EXHIBIT 10.6
MASTER ALLIANCE AGREEMENT DATED DECEMBER 5, 1996, BETWEEN INGENICO, S.A. AND
INTERNATIONAL VERIFACT INC.
THIS MASTER ALLIANCE AGREEMENT made as of the 5th day of December, 1996.
BETWEEN:
"COMPAGNIE INDUSTRIELLE ET
FINANCIERE" INGENICO, SOCIETE
ANONYME under the laws of
France, with capital of 80,559,960
Francs
(hereinafter called "Ingenico")
OF THE FIRST PART
- and -
INTERNATIONAL VERIFACT INC., continued
under the laws of Canada
(hereinafter called "IVI")
OF THE SECOND PART
WHEREAS Ingenico carries on the business of development, distribution,
marketing and manufacturing of transaction terminals with application to payment
systems, loyalty, electronic benefit transfer systems, and terminal systems for
smart card technology, principally in Europe, the Middle East, Africa,
Australia, Asia Pacific and the Americas;
AND WHEREAS Ingenico has developed a unique smart card technology under the
name "Unicapt" which is recognized world wide by major credit card
organizations, including Master Card and VISA;
AND WHEREAS IVI carries on the business of development, distribution,
marketing, and manufacturing of transaction terminals with application to
payment systems, loyalty, electronic benefit transfer systems and terminal
systems for smart card technology principally in the Americas, the Middle East,
Europe, Asia Pacific and Australia;
AND WHEREAS Ingenico and IVI desire to enter into this Master Alliance
Agreement so as to develop and expand their respective businesses on a
world-wide basis;
AND WHEREAS such development and expansion will be achieved through
marketing and distribution arrangements for existing products, certain
technology licensing arrangements, joint arrangements for new product
development, procurement and manufacturing selection, a capital investment by
Ingenico into treasury stock of IVI, and a Latin America joint venture for
product distribution purposes and, in certain circumstances, manufacturing;
AND WHEREAS IVI shall be obligated, following the Closing Date, to integrate
the Unicapt Technology into the Future IVI Smart Card Terminals, as specified in
Section 5.03;
AND WHEREAS Ingenico and IVI desire to establish certain performance
criteria pursuant to which the success and achievements of their distribution
arrangements will be measured from time to time;
AND WHEREAS each of Ingenico and IVI will have primary responsibility in
certain defined territories;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants and agreements contained herein, the parties hereto covenant and agree
with each other as follows:
ARTICLE ONE
INTERPRETATION
Section 1.01 DEFINED TERMS: As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" has the meaning ascribed thereto in the Canada Business
Corporations Act.
"Agreement" means this Master Alliance Agreement, and all schedules and
instruments supplemental hereto or in amendment or confirmation hereof.
"Business" means either the Ingenico Business or the IVI Business, as the
case may be.
"Closing" means the closing of the transactions provided for herein.
"Closing Date" means December 17th, 1996 or such other date to which the
parties may mutually agree in writing.
"Confidential Information" means all non-public information of Ingenico or
IVI, as the case may be, including but not limited to business plans, products,
marketing, promotion and pricing information, reports, budgets, forecasts,
records, business policies, operations, strategies, methods or practices, know-
how, the names of their respective clients and suppliers and information in
respect of their relationships with such parties, software, documentation,
information received from third parties that either Ingenico or IVI is obligated
to treat as confidential, and all information which is marked as confidential or
proprietary, but excluding all such information which (i) prior to or after the
time of disclosure was or became publicly available without the act or omission
of either IVI or Ingenico as recipient; (ii) is disclosed to the recipient by a
third party under no legal obligation to maintain the confidentiality of such
information; or (iii) is disclosed as required by applicable law or as is
necessary in any arbitration or court proceedings. For greater certainty,
"Confidential Information" includes the Ingenico Technology, Unicapt Technology
and the IVI Technology, as the case may be.
"Effective Date" means January 1, 1997.
"Event of Default" has the meaning set out in Article Thirteen.
"Future IVI Smart Card Terminals" means IVI Future Products which are smart
card-based transactional terminal products.
"Groupe Ingenico" or "Ingenico Group" means Ingenico, and all its Affiliates
from time to time, wherever located, as presently identified in Schedule "S".
"Ingenico Business" means the design, development, marketing, manufacturing,
sale and service throughout the world of transactional payment systems and
related software applications including auxiliary equipment using a card, either
mag stripe and/or smart card as well as cheque reader, cheque encoder and cheque
truncation.
"Ingenico Customer Contracts" means the customer contracts or purchase
orders of Ingenico applicable to the IVI Territory as the same exist on the
Closing Date and those expected to be entered into prior to March 31, 1997, as
described in Schedule "G", together with any other customer contracts or
purchase orders of Ingenico entered into on or before March 31, 1997 applicable
to the IVI Territory.
"Ingenico Future Products" means products, other than Ingenico Products,
developed, solely by Ingenico or with others, or with IVI pursuant to the Joint
Development and Procurement Agreement, in which case they may be referred to as
"Common Future Products", or products which Ingenico contracts IVI to develop or
manufacture, in which case they may be referred to as "Contracted Products",
after the Closing Date.
"Ingenico Intellectual Property" means all intellectual property of any
kind, including without limitation, patents, trade marks, trade names, and
copyrights, whether registered or unregistered, owned by or licensed to
Ingenico, and including without limitation, all applications and registrations
by Ingenico and/or its Affiliates for patents and similar rights for any
Ingenico Technology and Unicapt Technology that are now or may in the future be
adopted, prepared or filed, as the case may be, and all renewals, reissues and
extensions of the foregoing, and including, without limitation, those set forth
in Schedule "O" hereto.
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"Ingenico Products" means the existing products and product lines, and
products currently planned, of Ingenico, as described in Schedule "H".
