Exhibit 10.16
OTI-SAMSUNG CONFIDENTIAL
LICENSE AND COOPERATION AGREEMENT
THIS LICENSE AND COOPERATION AGREEMENT (hereinafter "Agreement) is made and
entered into by and between On Track Innovations Ltd., an Israel corporation
with offices at ▇.▇.▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ (hereinafter
"OTI"), and SAMSUNG Electronics Co., Ltd., a Korea corporation with offices at
▇▇▇, ▇-▇▇, ▇▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇ 100-742 (hereinafter "SAMSUNG")
WHEREAS, OTI develops and is the sole owner of certain proprietary technology
relating to contactless smart cards and readers and of various related patents,
including US Patent No. 5,241,160 and Antenna Interface (hereinafter "Antenna
Interface") patents (pending) and design, and has acquired considerable
expertise and technological know-how relating to the same and to the development
of contactless communication protocols (hereinafter "RF Routines") and
development of products based thereon; and
WHEREAS, SAMSUNG is a leading worldwide semiconductor manufacturer, owning a
worldwide marketing infrastructure, has its own expertise in the design of
microprocessor-based contact smart card IC and owns its proprietary smart card
operating system (hereinafter "SAMSUNG Technology"); and
WHEREAS, OTI and SAMSUNG wish to cooperate in the integration of OTI's Antenna
Interface design, with SAMSUNG's existing and future family of smart card's
microprocessors, in order to design a single chip solution (hereinafter
"Monochip") for both contact and contactless operation, with a view to commence
commercial manufacturing by Q1, 1999, all subject to the terms and conditions
hereinafter set forth in this Agreement.
WHEREAS, SAMSUNG desires to sell the Monochip on a worldwide basis as part of
its portfolio of smart card IC products and OTI also desires to purchase from
SAMSUNG the Monochip.
NOW, THEREFORE, in consideration of the promises and covenants set
forth herein, OTI and SAMSUNG agree as follows:
1. Definitions
1.1 "Development Schedule" means the schedule, attached as Exhibit A hereto,
according to which the parties will perform their obligations in relation to the
development of the Monochip under this Agreement.
1.2 "Effective Date" means the date of Korean Government approval to this
Agreement.
SAMSUNG will make its best effort to obtain the Korean Government approval to
the Agreement as soon as possible, and if such approval is not obtained within
45 days from the signing date of this Agreement OTI may terminate this
Agreement.
1.3 "Monochip" means a single microprocessor (including without a limitation a
co-processor) chip solution for both contact and contactless operation developed
or have developed and manufactured by SAMSUNG which the OTI Technology is
incorporated into.
1.4 "Monochip Specifications" means the technical specifications for the
Monochip, as further specified in Exhibit C hereto.
1.5 "Net Selling Price" means the net selling price of the SAMSUNG Products
which sold by SAMSUNG to third party customers, less any tax, packing, freight
and insurance cost from invoice price.
1.6 "OTI Technology" means , with regard to the Antenna Interface design and RF
Routines only, a certain proprietary technology and intellectual property rights
relating to contactless smart cards and readers and of various related patents,
including US Patent No. 5,241,160 and Antenna Interface patents (pending) and
design.
1.7 " Steering Committee" means a panel of two (2) or more members as agreed
between the parties, including one Representative for each party, where each
Party has an equal voting rights, even if there is not an equal representation
in a specific meeting of the Steering Committee
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1.8 "Representative" means an individual designated by a party hereto to serve
as a representative for that party on the Steering Committee.
1.9 "SAMSUNG Products" means an integrated circuit, including Monochip and/or RF
Memory chip, developed or have developed and manufactured by SAMSUNG which the
OTI Technology is incorporated into.
1.10 "SAMSUNG Reader Products" means a reader product developed or have
developed and manufactured by or on behalf of SAMSUNG which the OTI's OEM Reader
board is incorporated into.
1.11"Subsidiary" means any corporation, company or other entity controlled by,
the term "control" means ownership or control, direct or indirect, now or
hereafter controlling, or under common control with, either party hereto. As
used herein, during the term of this Agreement, of more than fifty percent (50%)
of the outstanding shares of interest entitled to vote for the election of
directors(other than any shares or stock whose voting rights are subject to
restriction) of such corporation, company or other entity. A company shall be
considered a Subsidiary only so long as such control exists, and after the
approval of the Steering Committee. It is agreed that in no case shall the
inclusion of a Subsidiary of one Party, under the scope of this Agreement,
establish any direct contractual relationships between such Subsidiary and the
other Party.
1.12 "Transfer Materials" means that technical information, forming part of OTI
Technology, identified in Exhibit B hereto.
2. Delivery of the Transfer Materials
2.1 Within the time specified in the Development Schedule, OTI shall complete
the activities contemplated hereunder and shall deliver the Transfer Materials
to SAMSUNG.
2.2 OTI and SAMSUNG shall use their best endeavors and shall cooperate in order
to get the Monochip design finished and qualified, and for such purposes each of
OTI and SAMSUNG shall perform its respective obligations as set forth in the
Development Schedule.
