EXHIBIT 10.16
CONFIDENTIAL TREATMENT REQUESTED.
CONFIDENTIAL PORTIONS OF THIS DOCUMENT
HAVE BEEN REDACTED AND HAVE BEEN
SEPARATELY FILED WITH THE COMMISSION.
AGREEMENT
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Made and executed in Holon on December 3, 2000
BETWEEN Arad Technologies, Ltd. No.
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Of: 0 Xxxxxxxx Xx., Xxxxxxx
Hereinafter: "ARAD"
THE FIRST PARTY
AND BETWEEN Tadiran Telematics, Ltd. No. 0-000000-00
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Of: 00 Xxxxxxxxx Xx., Xxxxx Xxxxxxxxxx Xxxx
Hereinafter: "TELEMATICS"
THE SECOND PARTY
WHEREAS Arad hereby declares that it is a company specializing in the
field of automatic meter reading (AMR);
AND WHEREAS Telematics hereby declares that it is a company specializing
in the field of RF;
AND WHEREAS The parties wish to cooperate together in order to develop,
manufacture and market RF systems for the AMR field, whereby
subject to the terms of this agreement Arad shall not
agreement with any other RF company except for Telematics;
and vice versa, Telematics shall not agreement with any other
AMR company except for Arad;
THEREFORE THE PARTIES HAVE AGREED AND STIPULATED AS FOLLOWS:
1. The declarations of the parties, as specified in the preamble to this
agreement, shall constitute an integral part of this agreement and its
terms.
2. The period of the agreement shall be five years, from the date on which
this agreement is signed (hereinafter, "the Original Agreement Period").
Following the end of the Original Agreement Period, the agreement shall be
renewed automatically for a period of an additional year, each year
(hereinafter, "the Extension Period"), unless one of the parties shall
inform the other via registered mail with confirmed delivery, of their
desire to terminate the agreement, not later than 90 days prior to the end
of the Original Agreement Period and/or any Extension Period, as relevant.
Should one party inform the other party of their desire to terminate the
agreement, as stated, all of the parties' mutual undertakings made during
the Original Agreement Period or during any Extension Period shall remain
valid
3. A) Telematics hereby declares and undertakes that throughout the entire
Agreement Period, it shall not develop, manufacture, market, order
and/or agreement in any manner whatsoever, with any body engaged in
the "AMR" field, apart from Arad.
B) Arad hereby declares and undertakes that throughout the entire
Agreement Period, it shall not develop, manufacture, market, order
and/or contract in any manner whatsoever, with any body engaged in the
"RF" field, apart from Telematics, with regard to AMR-RF systems,
except as stated in sub-paragraphs (C) and (D) below.
C) Notwithstanding the contents of sub-paragraph (B) above, Arad has the
right to continue its cooperation with bodies, contractors,
manufacturers and other agents engaged in the RF field, and which are
specified in Appendix A to this Agreement, with regard to existing
projects and initiatives, until the conclusion of these agreements
with the said bodies. Arad shall not renew the agreements it has with
these bodies and shall contract with Telematics instead - to the
extent this is possible. As far as possible, Arad and Telematics shall
act to gradually replace the products of the said bodies with
Telematics products on an economic basis, and provided that Arad does
not suffer any damage as a result, such as: violation of existing
agreements, payment of compensation, payment of excess expenses,
increased costs, and the like.
D) Arad shall continue to grant services, including support, to bodies
and agencies entitled to such support therefrom, on the basis of
existing
agreements and undertakings, even with regard to products originating
from those said bodies and agencies as described in sub-paragraph (C)
above.
E) In the event new, competitive technologies are developed in the AMR-RF
field, which shall be more advanced than the technologies that have
been developed up to that point in time by Telematics under this
agreement or in general, Telematics shall have the right of first
refusal to develop technologies at the level of the said new
technologies.
In such a case, Arad shall contact Telematics in writing, and shall
specify the characteristics of the competitive system and shall
include all information known to it regarding this technology, its
features and applications, cost, name and supplier, and any other
information. Not later than 30 days after receiving said communication
from Arad, Telematics shall send written notice informing Arad whether
it has decided to exercise its right of refusal or not. Should
Telematics decide to exercise its right of refusal the parties shall
agree immediately on a reasonable timetable for developing
technologies at a comparable level.