"Ingenico Technology" means the technology described in Schedule "M" and
software, library of applications, data files, object code, know-how, documents,
drawings, computer media, models, prototypes, sketches and designs relating
thereto, as well as licensed third party technology, as the same exists at the
Closing Date and all upgrades, modifications and enhancements to such
technology. "Ingenico Territory" means all of Europe and its related territories
and jurisdictions, Cuba, Africa, Australia, the Middle East, Asia and
Australasia.
"Intellectual Property" means either the Ingenico Intellectual Property or
the IVI Intellectual Property as may be dictated by the context in which such
reference appears.
"Interim Period" means the period of time from execution of this Agreement
to the Closing Date.
"Investment Agreement" means the agreement in the form annexed hereto as
Schedule "D".
"IVI Business" means the design, development, marketing, manufacturing,
sales and service throughout the world of transactional payment systems and
related software applications including auxiliary equipment using a card, either
mag stripe and/or smart card, as well as cheque reader, cheque encoder and
cheque truncation.
"IVI Customer Contracts" means the customer contracts or purchase orders of
IVI applicable to the Ingenico Territory as the same exist on the Closing Date
and those expected to be entered into prior to March 31, 1997, as described in
Schedule "I", together with any other customer contracts of IVI entered into on
or before March 31, 1997 applicable to the Ingenico Territory.
"IVI Future Products" means products, other than IVI Products, developed,
solely by IVI or with others, or with Ingenico pursuant to the Joint Development
and Procurement Agreement, in which case they may also be referred to as "Common
Future Products", or products which IVI contracts Ingenico to develop or
manufacture, in which case they may be referred to as "Contracted Products",
after the Closing Date.
"IVI Group" means IVI, and all its Affiliates from time to time, wherever
located, as presently identified in Schedule "T".
"IVI Intellectual Property" means all intellectual property of any kind,
including without limitation, patents, trade marks, trade names, and copyrights,
whether registered or unregistered, owned by or licensed to IVI, and including
without limitation, all applications and registrations by IVI and/or its
Affiliates for patents and similar rights for any IVI Technology that are now or
may in the future be adopted, prepared or filed, as the case may be, and all
renewals, reissues and extensions of the foregoing, and including, without
limitation, those set forth in Schedule "P" hereto.
"IVI Products" means the existing products and product lines, and products
currently planned, of IVI, as described in Schedule "J".
"IVI License Fee" in respect of the license to the Ingenico Technology and
Unicapt Technology, means US$1,000,000, payable in accordance with Section 5.02.
"IVI Technology" means the technology described in Schedule "N" and includes
software, library of applications, data files, object code, know-how, documents,
drawings, computer media, models, prototypes, sketches, designs relating
thereto, as well as licensed third party technology, as the same exists at the
Closing Date, and all upgrades, modifications and enhancements to such
technology.
"IVI Territory" means, subject to Article Three, all of the Americas,
including, North, South and Central America and the Caribbean, excluding, Cuba
and French territories.
"Joint Development and Procurement Agreement" means the agreement in the
form annexed hereto as Schedule "B".
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"Latin America" means all countries in the Western Hemisphere, other than
Canada, U.S.A. and the Caribbean, excluding Cuba and the French territories.
"Latin America Shareholder Agreement" means the Agreement in the form
annexed hereto as Schedule "U".
"Latin Newco" means a limited liability company, to be incorporated pursuant
to the laws of Delaware with its principal office in Miami, Florida, U.S.A.
"Liabilities" means all liabilities, obligations, claims and demands, direct
or indirect, absolute or contingent, of or against the Ingenico Business, or the
IVI Business, as the case may be, including, without limitation, all
liabilities:
(a) in respect of any contracts or leases which comprise part of such
Business and which are not being assigned hereunder;
(b) derived from the Ingenico Customer Contracts or the IVI Customer
Contracts for the period up to and including the Closing Date;
(c) relating to debts, accounts payable or other amounts owing to the
suppliers or creditors of Groupe Ingenico or the IVI Group;
(d) relating to debts or other amounts owing by Groupe Ingenico or the IVI
Group, as the case may be, to banks or any other financial institutions;
(e) for income and other taxes, levies, duties and governmental charges or
assessments and payable by Groupe Ingenico or the IVI Group, whether in
respect of the operation of the Ingenico Business or the IVI Business, or
otherwise;
(f) for claims, demands, penalties or fines made or assessed with respect to
either the Ingenico Business or the IVI Business;
(g) in respect of any employees of Groupe Ingenico or the IVI Group;
(h) for defective products, including inventory, or equipment sold or leased
by either Groupe Ingenico or the IVI Group, provided that any products
manufactured by either Ingenico or IVI shall remain the responsibility of
such manufacturer;
(i) in respect of any claims which relate to possible infringement of
intellectual property rights; and
(j) which arise from current or future litigation against either Groupe
Ingenico or IVI Group.
"Marketing and Distribution Agreement" means the agreement in the form
annexed hereto as Schedule "A".
"Master Alliance Agreement" or "Master Agreement" means this Agreement.
"Parties" means Ingenico and IVI.
"Performance Criteria for Ingenico" means the performance criteria which,
subject to Section 2.02, must be achieved by Ingenico from time to time pursuant
to the Marketing and Distribution Agreement.
"Performance Criteria for IVI" means the performance criteria for Canada and
the U.S.A., to be described in Schedule "R" hereto by the closing date which
must be achieved from time to time by IVI pursuant to the Marketing and
Distribution Agreement.
"Performance Criteria for Latin Newco" means the performance criteria for
Latin America described in Schedule "R" hereto which must be achieved from time
to time by Latin Newco pursuant to the Marketing and Distribution Agreement.
"Product" means either an Ingenico Product, Ingenico Future Product, IVI
Product or IVI Future Product as may be dictated by the context in which such
reference appears.
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"Selected IVI Products" means an IVI Product selected pursuant to Section
2.02 and any IVI Future Products selected by Ingenico from time to time, as may
be set forth in Schedule "A" to the Marketing and Distribution Agreement from
time to time.
"Technology" means either the Ingenico Technology, the Unicapt Technology,
or the IVI Technology as may be dictated by the context in which such reference
appears.