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2.3 If SAMSUNG gives written notice that the Monochip does not comply with the
specification as specified in Exhibit C in this Agreement, only in such a case,
and after it was clear that the reason for such a failure is the OTI Technology
and that OTI fails to cure such a failure within sixty (60) days from such
notice, then, and only then, this Agreement shall be terminated and OTI will
refund SAMSUNG all sums paid for the license.
3. Technical Support
3.1 At SAMSUNG's request, OTI shall provide SAMSUNG with up to fifteen (15) man
actual working days of technical support free of charge based on actual working
day at an agreed site either in Korea or in Israel for the Monochip development.
Additional engineering services will be available at US$100 an actual working
hour.
3.2 For such technical support, SAMSUNG shall pay the actual cost of all
reasonable travel expenses including accommodation expenses incurred by OTI to
the extent and approved in advance by SAMSUNG at SAMSUNG's request pursuant to
this Agreement. Payment for such travel and accommodation expenses shall be
payable net 30 days upon SAMSUNG's receipt of OTI's invoice.
4. License
Subject to the terms and conditions of this Agreement in general and to Article
7.2 hereafter in particular, OTI hereby grants to SAMSUNG and its Subsidiaries a
royalty-bearing, non-exclusive, nontransferable, worldwide right (without the
right to sub-license) and license under OTI Technology now owned or controlled
by OTI solely for the following purposes and not for any other purposes ("the
License), namely:
(a) to use, make, have made, design, have designed, modify, manufacture, have
manufactured, market, sell, distribute and otherwise dispose of SAMSUNG Products
and SAMSUNG Reader Products.
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(b) to incorporate the OTI Technology developed by SAMSUNG into SAMSUNG's
products for smart cards such as fixed and programmable ASIC, gate array,
cell-based or similar customizable libraries or tools("SAMSUNG Design Kit"), and
to make available the OTI Technology to SAMSUNG customers as part of a SAMSUNG
Design Kit.
With regard to a possible incorporation of the OTI Technology with SAMSUNG's
memory chips for smart cards, it is agreed that:
1) If the RF memory chip shall require a change from the existing
Antenna Interface design, the Steering Committee shall decide,
in good faith, what will be the cost of any extra engineering
cost of OTI that may be involved in the spin-off (and/or
downgrade) of the current Antenna Interface design to fit with
a memory chip. This agreed cost should be paid to OTI by
SAMSUNG prior to the start of such an integration.
2) OTI will contribute the RF technology while SAMSUNG will
contribute the logic part of such a memory chip.
3) The priority of development shall be set towards the Monochip.
4) The detailed specifications shall be decided in due time by
the Steering Committee and shall be attached as an appendix to
this Agreement.
5) The provision of Article 6.1 hereafter shall apply, mutatis
mutandis, also for the purchase of the memory chip.
(c) to use the OTI trade ▇▇▇▇ and trade name in conjunction with the marketing
and distribution of the SAMSUNG Products and SAMSUNG Reader Products hereunder,
in a manner agreed and acceptable to OTI.
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(d) The license shall be for a period of 10 years and shall be automatically
extended of one year each, provided that SAMSUNG shall continue the commercial
production of SAMSUNG Products.
5. Fees and Royalties
5.1 License Fee.
SAMSUNG shall pay OTI total sum of US$* as a lump-sum License fee to use
the OTI Technology in the SAMSUNG Products.
5.1.1 The said license fee shall be paid by SAMSUNG as follows:
-US$* as soon as possible after the Effective Date and not later
than 30 days from the Effective Date.
- US$* shall be paid not later than 4 months after the Effective
Date.
5.2 NRE.
Within 30 days from the Effective Date, SAMSUNG shall pay OTI US$* for NRE
of integrating OTI's Antenna Interface design with SAMSUNG's microprocessors.
5.3 Royalties.
5.3.1 OTI shall be entitled to an on-going royalty payment from SAMSUNG at a
rate of *% of the Net Selling Price of the SAMSUNG Products net, free of
Korean tax and any other deductions in Korea.
5.3.2 After the delivery of 20 million SAMSUNG Products, the Steering Committee
shall discuss in good faith the reduction of the royalties, according to the
market conditions at such a time, the other added functions of the chip as may
be applicable, and the relevant contribution of the OTI Antenna Interface design
to the market success of such SAMSUNG Products.
* Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
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5.3.3 It is agreed that the royalties payment shall not apply for any Monochip
purchased from SAMSUNG by OTI. The same shall apply with regard to the first
300,000 units of commercial SAMSUNG Products used by SAMSUNG internally.
5.3.4 Such royalties shall be due for payments on 15th of February and 15th of
August of each year, for the sales made by the previous half of year. Royalty
payments shall be made in U.S Dollars using average monthly exchange rates
during the period royalty was incurred. Royalties which are not timely paid
should, without affecting other remedies, bear compound interest, calculated on
a monthly basis, at LIBOR(for 6 months loans) + 4% for the period of delay.
