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EXHIBIT 10.9.1
TECHNOLOGY PURCHASE AGREEMENT
by and between
SOFTCHIP ISRAEL LTD.
and
AMERICAN CARD TECHNOLOGY, INC.
Dated as of March 7th, 1998
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TECHNOLOGY PURCHASE AGREEMENT
THIS TECHNOLOGY PURCHASE AGREEMENT ("Agreement") is made and entered into
as of the 7th day of March, 1998, between SOFTCHIP ISRAEL LTD. a corporation
organized under the laws of Israel ("Seller"), and AMERICAN CARD TECHNOLOGY,
INC., a Delaware corporation ("Buyer").
WITNESSETH:
WHEREAS, Seller owns that certain DVK-1 Chip Operating System (the "DVK-1
System") and development environment; and
WHEREAS, Seller desires to sell and assign and Buyer desires to purchase
and acquire the DVK-1 System and development environment; and
NOW THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants, and conditions set forth below, the parties hereby agree as
follows:
(1) CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below.
"Affiliate" shall mean, with respect to any Person, any shareholder,
subsidiary, officer, director or partner of such Person and any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person.
"Agreement" shall mean this Technology Purchase Agreement and all Exhibits
hereto, as the same may from time to time be amended.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement to be held at the offices of Cohn & Birnbaum P.C., 100 Pearl Street,
Hartford Connecticut, on the Closing Date or in such other place as may be
agreed to by the parties to this Agreement.
"Closing Date" shall mean the earlier of (i) September 15, 1998 or (ii) the
closing of an initial public offering of securities of the Buyer.
"Intellectual Property Rights" shall mean and include all of the Seller's
right, title and interest in and to the DVK-1 System and names "DVK-1," "DVK,"
and any other trade names used by the Seller with respect to the DVK-1 System
and development environment, together with all trademarks, copyrights, patents,
rights of privacy and all other intellectual property owned by the Seller in
connection with the DVK-1 System and development environment.
"Litigation Expense" shall mean any expenses reasonably incurred in
connection with investigating, defending or asserting any claim, action, suit or
proceeding incident to any matter indemnified against under this Agreement,
including, without limitation, court filing fees, court costs, arbitration fees
or costs, witness fees, and fees and disbursements of legal counsel,
investigators, expert witnesses, accountants and other professionals.
"Loss" shall mean any loss, obligation, claim, liability, settlement
payment, award, judgment, fine, penalty, interest charge, expense, damage or
deficiency or other charge, other than Litigation Expense.
"Major Enhancement" shall mean a change to the DVK-1 silicon mask ROM code
that (i) adds functionality, (ii) changes communication protocols or (iii)
involves downloading EEPROM code of over one kilobyte that implements (i) or
(ii) above.
"Minor Enhancement" shall mean (i) any change to the software drivers in
the host computer; (ii) porting host computer software to a different host
computer operating system; (iii) porting host computer software to a different
host computer central processing unit ("CPU"); (iv) downloading EEPROM code of
less than one kilobyte that implements a Major Enhancement; or (v) downloading
any amount of code to EEPROM for technical feasibility tasks, PROVIDED, HOWEVER,
that if such amount is greater than one kilobyte, the intellectual property
rights of such downloaded code shall, unless otherwise agreed to by the parties,
remain those of the Seller, and the results of any such feasibility studies
shall belong solely to the Buyer.
"Minor Mask Release" shall mean porting the DVK-1 silicon mask ROM code to
another chip, either with the same or different CPU type or memory
configuration, provided protocols are preserved and functionality is preserved
or reduced.
"Person" shall mean and include an individual, a corporation, a
partnership, a limited liability company, a limited liability partnership, a
joint venture, a trust, an unincorporated association, a government or political
subdivision or agency thereof or any other entity.
"Purchased Assets" shall mean all of the assets of the Seller described in
Section 3(a) hereof and more specifically set forth in EXHIBIT A hereto.
2) ACKNOWLEDGEMENTS. Buyer hereby acknowledges that the Seller has
previously provided to Buyer the DVK-1 System which Buyer has fully examined and
has found to be to its full satisfaction. Buyer hereby waives any claim of
unsuitability and acknowledges that the DVK-1 System as delivered is fully in
accordance with all representations of Seller regarding suitability and fully in
keeping with the specifications set out in its accompanying documentation.
3) SALE OF ASSETS; LIMITATIONS.