"Technology License Agreement" means the agreement in the form annexed
hereto as Schedule "C".
"Territory" means either the Ingenico Territory or the IVI Territory as may
be dictated by the context in which such reference appears.
"Transaction Documents" means this Agreement, the Marketing and Distribution
Agreement, the Joint Development and Procurement Agreement, Latin America
Shareholders' Agreement, the Technology License Agreement and the Investment
Agreement.
"Time of Closing" means the time of closing on the Closing Date.
"Unicapt Technology" means the Unicapt, Simelite and Memotite technology as
described in Schedule "Q", and software, library of applications, object codes,
source codes, know-how, data files, documents, drawings, computer media, models,
prototypes, sketches and designs relating thereto, as well as licensed third
party technology, as the same exists at the Closing Date and all upgrades,
modifications and enhancements to such technology.
Section 1.02 ACCOUNTING TERMS: Accounting terms not specifically defined
herein shall be construed in accordance with United States generally accepted
accounting principles consistently applied.
Section 1.03 INCORPORATION OF SCHEDULES: Schedules and other documents
attached or referred to in this Agreement are an integral part of this
Agreement. The Schedules to this Agreement are the following:
Schedule "A" -- Marketing and Distribution Agreement
Schedule "B" -- Joint Development and Procurement Agreement
Schedule "C" -- Technology License Agreement
Schedule "D" -- Investment Agreement
Schedule "E" -- (Intentionally deleted)
Schedule "F" -- (Intentionally deleted)
Schedule "G" -- Ingenico Customer Contracts
Schedule "H" -- Ingenico Products
Schedule "I" -- IVI Customer Contracts
Schedule "J" -- IVI Products
Schedule "K" -- Ingenico Price Lists
Schedule "L" -- IVI Price Lists
Schedule "M" -- Ingenico Technology
Schedule "N" -- IVI Technology
Schedule "O" -- Ingenico Intellectual Property
Schedule "P" -- IVI Intellectual Property
Schedule "Q" -- Unicapt, Simelite Technology
Schedule "R" -- Performance Criteria for IVI and Latin Newco
Schedule "S" -- Groupe Ingenico
Schedule "T" -- IVI Group
Schedule "U" -- Latin America Shareholder Agreement
Section 1.04 EXTENDED MEANINGS: As used herein, each gender shall include
all genders, and words importing the singular shall include the plural and
vice-versa as the context shall require.
Section 1.05 U.S. CURRENCY: Except as otherwise expressly stated, all
dollar amounts referred to in this Agreement are in United States currency.
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Section 1.06 TRADE TERMS: Undefined words and abbreviations which have
well-known technical trade meanings are used herein in accordance with such
recognized meanings in the electronic funds transfer at point of service
industry.
Section 1.07 CONFLICTING PROVISIONS: Subject to Article Fourteen hereof,
in the event of conflict or discrepancy between the provisions of this Agreement
and any of the ancillary agreements referenced in the Schedules to this
Agreement, the provisions of such ancillary agreement shall govern.
Section 1.08 GROUPE INGENICO AND IVI GROUP: Each of Ingenico and IVI
respectively shall take all steps, undertake all proceedings and enter into all
such agreements as may be necessary in order to cause all entities comprised in
Groupe Ingenico and IVI Group to fulfill all of the obligations of Ingenico and
IVI respectively in this Agreement and in Agreements comprised in the Schedules
to this Agreement, including without limitation pertaining to ownership of
intellectual property, compliance with the terms of technology licenses, and
compliance with confidentiality obligations. Notwithstanding the foregoing,
Ingenico shall be unconditionally responsible for any and all acts of Groupe
Ingenico, and IVI shall be unconditionally responsible for any and all acts of
the IVI Group.
Section 1.09 LANGUAGE: The Parties agree that all communications between
them shall be in the English language.
ARTICLE TWO
MARKETING AND DISTRIBUTION AGREEMENT
Section 2.01 MARKETING AND DISTRIBUTION AGREEMENT: On the Closing Date,
Ingenico and IVI shall enter into the Marketing and Distribution Agreement,
pursuant to which Ingenico shall be granted the exclusive right to market and
distribute the IVI Products, IVI Future Products and the IVI Technology in the
Ingenico Territory, and IVI shall be granted the exclusive right to market and
distribute the Ingenico Products and Ingenico Future Products and Ingenico
Technology and Unicapt Technology which is incorporated in IVI Products or IVI
Future Products only in the IVI Territory.
Section 2.02 RIGHT OF SELECTION OF IVI PRODUCTS: As soon as practicable,
but in any event not later than December 31, 1997, Ingenico shall provide a
written notice to IVI as to which of the IVI Products Ingenico shall market and
distribute in the Ingenico Territory. With respect to any of the IVI Products
which Ingenico has either not elected prior to December 31, 1997 to market, or
alternatively, in the case of Selected IVI Products for which Ingenico has not
generated actual, reoccurring sales in the Ingenico Territory on or before
December 31, 1998, Ingenico shall lose its exclusivity with respect thereto and
IVI shall thereafter be permitted to market and distribute such IVI Products and
IVI Future Products either directly or through such channels of distribution as
IVI in its sole discretion determines. Ingenico shall have the right to select
from time to time IVI Future Products which it wishes to distribute as Selected
IVI Products. With respect to any Selected IVI Products, Ingenico shall commit
resources, to achieve the Performance Criteria for Ingenico. IVI shall provide
that all Selected IVI Products shall conform to market and standards
specification requirements in the Ingenico Territory, failing which the Ingenico
exclusivity shall not be lost with respect to such product. In this regard,
Ingenico's exclusivity shall be lost with respect to IVI Products forthwith upon
Ingenico electing not to proceed with marketing and distribution thereof, or
alternatively if it so elected, by not achieving the required sales as
aforesaid.