5.3.5 SAMSUNG shall provide OTI with an annual report signed by a representative
of SAMSUNG stating the total quantities of the SAMSUNG Products sold, as well as
the selling prices of each sold batch. In addition, SAMSUNG shall provide to OTI
at OTI's expense other reasonable data required by OTI in relation to the
royalty payments.
5.3.6 OTI shall have the right to audit, through independent certified public
accountant, selected and paid by OTI (which will be agreed in advance that any
of the big six worldwide accounting firms will be acceptable for such an
appointment., the relevant calculation records of SAMSUNG. SAMSUNG shall not be
required to submit to any audit more than once during any twelve(12) month
period. Such audit shall be initiated by OTI on at least two (2) weeks prior
written notice, and any such audit shall be conducted during normal business
hours. All such records of any audit shall be considered Confidential
Information. OTI shall pay all cost of such accountants unless such audit
determines an unremedied discrepancy of at least ten percent (10%) of the
aggregate amount under audit. SAMSUNG shall not be required to maintain records
reflecting the performance of its obligations under this Agreement for a period
of more three (3) years after the end of the respective calendar year in which
the royalty bearing SAMSUNG Products are sold.
5.4 SAMSUNG will pay any withholding tax imposed by Korean taxing authority on
any payments to be made to OTI hereunder.
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5.5 All payments under this Agreement is made by SAMSUNG in the United States
dollars through wire transfer to OTI's bank account:
Bank Name - Bank Hapoalim
Bank Address - Rosh-▇▇▇▇, ▇▇▇▇▇▇
Bank Routing Number- Branch No. 12/542
Account Number - 107775
Account name - On Track Innovations Ltd.
6. Purchase.
6.1 Purchase of Monochip by OTI
6.1.1 OTI shall be entitled to purchase the Monochip from SAMSUNG with a
preferred price representing a reduction of *% of the lowest selling price of
the Monochip under similar quantity condition which SAMSUNG provide the Monochip
to any third party in arm's length transaction. SAMSUNG shall furnish OTI with
updated worldwide price lists, regarding quantities, upon OTI's request.
6.1.2 Each party shall be free to market the Monochip worldwide, as long as no
party shall offer to sell the Monochip directly to a client known to be a client
of the other party, but through the other party only.
6.2 Purchase of OEM Reader module by SAMSUNG
6.2.1 SAMSUNG shall be entitled to purchase from OTI the OEM Board for Reader
(of any type then available) with a preferred price representing a reduction of
*% of the lowest selling price of the OEM Reader under similar quantity
condition which OTI provide OEM Board for Reader to any third party in arm's
length transaction.. OTI shall furnish SAMSUNG with updated worldwide price
lists, regarding quantities, upon SAMSUNG's request.
* Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
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6.2.2 Each party shall be free to market the OEM Board for Reader worldwide, as
long as no party shall offer to sell the OEM Board for Reader directly to a
client known to be a client of the other party, but through the other party
only. It is agreed that if there will be any potential collision between the
marketing efforts of the Parties, it will be brought to the Steering Committee
to resolve the problem.
7. Representations, Warranties and Indemnification
7.1 OTI warrants and represents that it has the right and authority to convey
and grant the license as set forth herein.
7.2 OTI represents that the OTI Technology including the Transfer Materials
provided hereunder to SAMSUNG is, and shall be kept accurate, updated technology
available to OTI with regard to the ISO14443 standards compatibility, as this
standard may be changed from time to time.
7.3 OTI represents that to the best of its knowledge the OTI Technology provided
by OTI under this Agreement does not infringe upon any third party's patents,
copyrights, or trade secrets and that it has not been duly notified by any
patent holders of any assertion of patent infringement by using OTI Technology.
7.4 OTI agrees to indemnify, hold harmless and defend SAMSUNG from and against
any and all actions, damages, costs and expenses incurred by SAMSUNG in
connection with the SAMSUNG Products that such actions, damages, costs and
expenses incurred by fault of OTI Technology.
7.5 SAMSUNG agrees to indemnify, hold harmless and defend OTI from and against
any and all actions, damages, costs and expenses incurred by OTI in connection
with the SAMSUNG Products that such actions, damages, costs and expenses
incurred by fault of SAMSUNG Technology.
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8. Intellectual Property Rights.
8.1 SAMSUNG acknowledges that OTI shall exclusively own the OTI Technology,
including without limitation, the Transfer Materials and OEM Board for the
reader, subject to the license rights granted to SAMSUNG pursuant Clause 4.
8.2 OTI acknowledges that SAMSUNG shall solely and exclusively own the developed
SAMSUNG Products under this Agreement unless this Agreement is terminated with
SAMSUNG's material breach..