(a) Subject to the terms and conditions set forth in this Agreement,
at the Closing, in consideration of the payment of the Purchase Price, as
defined in Section 4 below, the Seller shall sell, transfer, assign, convey and
deliver to the Buyer, and the Buyer shall purchase, accept and acquire from the
Seller, all of the following assets and properties of the Seller (collectively,
the "Purchased Assets"):
(i) the DVK-1 System and development environment, including,
without limitation, all source code, object code, derivative mask, and
documentation; and
(ii) all Intellectual Property Rights.
(2)
(b) Upon the Closing, Buyer shall have the sole and exclusive
worldwide rights to develop, use, manufacture, modify, upgrade, improve and
enhance, and license, the DVK-1 System (including, without limitation, making
any Minor Enhancements thereto) and Seller shall have no further rights
therein. Notwithstanding the foregoing, Buyer hereby acknowledges and agrees
that Buyer shall not make any Major Enhancement or alter the code of the
DVK-1 System in order to create a derivative mask (other than a Minor Mask
Release) which differs from that embedded in the DVK-1 System.
(c) The Buyer hereby agrees not to convey, transfer, or sell, (except
to a purchaser of all or substantially all of the assets of Buyer other than a
competitor of Seller), the DVK-1 System, Intellectual Property Rights or DVK-1
source code to any third party without the prior written consent of Seller,
which consent shall not be unreasonably withheld. Withholding of consent of
sale to a competitor of Seller shall not be deemed unreasonable.
4) PURCHASE PRICE. The aggregate purchase price to be paid by the Buyer
for the Purchased Assets (the "Purchase Price") shall be One Hundred Thousand
and 00/100 Dollars ($100,000.00), payable at the Closing in the manner described
in Section 5(b) hereof.
5) INSTRUMENTS OF TRANSFER; PAYMENT OF PURCHASE PRICE; FURTHER ASSURANCES
(a) SELLER'S DELIVERIES. At the Closing, the Seller shall deliver
the following to the Buyer, each of which shall be in form reasonably
satisfactory to the Buyer:
(i) Bill of Sale for the Purchased Assets;
(ii) instruments of transfer reasonably necessary to transfer to
the Buyer all of the Seller's rights to any Intellectual Property Rights
included as Purchased Assets, including any instruments of assignment to assign
Seller's interest in such rights to be filed with the United States Patent and
Trademark Office or the equivalent governmental office of any other country at
Buyer's option;
(iii) Director's Certificate regarding resolutions authorizing
this transaction and the due authority of persons executing documents on
behalf of the Seller;
(iv) legal opinions of the Seller's counsel in form and
substance satisfactory to Buyer and Buyer's counsel;
(v) a Certificate as to the Seller's compliance with
Sections 10(a) and (b) of this Agreement;
(vi) Evidence reasonably satisfactory to the Buyer, of the
Seller's ownership of and authority to convey the Purchased Assets; and
(vii) Such other instrument or instruments of transfer, in
such form as shall be reasonably necessary or appropriate to vest in the
Buyer all of the Seller's right, interest and title to the Purchased Assets.
(3)
(b) BUYER'S DELIVERIES. At the Closing, the Buyer shall deliver the
following to the Seller, each of which shall be in form reasonably satisfactory
to the Seller:
(i) bank checks or wire transfers of immediately available
funds for an aggregate amount equal to the Purchase Price;
(ii) a certificate as to the Buyer's compliance with Sections
9(a) and (b) of this Agreement;
(iii) Secretary's Certificate regarding resolutions
authorizing this transaction and the due authority of persons executing
documents on behalf of the Buyer; and
(iv) an opinion of counsel to the Buyer in form and substance
satisfactory to Seller and Seller's counsel; and
(v) such further instruments as the Seller may reasonably
request to evidence the consummation of the transactions contemplated by this
Agreement.
(6) REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Buyer as follows:
(a) ORGANIZATION; GOOD STANDING; POWER. The Seller is a duly
organized, validly existing corporation in good standing under the laws of the
State of Israel. The Seller has the corporate power, authority and capacity to
own, lease and operate its properties, and to carry on its business as and where
the same is now being conducted.