In the event that Ingenico does select an IVI Product or IVI Future Product
and thus becomes an exclusive distributor of such Selected IVI Products in the
Ingenico Territory, Ingenico and IVI shall prepare and agree on Performance
Criteria for Ingenico for such Selected IVI Products and such Performance
Criteria shall be reviewed annually, commencing in October of each year, and
approved by the Parties by no later than the following January 31st. Revisions
to the Performance Criteria for Ingenico and for sales and performance targets
for Selected IVI Products in the Ingenico Territory shall be subject to mutual
agreement between the Parties. In the event that the Performance Criteria for
Ingenico are not so mutually agreed by the Parties for any year, they shall, for
each subsequent year, be equal to the
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Performance Criteria for Ingenico established by mutual agreement for the prior
year, increased by 10%. Should the Performance Criteria for Ingenico, or any
mutually agreed sales performance targets not be achieved in any year, IVI shall
notify Ingenico of its recommendations for operational improvements in order to
achieve such targets for the following year. In addition, prior to any loss of
exclusivity for Ingenico based on failure to comply with this Section 2.02 with
respect to sales of the Selected IVI Products in the Ingenico Territory, IVI
shall notify Ingenico on or before each October 1 that the level of sales of IVI
Products are not satisfactory to IVI.
Notwithstanding the foregoing, Ingenico's right to market and distribute the
IVI Products on an exclusive basis shall be terminated in the event that
revenues generated by Ingenico from sales of the Selected IVI Products in the
Ingenico Territory are less than 20%, 50% or 60% of the Performance Criteria for
Ingenico in 1997, 1998 and 1999 respectively, provided that such distribution
rights shall continue on a non-exclusive basis for the remainder of the term of
the Marketing and Distribution Agreement.
Section 2.03 RIGHT OF SELECTION OF IVI TECHNOLOGY: As soon as practicable,
but in any event not later than December 31, 1997, Ingenico shall provide a
written notice to IVI as to whether and to what extent it is electing to utilize
the IVI Technology in the Ingenico Products and Ingenico Future Products
thereafter. To the extent Ingenico does not elect to so utilize the IVI
Technology, IVI shall thereafter be entitled, in its sole discretion, to license
the IVI Technology to such third parties in the Ingenico Territory as IVI shall
determine.
Section 2.04 PERFORMANCE CRITERIA FOR IVI: IVI shall commit resources, to
achieve the Performance Criteria for IVI for 1997, 1998, and 1999 appended
hereto as Schedule "R". The business plan for the sale and marketing of Ingenico
Products in the IVI Territory shall be reviewed annually in October, commencing
October 1997, and approved by the Parties by no later than the following January
31. Revisions to the Performance Criteria for IVI appended hereto as Schedule
"R", and for sales and performance targets for Ingenico Products and Ingenico
Future Products in the IVI Territory thereafter, shall be subject to mutual
agreement between the Parties. In the event that the Performance Criteria for
IVI are not so mutually agreed by the Parties for any year, they shall, for each
subsequent year, be equal to the Performance Criteria for IVI established by
mutual agreement for the prior year, increased by 10%. Should the Performance
Criteria for IVI, or any mutually agreed sales performance targets not be
achieved in any year, Ingenico shall notify IVI of its recommendations for
operational improvements in order to obtain such targets for the following year.
In addition, prior to any loss of exclusivity for IVI based on failure to comply
with this Section 2.04 with respect to sales of the Ingenico Products in Canada
and the U.S.A., Ingenico shall notify IVI on or before each October 1 commencing
October 1, 1997 that the level of sales of Ingenico Products are not
satisfactory to Ingenico.
Notwithstanding the foregoing, IVI's right to market and distribute the
Ingenico Products, Ingenico Future Products, Ingenico Technology and Unicapt
Technology on an exclusive basis in Canada and the U.S.A. shall be terminated in
the event that either:
(a) IVI does not adopt and incorporate the Unicapt Technology into Future
IVI Smart Card Terminals, and actively promote the Unicapt Technology in
Canada and the U.S.A.; or
(b) revenues generated by IVI from sales of the Ingenico Products, Ingenico
Future Products, Ingenico Technology and Unicapt Technology in Canada and
the U.S.A. are less than 20%, 50% or 60% of the Performance Criteria for
IVI in the first, second or third years respectively of the term of the
Marketing and Distribution Agreement;
provided that such distribution rights shall continue on a non-exclusive basis
for the remainder of the term of the Marketing and Distribution Agreement.
Section 2.05 TERM: The Marketing and Distribution Agreement shall be for a
period of ten (10) years, commencing January 1, 1997, and shall be automatically
renewed for subsequent periods of five
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(5) years unless either Party provides written notice of non-renewal to the
other not later than six months, prior to the expiry of the initial ten (10)
year term and the subsequent renewal periods, if any.
Section 2.06 NON-COMPETITION OF IVI: Except as indicated on Schedule "J",
during the term of the Marketing and Distribution Agreement, including any
renewal thereof, IVI shall not, either directly or indirectly, and shall not
permit any member of the IVI Group, to develop, distribute, market or
manufacture any smart card-based transfer system with application to payment
systems, loyalty, electronic benefit transfer systems, or terminal systems for
smart card technology, except utilizing the Unicapt Technology and Ingenico
Technology.
Section 2.07 NON-COMPETITION OF INGENICO: In the event that Ingenico
elects to become an exclusive licensee of Selected IVI Technology, pursuant to
Section 2.03 hereof, it shall not thereafter, either directly or indirectly, and
shall not permit any member of Groupe Ingenico, to develop, distribute, market
or manufacture any products in competition with the Selected IVI Technology
except utilizing either the Ingenico Technology, Unicapt Technology or the
Selected IVI Technology.
Section 2.08 NON-SOLICITATION OF EMPLOYEES: During the term of the
Marketing and Distribution Agreement and for a period of one year thereafter,
neither Ingenico nor IVI shall solicit or induce current employees of the other
to accept employment or provide contract services to any member of the IVI Group
or Groupe Ingenico, except with the mutual written approval of both Ingenico and
IVI. Notwithstanding the foregoing, both Ingenico and IVI consent to the
employment of ▇▇▇▇-▇▇▇▇▇▇ Chabanel by IVI.
