israel and Softchip Tech have not been a division
or subsidiary of another company or have had one institutional
investor (including a venture capital firm) who controlled more
than 50% of their voting capital during the said two years
period.

5.1.11. Subject as otherwise expressly provided in this Agreement, up to
the Closing, Softchip shall not adopt without OTI's prior written
approval, whether at general meetings or at the Board, any
resolution whatsoever.

5.2. Authorization

5.2.1. Softchip has the necessary power and authority to execute this
Agreement, authorize to transfer of the Transferred Shares and to
carry out and perform their obligations thereunder.

5.2.2. This Agreement is valid and binding upon Softchip and the
Founders.

5.3. Transfer of the Shares

5.3.1. Following the transfer of the Transferred Shares to OTI pursuant
to this Agreement, OTI shall hold, on a fully diluted basis, 100%
of the outstanding share capital of Softchip.

5.3.2. Except as otherwise expressly provided in this Agreement, until
Closing, Softchip shall not allot, and the Founders shall not
transfer, shares or other securities of Softchip to any person or
entity (including Softchip's shareholders or employees), and
shall not grant any option to purchase such shares or securities,
without OTI's prior written approval.

5.4. Consents for transaction

5.4.1. No obligation is imposed upon Softchip to obtain an approval or
authorization from any competent authorities, banks, or any other
third party, in relation with the transactions contemplated
herein, no person or entity whatsoever has any right of first
refusal or other preemption rights of any kind, relating to the
Transferred Shares; and there exists no hindrance, whether by
statute, contract, or otherwise, preventing Softchip and the
Founders from entering into this Agreement, and fulfilling their
respective undertakings in terms hereof.

5.4.2. Softchip have adopted all resolutions necessary to enter into
this Agreement and fulfill their undertakings therein, and in
accordance with such resolutions, Mr. Xxxxxxx Xxxxx is entitled
to sign this Agreement on behalf of Softchip.

5.5. Intellectual Property Rights

5.5.1. As at the date hereof, and as of the Closing, Softchip owns and
shall own all intellectual property necessary for the operation
of the busnesses of Softchip as presently conducted, including,
without limitation, all the items set forth in Annex D hereto
("Intellectual Property"). Each item of Intellectual Property
owned or used by Softchip immediately prior to the Closing shall
be owned or available for use by Softchip on identical terms and
conditions immediately subsequent to the Closing hereunder.

5.5.2. To the best of the Founders' knowledge, the Intellectual Property
does not interfere with, infringe upon, misappropriate, or
otherwise come into conflict with any intellectual property
rights of third parties, and Softchip has not received any
charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation
(including any claim that Softchip must license or refrain from
using any rights of any third party). No third party has
interfered with, infringed upon, misappropriated, or otherwise
comes into conflict with any Intellectual Property rights of
Softchip.

5.5.3. Annex D identifies each patent or registration which has been
issued to Softchip with respect to any part of their Intellectual
Property, and each of the pending patent applications or
application for registration which Softchip have made with
respect to any of their Intellectual Property. Softchip have not
granted any license, agreement, or other permission to any third
party with respect to any of their Intellectual Property.
Softchip have delivered to OTI correct and complete copies of all
such patents, registrations and applications, (as amended to
date) and have made available to OTI correct and complete copies
of all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. Annex D also
identifies each trade name or trademark used by Softchip in
connection with any of their businesses. With respect to each
item of Intellectual Property required to be identified in Annex
D:

5.5.3.1. Softchip possess all rights, title, and interest in and
to the item, free and clear of any interest, license, or
other restriction;

5.5.3.2. the item is not subject to any outstanding injunction,
judgment, order, decree, or charge;

5.5.3.3. no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or
threatened to the best knowledge of Softchip, which
challenges the legality, validity, enforceability, use,
or ownership of the item; and

5.5.3.4. Softchip have not agreed to indemnify any person for or
against any interference, infringement,
misappropriation, or other conflict with respect to the
item.

