EXHIBIT 10.7
AGREEMENT
PURCHASE AGREEMENT AND ASSIGNMENT made this 5th day of December 1995 by and
between Gen Technologies Inc., a Delaware company (hereafter the " Purchaser")
and Xxxxxxxxx Xxxxx, an Israeli citizen, I.D. _________ (hereafter the "Seller")
W I T N E S S E T H:
WHEREAS, Seller is the sole owner of the Purchased Property (as defined
below); and
WHEREAS, the Purchaser desires to purchase, and the Seller desires to
sell and assign to the Purchaser, subject to the terms and conditions contained
herein, all of Seller's right, title and interest in and to Purchased Property
(as defined below); and
WHEREAS, the Purchaser and the Seller desire to set forth their
agreement relating to the sale and assignment to the Purchaser of all the
Seller's rights, title and interest to the Purchased Property.
NOW THEREFORE, in consideration of the terms and conditions hereafter
set forth, the Parties hereto mutually agree as follows:
1. Definitions & Interpretation
1.1 Definitions. As used herein, the following terms shall,
unless the context otherwise requires, have the following meanings ascribed to
them.
"Closing Date" shall mean December 11, 1995 or any subsequent date
mutually agreed to by the parties.
"Electronic Data Communication System" or "System" shall mean that
system described in the Patent Application defined below) on the date hereof.
"Patent Application" shall mean the application for patent made by the
Seller to the Israeli Patent Office for the Electronic Data Communication System
and bearing Patent Office Number 108912 dated 09.08.94.
"Documentation" shall mean all manuals and technical information
describing any aspect of the Electronic Data Communication System or designed to
facilitate the use or modification or enhancement of such system.
"Permits" shall mean all licenses, permits, authorizations, and other
approvals from any Israeli or foreign governmental, public, or self-regulatory
body or authority, or from any private party, pertaining to the System and the
Documentation.
"Intangible Property" shall mean shall mean all trade names and other
identifying names, all trademarks, service marks and other identifying names and
marks associated with the System, whether registered or unregistered, and all
applications, relating to the foregoing, all patents, copyright, copyright
registrations and patent applications therefor, together with all divisions,
renewals and continuations of any of the foregoing, and all know-how, unpatented
inventions, trade secrets and other intangible, intellectual property embodied
in or pertaining to the System and the Documentation.
"Technology" shall mean all things authored, discovered, developed,
made, perfected, improved, designed, engineered, acquired, produced, conceived
or first reduced to practice by the Seller or any of his employees or agents
that are embodied in, derived from or relate to the System, in any stage of
development, including without limitation, modifications, enhancements, designs,
concepts, techniques, methods, ideas, flow charts, coding sheets, programmer's
notes and all other information relating to the System whether or not such
information is subject to protection under any applicable intellectual property
law.
"Purchased Property" shall mean collectively, the System, Documentation,
Intangible Property, Patent application, Technology and Permits including,
without limitation, name and goodwill associated with the foregoing.
"Unit" shall mean a product or component wherein the System is the
predominant technology being used.
1.2 Interpretation. The recitals set forth above are incorporated
into the body of this Agreement and constitute an inseparable part thereof
2. Sale, Assignment and Purchase of Right, Title and Interests in
the Purchased Property
2.1 Subject to the terms and conditions set forth herein, and on
reliance on the representations and warranties of the Purchaser, on the Closing
Date the Seller shall sell, assign, grant, convey and deliver all of the
Seller's right, title and interests in and to the Purchased Property (hereafter
the "Sale and Assignment").
2.2 The Sale and Assignment shall be effected on the Closing Date
by assignments and such other instruments of transfer and conveyance as shall be
deemed necessary or desirable to counsel for the Purchaser including without
limitation, the Trust Declaration attached hereto as schedule A ("Trust
Declaration") and an assignment of
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ownership of the Patent Application to Xxxx Xxxxx, Adv. (hereafter the
"Trustee"). Such assignment to Trustee shall be registered forthwith by the
Purchaser in the office of the Commissioner of Patents, Designs and Trade Marks.
2.3 The Trustee shall transfer to the Purchaser the Patent
Application upon the occurrence of the following terms ("the Release
conditions"):
(i) the transfer or deposit of no less then
$105,000.000 in the aggregate into the Israeli Company's bank account as
provided for in section 11 below, which in no event shall be later than 150 days
of the Closing Date; and
(ii) at all times prior to the event specified in (i)
above, the Purchaser shall have paid the Gross Salary specified in the
Employment Agreement in accordance therewith.