Section 2.09 During the term of this Agreement, if an Ingenico Product or
Ingenico Future Product exists which meets the requirements of the IVI Territory
and is provided to IVI by Ingenico at prices which enable IVI to distribute such
product at a price which is competitive in the market and allows IVI to make a
reasonable return on such product, IVI shall not develop or sell its own product
which is identical to the Ingenico Product or Ingenico Future Product and shall
buy such Product from Ingenico.
ARTICLE THREE
LATIN AMERICA
Section 3.01 LATIN AMERICA JOINT VENTURE: On or before the Closing Date,
the Parties shall have incorporated and organized a separate corporation or
limited liability company under Delaware jurisdiction, having its head office in
Miami, Florida, United States, which shall be the corporation responsible for
conducting the marketing, distribution and manufacturing, if necessary, of the
Products and Technology and the carrying out of the related businesses of IVI
and Ingenico, in Latin America. Such corporation shall be owned as to 51% by IVI
and as to 49% by Ingenico and shall be initially capitalized in a mutually
agreeable amount as necessary to meet the proposed business plan, with a
debt-equity ratio sufficient to comply with thin capitalization regulations.
During the term of the Marketing and Distribution Agreement, Ingenico and
IVI shall supply Products and Technology to such joint venture corporation on
transfer pricing terms that are equal to the lesser of a transfer price mutually
agreed, and direct manufacturing costs plus a ▇▇▇▇-up of 20%. The business of
Latin Newco may be carried out in one or more of the countries comprising Latin
America either by it directly, through subsidiaries (which may or may not
include the participation of other parties) or through distribution agreements
entered into with distributors in Latin America.
Section 3.02 LATIN AMERICA SHAREHOLDERS' AGREEMENT: On the Closing Date,
the Parties shall enter into the Latin America Shareholders' Agreement in the
form annexed hereto as Schedule "U". Latin Newco shall be organized with respect
to directors, officers, voting rights, banking arrangements and other
organizational particulars as prescribed in the Latin America Shareholder
Agreement.
Section 3.03 MANUFACTURING IN LATIN AMERICA: Ingenico and IVI shall not
permit the manufacturing of Ingenico Products, Ingenico Future Products, IVI
Products or IVI Future Products in any country in
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Latin America without the prior written approval of Latin Newco as prescribed in
the Latin America Shareholder Agreement.
Section 3.04 CHANGE OF SHAREHOLDINGS: If Latin Newco does not achieve the
targets for the Performance Criteria for Latin Newco, set out in Schedule "R",
then Ingenico may elect to acquire 1% of the shares of Latin Newco held by IVI
so that the shareholdings of Latin Newco shall be 50% for each of IVI and
Ingenico.
ARTICLE FOUR
JOINT DEVELOPMENT AND PROCUREMENT AGREEMENT
Section 4.01 DEVELOPMENT: Effective as of the Closing Date, each of
Ingenico and IVI will enter into the Joint Development and Procurement Agreement
and co-operate in order to jointly develop new products with common architecture
and common componentry which would have worldwide application based on the
Ingenico Technology, Unicapt Technology, and the IVI Technology.
Section 4.02 PROCUREMENT: In addition, Ingenico and IVI shall co-operate
and coordinate their supplier relationships in order to maximize their joint
purchasing and procurement abilities for suppliers, all as provided in the Joint
Development and Procurement Agreement and also to choose and locate the most
cost effective manufacturing locations for new products, as agreed with Ingenico
and IVI.
Section 4.03 NEW PRODUCTS: Should either of Ingenico or IVI, after the
Effective Date, desire to develop any IVI Future Product or Ingenico Future
Product (the "New Product"), they shall, prior to implementing development of
any such New Product, extend a written offer to the other to jointly develop
such New Product. Such development would be implemented on the basis of 50% cost
reimbursement to the Party performing such development, provided that such Party
shall be and remain the sole and absolute owner of the New Product, subject to
an exclusive license in favor of the other Party to utilize such product in its
own Territory. A product jointly developed in this manner will be a Common
Future Product. In the case of a Common Future Product, the non-owning party
shall have a right of access to all materials necessary to produce and market
the Common Future Product;
In the event that the recipient either rejects or neglects to exercise the
foregoing right of first refusal, and should the Party which has not initiated
the New Product subsequently desire to have access to it following its
development, it shall be entitled to access to the New Product for marketing and
distribution purposes only in the Ingenico Territory or the IVI Territory (as
the case may be), but only after complete reimbursement to the initiating Party
of the New Product of 65% of all of such party's non-reoccurring engineering
costs to date. In such case, such product will be a Common Future Product.
ARTICLE FIVE
TECHNOLOGY LICENSE
Section 5.01 TECHNOLOGY LICENSE AGREEMENT: On the Closing Date, Ingenico
and IVI shall enter into the Technology License Agreement in the form annexed
hereto as Schedule "C" pursuant to which Ingenico shall license the Unicapt
Technology to IVI for the purposes of incorporating it into Future IVI Smart
Card Terminals and Ingenico and IVI shall cross-license their Technology to the
other on certain terms and conditions.
Section 5.02 IVI PAYMENT: IVI shall pay to Ingenico on the Closing Date
the IVI License Fee amount of US$1,000,000 in consideration of the Technology
License Agreement.
Section 5.03 IVI OBLIGATION TO UTILIZE UNICAPT TECHNOLOGY: From and after
the Closing Date, IVI shall use or incorporate the Unicapt Technology, as
amended and evolved from time to time, in any and all Future IVI Smart Card
Terminals manufactured, sold, or distributed by IVI thereafter, and shall use
the Unicapt trade marks in association therewith. IVI shall, from time to time
upon the written request of
9
Ingenico, provide evidence satisfactory to Ingenico, acting reasonably, that the
Unicapt Technology, is incorporated into all Future IVI Smart Card Terminals.