5.6. Title to Assets

5.6.1. Annex E contains separate lists of all equipment and other
chattels owned by Softchip and used by them in, for the purpose
of, or in connection with their business (the "Fixed Assets"). Is
recorded that Annex E attached hereof reflects the status as at
11.11.99 and Founders undertake to prepare and provide OTI by not
later than February 15th, 2002, with an updated list as at the
date thereof, which shall be enclosed to this Agreement and the
provisions of this section 5.6 shall apply to it as well.

5.6.2. The Fixed Assets are in good operating condition and repair
(ordinary wear and tear excepted) and are suitable for the
purposes used.

5.7. Real Property. Softchip do not own any real property. The premises
presently used by Softchip for conducting their business are leased
under a lease agreement dated January 1st, 1997 between Amutat Keren
Beit Israel (the "lessor") and Softchip Israel (the "Lessee"), and
addendum to such agreement which allowed the lessee to enable Softchip
Tech to use the property provided that it will be subject to the
provisions of the lease agreement. The period of the lease agreement has
ended on December 31st, 1998. The period was not extended, but the
parties continue to act according to the provisions of the agreement. A
true and updated copy of the lease agreement and its amendments were
disclosed to OTI.

5.8. Loans. Softchip do not have any outstanding loans whatsoever, including,
without limitation, bank credit facilities. From the date hereof and
until the Closing, Softchip shall not take any loan whatsoever, without
OTI's prior written consent.

5.9. Guarantees

5.9.1. Softchip do not have any outstanding guarantees whatsoever,
whether to secure Softchip's commitments or the commitments of
any other person or entity (including Softchip's employees), from
the date hereof and until the Closing. Softchip shall not grant
any guarantees, unless made in the ordinary course of business.

5.9.2. No guarantees were given by third parties (including by the
Founders) to secure Softchip's commitments to other or others,
which are in force at the date hereof.

5.10. Contracts and Commitments

5.10.1. Annex F hereto contains a complete list of all of Softchip's
contracts which are in force at the date hereof (the
"Contracts"). True copies of the Contracts were provided to
OTI.

5.10.2. Unless otherwise disclosed by Softchip in Annex F hereto, the
Contracts are in full force and effect, Softchip fulfilled all
of their obligations under the Contracts which are due up to
the date hereof, and to the best of the knowledge of Softchip
and the Founders, none of the other parties to the Contracts
has any ground to cancel or rescind the Contract, and from the
date hereof and until the Closing Softchip shall not agree to
amend the terms of the Contracts or any of them, and Softchip
shall not enter into any substantial or other contracts not in
the ordinary course of business, except with OTI's prior
written consent.

5.10.3. To the best of the knowledge of Softchip and the Founders,
American Card Technology, Inc. ("ACT"), has no ground to raise
any claim against Softchip Israel in relation with the
agreement signed between the parties on March 7th, 1998.

5.11. Customers
The main customers of Softchip (i.e., customers which have purchased
more than 5% of the annual turnover of Softchip) for the years 1997,
1998 and 1999 and the sales made to each such customer, on a quarterly
basis, for each such year is listed in Annex G.

5.12. Warranty for Products
All products sold by Softchip to customers were sold under regular
commercial terms and in particular and without derogating from the
generality of the above, Softchip has not offered to any of its
customers warranties for a period of more than twelve months.

5.13. Softchip's Liability
Softchip do not have any other liabilities or obligations, whether or
not absolute, accrued, contingent, known, unknown (other than unknown
liabilities which are immaterial in amount) or otherwise, and there are
no and until the Closing Date there will not be any further debts and
liabilities or any other creditors, other than debts and liabilities
incurred in the ordinary course of Softchip's Business.

5.14. Pledges
Softchip do not have any Pledges whatsoever, from the date hereof and
until the Closing. Softchip shall not incur any Pledges, without OTI's
prior written consent.