In the event the Release Conditions are not satisfied then the
Trustee shall transfer forthwith, without consideration, the Patent Application
to the Seller.
2.4 The Seller and Purchaser shall act in accordance with the
terms and conditions set out in the Trust Declaration which forms an integral
part hereof
2.5 The Seller shall, at any time and from time to time after the
closing Date, upon the request of the Purchaser, execute, acknowledge and
deliver, and will cause to be done, executed, acknowledged and delivered all
such further acts, applications, deeds, assignments, transfers, conveyances and
assurances as may be reasonably required for the better assigning, transferring,
granting, conveying and confirming to the Purchaser, or to its successors and
assigns, the right, title and interests in any or all of the Purchased Property.
Prior to the fulfillment of the Release Conditions all such further
documentation will be assigned to the Trustee.
3. Consideration
3.1 The consideration for the Sale and Assignment shall be as
follows:
On or prior to closing the Purchaser shall cause to be
established a private company under the laws of Israel (hereafter the "Israeli
Company") of which the Seller shall own 5% of the ordinary shares which shall be
transferred into the name of the Seller without further consideration. The
Purchaser will cause the Israeli Company to enter into an employment agreement
with the Seller as set out in Schedule B attached hereto ("Employment
Agreement").
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4. Closing
The closing of the Sale and Assignment shall be at a mutually agreeable
place at 11:00 AM on the Closing Date.
5. Representations and Warranties of the Seller
The Seller represents and warrants to the Purchaser as of the
Closing Date as follows:
5.1 Conflicting Agreements; No Liens. Neither the execution nor
the delivery of this Agreement nor the fulfillment nor the compliance with the
terms and conditions hereof will constitute a breach of the terms, conditions or
provisions of, or constitute a default under or result in a violation of any
agreement, contract, instrument, order, judgment or decree to which the Seller
is a party or by which it is bound, or result in a violation by the Seller of
any existing law or statute or regulation or result in the creation or
imposition of any lien, charge, restriction, security interest or encumbrance of
any nature whatsoever on the Purchased property.
5.2 Consents. Other then with respect to assignment of the Patent
Application no consent or other approval of any governmental entity or other
person is necessary in connection with the execution of this Agreement or the
consummation by the Seller of the Sale and Assignment or any other transaction
contemplated herein.
5.3 Title to Purchased Property. Seller owns all the right, title
and interests in and to all the purchased property free and clear of all liens,
charges, encumbrances or title defects of any nature whatsoever, including,
without limitation, patent or intellectual rights or other proprietary fights
infringement.
5.4 Litigation. There are no actions, suits, proceedings or
investigations pending, or, to the knowledge of the Seller, threatened against
or involving Seller affecting the Purchased property.
5.5 Patents, Trademarks and Copyrights; Infringement. Other then
that relating to the patent application the Seller does not own any patents,
trademarks, patents rights, or copy fights, nor has the Seller applied for any
patent, trademark or copyright registrations, in respect of the System or any of
the purchased property. The Seller has not received any notice of claim of
infringement of any patent, invention, rights, trademarks, trade names or
copyrights of others with reference to the processes, methods, formulae or
procedures used by the Seller in the design, development, marketing or sale of
the System or any of the Purchased Property.
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5.6 Patent Application. The Patent Application is subsisting and
nothing has been done nor has any event occurred whereby the same may be
declared void or invalidated (but the Seller does not warrant that the
application will be granted).
5.7 Untrue Statements or Material Omissions. No representation or
warranty by the Seller, and no statement contained in any other instrument or to
be furnished to the Purchaser pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material fact which is
necessary in order to make the statements contained therein not misleading.
6. Representations and Warranties of the Purchaser
The Purchaser represents and warrants to the Seller as of the Closing
Date as follows:
6.1 Organization. The Purchaser is a company dully organized,
validly existing and in good standing under the laws of the State of Delaware.
6.2 Authority. Purchaser has full corporate authority to execute
and perform in accordance with this Agreement, and this Agreement constitutes a
valid and binding obligation of the Purchaser and is enforceable in accordance
with its terms.