9. Limited Representation and Warranties
THE REPRESENTATIONS AND WARRANTIES EXPRESSED IN PARAGRAPH 7 ABOVE ARE
LIMITED REPRESENTATIONS AND ARE THE ONLY REPRESENTATIONS AND WARRANTIES, EXPRESS
OR IMPLIED, MADE BY OTI. ANY AND ALL OTHER REPRESENTATIONS AND WARRANTIES,
INCLUDING SPECIFICALLY WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE EXPRESSLY EXCLUDED. NEITHER SAMSUNG NOR OTI SHALL BE
LIABLE OR OBLIGATED IN ANY MANNER FOR ANY CONSEQUENTIAL OR INDIRECT DAMAGES OF
THE OTHER, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
10. Term and Termination.
10.1 This Agreement shall remain in full force and effect for ten (10) years
from the Effective Date, unless earlier terminated as provided elsewhere herein.
This Agreement shall be automatically extended for successive periods of one (1)
year each according to the provisions of Article 4(d) above.
10.2 Without prejudice to any other right or remedy which may be available to
it, either party shall be entitled summarily to terminate this Agreement by
giving written notice to the other:
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(i) if the other party has committed a material breach of any of its obligations
hereunder which is not capable of remedy; or
(ii) if the other party has committed a material breach of any of its
obligations hereunder which is capable of remedy but which has not been remedied
within a period of sixty (60) days following receipt of written notice to do so;
or
10.3 OTI shall be in material breach as of twelve (12) months after the
Effective Date, if the following occurs: The Monochip developed by SAMSUNG using
OTI Technology fail to meet the Monochip Specifications as specified in Exhibit
C as a result of OTI Technology problem.
10.4 SAMSUNG shall be in material breach as of twelve (12) months after the
Effective Date, if the following occurs:
The Monochip developed by SAMSUNG using OTI Technology fail to meet the Monochip
Specifications as specified in Exhibit C as a result of SAMSUNG technology
problem. In such a case, OTI shall not be entitled to any additional
compensations beyond the license fee, and the right to terminate this Agreement.
10.5 The provisions of Article 5, 7, 8, 9, and 11 shall survive any termination
or expiration of this Agreement for any reason.
11. Effect of Termination
Upon termination of this Agreement by OTI pursuant to Clause 10.2, SAMSUNG shall
discontinue any use of OTI Technology. However, SAMSUNG will have rights, after
such termination, as are necessary for SAMSUNG to (a) supply replacement
products for any defective SAMSUNG Products sold by SAMSUNG on or prior to the
date of such termination, and (b) supply SAMSUNG Products under, and pursuant to
the terms of, commitments of SAMSUNG to third parties, for a period of one year
thereafter, and (c) dispose of inventory of SAMSUNG Products under
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SAMSUNG's control as of the date of such termination, and for a period of
six (6) months thereafter. In no event shall SAMSUNG have the right to commit to
supply SAMSUNG Products to new product design, for the purpose of
sub-paragraph(c) herein, new product designs do not include products which have
been taped out, masking plates have been made for them, and such proof of
existence is provided by SAMSUNG to OTI no later than thirty (30) days after
termination of this Agreement. SAMSUNG will provide OTI a statement of inventory
at this point in time, as well as an estimate of time required to dispose of
said inventory. SAMSUNG shall cause to be issued an irrevocable letter of credit
issued by a commercial bank equal to the amount of royalty based upon the
inventory. SAMSUNG will fulfill all royalty obligations for material described
in (a), (b) and (c).
12. Steering Committee and Dispute Resolution
12.1 Participation.
12.1.1 Steering Committee Representatives. In an effort to facilitate
communications and cooperation between OTI and SAMSUNG in connection with this
Agreement, each party shall designate in writing two Representatives to serve as
its representatives for purpose of this Agreement on the Steering Committee. The
Representatives for OTI and for SAMSUGN initially shall be ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
and ▇▇. ▇▇▇▇ Itay for OTI and Mr. Chilhee ▇▇▇▇▇ and Mr. Sang ▇▇▇▇ ▇▇▇ for
SAMSUNG. Each party may remove and replace any one of its respective
Representatives; provided, however, such party gives thirty (30) days prior
written notice to the other party of such removal and identifies the replacement
representative.
12.1.2 Powers of Steering Committee. Subject to the limitations set forth in
this Agreement, the Steering Committee shall have the following powers:
(a) the authority to issue, execute, consents, requests, notices, or other
communications required or appropriate hereunder;
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(b) the authority to resolve and settle disputes between the parties pursuant to
Article 6 hereof.
12.1.3 Communication. The parties hereto agree and acknowledge that they will
communicate on an as-needed basis. In addition, the Representatives will
communicate at least once every month by telephone or e-mail in order to review
progress, track schedules, resolve problems. Steering Committee meetings, to be
attended by the appropriate personnel, shall be as required, but no less
frequently than once every three (3) months. All of the Steering Committee
meetings shall take place at a place mutually agreed upon by the Representatives
prior to such meeting. Each party shall bear its own expenses for attendance of
its Representative at such Steering Committee meetings. A failure by either
party to meet the obligations set forth in this Article 12.1.3 shall not
constitute a material breach of this Agreement by that party.