5.15. Litigation
There are no claims in existence or pending before judici8al or
quasi-judicial instances, against Softchip (or any of the Founders
which may have a repercussion or effect on the business of Softchip)
and there does not exist any judgment given in a claim against Softchip
which was not yet executed. Softchip and the Founders are not aware of
any person's or entity's intention to submit any claim against Softchip
and likewise of any investigation which is - or is seriously considered
of - being conducted by any legal authority against Softchip.

5.16. Compliance with Laws

5.16.1. Softchip have complied, and are complying in all material
respects with, all laws, orders, ordinances, rules and
regulations relating to its properties, business, products, and
the operation and conduct thereof and with all provisions of
their Memorandum and Articles of Association. Softchip have not
received notice of violation of any applicable law, regulation,
ordinance or order of a material nature with respect to their
business, properties or products and are not aware of any
investigations or inquiries by or on behalf of any governmental
body in respect of their affairs pending or taking place.

5.16.2. Softchip carries on the business described in the preamble to
this Agreement, and have all licenses and approvals necessary
or required under any law to allow them to do their business as
and where currently conducted.

5.17. Financial Statements and Conduct of the Company's Business

5.17.1. Annex H contains Softchip's audited financial statements for
December 31, 1998 and the year ended at such date (the "1998
Financial Statements") and the 1999 Financial Statements.

5.17.2. The 1998 Financial Statements and the 1999 Financial Statements
fairly reflect the respective business situation of Softchip,
their assets and liabilities as at December 31, 1998, and at
December 31st, 1999, respectively, and the profit and loss
statements of Softchip contained in the 1998 Financial
Statements and the 1999 Financial Statements fairly reflect the
respective result of Softchip's operations during the periods
ended at their respective dates.

5.17.3. Since the date of the 1999 Financial Statements:

5.17.3.1. there has been no material adverse change in the
condition (financial or otherwise), business,
property, assets and liabilities of Softchip and
their business.

5.17.3.2. Softchip have, and until the Closing Date shall have
conducted their business only in the ordinary course
of business.

5.18. Employees

5.18.1. Annex I hereto contains full, true and accurate details of
Softchip's employees, their duties, date of beginning of their
employment, monthly salary and other terms of employment,
including, full, true and accurate particulars regarding the
number of leave, sickness or recreation days standing to the
credit of such employee as at the Closing Date or other
accumulated rights as at such date.

5.18.2. Annex I further lists each employee benefit or executive
insurance policy (the "{Benefit Plan") that Softchip maintains
or to which Softchip contributes. All contributions (including
all employer contributions and employee salary reduction
contributions) which are due, have been paid to each Benefit
Plan, and all contributions for any period ending on or before
the Closing which are not yet due to each Benefit Plan have
been accrued in accordance with the past custom and practice of
Softchip. All premiums or other payments for all periods ending
on or before the Closing have been paid with respect to each
employee Benefit Plan which is an employee welfare benefit
plan.

5.18.3. Annex I further contains a form of an employment agreement and
confidentiality and non-competition undertaking of Softchip's
employees; All employees, consultants, former employees and
former consultants of Softchip which deal and/or dealt with
Softchip's Intellectual Property, have signed an employment
agreement and a confidentiality, assignment of intellectual
property rights, non-competition and non-solicitation of
employees undertaking towards Softchip identical to such forms
(save as otherwise set forth in Annex I)

5.19. Interested Parties: Shareholders

5.19.1. There are no agreements in force between Softchip and any of
their respective shareholders, directors, affiliates of
shareholders and directors or any other interested party in
Softchip, and/or agreements which are related in any manner to
Softchip's capital and corporate structure of their business.

5.19.2. There is no agreement (written or oral) which is or may be
deemed to be a voting agreement, or which otherwise grants any
of the parties any right in Softchip not expressly set forth in
this Agreement or in the Articles of Association.

5.20. Taxation

5.20.1. Softchip duly submitted to the Income Tax Authorities reports
relating to its respective income up to and including the
fiscal year of [1998]; up to the date hereof. Softchip did not
have any taxable income, and Softchip duly submitted to the
Value Added Tax Authorities current VAT reports and paid what
was due by them as arising from such reports.