(b) AUTHORIZATION; EFFECTIVE AGREEMENT. The Seller has the requisite
corporate power, authority and capacity to enter into this Agreement and to
perform all of its obligations hereunder. All corporate proceedings required to
be taken by the Seller to authorize the execution and delivery of this Agreement
and the performance of the Seller's obligations hereunder have been duly taken,
and this Agreement constitutes the legal, valid and binding obligation of the
Seller, enforceable against it in accordance with its terms. The execution,
delivery and performance of this Agreement by the Seller does not and will not
conflict with, violate or result in the breach of any of the terms or conditions
of, or constitute a default under, the Articles of Incorporation or By-Laws of
the Seller or any indenture, mortgage, pledge, note, bond, license, permit or
other agreement, commitment or lease to which the Seller is a party or by which
the Seller or its assets are bound or affected, or any law, regulation,
ordinance or decree to which the Seller or its assets are subject, except for
such violations of any law, regulation, ordinance or decree which would not have
a material adverse effect on the Purchased Assets.
(c) CONSENTS. No permit, consent, approval, or authorization of any
governmental authority or any other Person on the part of the Seller is required
in connection with the execution or delivery by the Seller of this Agreement or
the consummation of the transactions contemplated hereby.
(d) ADEQUACY OF AND TITLE TO PURCHASED ASSETS. The Seller has good
and marketable title to all of the Purchased Assets, none of which are subject
to a mortgage, pledge, lien, security interest, lease, charge, encumbrance or
conditional sale or other title retention agreement.
(4)
(e) INTELLECTUAL PROPERTY RIGHTS. The Seller is the sole and
exclusive owner of any and all intellectual property rights in and to the
Purchased Assets, including, without limitation, any and all trademarks,
patents, copyrights, rights of privacy, and trade secrets. The Seller
acknowledges, however, that the names "DVK-1" and "DVK" are not registered
trademarks. The Seller has the sole and exclusive right to use all such
intellectual property rights, the Seller's use of such intellectual property
rights does not conflict with the intellectual property rights of any other
party, and all such intellectual property rights are fully assignable to the
Buyer without the consent of any third party and, to the best of Seller's
knowledge, without infringing or violating the rights of any third party.
(f) SELLER ACTIONS. The Seller has not sold, assigned, licensed,
transferred, or otherwise conveyed any rights in any of the Purchased Assets, or
entered into any agreements with any third party to do so.
(g) LITIGATION, ETC. There is no suit, action or litigation,
administrative hearing, arbitration, labor controversy, warranty claim,
governmental inquiry, investigation or other proceeding or claim pending or, to
the Seller's knowledge, threatened against or relating to the Seller with
respect to the Purchased Assets. There are no judgments, consent decrees or
injunctions against, affecting or binding upon the Seller with respect to the
Purchased Assets. The Seller is in compliance with all laws, ordinances,
requirements, orders and regulations applicable to it, the violation of which
would have a material adverse effect on the Purchased Assets or on the ability
of the Seller to consummate the transactions contemplated hereby.
(h) DELIVERIES. The Seller has delivered or made available to the
Buyer true, correct and complete copies of the by-laws, articles of
incorporation and organizational documents of the Seller and if embodied in
written form, all Intellectual Property Rights and other information or data
referred to in this Section 7.
(i) INACCURACIES. Neither this Agreement nor any certificate or
statement furnished by or on behalf of the Seller at the Closing in connection
with this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein not misleading; and there is no fact known to the Seller in connection
with this Agreement which might reasonably be expected to materially adversely
affect the ability of the Seller to consummate the transactions contemplated
hereby which has not been set forth herein or in a certificate or statement
furnished to the Buyer at the Closing by the Seller.
(7) REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to the Seller as follows:
(a) ORGANIZATION; GOOD STANDING; POWER. The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Buyer has the requisite power, authority and capacity to
own, lease and operate its properties and to carry on its intended business.
(b) AUTHORIZATION. The Buyer has the requisite power, authority and
capacity to enter into this Agreement and to perform all of its obligations
hereunder. The Buyer has duly taken all necessary action to approve this
Agreement and the performance of its obligations hereunder. This Agreement
(5)
constitutes the legal, valid and binding obligation of the Buyer enforceable
against it in accordance with its terms.