12.2 Dispute Resolution
12.2.1 General. Any and all disputes between the parties hereto relating to or
arising out of this Agreement shall be resolved in accordance with this Article
12.2.2
12.2.2 Resolution by Steering Committee. The parties agree that upon the written
request of either party hereto, the parties shall immediately submit any dispute
to the Steering Committee for consideration. Upon receipt of such submission,
the Steering Committee shall confer and endeavor in good faith to resolve and
settle any dispute within fifteen (15) days thereafter.
13. General Provisions
13.1 Governing Law. This Agreement shall be governed by and in accordance with
the laws of England.
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13.2 Notice. Any notice required or permitted to be made or given by either
party hereto pursuant to this Agreement will be sufficiently made or given on
the date of issuance if sent by such party to the other party by certified mail,
e-mail, commercial courier, facsimile, personal delivery, or a similar reliable
delivery method, addressed as follows:
Notices to OTI:
Address : On Track Innovations Ltd.
▇.▇.▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇.
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (Vice President of Marketing)
TEL: ▇▇▇-▇-▇▇▇▇▇▇▇
FAX: ▇▇▇-▇-▇▇▇▇▇▇▇
E-mail: ▇▇▇▇-▇@▇▇▇▇▇.▇▇▇.▇▇
Notices to SAMSUNG:
Address : Samsung Electronics Co., Ltd
San #24 Nongseo-Ri, Kiheung-Eup
Yongin-City, Kyungki-Do, Korea
449-900
Attn : Sang ▇▇▇▇ ▇▇▇ (LSI Planning Team)
TEL: ▇▇ ▇ ▇▇▇ ▇▇▇▇
FAX: ▇▇ ▇ ▇▇▇ ▇▇▇▇
E-mail: ▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇.▇▇
A notice shall be considered as received by the other party after two (2)
business days if sent by certified mail, commercial courier or facsimile with a
proof of receipt.
13.3 Assignment; Binding Effect. This Agreement may not be assigned nor any duty
hereunder delegated, by either party without the prior written consent of the
other which consent shall not be unreasonably withheld. Any attempted assignment
or delegation without such prior written consent shall be void. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives, successors and
permitted assigns. Sale, merger or acquisition shall not constitute an
assignment.
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13.4 Arbitration. All disputes, controversies, or differences which may arise
between the parties out of or in relation to or in connection with this
Agreement, shall be finally settled by arbitration in London, in accordance with
the then-current Commercial Arbitration Rules of the International Chamber of
Commerce . Each party shall pay its pro rata share of the costs and expenses of
such arbitration, and each shall separately pay its own attorney's fees and
expenses.
13.5 Entire Agreement. This Agreement, together with the exhibits, schedules,
appendixes and addenda hereto, represents, constitutes and expresses the entire
agreement between the parties with respect to the subject matter contained
herein and supersedes any previous or simultaneous oral or written
communications, representation, understandings or agreements with respect
thereto. The terms of this Agreement may be modified only in writing signed by
an authorized representative of each party hereto.
13.6 Disclosure . During the term of this Agreement, neither party shall
disclose to any third party, without the prior written consent of the party, the
terms of this Agreement, except (1) as required by law or governmental
regulations, requirements or orders, as may be necessary to establish or assert
its rights hereunder or (2) pursuant to an appropriate confidential disclosure
agreement.
13.7 No Third Party Beneficiaries; Party Not Partners. No person or entity which
is not a party to this Agreement (including any employee of either party) shall
have or acquire any rights by reason of this Agreement, nor shall any party
hereto have any obligations or liabilities to such other person by reason of
this Agreement. Nothing contained in this Agreement shall be deemed to
constitute the parties partners or joint ventures with each other or any other
person. The parties are, for any and all purposes, independent contractors.
Neither party has, nor shall ever have, any express or implied right to enter
into any obligation or responsibility on behalf of the other party.
13.8 Force Majeure. Neither party shall be held liable for failure to fulfill
its obligations under this License agreement, if such failure is caused by
flood, extreme weather, fire, or other natural calamity, acts of governmental
agency, or similar causes beyond the control of such party. A party should
promptly notify the other party in writing of the occurrence of Force Majeure
and specify the relevant circumstances and expected duration of such
circumstances. If such force majeure event continues for longer than six (6)
months, then either party may terminate this Agreement.
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13.9 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same original.
13.10 Exhibits. The following exhibits form a part of this Agreement.
---------
A. Development Schedule
B. Transfer Materials
C. Monochip Specifications
D. Mutual Confidentiality Agreement
13.11 Authority. The persons executing this Agreement represent that they each
have requisite corporate authority to do so which is not subject to any further
ratification or approval whatsoever.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their respective authorized representatives as of the date first
written.
For and on behalf of For and on behalf of
On Track Innovations Ltd. Samsung Electronics Co., Ltd.