5.20.2. Nothing in this Agreement or its execution shall impose any tax
liability of any sort on Softchip.

5.21. Indebtedness. Softchip is not indebted to any director, officer, or
employee, except for amounts due as normal salary, wages or
reimbursements of expenses in the ordinary course of business. No
shareholder, director, officer, or employee of Softchip is indebted to
Softchip.

5.22. No Broker. No agent or broker or other person acting pursuant to
authority given by Softchip is entitled to any commission or finders'
fee in connection with the transaction contemplated by this Agreement.

5.23. Insurance

5.23.1. Annex J hereto details the true, complete and accurate details
on all insurance policies for the benefit of Softchip,
purchased by and currently in force at the date hereof. Such
insurance is commonly procured by responsible companies
similarly situated and is in material accordance with all
contractual requirements applicable to Softchip, and Softchip
shall continue to maintain such commonly procured insurance.
Without derogating from the aforesaid, the insurance policies
held by Softchip shall include, without limitation, policies
insuring (i) Softchip's assets for their full replacement or
reinstatement value, and (ii) against accident, damage, injury,
third party loss.

5.23.2. Softchip have not done nor suffered anything to be done which
has rendered or might render any policies of insurance taken
out by them void or violable or which might result in an
increase in premiums; Softchip have complied with all
conditions attached to such policies.

5.23.3. There are no claims or circumstances giving rise to a claim
under any of Softchip's insurance policies.

5.24. Full Disclosure. The representations and warranties of Softchip and the
Founders contained in this Agreement and the information and statements
furnished in writing to OTI do not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made therein, not misleading Softchip and the Founders are
not aware of any material facts or circumstances which were not
disclosed by Softchip in writing to OTI and which, had they been so
disclosed, would have prevented OTI from entering into this Agreement.

6. OTI's representations

OTI hereby represents and undertakes towards Softchip and the Founders as
follows:

6.1. It is validly incorporated and has the full legal right and power to
enter into and perform this Agreement.

6.2. Its ordinary shares are registered for trade in the Frankfurt Neuer
Markt Stock-Exchange. OTI has not received any notice of delisting its
shares from trade or has any knowledge of a cause for such notice.

6.3. OTI has adopted all the resolutions required under its incorporation
documents so as to empower it to enter into this Agreement and to
fulfill its undertakings under this Agreement.

6.4. No obligation is imposed upon OTI to obtain an approval or authorization
from any competent authorities, banks, or any other third party, in
relation with the transactions contemplated herein, except for the
approval required by the Frankfurt stock exchange in order to register
the Allotted Shares for trade; and except as aforesaid, there exists no
hindrance, whether by statute, contract, or otherwise, preventing OTI
from entering into this Agreement, and fulfilling its respective
undertakings in terms hereof.

6.5. Without derogating from the representations and warranties set forth in
section 5 above or the Founders' and Softchip's liability therefor under
this Agreement, OTI represents that it has been given access to
information regarding Softchip, and has had an opportunity to ask
questions and receive answers from the Founders and Softchip's
representatives, concerning Softchip.

7. Information Rights

Softchip shall provide OTI with all the necessary statements in due time in
order to enable OTI to meet with the disclosures required from OTI under the
German Security Law and/or the requirements and/or regulations of the
Frankfurt Neuer Markt Stock-Exchange. OTI shall be entitled to publish any
information concerning Softchip, its capital and/or their business which
such entities shall be required to disclose by applicable law and
regulations, including without being limited to, in relation with public
offering of securities of such entities, or with disclosures required from
public companies under the securities laws of the jurisdictions in which such
entities are traded.

8. Legal counsels' opinion

At the Closing:

8.1. Softchip shall deliver to OTI its legal counsel's opinion in the form
attached as Annex K hereto.

8.2. OTI shall deliver to Softchip its legal counsel's opinion, certifying
that OTI has adopted all the resolutions necessary to empower it to
enter into this Agreement and to fulfill its undertakings under this
Agreement, and that in accordance with the said resolutions, Xx. Xxxx
Xxxxxx and Xxxxxx Xxxxxx were given the authority to sign this Agreement
and all ancillary documents required for its execution on OTI's behalf.