Section 5.04. THIRD PARTY RIGHTS: Each of IVI and Ingenico shall make
available to the other, pursuant to the Technology License Agreement, all third
party technology and/or intellectual property utilized within the Technology or
the Products at cost.
Section 5.05 NATURE OF LICENSE TO IVI: The license for the Ingenico
Technology and Unicapt Technology to IVI in the Technology License Agreement
shall be an irrevocable royalty-free exclusive license for the purpose of using
and incorporating the Ingenico Technology and Unicapt Technology into the IVI
Products and IVI Future Products, but not for manufacturing any Ingenico
Products unless otherwise agreed.
Section 5.06 GROUPE INGENICO AND IVI GROUP: The respective rights and
benefits of IVI and Ingenico under the Technology License Agreement may be
extended by IVI to the IVI Group, and by Ingenico to Groupe Ingenico, provided
that IVI and Ingenico respectively shall remain fully responsible for all of
their duties and obligations prescribed in such Agreement, as specified in
Section 1.08 hereof.
Section 5.07 NON DUPLICATION: The Parties shall not copy or reproduce the
software as well as the electrical and electronic design incorporated within the
Technology nor transfer it to a third party without the other Party's written
consent.
ARTICLE SIX
INVESTMENT BY INGENICO IN IVI
Section 6.01 IVI TREASURY ISSUE: On the Closing Date, Ingenico shall
subscribe for 1,439,00 treasury common shares in the capital stock of IVI
representing approximately 18% of the issued and outstanding share capital of
IVI, assuming the exercise of all outstanding options granted pursuant to the
1994 Employee Stock Option Plan. In consideration for the issuance of such
treasury shares, Ingenico shall pay to IVI Cdn. $6,89, being an amount per share
equal to the simple average closing price of such common shares on The Toronto
Stock Exchange during the 30 trading days prior to the date hereof. Ingenico
may, in its discretion, assign its subscription for up to 479,666 treasury
common shares of IVI to ▇▇▇▇-▇▇▇▇▇▇▇ Poutrel.
Section 6.02 FUTURE PARTICIPATION RIGHT: Ingenico and IVI acknowledge and
agree that until December 31, 2001, and subject to regulatory approval, Ingenico
is entitled to a future participation right to acquire additional treasury
common shares of IVI at such time as additional treasury shares are offered for
sale, whether to the public or otherwise, in order to preserve its 15% ownership
of all outstanding common shares in IVI.
Section 6.03 TSE APPROVAL: Ingenico and IVI acknowledge that the within
investment by Ingenico requires approval of The Toronto Stock Exchange and
non-disapproval of the National Association of Securities Dealers (U.S.)
("NASD"), and each Party shall co-operate in making all of its necessary filings
as may be required by the Toronto Stock Exchange, NASD, and the Ontario
Securities Commission.
Section 6.04 IVI BOARD OF DIRECTORS: From and after the Closing Date, and
provided Ingenico maintains certain levels of share ownership, Ingenico shall be
entitled to appoint 2 nominees to the board of directors of IVI, which shall be
comprised of 8 directors, and shall be entitled to one representative on the
nominating committee for such directors, which will be comprised of three
members. Another director shall be selected by the nominating committee of IVI
from the payment industry.
Section 6.05 INVESTMENT AGREEMENT: Ingenico and IVI shall enter into the
Investment Agreement in the form annexed hereto as Schedule "D" on the date of
this Agreement.
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ARTICLE SEVEN
INTERIM PERIOD
Section 7.01 INTERIM PERIOD: During the Interim Period each of IVI and
Ingenico shall be entitled to full and complete access to all of the other's
premises, books, contracts and records, respectively, for the purpose of
completing due diligence provided that each Party shall use its best efforts not
to disrupt the ongoing nature of the Ingenico Business, or the IVI Business, as
the case may be.
Section 7.02 OPERATION OF BUSINESS: Each of IVI and Ingenico shall cause
the IVI Business and the Ingenico Business respectively to be carried on in the
normal course of business up to and including the Closing Date.
ARTICLE EIGHT
CLOSING ARRANGEMENTS
Section 8.01 CLOSING: The Closing shall take place at 2:30 p.m. on the
Closing Date at the offices of Ingenico, ▇, ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
or at such other time and place as may be agreed to by the parties hereto.
Section 8.02 CLOSING PROCEDURES:
(a) At or before the Closing, Ingenico and IVI shall complete or cause
to be completed all actions, steps and corporate and regulatory proceedings
necessary or desirable to validly and effectively approve or authorize the
completion of the transactions herein provided for.