By ___________________ By ___________________
Name : ▇▇▇▇ ▇▇▇▇▇▇ Name : Sang ▇▇▇▇ ▇▇▇
Title: President & CEO Title: Executive Director
Date : 13.5.98 Date :
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Exhibit A
Development Schedule
-------------------- ---------------------- -----------------------------------
Accumulated
Schedule Relative Timing Functions
(Weeks) (Week)
-------------------- ---------------------- -----------------------------------
0
T0 Start
-------------------- ---------------------- -----------------------------------
1 T1=T0+1 Design rules & device parameters
-------------------- ---------------------- -----------------------------------
T2 Technical discussion
-------------------- ---------------------- -----------------------------------
4 T3=T1+3 1st Meeting at Matrics
-------------------- ---------------------- -----------------------------------
5 T4=T1+4 Initial specification
-------------------- ---------------------- -----------------------------------
6 T5=T1+5 Design start
-------------------- ---------------------- -----------------------------------
T6 2nd Meeting at Matrics
-------------------- ---------------------- -----------------------------------
10 T7=T5+4 Layout start
-------------------- ---------------------- -----------------------------------
T8 3rd Meeting at Matrics
-------------------- ---------------------- -----------------------------------
14 T9=T5+8 Design end & 4th meeting at Matrics
-------------------- ---------------------- -----------------------------------
16 T10=T9->T9+2 Design of testing
-------------------- ---------------------- -----------------------------------
18 T11=T9+4 Layout finish
-------------------- ---------------------- -----------------------------------
Notes
1. Internal block diagram and its detailed schedule shall be delivered to
Samsung at the first meeting.
2. According to each block progress, the block diagram, the specification of
the block, schematics and simulation results of the each block shall be
sent to Samsung.
3. During the design stage, there will be three meetings including the second
meeting (two days) and the third one (four half days). In these meetings,
Oti and Matrics will do their best to inform to and answer to Samsung of
the details of the Monochip design.
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EXHIBIT B : TRANSFER MATERIALS
------- --------------------------------------------------------------- ---------------- --------------------
Deliverable Item Description Comment Schedule
------- --------------------------------------------------------------- ---------------- --------------------
1. - Design consideration document Start of
development
------- --------------------------------------------------------------- ---------------- --------------------
2. Antenna interface design
- Overall design specification
- Overall block diagram
- Individual block specification
- Individual block schematic & simulation results
By the end of each
design stage
IC Testing
- Test plan & test board circuit diagram By the end of
design
------- --------------------------------------------------------------- ---------------- --------------------
3. Antenna interface layout
------- --------------------------------------------------------------- ---------------- --------------------
4. Software By the end of
design
- Coding specification
- Communication protocol between reader and card
- Anti-collision algorithm and protocol
- Authentication algorithm and protocol
- Subroutine for contactless communication
------- --------------------------------------------------------------- ---------------- --------------------
5. Test document by system design By the end of
design
------- --------------------------------------------------------------- ---------------- --------------------
6. Chip evaluation board or tool Application By first silicon
test 2 sets
------- --------------------------------------------------------------- ---------------- --------------------
18
Exhibit C : Frame of Antenna Interface overall design specifications
1. DEFINITIONS OF REQUIREMENTS
This is an "upper level" description of purpose of product, the environment in
which has to work, the standard it has to follow and misc.
2. PRODUCT DESCRIPTION
2.1 Text - General
2.2 Block diagram
2.3 Principle of operation:
2.3.1 Modes of operation (e.g. Contact, C/L, Test Programming)
2.3.1.1 Contact mode
2.3.1.2 Contactless mode - Variable standards
- Read ie card simulations models
- Modulation/demodulation
- Power management
- Various control statues and signals
- Data flow handling
- u.P. Interface
2.3.1.3 Test mode
2.3.1.4 Programming mode
2.4 Detailed description of various block
2.5 Electrical parameters:
- Absolute max. values
- Input characteristic
- D.C. characteristic
- A.C. characteristic
2.6 Testing:
- FAB Testing
- Complete product testing
19
3. PRODUCT SPECIFICATION
----------------------- ------------------------------- -----------------------
CPU 8 bit architecture CPU SAM87RC
----------------------- ------------------------------- -----------------------
EEPROM Size 8 Kbytes
------------------------------- -----------------------
Single cycle programming 1 to 32 bytes
------------------------------- -----------------------
Write / Erase time Typ. 1.5 msec each
------------------------------- -----------------------
Endurance > 100,000 cycles
------------------------------- -----------------------
Data Retention > 10 years
------------------------------- -----------------------
Cell size 27,5 umsq
----------------------- ------------------------------- -----------------------
ROM User ROM 24 Kbytes
------------------------------- -----------------------
Test ROM 2 Kbytes
------------------------------- -----------------------
RAM Data memory 256 Bytes
------------------------------- -----------------------
Register file 272 Bytes
----------------------- ------------------------------- -----------------------
EXT. CLOCK Contact mode 1 to 5 Mhz
----------------------- ------------------------------- -----------------------
SUPPLY VOLTAGE Contact mode 2,5 to 5,5 V
------------------------------- -----------------------
INTERFACE Frequency 13,56 Mhz
------------------------------- -----------------------
FROM READER TO CARD Modulation Type B -10%
OTI - 100 %
------------------------------- -----------------------
Bit encoding Type B - NRZ
OTI - PWM
----------------------- ------------------------------- -----------------------
INTERFACE Modulation Load switching
------------------------------- -----------------------
FROM CARD TO READER Sub-Carrier Frequency (Type B) 847,5 Khz
------------------------------- -----------------------
Bit encoding Type B - BPSK
OTI - PWM
------------------------------- -----------------------
20
----------------------- ------------------------------- -----------------------
COMMUNICATION SPEED (ATR) 106 Kbps
------------------------------- -----------------------
(After ATR) 106 Kbps or higher (?)