9. Indemnification

9.1. Softchip and each of the Founders, jointly and severally, shall
indemnify, defend and hold OTI harmless against any and all liabilities,
damages, claims, costs and expenses (including attorneys' and accounting
fees) incurred by OTI arising out of or resulting from (i) any breach of
any warranty or representation by Softchip and/or by the Founders
contained herein, or (ii) any undertaking and/or commitments and/or
liabilities ("liabilities") not included in the Financial Statements
and/or any difference between the contributions actually made on account
of such liabilities and the contributions that should have been made
according with generally accepted accounting principles. (iii) the non
performance of any covenant or obligation to be performed by Softchip or
the Founders under this Agreement, provided that with respect to the
above (i) OTI shall not bring any claim or a series of claims for
monetary compensation, unless the damage claimed in accordance therewith
are at least US$5,000 (five thousand U.S. dollars), or, in the case of
several damages, none of which amounts to US$5,000 (five thousand U.S.
dollars), the aggregate damages claimed in accordance therewith are at
least US$5,000 (five thousand U.S. dollars). (ii) OTI shall not be
entitled to bring any claim hereunder following 3 months as of the
approval by OTI's board of directors of the first Year end audit of the
combined operations of OTI and Softchip. (iii) OTI shall notify Softchip
and the Founders in writing promptly upon discovery by OTI of any claim
thereunder.

9.2. It is agreed that in order to secure Softchip and each of the Founders'
undertaking to indemnify OTI for breaches of general representations and
warranties, 10% of the Allotted Shares (the "Trust Shares") shall be
allotted at the Closing to the B.A.S. Trust Ltd. (the "Trustee"). The
Trustee shall hold the Trust shares in trust for OTI and the Founders,
subject to the terms and conditions set forth in the trust agreement and
irrevocable instructions attached as Annex L hereto (the "Trust
Agreement"). Unclaimed shares out of the Trust Shares, shall be released
from Trust on the earlier of one year from the Closing or the first Year
and audit of the combined operations of OTI and Softchip. OTI shall bear
all costs of the Trustee.

9.3. It is further agreed and recorded that claims against shares held in
Trust shall be valued at the Closing Date price.

9.4. For avoidance of doubt, it is agreed and recorded, that as long as any
part of the Trust Shares shall be held by the Trustee, any and all
rights attached to such shares shall be held in trust for the Founders.

10. Taxes and expenses

10.1. Each of the parties shall bear and pay the taxes and levies imposed on
it (if at all) under any law in relation with this Agreement and the
transactions contemplated therein.

10.2. Stamp duty, if payable in relation to this Agreement and all ancillary
documents, including stamp duty due in relation to the allotment of
the Allotment Shares shall be borne and paid by OTI.

11. Non Competition

Each of the Founders undertake that as long as Mr. Xxxxxxx Xxxxx shall be a
member of the Board and/or be employed by Softchip, and for a period of two
(2) years thereafter, they shall not, without OTI's or Softchip's prior
written approval (which shall not be unreasonably withheld), as the case may
be, sale, promote the sale, distribute, instruct, manufacture or develop
competing or similar products to the products of OTI or Softchip in the
smart card industry (the "Products"), or represent or agree to represent any
third party in respect to any product cmpeting or similar to the Products
and shall in no other way engage in activities which may directly or
indirectly jeopardize or come into conflict with the interests of OTI and/or
Softchip.

12. Miscellaneous

12.1. Additional Actions. Without derogating from the other parties'
obligations under this Agreement, each of the parties undertakes to
sign all documents and carry out all actions which signing or
execution by the parties are required to give effect to the provisions
of this Agreement and implement them.