(c) EFFECTIVE AGREEMENT. The execution, delivery and performance of
this Agreement by the Buyer do not and will not (i) conflict with, violate or
result in the breach of any of the terms or conditions of, or constitute a
default under, the articles of organization or operating agreement of the Buyer,
or any contract, agreement, commitment, indenture, mortgage, pledge, note, bond,
license, permit or other instrument or obligation to which the Buyer is a party
or by which the Buyer or its assets are bound or affected, or any law,
regulation, ordinance or decree to which the Buyer or its assets are subject, or
(ii) result in the creation or imposition of any lien, security interest,
charge, encumbrance, restriction or right, including rights of termination or
cancellation, in or with respect to, or otherwise materially adversely affect,
any of the properties, assets or business of the Buyer.
(d) CONSENTS. No permit, consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority or any other
Person on the part of the Buyer is required in connection with the execution or
delivery by the Buyer of this Agreement or the consummation of the transactions
contemplated hereby, except where the failure to obtain such consent would not
materially adversely affect the Buyer's ability to consummate the transactions
contemplated by this Agreement.
(e) SHAREHOLDERS. Attached hereto as EXHIBIT B is a list setting
forth the names of shareholders of the Buyer. The Buyer agrees to give the
Seller notice of any changes to such list within thirty (30) days of the
effective date of any such changes, PROVIDED, HOWEVER, that Buyer's obligation
to provide such information to the Seller terminates upon the closing of an
initial public offering of securities of the Buyer.
(f) LITIGATION. There is no suit, action or litigation,
administrative hearing, governmental inquiry, investigation, arbitration or
other proceeding pending or, to the Buyer's knowledge, threatened against or
relating to the Buyer. There are no judgments, consent decrees or injunctions
against, affecting or binding upon the Buyer. The Buyer is in compliance with
all laws, ordinances, requirements, orders and regulations applicable to it, the
violation of which would have a material adverse effect on its ability to
consummate the transactions contemplated by this Agreement, and the Buyer has
not received notice of any claimed violation with respect to any of the
foregoing, and none of the foregoing will be affected by the consummation of the
transactions contemplated by this Agreement.
(8) USE OF NAME. The Seller agrees that from and after the Closing Date,
neither the Seller nor any person under the control of the Seller shall use the
name "DVK-1" or "DVK" for any computer chip operating system or software source
documents, or any devices otherwise used in computer systems. Notwithstanding
the foregoing, Seller may acknowledge that Seller created the DVK-1 System in
advertisements and promotional material to which Buyer has given its prior
written consent, which consent shall not be unreasonably withheld.
(9) CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER. All
obligations of the Seller under this Agreement are subject to the fulfillment,
at or prior to the Closing Date, of each of the following conditions, which
conditions may be waived only by the Seller:
(6)
(a) The representations and warranties of the Buyer herein contained
shall be true and correct as of the date hereof.
(b) The Buyer shall have performed or complied with all the
obligations, agreements and covenants of the Buyer herein contained to be
performed by it prior to or as of the Closing Date.
(c) The Seller shall have received a certificate of the Buyer as to
compliance with paragraphs (a) and (b) of this Section 9.
(d) No action, suit or proceeding by or before any court or any
governmental or regulatory authority shall have been commenced or threatened,
and no investigation by any governmental or regulatory authority shall have been
commenced or threatened, seeking to restrain, prevent or change the transactions
contemplated hereby or seeking judgments against the Seller or the Buyer
awarding substantial damages in respect of the transactions contemplated hereby.
(e) All deliveries required to be made under this Agreement to the
Seller at or before the Closing Date shall have been received by the Seller.
(10) CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER. All obligations
of the Buyer under this Agreement are subject to the fulfillment, at or prior to
the Closing Date, of each of the following conditions, which conditions may be
waived only by the Buyer.
(a) The representations and warranties of the Seller herein contained
shall be true and correct as of the date hereof.
(b) The Seller shall have performed or complied with all the
obligations, agreements and covenants herein contained to be performed by them
prior to or as of the Closing Date.
(c) The Buyer shall have received a certificate from the Seller as to
compliance with paragraphs (a) and (b) of this Section 10.
(d) No action, suit or proceeding by or before any court or any
governmental or regulatory authority shall have been commenced or threatened,
and no investigation by any governmental or regulatory authority shall have been
commenced or threatened, seeking to restrain, prevent or change the transactions
contemplated hereby or seeking judgments against the Seller or the Buyer
awarding substantial damages in respect of the transactions contemplated hereby.
(e) All deliveries required to be made under this Agreement to the
Buyer on or before the Closing Date shall have been received by the Buyer.