----------------------- ------------------------------- -----------------------
MCU CLOCK Contactless mode 13.56/3, 4, 6, 8 (MHz)
----------------------- ------------------------------- -----------------------
ANTI-COLLISION Method Software
----------------------- ------------------------------- -----------------------
----------------------- ------------------------------- -----------------------
POWER uP. Operating Current Typ. 3,5 mA
Max 10 mA
------------------------------- -----------------------
Stop Mode current Max. 100uA (?)
------------------------------- -----------------------
Antenna Interface current 300uA (?) - 500uA (?)
----------------------- ------------------------------- -----------------------
----------------------- ------------------------------- -----------------------
PROGRAMMABLE Memory EEPROM
------------------------------- -----------------------
PARAMETERS Programming TBD during design
------------------------------- -----------------------
Parameters list TBD during design
------------------------------- -----------------------
CONTACT-CONTACTLESS Operation Automatic
------------------------------- -----------------------
MODE SELECTION Pads Status TBD during design
----------------------- ------------------------------- -----------------------
EXTERNAL PADS I/O Lines IO1, IO2 (?)
------------------------------- -----------------------
Programming TBD during design
------------------------------- -----------------------
Positioning TBD during design
----------------------- ------------------------------- -----------------------
TEMPERATURE Operating, Ambient -20 to 85(Degree) C
----------------------- ------------------------------- -----------------------
ESD HBM =>4000 (target)
----------------------- ------------------------------- -----------------------
TESTING Factory testing (wafer level) TBD during design
----------------------- ------------------------------- -----------------------
Product testing TBD during design
----------------------- ------------------------------- -----------------------
21
Exhibit D : Mutual Confidentiality Agreement
MUTUAL CONFIDENTIALITY AGREEMENT
signed and made as of the ______ day of ________
BETWEEN
ON TRACK INNOVATIONS LTD.,
of ▇.▇.▇. - ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ (_OTI")
AND
SAMSUNG ELECTRONICS CO., LTD.,____________________________
OF _250, ▇-▇▇, ▇▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇ 100-742
__________________________________________("Company")
WHEREAS OTI has developed and is the sole owner of certain proprietary
technology relating in particular to contactless smart cards
and readers of which it is the sole owner (_OTI'S
TECHNOLOGY"); and -
WHEREAS the Company is the owner of certain confidential information
relating to its field of operation; and -
NOW THEREFORE THE PARTIES HAVE AGREED AS FOLLOWS:
1. In this Agreement:
1.1 the term "DISCLOSER" means a party to this Agreement
disclosing Confidential Information to the other party.
1.2 the term "RECIPIENT" means a party to this Agreement receiving
Confidential Information from the other party.
1.3 the term "CONFIDENTIAL INFORMATION" means any and all
information relating to the Discloser's proprietary technology
or business made available by the Discloser to the Recipient
including, without limitation, information, data, know-how,
22
formulas, concepts, tests, drawings, specifications,
applications, designs and trade secrets, information and data
relating to the Discloser's products, design methodology,
engineering and manufacturing processes and related equipment,
suppliers, sales, customers, business operations and plans,
financial situation, members, employees and investors and any
notes, memoranda, summaries, analyses, compilations or any
other writings relating thereto prepared by the Discloser or
the Recipient or on such party's behalf, provided that such
information is in writing or other tangible form and is
clearly marked as "proprietary" or "confidential" when
disclosed to the Recipient; or if such information is not in
tangible form, that (i) such information is identified as
"proprietary" or "confidential" when disclosed and summarized
in a written document which is marked "proprietary" or
"confidential" and is delivered to the Recipient within 30
(thirty) days after date of disclosure; or (ii) is deemed
"proprietary" or "confidential" if such information is known
or reasonably should be known by the Recipient to be
"confidential" or "proprietary". Without derogating from the
generality of the above, Confidential Information shall
include all information, data and know-how relating to OTI's
Technology.
2. Recipient undertakes to maintain as fully confidential:
2.1 all the Discloser's Confidential Information and not to
disclose, divulge or use same, directly or indirectly, save
exclusively for the purposes for which it was disclosed to the
Recipient.