(b) Upon fulfillment of all of the conditions set out in Article Nine
that have not been waived in writing as therein provided, each Party shall
execute and deliver to the other at or before Closing:
(i) the Marketing and Distribution Agreement;
(ii) an assignment of all Ingenico Customer Contracts and IVI
Customer Contracts (other than the agreement between Dassault
Automatismes et Telecommunications and IVI dated September 29, 1995), as
the case may be, to the Party carrying on the Business in the applicable
Territory pursuant to the Marketing and Distribution Agreement, and the
written consents to such assignment of the other parties to such
contracts as required. To the extent that any of the Ingenico Customer
Contracts or the IVI Customer Contracts cannot be so assigned, the Party
to such agreements hereby covenants and agrees that from and after the
Closing Date, they shall hold such agreement(s) in trust for the Party
holding the distribution rights in the applicable Territory pursuant to
the Marketing and Distribution Agreement. Such assignment shall provide
that all gross profits, less the assignee's reasonable servicing expenses
as agreed by the assignor, attributable to the Ingenico Customer
Contracts and the IVI Customer Contracts, for firm purchase orders
received before March 31, 1997 with fixed delivery schedules for delivery
before December 31, 1997 shall be remitted quarterly, as received, to
Ingenico by IVI and to IVI by Ingenico, respectively; furthermore with
respect to all of such Customer Contracts or purchase orders not entered
into or accepted by either Ingenico or IVI as of the Closing Date, no
such contract or purchase order shall be executed or accepted following
the Closing Date by a Party without the prior written approval of the
Party in whose Territory the proposed Customer Contract will be serviced;
(iii) the Joint Development and Procurement Agreement;
(iv) the Technology License Agreement;
(v) the Latin America Shareholder Agreement;
11
(vi) a certified resolution of the directors of each Party approving
the transactions contemplated herein and designating signing authorities
for all documents required to effect such transactions;
(vii) a certificate of an officer of each Party as to the
representations and warranties contained in this Agreement and confirming
due compliance with or performance of all terms, covenants and agreements
contained in this Agreement;
(viii) a current list of the names and addresses of all customers of
each of the Ingenico Business and IVI Business situated in the opposite
Party's Territory, together with all other records relating to each such
business which are reasonably necessary to carry on the transactions
contemplated in this Agreement;
(ix) all documents necessary to complete closing of the Marketing and
Distribution Agreement, the Joint Development and Procurement Agreement,
the Technology License Agreement, the Investment Agreement and the Latin
America Shareholder Agreement;
(x) subject to Section 8.02(b)(ii), evidence reasonably satisfactory
to each of Ingenico and IVI, as the case may be, that neither IVI nor
Ingenico will be responsible for or assuming any Liabilities of the other
Party;
(xi) consent of the Toronto Stock Exchange and non-disapproval of
NASD to the transactions described in the Investment Agreement, together
with such documentation as is necessary for filing with the Ontario
Securities Commission or other applicable regulatory authorities to
evidence these transactions;
(xii) all other documents that each Party considers reasonably
necessary or desirable to validly and effectively complete the
transactions described herein, including without limitation registered
user agreements with respect to the Ingenico Intellectual Property and
the IVI Intellectual Property in form satisfactory to counsel for each
party;
(xiii) payment by IVI to Ingenico of the IVI License Fee;
(xiv) payment by Ingenico of the subscription price for shares in IVI
pursuant to section 6.01 and the Investment Agreement; and
(xv) confirmation that IVI shall appoint an Ingenico nominee as an
officer of International Verifact Inc. ("U.S.") reporting to the
President of IVI, responsible for coordinating the use and incorporation
of the Ingenico Products and Ingenico Technology by the IVI Group.
ARTICLE NINE
CONDITIONS OF CLOSING
Section 9.01 EACH PARTY'S CONDITIONS OF CLOSING: Each Party shall not be
obliged to complete the transactions herein provided for unless, on the Closing
Date, each of the following conditions shall have been satisfied, which
conditions are for the exclusive benefit of each such Party and may be waived in
whole or in part by such Party at any time:
(a) REPRESENTATIONS AND WARRANTIES: The representations and warranties
of each Party to the other contained in this Agreement shall be true and
correct in all material respects on the Closing Date, and each of Ingenico
and IVI shall have delivered a certificate to the other in this respect.
(b) COMPLIANCE: All of the terms, covenants and agreements set forth in
this Agreement to be complied with or performed by each Party on or before
the Closing Date shall have been complied with or performed by each Party.
12
(c) CONSENT OF REGULATORY AUTHORITIES: IVI and Ingenico shall have
obtained the consent of all necessary regulatory authorities to the
transactions contemplated herein, including but not limited to the Toronto
Stock Exchange and NASD.
(d) CONCURRENT TRANSACTIONS: Each of the transactions described in the
Marketing, and Distribution Agreement, the Joint Development and Procurement
Agreement, the Technology License Agreement, the Investment Agreement and
the Latin America Shareholder Agreement shall have closed concurrently on
the Closing Date.
(e) BOARD APPROVALS: The boards of IVI and Ingenico shall, prior to the
expiry of ten days after the date of this Agreement, have approved the
transactions contemplated in this Agreement, provided that each Party shall
forthwith notify the other upon approval or rejection of this Agreement by
its board.
(f) DELIVERY AT CLOSING: Each Party shall have delivered to the others
all of the documents and other materials required to be delivered by a Party
pursuant to Section 8.02(b).
(g) CONFIRMATION: Each Party shall have confirmed the Performance
Criteria for IVI and Performance Criteria for Latin Newco for 1997 and 1998
and each Party's respective price lists.
If any of the foregoing conditions has not been fulfilled on or before the
Closing Date, either Ingenico or IVI may terminate this Agreement by notice in
writing to the other, in which event IVI and Ingenico shall be released from all
obligations under this Agreement, except in respect of Article Twelve hereof.
ARTICLE TEN
REPRESENTATIONS AND WARRANTEES
Section 10.01 REPRESENTATIONS AND WARRANTIES OF IVI AND INGENICO: Each of
IVI and Ingenico represents and warrants to the other, and acknowledges and
confirms that the other (with respect to itself alone) is relying on such
representations and warranties in connection with the transactions described
herein (notwithstanding any due diligence by a Party or its representatives),
that on the date hereof:
(a) GOOD STANDING: Each Party is a corporation (i) duly incorporated and
organized, validly subsisting and in good standing under the laws of its
jurisdiction; (ii) duly authorized and licensed to own its properties and to
carry on its business as presently owned and carried on; (iii) having the
corporate power and authority and right to enter into the transactions
contemplated in this Agreement;
(b) NO BREACH CAUSED BY THIS AGREEMENT: Except as the Parties have
disclosed to each other, neither the execution nor delivery of this
Agreement nor the fulfillment or compliance with any of the terms hereof
will conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, the articles and by-laws, as
amended, of the Party or any material agreement or instrument to which the
applicable Business or the Party is subject, or any applicable law, rule,
regulation, order, judgment, injunction, award or decree, or will require
any consent or other action by any administrative or governmental body with
the exception of The Toronto Stock Exchange and NASD.
(c) ENFORCEABILITY: The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of each
Party. This Agreement constitutes a valid and binding agreement of each
Party enforceable in accordance with its terms.