In the event no such notice is given, or in the event that Telematics
decides not to exercise its aforementioned right of refusal, Arad
shall be entitled to contract with another supplier for the sole
purpose of this technology, on condition that it is identical to the
technology specified in Arad's said communication to Telematics.
4. Arad and Telematics do hereby undertake to develop, manufacture and market
together an AMR-RF system according to the system characterization to which
they shall agree, and financing and responsibility for each of the stages
shall apply to one of the companies, as specified below:
A) SYSTEM CHARACTERIZATION - to be defined together, according to the
marketing description supplied by Arad. The characterization shall be
owned by both of the parties.
B) DEVELOPMENT - to be carried out together, whereby the system
characterization shall specifically define the role of each party in
the
development process. Each party shall absorb the cost of developing
its own part, and shall be sole owners of that part of the
development.
The development stages shall be agreed between the parties, each stage
separately, and a joint committee consisting of the directors of both
companies, the project managers and Arad's marketing director, shall
decide with regard to its progress in a joint decision.
C) MANUFACTURING - to be carried out by Telematics, where Telematics
shall supply Arad with the electronic system and Arad shall be
responsible for installing and integrating it into the final product.
In stage 1, Telematics shall provide a prototype product for the
purpose of assessment and/or improvement and/or modification; Arad
shall assess and examine all aspects of the product, and on the basis
of the outcome of these tests Telematics shall make any modifications
and improvements accordingly.
D) MARKETING - to be carried out by Arad, in consultation with
Telematics.
E) SUPPORT - to be provided by Telematics, subject to a warranty and a
support agreement, which will also grant any technical assistance that
may be needed for the various markets, according to the support
agreements.
F) ANCILLARY PRODUCTS - such as: connections to cellular networks,
connections for hand-held (Palm) devices, etc., Arad shall give
Telematics the right of first refusal regarding all aspects of
developing and manufacturing ancillary products in Telematics's field
of expertise as defined in this agreement. The right of first refusal
mechanism shall be as stated above in paragraph 3(E), with the
necessary and relevant changes.
This paragraph shall not apply in the event the development is carried
out by Arad (development in analog, digital or cellular fields, etc.),
but shall apply to development in the RF sphere.
5. In exchange for manufacturing the system, Telematics shall receive from
Arad the production costs, as defined above, with the addition of the
following sums:
A) For the sale of up to *** units, the sum of $ *** , not including
VAT, *** $ *** in NIS (not including VAT).
B) For the sale of every unit above the first *** units - the sum of
$ *** in NIS, not including VAT, *** $ *** in NIS (not including VAT).
For the purpose of this paragraph:
"Unit" shall mean an RF unit, not including batteries but without the
housing.
"Production cost" shall mean the direct cost, i.e., the ex-factory
cost, without any other associated costs, such as publicity,
marketing, transportation, insurance, taxes, parts that do not belong
to the electronic components, such as plastic, glass, etc., and all of
the other items and components that are not directly associated with
the assembly line of the electronic product, but including
Telematics's cost for the ongoing operation of its assembly line and
support thereof, which shall be calculated once a year, and in any
case, shall not exceed the cost of an engineer's yearly salary and
shall not be less than half the cost of an engineer's yearly salary.
C) In exchange for manufacturing the system's ancillary components,
Telematics shall receive from Arad ***% of the production cost.
D) It is understood that all of the data required to calculate the
production costs, as defined above, shall be accessible and available
to Arad.
E) During the Agreement Period, and following completion of the product's
development according to the characterization and the goals defined,
Telematics shall begin the process of value engineering, with a view
to reducing the cost of the product without jeopardizing its quality
while improving the venture's profitability.
If Telematics is successful, then Telematics shall receive, after
carrying out the process, the following sums:
*** Confidential material redacted and filed separately with the Commission.
(1) For the first *** units sold - *** % of the total savings X the
number of units actually sold;
(2) Beyond the first *** units sold, no matter what the figure -
*** % of the total savings X the number of units actually sold.
F) The parties shall agree between them regarding the manner and terms of
the payments Arad is required to transfer to Telematics, according to
standard market conditions at the time relating to similar
transactions between companies, such as Net+, etc., and in accordance
with the payments made to the sub-contractor.
6. It is hereby agreed between the parties that any advertising and/or
presentation made by one party to this agreement that uses the name of the
other party, shall require prior approval by the party so mentioned in the
advertising and/or presentation.