(11) INDEMNIFICATION; SURVIVAL
(a) INDEMNIFICATION BY THE BUYER. The Buyer shall indemnify and save
harmless the Seller, officers and directors of the Seller and their respective
successors and assigns from, against, for and in respect of:
(7)
(i) any Loss incurred or required to be paid because of the
breach of any representation, warranty, covenant or agreement of the Buyer in
this Agreement; and
(ii) any Litigation Expense incurred or required to be paid
in connection with any matter indemnified against in Section 11(a)(i) hereof.
(b) INDEMNIFICATION BY THE SELLER. The Seller shall indemnify and
save harmless the Buyer, the Affiliates of the Buyer, employees, officers, and
directors of the Buyer, and their respective successors and assigns from,
against, for and in respect of:
(i) any Loss incurred or required to be paid because of the
breach of any representation, warranty, covenant or agreement of the Seller
in this Agreement;
(ii) any claims raised between the date of Closing and five
years thereafter, to the extent they are based upon any claimed infringement
or violation of any third party's copyright, patent, trademark or other
property right by any of the Purchased Assets, except to the extent the claim
is a result of the combination of the Purchased Assets with other software or
equipment which is not included in the Purchased Assets. In the event that
Buyer receives notice of any such claim, Buyer shall (i) promptly notify
Seller of the claim, (ii) permit Seller to assume the defense of such claim
or any negotiations related thereto at Seller's expense (though no settlement
of such claim may be entered into without Buyer's approval which shall not be
unreasonably withheld), and (iii) provide such information and assistance as
is requested by Seller in connection with the defense of such claim. In
addition to defending such claim as provided in the foregoing (regardless of
the outcome), Seller will pay any amount finally awarded in a proceeding to
the extent based upon such a claim (including attorney's fees, if any, in
such award), provided that such award is based upon a finding that Seller
knew or should have known of the infringement or violation of such third
party's rights. Should any such claims be made or brought to the attention
of the parties or either of them prior to the Closing, either party shall
have the option to cancel this Agreement by written notice to the other prior
to Closing, in which case the parties shall have no further obligations
whatsoever to each other hereunder. If neither party elects to so cancel,
Seller shall be obligated to act in accordance with this Section.
(iii) any Litigation Expense incurred or required to be paid
in connection with any matter indemnified against in Section 11(b)(i) or
Section 11(b)(ii) hereof.
(c) SURVIVAL. The representations, warranties, covenants and
agreements of the parties hereto (including indemnification obligations of
the parties hereunder with respect to all Losses and Litigation Expense
incurred or required to be paid) shall survive the execution and delivery of
this Agreement.
(d) NOTICE. The indemnified party shall use its best efforts to give
prompt written notice to the indemnifying party or parties of any claim or event
known to it which does or may give rise to a claim by the indemnified party
against the indemnifying party or parties based on this Agreement, stating the
nature and basis of said claims or events and the amounts thereof, to the extent
known.
(e) DEFENSE OF CLAIMS OR ACTIONS. In the event any claim, action,
suit or proceeding is made or brought by third parties with respect to which a
party may be entitled to indemnity hereunder, the
(8)
indemnified parties shall given written notice of such claim, action, suit or
proceeding and a copy of the claim, process and all legal pleadings with
respect thereto to the indemnifying parties within ten (10) business days of
being served with such claim, process or legal pleading. Such notice shall
not be a condition precedent to any liability of the indemnifying parties
under this Agreement unless the failure to give such notice results in any
prejudice to the indemnifying parties. The indemnifying parties shall have
the right to assume the defense of any such claim or action. If the
indemnifying parties wish to assume the defense of such claim or action, such
assumption shall be evidenced by written notice to the indemnified parties.
After such notice, the indemnifying parties shall engage independent legal
counsel of reputable standing selected by them to assume the defense and may
contest, pay, settle or compromise any such claim or action on such terms and
conditions as the indemnifying parties may determine. If the indemnifying
parties assume the defense of any such claim, action, suit or proceeding, the
indemnified parties shall have the right to employ their own counsel, at
their own expense, and if the indemnified parties shall have reasonably
concluded and specifically notified the indemnifying parties either that
there may be specific defenses available to them which are different from or
additional to those available to the indemnifying parties or that such claim,
action, suit or proceeding involves or could have a material adverse effect
upon them with respect to matters beyond the scope of the indemnity provided
hereunder, then the counsel representing them, to the extent made necessary
by such defenses, shall have the right to direct such defenses of such claim,
action, suit or proceeding in its behalf at the indemnified party's expense.