6.3 Conflicting Agreements; No Liens. Nether the execution nor
the delivery of this agreement not the fulfillment nor the compliance with its
terms and conditions hereof will constitute a breach by the Purchaser of its
articles or memorandum of association or result in a breach.
7. Non-Competition
From the Closing Date and for a two (2) year period thereafter Seller
will not, directly or indirectly, for his own account or as an employee,
officer, director, partner, joint venturer, shareholder, investor, consultant or
otherwise (except as an investor in a corporation whose stock is publicly traded
and in whitch Employee holds less than 5% of the outstanding shares) interest
himself in or engage in any business enterprise anywhere in the world, that
directly competes with the System and applications being developed by the
Israeli Company, as now existing or after any modifications or enhancements
during the term of the Seller's employment with the Israeli Company.
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8. Secrecy and Nondisclosure
The Seller undertakes that he shall treat as secret and confidential all
of the Technology and Intangible Property and other information which are not of
public knowledge or record pertaining to the Purchased Property ( the
"Proprietary Information") and Seller shall not disclose, use, publish, or in
any other manner reveal, directly or indirectly, any such Proprietary
Information. For purposes hereof 'public knowledge' shall not include
information filed with the Patent Office in Israel.
9. Conditions Precedent of Purchaser
The obligations of the Purchaser under this Agreement are subject to the
conditions that on or prior to Closing Date the following conditions shall have
been satisfied in full, it being understood and agreed that if any of the
foregoing conditions shall not have been fulfilled by the Closing Date, the
Purchaser may terminate without penalty or liability this Agreement by written
notice to the Seller:
9.1 Accuracy of Representations and Warranties on Closing Date.
The representations, warranties, covenants and undertakings of the Seller
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof or in connection with the transactions contemplated
hereby shall be true on and as of the Closing Date as though such
representations, warranties, covenants and undertakings were made at and as of
such date, except as otherwise contemplated herein.
9.2 Seller's Compliance with Agreement. The Seller shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the closing of
this Agreement.
9.3 Injunction. On the Closing Date, there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as herein provided.
9.4 Approval of Proceedings. All actions, proceedings,
instruments and documents required to carry out this Agreement, or incidental
thereto, and all other related legal matters shall have been approved by Aboudi
& Xxxxxxxxxx, counsel for the Purchaser and Xxxxxx Xxxxx, counsel for the
Seller.
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10. Conditions Precedent of the Seller
The obligations of the Seller under this Agreement are subject to the
conditions that on or prior to the Closing Date the following conditions shall
have been satisfied in full, it being understood and agreed that if any of the
foregoing conditions shall not have been fulfilled by the Closing Date, the
Seller may terminate this Agreement by notice to the Purchaser:
10.1 Accuracy of Representations and Warranties on Closing Date.
The representations and warranties of the Purchaser contained in this Agreement
or in any certificate or document delivered pursuant to the provisions hereof or
in connection with the transactions contemplated hereby shall be true on and as
of the Closing Date as though such representations and warranties were made at
and as of such date, except as otherwise contemplated herein.
10.2 Purchaser's Compliance with Agreement. The Purchaser shall
have performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the closing of
this Agreement.
10.3 Injunction. On the Closing Date, there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as herein provided.
10.4 Guarantee. On Closing Date the Purchaser shall deliver to
the Seller the following executed guarantees
`Each of (Israeli Co.) and Gen Technologies Inc. hereby
undertake to guarantee the others obligations to Xxxxx Xxxxxxxxx
as specified in the agreement between Xxxxx Xxxxxxxxx and Gen
Technologies Inc. dated the 5th day of December, 1995 relating
to the sale of the Purchased Property described therein and the
obligations contained in the Employment Agreement attached
thereto. Notwithstanding anything to the contrary in the
Guarantee Law, the Seller will be entitled to join the guarantor
as a corespondent in any legal actions by Seller against the
principal.'
11. R&D
11.1 The Purchaser undertakes to provide or obtain funding for
further research and development (which will be used for payment of all Israeli
Company expenses including salaries, office expenses, professional fees and R &
D costs) of the System at least
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$105,000 US for the first six month period from the Closing Date. Such funding
shall be advanced to the Israeli Company by the Purchaser from time to time as
needed as determined by the Purchaser. On or before the Closing Date at least
$50,000.00 US shall have been transferred or deposited into the Israeli
Company's bank account in Israel ("Initial Deposit"). The $105,000.00 mentioned
in this section shall not be used for purposes other then in the ordinary course
of business of the Israeli Company without the consent of the Seller.