7. During the Agreement Period, and even afterwards and subject to any law,
the parties do hereby undertake one towards the other to maintain absolute
confidentiality with regard to all of their joint business and/or the
business of each one separately, and this shall refer to the following
matters: finances, payments, costs, profit and loss, customers, suppliers,
sub-contractors, production and marketing techniques, processes and
methods, etc.
Any party that shall violate this paragraph shall be considered as if he
committed a substantial breach of contract, with all of the legal
consequences this entails.
8. Changes to the instructions contained in this agreement may be made only in
writing, and signed by the two parties.
9. Arad hereby undertakes to transfer to Telematics a deposit payment of
$ *** for LLI components within 30 days of the signing of this
agreement, and this shall be against an order for *** units.
AND IN WITNESS THEREOF THE PARTIES HAVE SIGNED ON THE AFOREMENTIONED DATE:
(-signed-) (-signed-)
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Tadiran Telematics, Ltd. Arad Technologies, Ltd.
*** Confidential material redacted and filed separately with the Commission.
ESCROW AGREEMENT
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This Escrow Agreement dated as of 11 June 2001 is entered into by and among
Tadiran Telematics Ltd. (hereinafter referred to as "Telematics"), a company
organized under the laws of ISRAEL), Arad Technologies Ltd. (hereinafter
referred to as "Arad"), a company organized under the laws of ISRAEL, and
________________ a corporation organized under the laws of Israel ("Escrow
Agent"), with reference to the following facts:
A. Telematics and Arad Technologies Ltd. (hereinafter referred to as "Arad") are
parties to that certain Agreement dated 3 December 2000 (the "AMR Agreement"); a
copy of which is attached hereto as Exhibit "A" concerning the development of an
AMR System (the "Product").
B. It is the policy of Telematics not to disclose the Production File of the
AMR system, except as provided in this applicable escrow agreement.
C. Telematics and Arad desire that upon the occurrence of certain events
described in Paragraph 3.1. below Arad will be entitled to use the AMR system
production file subject to the terms of this agreement.
THEREFORE, FOR VALUABLE CONSIDERATION Telematics, Arad and Escrow Agent agree as
follows:
1 Deliveries to Escrow Agent
1.1 Three months after delivery of the first AMR System production batch,
Telematics shall deliver the AMR system Production File to Escrow
Agent. Escrow Agent shall confirm to Arad, in writing, that the AMR
system production file have been deposited.
1.2 Telematics shall deliver, when applicable, and, on an annual basis, to
Escrow Agent the updates and new revision of any document included in
the AMR system Production File (the "Upgrades").
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2. Safekeeping of AMR system Production File
2.l The AMR system Documents held by the Escrow Agent shall remain the
exclusive property of Telematics, and the Escrow Agent shall not use
the AMR system Documents or disclose the same to any third party
except as specifically provided for herein. The Escrow Agent shall
hold the AMR system Documents in safekeeping as applicable for
commercially sensitive material at its offices indicated below unless
and until the Escrow Agent is to deliver the AMR system Documents to
Arad or Telematics.
2.2 The production file shall be identical to the production file provided
to the manufacturers and will include PCB layouts, Gerber files, xxxx
of material, production instruction, scheme drawings.
3. Conditions for Release of AMR system Production File
3.1 The occurrence of any of the following shall constitute a "Condition
of Release" or by Escrow Agent under this Agreement:
(a) The commencement of voluntary or involuntary receivership,
liquidation, winding up or reorganization proceedings against
Telematics, that will prevent the Telematics from fulfillment of
its obligations under the AMR Agreement, unless in the case of
involuntary matters such proceedings are discharged within ninety
(90) Days of their commencement, or any interim or permanent
receiver or liquidator is appointed over the Telematics rights
under the Contract or if Telematics becomes insolvent;
(b) Telematics does not execute a "AMR Purchase order" to Arad within
120 days of the mutually agreed upon delivery schedule and
provided that the delay is not due to external causes to which
Telematics has no control over;
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3.2 Arad shall give written notice (the "Release Notice") to the Escrow
Agent of the occurrence of any Condition of Release. The Release
Notice shall (a) identify the Agreement and this Escrow Agreement; (b)
specify the Condition of Release that has occurred; (c) identify the
AMR system Production File; and (d) demand the delivery of the AMR
system Documents to Arad.