In the event that the indemnifying parties shall not agree in writing to
assume the defense of such claim or action, the indemnified parties may
engage independent counsel of reputable standing selected by them to assume
the defense and may contest, pay, settle or compromise any such claim or
action on such terms and conditions as the indemnified parties may determine;
PROVIDED, HOWEVER, that the indemnified parties shall not settle or
compromise any claim or action without the prior consent of the indemnifying
parties (which consent shall not be unreasonably withheld). The fees and
expenses of such counsel shall constitute Litigation Expenses. The
indemnified parties and the indemnifying parties shall cooperate in good
faith in connection with such defense, and all such parties shall have the
right to employ their own counsel; but, except as provided above, the fees
and expenses of their counsel shall be at their own expense. The indemnified
parties or the indemnifying parties, as the case may be, shall be kept fully
informed of such claim, action, suit or proceeding at all stages thereof,
whether or not they are represented by their own counsel.
(f) COOPERATION. The parties hereto agree to render to each other
such assistance as they may reasonably require of each other and to cooperate in
good faith with each other in order to ensure the proper and adequate defense of
any claim, action, suit or proceeding brought by any third party. Where
independent counsel has been selected by the indemnifying parties or by the
indemnified parties pursuant to Section 11(e) hereof, the indemnifying parties
or the indemnified parties, as the case may be, shall be entitled to rely upon
the reasonable advice of such counsel in the reasonable conduct of the defense,
and no indemnifying party shall be relieved of liability hereunder by reason of
such reliance or the defense conducted by such counsel.
(g) THE BUYER'S RIGHT OF OFFSET. Without limiting in any way the
rights of the Buyer to be indemnified under this Section 11 for Losses and
Litigation Expense (or the measure of amounts of loss and Litigation Expense for
which the Buyer may be entitled to indemnification), the Buyer shall have a
right to offset against the amounts due under Section 5 hereof and against the
amounts due under Section 11 hereof for the amount of any Loss or Litigation
Expenses incurred by the Buyer.
(9)
(12) RESTRICTIVE COVENANTS. The parties hereto acknowledge that (i) the
Seller has developed trade secrets and confidential information concerning
the Purchased Assets, and (ii) in the course of dealing with each other, the
parties have acquired confidential information about the business,
activities, operations, technical information, and trade secrets of each
other, and (iii) the agreements and covenants contained in this Section 12
are essential to protect each of the parties following the consummation of
the transactions contemplated hereby or in the event (i) of a failure to
consummate such transactions, or (ii) this Agreement is terminated for any
reason. Accordingly, each party covenants and agrees as follows:
(a) CONFIDENTIAL INFORMATION. Each party shall keep secret and
retain in strictest confidence, and shall not use, in competition with or in
a manner otherwise detrimental to the interests of the other, for the benefit
of itself or others other than the other party hereto, any confidential
information, including, without limitation, any confidential technology,
"know-how," trade secrets, processes, designs, specifications, inventions,
methods, developmental work, improvements, unpublished patent applications,
development tools, software programs, software source documents, licenses,
customer lists, customer personnel information, details of client or
consultant contracts, pricing policies, operational methods, marketing plans
or strategies, or product development techniques or plans related to the
Purchased Assets or the other party hereto ("Confidential Information").
Notwithstanding the foregoing, nothing herein shall prohibit Buyer from using
the Purchased Assets in any manner whatsoever so long as such use is not in
violation of this Agreement. The term "Confidential Information" does not
include, and there shall be no obligation hereunder with respect to, (i)
information concerning either Seller or Buyer that becomes generally
available to the public other than as a result of a disclosure by the other
party or any agent or other representative thereof after the Closing Date,
and (ii) general business methods applicable to the Purchased Assets. The
parties shall have no obligation hereunder to keep confidential any of the
Confidential Information to the extent disclosure of any thereof is required
by law, or determined in good faith by the disclosing party to be necessary
or appropriate to comply with any legal or regulatory order, regulation or
requirement; PROVIDED, HOWEVER, that in the event disclosure is required by
law, the disclosing party shall use best efforts to provide the other party
with prompt advance notice of such requirement so that the other party may
seek an appropriate protective order.