11.2 The Initial Deposit will be designated for, inter alia, the
employment of a second electrical engineer to be employed by Israeli Company as
soon as operations begin and the employment of a third electrical engineer after
two months of operation of the Israeli Company. The gross salary for each of the
two mentioned employees shall not exceed 7000NIS and 6500NIS respectively per
month.
11.3 Within twelve months of operations of the Israeli Company,
the Israeli Company shall issue, upon consultation with the Seller and without
payment of consideration, 5% of the ordinary shares of the Israeli Company to
its employees.
11.4 A further $25,000 will be deposited in the Israeli Company
account within 60 days of Closing Date and a further $45,000 will be deposited
in the Israeli Company account within 150 days of the closing Date.
11.5 The Purchaser acknowledges that the Israeli Company will
require premises of 20 square meters during the first six months of operations
and an additional 20 square meters thereafter.
11.6 Subject to Israeli Company's receipt of a proper R & D
budget plan for the second six months of operations the Purchaser undertakes to
provide $120,000 for R & D during the second six months of the Israeli Company's
operations.
12. Royalties
12.1 For a period of twenty years from the Closing Date the
Seller shall be paid a royalty of 20% of Purchaser's Net Profits from all sales
or licenses of Units. Royalties shall be paid at the end of each three month
period commencing upon the commercial distribution of Units. Accompanying each
payment of Royalties, the Purchaser shall provide a statement of sales to the
Seller but shall only be obligated to provide such statement if Royalties are
owing for the pervious three month period. `Purchaser Net Profits' shall mean
consideration received by Purchaser respecting use of Units, less customary
credits, discounts, returns, sales or value added taxes (but before income taxes
unless such taxes are required by law to be deducted or withheld in which case
Seller will be provided with proper tax authority's receipt) and less the cost
to Purchaser of components contained in each Unit.
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12.2 If the Company sells or licenses a product or component
wherein the System is not the predominant technology then the royalty payments
paid to the Seller shall be reduced by an amount to be agreed upon by the
Parties.
12.3 The Seller shall be paid 20% of consideration from any
subsequent sale or assignment of the Purchased Property excluding any sale or
assignment to and between affiliate companies of the Purchaser, and in such an
event will be provided with a lawyers certificate setting out consideration paid
to assignor.
12.4 The Seller shall be paid 15% of all Israel Net Profits from
all sales of products (including technology) sold by the Israeli Company.
`Israel Net Profits' shall mean consideration received by Israel Company
respecting products less customary credits, discounts, returns, sales or value
added taxes (but before income taxes unless such taxes are required by law to be
deducted or withheld in which case Seller will be provided with proper tax
authority's receipt) and where product is assembled or manufactured by the
Israeli Company, less the cost to the Israeli Company of the components
contained in each product.
12.5 During the Term of this Agreement, Purchaser grants to
Seller the following audit rights to the extent necessary to verify that
Purchaser is complying with its payment obligation under this Agreement (the
"Auditing Rights"). The Auditing Rights may be exercised once per year, by
giving Purchaser thirty (30) days written notice. Such audit will be conducted
by an independent auditor to be agreed upon by the parties who shall have signed
an appropriate non-disclosure agreement with Purchaser.
12.6 The exercise of the Auditing Rights shall be done at
Seller's expense, unless the audit reveals that there is a discrepancy of more
than 4% between the amount which Seller actually received and amount which
Seller should have received, in which case the Purchaser shall bear the cost of
such audit. In any event if the exercise of the Auditing Rights reveals money
owing to the Seller, such money will be paid forthwith.
12.7 In addition to the above Auditing Rights the Seller shall
have the right to appoint an agent to verify that payment obligations to Seller
hereunder are being fulfilled. This right may be exercised once per year, by
giving the Purchaser thirty (30) days notice. The Seller shall bear the cost of
exercising this right.
13. Miscellaneous
13.1 Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties, and supersedes any and all
prior discussions and agreements and correspondence, and may not be amended or
modified in any respect except by a subsequent writing executed by both parties.