3.3 Telematics, at any time, may give written notice (the "Termination
Notice") to the Escrow Agent. The Termination Notice shall (a)
identify the Agreement and this Escrow Agreement; (b) specify that the
Agreement has terminated for reason other than a Condition of Release;
(c) identify the AMR system Production File; and (d) demand delivery
of the AMR system Production File to Telematics.
3.4 Upon receipt of the Release Notice or the Termination Notice, the
Escrow Agent shall send a copy thereof to the other party. If the
other party desires to dispute the Release Notice or the Termination
Notice, such party shall, within forty-five (45) days after the
receipt of the copy of the Release Notice or the Termination Notice
from the Escrow Agent, deliver to the Escrow Agent a sworn statement
(the "Affidavit") stating that the specified condition or termination
has not occurred, whereupon the provisions of Paragraph 4 below will
become applicable. If the Escrow Agent received the Affidavit within
such forty-five (45) day period, the Escrow Agent shall send a copy
thereof to the party that sent the Release Notice or the Termination
Notice, and Escrow Agent shall continue to hold the AMR system
Documents under the terms of this Escrow Agreement. If the Escrow
Agent does not receive the Affidavit within such forty-five (45) day
period, the Escrow Agent shall deliver the AMR system Documents to the
party that sent the Release Notice or the Termination Notice.
4. Disputes
4.1 In the event that a party files the Affidavit with the Escrow Agent in
the manner and within the time period set forth in
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Paragraph 3.4 above, the Escrow Agent shall not release the AMR system
Documents to either party except (a) in accordance with a final
decision of the arbitration panel as set forth in Paragraph 4.2 below,
or (b) upon receipt of an agreement executed by Telematics and Arad,
authorizing the release of the AMR system Documents to Telematics or
to Arad.
4.2 Disputes arising out of or relating to this Escrow Agreement, or the
breach, termination, or invalidity thereof, shall be settled in
accordance with the applicable dispute resolution provisions set forth
in Para. 4.3 below. The Escrow Agent shall give prompt effect to any
authenticated arbitration award. Notwithstanding anything to the
contrary contained in this paragraph 4.2, neither party may terminate
the Agreement nor pursue any remedies for its material breach first
having given the breaching party written notice of the material breach
and an opportunity to cure such breach within forty-five (45) days of
the receipt of such written notice.
4.3 Dispute Resolution and Arbitration
(a) If one or more disputes arise between the parties with respect to
the obligations and responsibilities of either party under this
Agreement, any such dispute shall be resolved in accordance with
the process described in this Section 4.3, provided, however,
that if either party determines that provisional relief (e.g. a
temporary restraining order or preliminary injunction) is
required to provide temporary relief, nothing herein shall
prevent the aggrieved party from applying to a court for
provisional relief. An application for provisional relief to a
court shall not relieve either party of its obligation under this
section 3.4, and shall not alter the power of the arbitrator to
determine the rights and obligations of the parties under this
Agreement.
(b) The parties shall attempt to select a mutually acceptable
arbitrator. If, however, after 30 days of the declaring of a
dispute and the suggestion of a candidate for arbitrator, the
parties are unable to agree upon an arbitrator who is willing to
accept the
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appointment, the arbitrator shall be selected by the President of
the Israeli Bar Association, whose selection shall be binding
upon the parties.
(c) The arbitrator's fee and all other incidental costs incurred
during the arbitration process will be shared equally between the
parties.
(d) The arbitrator shall be neutral and impartial, and shall use the
laws of the State of Israel to resolve the dispute between the
parties.
(e) The arbitrator shall control the procedural aspects of the
arbitration. The parties shall cooperate fully with the
arbitrator at all times.
(f) The arbitrator shall, in consultation with the parties, fix the
agenda for all meetings.
(g) Each party may be represented by counsel, who shall be authorized
to recommend settlement options to their principals. Each party
shall bear their attorney's fees.
(h) The arbitration shall be conducted expeditiously and shall be
completed in less than 180 days from the date the arbitrator was
selected. Each representative shall make every effort to be
available for meetings, and the arbitrator shall ensure that he
is able to devote all the time necessary to quickly and
effectively render an arbitration judgement.