(b) RIGHTS AND REMEDIES UPON BREACH. In the event a party breaches,
or threatens to commit a breach of, any of the provisions of this Section 12 or
Section 3(c) hereof (the "Restrictive Covenants"), the non-breaching party may
have the Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the non-breaching party
and that money damages would not provide an adequate remedy to the non-breaching
party. Such rights and remedies, shall be independent of any others and
severally enforceable, and shall be in addition to, and not in lieu of, any
other rights and remedies available to the non-breaching party at law or in
equity.
(c) SEVERABILITY OF COVENANTS. Each party acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in geographical and
temporal scope and in all other respects. If any court determines that any of
the Restrictive Covenants, or any part thereof, are invalid or unenforceable,
the remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect, without regard to the invalid portions.
(10)
(d) ENFORCEABILITY IN JURISDICTIONS. The parties hereto intend to
and hereby confer jurisdiction to enforce the Restrictive Covenants upon the
courts of the State of Georgia, U.S.A. (and the Buyer and the Seller hereby
consent to the jurisdiction of such courts).
(13) TERMINATION; BREACH. Notwithstanding anything to the contrary herein,
this Agreement may be terminated and the transactions contemplated hereby may be
abandoned:
(a) by the Buyer if there exists a breach of any material
representation, warranty, covenant or agreement made to the Buyer under this
Agreement (which breach cannot be cured or is not cured upon fifteen (15) days'
written notice);
(b) by the Seller if there exists a breach of any representation,
warranty, covenant or agreement made to the Seller under this Agreement (which
breach cannot be cured or is not cured upon fifteen (15) days' written notice);
(c) by the Seller or the Buyer, provided that the terminating party
is not then in breach of any of its material representations, warranties,
covenants or agreements set forth in this Agreement, if the Closing has not been
consummated by the earlier of (i) September 15, 1998 or (ii) the closing of the
initial public offering of securities of the Buyer, or such extended date as may
be agreed to in writing by the parties.
Upon the termination of this Agreement under Section 13(c), no party
hereto shall have any further liability or obligation to any other party
hereunder, except for the obligation of each party to pay its own expenses as
set forth in Section 16 hereof and (ii) return to the Seller the DVK-1 System
previously provided to Buyer, together with all modifications, upgrades,
improvements and enhancements thereof made by Buyer or on Buyer's behalf. Upon
the termination of this Agreement under Sections 13(a) or 13(b), the terminating
party shall be entitled, in addition to pursuing other remedies, to recover its
actual damages (including costs of enforcement and reasonable attorneys' fees),
arising from the breach by the non-terminating party. In the event of a breach
by the Seller of any material representation, warranty, covenant or agreement
made by the Seller under this Agreement, the Buyer may, in lieu of exercising
its right to terminate the Agreement, bring an action to enforce the terms of
this Agreement by decree of specific performance, it being agreed that the
property to be conveyed hereunder is unique and not readily available in the
open market and, in any such event, the Seller hereby further agrees to waive
any and all defenses against any such action for specific performance on the
grounds that there is an adequate remedy for money damages available.
(14) LIMITATION ON LIABILITY. Notwithstanding any provision of this
Agreement, the liability of the Seller for damages, for any cause whatsoever,
shall be limited to an amount equal to the amount which Seller has actually
received in payment under the terms of this Agreement, provided, however that
the foregoing limitation shall not apply with respect to damages resulting from
any fraud, willful misconduct or intentional misrepresentation by Seller, and
further provided that, in the event of indemnification of the Buyer pursuant to
Section 11(b)(ii) hereof, Seller shall make pay annual payments in advance to
the Buyer, amortized over a five-year period.
(11)
(15) AMENDMENTS. This Agreement may be amended, modified and supplemented
only by written agreement of the parties hereto at any time prior to the Closing
Date with respect to any of the terms contained herein.
(16) EXPENSES. Except as otherwise provided in this Agreement, each party
hereto shall bear all of its own expenses, including, without limitation, the
fees and disbursements of its counsel.
(17) NOTICES, ETC. All notices, consents, demands, requests, approvals and
other communications which are required or may be given hereunder shall be in
writing and shall be deemed to have been duly given (a) when delivered
personally, (b) if sent by facsimile, when receipt thereof is acknowledged at
the facsimile number below, (c) the second day following the day on which the
same has been delivered prepaid to a national air courier service, or (d) three
(3) business days following deposit in the mails registered or certified,
postage prepaid, in each case, addressed as follows:
if to the Seller: Softchip Israel Ltd.