2.2 the existence of this Agreement, or any details relating to
the Discloser, its business or its Confidential Information,
or the fact that negotiations or discussions between the
parties have taken or are taking place, or the terms and
conditions on which any possible arrangements or agreements
between the parties may take or might have taken place, unless
otherwise agreed in writing between the parties.
3. The restrictions of use and disclosure set forth in this agreement
shall not apply to any Confidential Information which:
3.1 was already known to the Recipient at the time such
information was received from the Discloser, based on written
reliable evidence that shall be presented by the Recipient
promptly after receipt of the Confidential Information from
Discloser;
3.2 after it is disclosed, became available to the general public,
through no breach of a confidentiality undertaking towards
the Discloser;
23
3.3 after it is disclosed, is at any time lawfully obtained by the
Recipient from any other person, firm or company having no
obligation not to disclose it.
3.4 is required to be disclosed by the Recipient by applicable
law, regulation or court order; provided that the Recipient
shall first give twenty (20) days prior written notice to the
Discloser of the requirement for such disclosure and
co-operate through all reasonable and legal means, at the
Discloser's expense, in any attempts by the Discloser to
prevent or otherwise restrict disclosure of such Confidential
Information.
4. In order to secure the confidentiality of the Confidential Information
the Recipient shall:
4.1 safeguard the Confidential Information of the Discloser with
at least the same degree of care as it uses for its own
Confidential Information, and without derogating from the
generality of the above, shall keep the Confidential
Information in a safe and separate place, and not make any
copies of it (including by way of transcription using PC's or
other computing or scanning means) without the express written
approval of the Discloser.
4.2 limit access to the Confidential Information only to those of
the Recipient's employees to whom disclosure is necessary for
the purposes hereof provided that all such employees which may
have access to the Confidential Information are under a
confidentiality undertaking towards the Recipient and towards
the Discloser (as a third party beneficiary), to maintain the
Confidential Information as fully confidential and not to
disclose, divulge or use same, directly or indirectly, but for
the purposes of carrying out their duties towards the
Recipient. At the Discloser's request, the Recipient shall
provide the Discloser with an accurate list of all of its
employees which had or have access to the Confidential
Information. For avoidance of doubt, the Recipient will assume
responsibility for any breach of the terms of this Agreement
by any person, including without limitations all the
Recipient's employees, to whom disclosure of the Confidential
Information is permitted and made by the Recipient under this
Agreement.
5. At the Discloser's request, Recipient shall forthwith return to the
Discloser all Confidential Information in tangible form and not retain
any copies of it, including copies made by electronic forms.
24
7. Each party hereto reserves all rights in any inventions, patents,
copyrights, designs, and any other intellectual property invented or
devised by it in relation to Confidential Information of such party.
8. This Agreement shall be valid for a period of five (5) years after the
later of the termination of discussions or business relationship
between the parties. A Discloser shall be entitled, in the event of a
breach or non compliance by the Recipient with the provisions of
Sections 2, 3 or 4 above, to terminate this Agreement with immediate
effect, by means of a written notice sent by registered mail to the
address stated above or facsimile with notice of proper receipt. Such
termination shall be without prejudice to the Discloser's right to
demand from the Recipient indemnification for any damages, including
loss of income, incurred to the Discloser due to such breach or non
compliance. Any termination of this Agreement shall not derogate from
the Recipient's obligations in terms of Section 2 above
9. It is agreed that the unauthorized disclosure or use of any
Confidential Information will cause immediate or irreparable injury to
the Discloser, and that the Discloser can not be adequately compensated
for such injury in monetary damages. Each party therefore acknowledges
and agrees that, in such event, the Discloser shall be entitled to any
temporary or permanent injunctive relief necessary to prevent such
unauthorized disclosure or use, or threat of unauthorized disclosure or
use.
10. No party shall be entitled to assign its rights and undertakings
hereunder without the other party's prior written approval.
11. If any condition, term or covenant of this Agreement shall at any time
be held to be void, invalid or unenforceable, such condition, covenant
or term shall be construed as severable and such holding shall attach
only to such condition, covenant or term and shall not in any way
affect or render void, invalid or unenforceable any other condition,
covenant or term of this Agreement, and this Agreement shall be carried
out as if such void, invalid or unenforceable term were not embodied
herein.
12. This Agreement shall be governed by the laws of Great Britain. Unless
specifically agreed otherwise in the Main Agreement (if executed), any
dispute between the parties in relation to this Agreement shall be
referred to and be finally resolved by arbitration of the London Court
of International Arbitration in accordance with its rules. The
arbitration award may be enforced by any court of competent
jurisdiction.
25
----------------------------- ---------------------------------
ON TRACK INNOVATIONS LTD. COMPANY
by: ▇▇▇▇ ▇▇▇▇▇▇ by: Sang ▇▇▇▇ ▇▇▇
title: President & CEO title: Executive Director
26