EXHIBIT 10.17
Acquisition Agreement, dated as of December 29, 1999, by and among City Smart
Ltd., Xxxx Xxxxx Shan, City Smart (Australia) PTY Ltd. and the Registrant.
AGREEMENT
Made and signed as of the 29 day of December, 1999
By and between
City Smart Limited, a company duly organized and existing under the laws of Hong
Kong (Hong Kong Company No. 539616), having its principle place of business at
1st Floor, Jupiter Tower, 9 Jupiter Street, North Point, Hong Kong ("City
Smart"), of the one part, and the Companies' founders - Xxxx Xxxxx Shan (Hong
Kong I.D. No. E820660-4) of Xxxx 0XX, XxxXxx Xxxxxxx, Xxxxxxx Garden, Tsuen Wan,
Hong Kong and City Smart (Australia) PTY Ltd. (Australian Reg. No. ACN074345047)
of Xxxxx 000 & 000, 0/X., 000 Xxxxxxxxx Xx., Xxxxxxxx Xxxxxx Q4006 (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.:
51-161929-8), and which its securities 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: 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: City Smart acts as the system integrator and the distributor of OTI
products in Hong Kong, and;
Whereas: The Founders, who own the entire outstanding and paid up share capital
of City Smart, wish to transfer to OTI their entire holdings in City
Smart 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, and
Whereas: The Deutsche Xxxxx authorities of the Frankfurt Neuer Markt
Stock-Exchange has authorized the release of the Allotted Shares (as
defined below) from the lock-up under which they were placed as
described in OTI's prospectus of 1999, subject to the condition that
the new share holders will enter into a lock-up agreement with OTI.
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 HKS 1.00 n.v. each of City
Smart as listed opposite its name in the second column of the table set
forth in Section 1.3 below (the "Purchased Shares"), which constitutes
such percentage of the entire outstanding share capital of City Smart as
listed opposite its name in the third column of the table set forth in
section 1.3 below, 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 City Smart.
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
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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, and subject to the provisions
of section 1.7 below, 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 table set forth in section 1.3 below (the "Allotted Shares"), which
constitutes such percentage of the Allotted Shares as listed opposite
its name in the fifth column of the table set forth in section 1.3
below, as shares fully paid up, non assessable and free and clear of any
pledges.
1.3.
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Name No. of Percentage of City No. of shares Percentage of
Purchased Smart's allotted the Allotted
Shares outstanding share Shares
transferred capital
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Xxxx Xxxxx Shan 9,500 95% 63517 95%
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City Smart 500 5% 3343 5%
(Australia) PTY
Ltd.
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1.4. The Allotted Shares constitutes the full, final and absolute
consideration for the Purchased Shares. The Founders hereby undertake
not to sell any of the Allotted Shares during the period commencing at
signature hereof and ending 6 (six) months thereafter (the "First
Lock-Up Period"). After the First Lock-Up Period and for a period of
another 6 (six) months (the "Second Lock-Up Period"), the Founders,
subject to the provisions of section 6.2 below, shall be entitled to
sell up to 50% of the Allotted Shares.
1.5. Following the allotment of the Allotted Shares, OTI, at its own expense,
will use its best efforts to effect the registration of the Allotted
Shares with the proper authorities and list such Allotted Shares on the
Frankfurt Neuer Markt Stock-Exchange.
2. Closing
The Closing of the transactions contemplated under this Agreement shall take
place at the offices of Bach, Arad, Xxxxxx & Co. (the "Attorneys") at 0
Xxxxxxxx Xx., Tel-Aviv on the date hereof, 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.
3. City Smart and Founders' representations
City Smart and the Founders, jointly and severally, hereby represent and
undertake towards OTI that: (i) City Smart's registered share capital as at
the date hereof is HKS10,000 divided into 10,000 Ordinary Shares of HKS1.00
n.v. each. City Smart's outstanding share capital is as set forth in Part 1
of Annex B hereto; (ii) The Shares are
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fully paid up, non assessable and free and clear of any pledges,
encumbrances, liens or other third party's right; (iii) 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 City Smart; (iv) The representations and warranties of City Smart and the
Founders contained in this Agreement and in Annex C hereto, and the
information and statements furnished in writing to OTI do not contain an
untrue statement or omit to state a material fact necessary to make the
statements made therein, not misleading and City Smart and the Founders are
not aware of any material facts or circumstances which were not disclosed by
City Smart in writing to OTI and which, had they been so disclosed, would
have prevented OTI from entering into this Agreement; (v) City Smart has
taken such actions under its documents of incorporation and the law as may be
necessary to permit the purchase of the Shares and the full exercise of the
voting rights by OTI; (vi) City Smart and Founders undertake to provide OTI
within 10 days of signature hereof, with signed employment, confidentiality,
non-competition, and assignment of Intellectual Property Rights agreements
with all City Smart's employees and outside consultants to the complete
satisfaction of OTI.
4. OTI's representations
OTI hereby represents and undertakes towards City Smart and the Founders as
follows: (i) It is validly incorporated and has the full legal right and
power to enter into and perform this Agreement. (ii) 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.
5. Information Rights
City Smart 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 City Smart, 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.
6. Indemnification
6.1. City Smart 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 City Smart 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 City Smart
or the Founders under this Agreement. OTI shall notify City Smart and
the Founders in writing promptly upon discovery by OTI of any claim
thereunder.
6.2. It is agreed that in order to secure City Smart 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
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Closing to the B.A.S. Trust Ltd. (the "Trustee"). The Trustee shall hold
the First 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 D hereto (the "Trust Agreement").
Unclaimed shares out of the First 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 City Smart.
6.3. It is further agreed and recorded that claims against shares held in
Trust shall be valued at the Closing Date price.
6.4. 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.
7. Taxes and expenses
7.1. 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.
7.2. 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.
8. Non Competition
Each of the founders, their directors and shareholders, undertake that for a
period of ten (10) years after signature hereof, they shall not, without
OTI's and City Smart's prior written approval, sell, promote the sale,
distribute, instruct, manufacture or develop competing or similar products to
the OTI products and City Smart products or represent or agree to represent
any third party in respect to any product competing or similar to the OTI
products and City Smart 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 City Smart.
9. Miscellaneous
9.1. 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.
9.2. 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.
9.3. 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.
9.4. 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, which shall become, upon signature
of this Agreement, null and void.
9.5. Amendments. No modification or amendment of this Agreement may be made
except in a written instrument duly signed by all parties.
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9.6. 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 each party, and shall not be deemed a waiver of any other right
hereunder.
9.7. 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.
9.8. 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).
9.9. Notices. Any notice sent by one party to the others to the addresses set
forth in the preamble of this Agreement 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.
In witness whereof the parties have set their signatures hereunto:
/s/ City Smart Ltd. /s/ Xxxx Xxxxx Shan
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City Smart Ltd. Xxxx Xxxxx Shan
/s/
On Track Innovations Ltd. /s/ City Smart (Australia) PTY Ltd.
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On Track Innovations Ltd. City Smart (Australia) PTY Ltd.