418/3 Frankfurter Street
Jerusalem, Israel
Attention: Mr. Mickey Cohen
with a copy to: Wine, Misheiker & Ernstoff Law Offices
12 Moshe Hess Street
94185 Jerusalem, Israel
Attention: Brian D. Wine, Advocate
if to the Buyer: American Card Technology, Inc.
1355 Terrell Mill Road
Building 146, Suite 200
Marietta, Georgia 30067
Attention: President
with a copy to: Cohn & Birnbaum P.C.
100 Pearl Street, 12th Floor
Hartford, Connecticut 06103-4500
Attention: Richard J. Shea, Jr., Esq.
or to such other Person or Persons at such address or addresses as may be
designated by written notice hereunder.
(18) ASSIGNMENT. No party may assign or convey this Agreement or any of
their respective rights or obligations hereunder to any other party.
Notwithstanding the foregoing, the Buyer may assign its rights and obligations
hereunder to any purchaser of all or substantially all of its assets.
(19) APPLICABLE LAW. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of Georgia without giving
effect to conflict of laws principles thereof.
(20) CURRENCY. All sums of money payable hereunder are to be paid in U.S.
dollars.
(12)
(21) ENTIRE AGREEMENT. This Agreement and all Exhibits hereto embody the
entire agreement and understanding of the parties hereto and supersede any prior
agreement or understanding between the parties.
(22) COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document.
(23) HEADINGS. Headings of the Sections in this Agreement are for
reference purposes only and shall not be deemed to have any substantive effect.
(24) BINDING EFFECT; BENEFITS. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs,
administrators, executors, successors and assigns; PROVIDED, HOWEVER, that
nothing in this Agreement, expressed or implied, is intended to confer on any
Person other than the parties hereto or their respective successors and assigns,
any rights and remedies, obligations or liabilities under or by reason of this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first above written.
SELLER:
SOFTCHIP ISRAEL LTD.
By /s/ Michael Cohen
---------------------------------------
Its Managing Director
BUYER:
AMERICAN CARD TECHNOLOGY, INC.
By /s/ Raymond Findley, Jr.
---------------------------------------
Its President
(13)
TABLE OF CONTENTS
(1) CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . (1)
(2) ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . (2)
(3) SALE OF ASSETS; LIMITATIONS. . . . . . . . . . . . . . . . . . . . (3)
(4) PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . (3)
(5) INSTRUMENTS OF TRANSFER; PAYMENT OF PURCHASE PRICE; FURTHER
ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)
(6) REPRESENTATIONS AND WARRANTIES OF THE SELLER . . . . . . . . . . . (4)
(7) REPRESENTATIONS AND WARRANTIES OF THE BUYER. . . . . . . . . . . . (6)
(8) USE OF NAME. . . . . . . . . . . . . . . . . . . . . . . . . . . . (7)
(9) CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER. . . . . . . (7)
(10) CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER . . . . . . . (8)
(11) INDEMNIFICATION; SURVIVAL. . . . . . . . . . . . . . . . . . . . . (8)
(12) RESTRICTIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . .(11)
(13) TERMINATION; BREACH. . . . . . . . . . . . . . . . . . . . . . . .(12)
(15) AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .(13)
(16) EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(13)
(17) NOTICES, ETC.. . . . . . . . . . . . . . . . . . . . . . . . . . .(13)
(18) ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .(14)
(19) APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . .(14)
(20) CURRENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(14)
(21) ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . .(14)
(22) COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . .(14)
(23) HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(14)
(24) BINDING EFFECT; BENEFITS . . . . . . . . . . . . . . . . . . . . .(14)
(i)
EXHIBIT A
PURCHASED ASSETS
EXHIBIT B
SHAREHOLDERS
Joseph Basch
Bruce R. Bonadies
Salvatore Cartagine
Chapman Group LLC
Lloyd R. Davis and Patricia P. Davis
Robert Dixon
Raymond Findley, Jr.
Neil Greenbaum
Barbara Hamill
John Hamill
Sidney O. Harriel
Lawrence O. Perl
The 1994 Perl Trust Indenture
Harold Rothstein
The Rothstein Family Trust
Raymond A. Roncari
Ronald Seplowitz
Richard Shelton
Susan Shelton
Joseph Sweedler