(i) The entire arbitration shall remain confidential. The parties or
the arbitrator shall not disclose information regarding the
process, including settlement terms, unless the parties agree
otherwise.
The arbitrator may obtain assistance and independent expert
advice with the agreement of and at the expense of the parties.
(j) The arbitrator shall not be liable for any good faith act or
omission in connection with his role as arbitrator.
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(k) The arbitration shall take place in Tel-Aviv, Israel.
(l) The arbitrator's decision shall be final and binding upon both
parties.
5. Payment to Escrow Agent
The fees of the Escrow Agent for acting as escrow agent hereunder shall be
shared equally by Telematics and Arad.
6. Termination
This Escrow Agreement shall terminate upon delivery of the AMR system
Production File to either Telematics or Arad in accordance with the terms
of this Agreement.
7. Modification; Severability
This Escrow Agreement shall not be waived, amended or modified except by
the written agreement of all the parties hereto. Any invalidity, in whole
or in part, of any provision of this Escrow Agreement shall not affect the
validity of any other of its provisions.
8. Notice
All notices under this Agreement shall be in writing and shall be effective
when delivered in person to the recipient by courier.
All Notices to Telematics shall be delivered to:
Tadiran Telematics Ltd.
26, Hashoftim St., XXXxx 000
Xxxxx 00000
Tel.: 00-0000000
Fax: 00-0000000
Attention: Eddy Kafzy
All notices to Arad shall be delivered to:
Arad Technologies Ltd.
POB 332 Yakedon 00000 Xxxxxx
Tel: 00-0000000
Fax: 00-0000000
Attention: Don Winter
All notices to Escrow Agent shall be sent to:
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9. Limitations or Responsibility and Liability
9.1 The Escrow Agent shall exercise reasonable care as provided in Para.
2.1 above with respect to safekeeping of the AMR system Documents and
shall provide at least the same degree of care for the AMR system
Production File as it maintains for its valuable documents and those
of its customers lodged in the same location with appropriate
atmospheric or other safeguards.
9.2 The Escrow Agent shall be protected in acting upon any written notice,
request, waiver, consent, receipt, or other paper or document
furnished to Escrow Agent, not only in assuming the due execution and
the validity and effectiveness of the provisions of the notice, but
also as to the truth and acceptability of any information herein
contained, with Escrow Agent reasonably and in good faith believes.
9.3 The Escrow Agent shall have no duties except those which are expressly
set forth herein.
9.4 Telematics and Arad hereby jointly and severally shall indemnify the
Escrow Agent against any loss, liability, or damage (other than any
loss, liability, or damage caused by the gross negligence or willful
misconduct of Escrow Agent), including reasonable costs of litigation
and attorneys' fees, arising from and in connection with the
performance of Escrow Agent's duties and obligations under this
Agreement as such duties and obligations pertain to the AMR system
Documents.
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9.5 The parties agree that all remedies and damages that might otherwise
be available against Telematics or Arad for claims arising out of or
related to this Agreement shall be subject to the limitations set
forth in the Agreement, including, but not limited to the limitation
of liability set forth in Section 13 of the Agreement.
10. Counterparts
This Escrow Agreement may be executed in multiple counterparts each of
which shall be deemed an original, and all of which together shall
constitute one and the same Escrow Agreement.
11. Choice Of Law
The governing law of this Agreement shall be that of the State of Israel,
as if both parties to this Agreement were resident and doing business in
such state.
12. Binding Effect
This Agreement shall be binding on and insure to the benefit of the
respective successors and permitted assigns of the parties.
13. Entire Agreement
This Escrow Agreement, together with the Agreement, constitutes the entire
agreement of the parties with respect to the escrow of the AMR system
Documents, and supersedes any and all prior negotiations, correspondence,
understanding, and agreements between the parties respecting the subject
matter of this Escrow Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
executed and delivered by their duly authorized representatives as of the year
and date first-above written.
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ESCROW AGENT
By: Date:
Name:
Title:
Date:
TADIRAN TELEMATICS ARAD
By: Xxxx Xxxxx Date: 11/6/01 By: Xxx Xxxxxx Date: 11/6/01
Name: Xxxx Xxxxx Name: Xxx Xxxxxx
Title: President Title: VP Technology
Date:
Xxxxx Xxxxxxxxx
/s/ Xxxxx Xxxxxxxxx
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