12.2. Assignments. No party to this Agreement shall be entitled to transfer
or assign to other or others its rights or obligations under this
Agreement or arising therefrom, unless with the prior written consent
of the other party.

12.3. Law and Jurisdiction. This Agreement shall he governed by the laws of
the state of Israel and the competent courts in Tel Aviv shall have
exclusive jurisdiction in all matters pertaining to this Agreement.

12.4. Arbitration. (i) The parties shall endeavor to equitably settle any
dispute, questions or differences which may arise under this
Agreement, or in connection to this Agreement or in connection to the
transactions contemplated hereunder. (ii) In the event that the
parties are unable to reach an equitable settlement within 30 (thirty)
days, such a dispute shall be referred to a sole arbitrator determined
by the parties within such 30 (thirty) day period (the "Arbitrator").
If the parties shall not be able to reach an agreement in relation to
the identity of such Arbitrator within such 30 (thirty) days period,
then, upon the written request of either party (the "Request"), the
identity of such Arbitrator shall be determined by the President of
the District Court of Tel-Aviv, whose appointment shall bind the
parties. The Request shall be made after the lapse of 14 (fourteen)
days subsequent to a notice in writing by one party hereto having been
sent to the other party or parties stating the intention to make the
Request. (iii) The arbitration shall be held in Tel-Aviv, Israel. (iv)
The Arbitrator shall be bound to reason his decision and the
arbitration shall be subject to the substantive law (but not to rules
of procedure and evidence). The decision and award of such arbitration
shall be given within 30 (thirty) days from the date of appointment of
the Arbitrator (subject to any extension of such period up to not more
than 90 days determined in writing by the Arbitrator), and shall be
final and binding upon the parties.

12.5. Entire Agreement. This Agreement, including all annexes attached
hereto constitutes the entire understanding of the parties and
supersedes all oral or written representations or agreements,
privileges or understandings between the parties, including without
limitation the term sheet signed by the parties on November 5th, 1999,
which term sheet shall become, upon signature of this Agreement, null
and void.

12.6. Amendments. No modification or amendment of this Agreement may be made
except in a written instrument duly signed by all parties.

12.7. Waivers. A waiver by a party of any of its rights under this Agreement
shall not be effective unless made by a written instrument duly signed
by such party, and shall not be deemed a waiver of any other right
hereunder.

12.8. Headings. The headings in this Agreement are inserted only as a matter
of convenience, and shall not be taken into consideration in the
interpretation of this Agreement.

12.9. Preamble and Annexes. The preamble and annexes to this Agreement shall
constitute an integral part thereof (and the term "this Agreement"
appearing herein shall be interpreted as to include this document and
all annexes thereto).

12.10. Notices. Any notice sent by one party to the others to the addresses
set forth below shall be considered as having reached its destination,
if it was delivered by hand, at the time of its delivery; if it was
sent by registered mail, within 96 hours from the time it was so
dispatched; and if it was sent by facsimile, within 48 hours from the
receipt of the confirmation of proper transmission of the notice.

12.11. Addresses. The parties' addresses for the purpose of this Agreement
are as set forth below, unless otherwise notified in writing to all
parties:

Softchip Israel, Softchip Tech and Founders:

Address: 00 Xxxxx Xxxxxx, Xxxxxxxxx 00000 X.X. Xxx 00000

Tel: 00-0000000

Fax: 00-0000000

XXX

Xxxxxxx: X.X.X. X.X., Xxxx Xxxx 00000, Xxxxxx

Tel: 00-0000000

Fax: 00-0000000

In witness whereof the parties have set their signatures hereunto:

/s/ Softchip Israel Ltd. /s/ Xxxx Xxxxx
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Softchip Israel Ltd. Xxxx Xxxxx

/s/ Softchip Technologies (3000) Ltd. /s/ Xxxxxxx Xxxxx
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Softchip Technologies (3000) Ltd. Xxxxxxx Xxxxx

/s/ On Track Innovations Ltd.
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On Track Innovations Ltd.

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AGREEMENT

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