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13.2 Successors & Assigns. Purchaser is entitled to assign to any
person or persons, firm or company the benefit of this Agreement and all or any
of the rights hereby sold and assigned to it and to sub-license the exercise
thereof and in any such event all the representations, warranties and covenants
on the part of the Seller herein contained shall to the extent of such
assignment or grant thereupon inure for the benefit of such assignee or grantee.
To the extent applicable all assignees of the Purchaser or Israeli Company or
subsequent assignees of assignees shall be obligated to perform and fulfill the
terms of sections 3, 11, 12.1, 12.2, 12.3 and 12.4 hereof and shall undertake
the same in writing. Upon any such assignment Seller will be provided with a
lawyer's certified copy of undertakings of assignee to perform and fulfill such
above mentioned sections. The Purchaser shall be responsible to Seller if an
assignee fails to carry out its obligations under the above mentioned sections
and the Seller is not in breach of any of his obligations hereunder.
The Seller shall not be entitled to assign or transfer his
obligations hereunder without the written consent of the Purchaser but all
rights and obligations hereunder shall continue to be binding upon and to
subsist and inure to the benefit of his respective successors and assigns. The
Seller shall be informed of any assignment hereunder within thirty days thereof.
13.3 Governing Law & Jurisdiction.
13.3.1 This Agreement shall be governed by and construed
in accordance with the laws of the State of Israel. All disputes, differences or
questions arising out of or relating to this Agreement, or pertaining to its
validity, interpretation, breach or violation or execution of any judgment shall
be decided exclusively by the appropriate court sitting in Tel Aviv-Jaffa.
13.3.2 Notwithstanding the above so long as Employment
Agreement is in force all disputes, controversies, differences or questions
arising out of or relating to technical matters and at all times relating to
section 13 will be finally and solely determined and settled by an arbitrator in
Israel, mutually agreed upon or appointed by the Parties.
In the absence of agreement between the Parties either shall have
the right to apply to the acting Chairman of the Institute of Architects &
Engineers in Israel to appoint an arbitrator to act in accordance with the
provisions set out in this sub-section.
13.4 Counterparts & Execution. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement may
be executed and delivered by fax and such delivery shall be valid and binding as
if signed in person.
13.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing this Agreement.
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13.6 Notices. All notices or other communications required or
desired to be sent to either Party shall be in writing and shall be sent by hand
or by Registered mail, postage prepaid, return receipt requested, or sent by
telegram or facsimile to the address set forth below or to such other address as
the recipient may designate by notice in accordance with the provisions of this
Section.
Purchaser: 00/0 Xxxxxx Xx., Xxxxxxxxx 00000 fax-638833
Seller: P.0. Xxx 00000 Xxxxxxxxx 00000
Any such notice shall have been deemed to have been delivered if served by hand
when delivered, if by Registered Mail 48 hours after posting if within the same
country or 14 days if posted from another country, and by telex or facsimile
transmission when dispatched and receipt confirmed by receiving Party.
13.7 Amendments & Waivers. Any term of this Agreement may be
amended and the observance of any term may be waived only with the written
consent of the party to be charged.
13.8 Nature & Survival of the Representations. All statements
contained in any certificate or other instrument delivered by or on behalf of a
party pursuant to this Agreement or in connection with the transactions
contemplated hereby shall be deemed representations and warranties by such
party. All representations and warranties and agreements made by the parties
hereto in this Agreement or pursuant hereto shall survive the Closing Date
hereunder.
13.9 Acknowledgment Regarding Legal Representation. Each of the
parties hereto acknowledges and confirms that it has had a full and complete
opportunity to obtain independent legal advice in connection with the
advisability of entering into this Agreement.
13.10 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provisions shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provisions were so excluded and shall be enforceable in
accordance with its terms.
13.11 Fundamental Breach. The breach of any of the following
sections will be considered a fundamental breach of this Agreement: 2, 3, 5, 6,
7, 8, 11, 12.
13.12 Trustee Fees. All expenses and fees of Trustee arising out
of this Agreement, but excluding any arising from the indemnity clause contained
in the Trust Declaration, shall be paid by Purchaser.
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IN WITNESS WHEREOF, the undersigned have set forth their signature as of
the date first written above.
Gen Technologies, Inc.
/s/ Xxxx Xxxxxxx /s/ Xxxxxxxxx Xxxxx
__________________________________ ___________________________________
By: Xxxxx Xxxxxxxxx
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