(d) CONTRACTS: There are no material defaults by a Party under the
Customer Contracts which are included in the IVI Customer Contracts or the
Ingenico Customer Contracts respectively, and the Party does not know of any
material default of any other party to such Contracts. No party to any
13
material Customer Contract to which the Party is a party has canceled or
threatened to cancel any such Customer Contract. The assigning party with
respect to such Customer Contracts is entitled to all of the right, title
and interest set forth therein including without limitation, the right to
enforce any obligations, warranties, covenants and/or indemnities. The
assigning party has not otherwise assigned or encumbered any of its rights
under such Customer Contracts, and the Customer Contracts in existence of
the date hereof have been duly authorized by, are binding, upon and are
enforceable against the Party thereto.
(e) CONTRACTUAL RELATIONSHIPS AND SUPPLIES:
(i) There are no material unresolved disputes with any
subcontractors, suppliers, shippers, customers or any other party to any
contract, agreement or commitment in respect of the applicable Business;
(ii) In the six months preceding the date of this Agreement, no
suppliers or customers have canceled, modified in any material adverse
respect or notified the Party of their intention to cancel, modify in any
material adverse respect, or terminate their relationship with the
applicable Business; and
(iii) There exists no claim or threatened claim of any Liability or
obligation, absolute or contingent, which arises out of the sale of any
product or performance of any service by the applicable Business and
which may be based on or derived from the failure or alleged failure of
such product or service to conform to specifications or other contract
terms or to satisfy any warranty (express or implied) or arising from
negligence or other failure of the applicable Business or the Party.
(f) TAX MATTERS: Neither Party is in arrears or in default in respect of
the applicable Business in the filing of any required federal, provincial,
state, departmental or municipal tax, remittance, information or other
return; no claim for additional taxes, filing fees or other amounts and
assessments has been made which has not been paid or collected.
(g) LITIGATION: There are no actions, claims or demands or other
proceedings pending or threatened before any court or administrative agency
which would have a material adverse effect on the financial condition or
overall operations of the applicable Business, and no judgment, order or
decree enforceable against the applicable Business which involves or may
involve, or restricts or may restrict, or requires or may require, the
expenditure of money as a condition to or a necessity for the right or
ability of the applicable Business to conduct its business in the manner in
which such business has been carried on prior to the date hereof.
(h) PRODUCT WARRANTY CLAIMS: There are no material product warranty
claims pending, or threatened against either Party with respect to Products
sold by either the IVI Business or the Ingenico Business.
(i) ENVIRONMENTAL: Each of the Ingenico Business and the IVI Business,
as the case may be, have and are being conducted in compliance with all
applicable environmental laws, orders and regulations, whether federal,
provincial or municipal; no investigation has been undertaken by any
governmental or quasi-governmental body with respect to any environmental
infraction; and neither IVI nor Ingenico is aware of and no circumstances
exist which could result in any order of any kind including remedial or
corrective, being requested against IVI or Ingenico with respect to either
the IVI Business or the Ingenico Business.
(j) FULL DISCLOSURE: There is no material information concerning or
affecting the transactions described herein which either Ingenico or IVI has
not disclosed to the other.
(k) DISCLOSURE: The Schedules respectively constitute accurate and
complete lists and disclosure of the matters to be referred in such
Schedules. Except as disclosed on either Schedule "M" or
14
Schedule "N", as the case may be, Ingenico and IVI are and will continue to
be, throughout the term of the Technology License Agreement either exclusive
owners or licensees of the Ingenico Technology, Ingenico Intellectual
Property, Unicapt Technology, IVI Technology and IVI intellectual Property,
as the case may be, and have and will have the exclusive right to use such
technology and have the full and sufficient right and entitlement to grant
the rights and licenses granted herein by good and marketable title, free
and clear of any and all attachments, liens, claims, charges, options,
pledges or other encumbrances;
(l) THIRD PARTY RIGHTS: All third party technology and intellectual
property contained in either the Ingenico Technology, the Unicapt Technology
or the IVI Technology are separately identified in Schedule "M", "N" and "Q"
respectively. Ingenico and IVI have duly obtained the right and license to
use, copy, modify and distribute the third party technology and intellectual
property contained in their respective technologies; other than as disclosed
respectively in the aforesaid Schedules, neither the Ingenico Technology,
Unicapt Technology nor the IVI Technology contain other software or
intellectual property components in which any third party may claim superior
or joint ownership, other than as disclosed on Schedules "M" and "N"
respectively; neither the Ingenico Technology nor the IVI Technology
constitute derivative works of any other intellectual property not owned in
their entirety respectively by either Ingenico or IVI as the case may be;
(m) PROCEDURES FOR COPYRIGHT PROTECTION: Schedule "M" and Schedule "N"
respectively set forth the form and placement of the proprietary legends and
copyright notices displayed in or on the published Ingenico Technology,
Unicapt Technology and IVI Technology including, without limitation,
software programs. In no instance has the eligibility of the Ingenico
Technology, Unicapt Technology or the IVI Technology for protection under
applicable copyright law been forfeited to the public domain by omission of
any required notice or any other action;
(n) PROCEDURES FOR TRADE SECRET PROTECTION: Ingenico and IVI have used
their best efforts to adhere to and enforce the trade secret protection
programs respectively disclosed by each Party to the other. Neither Ingenico
nor IVI have reason to believe that there, has been a material violation of
such program by any person;
(o) ABSENCE OF CLAIMS: No claims have been asserted by any person to the
use of the Ingenico Technology, Unicapt Technology or the IVI Technology as
the case may be and neither Ingenico nor IVI know of any valid basis for any
such claim. The use of the Ingenico Technology and Unicapt Technology by
Ingenico, IVI, their sublicensees or end-users, does not and will not
infringe on the rights of any person. The use of the IVI Technology by IVI,
Ingenico, their sublicensees or end-users, does not and will not infringe on
the rights of any person;
(p) AGREEMENTS: Except as disclosed by the respective parties on either
Schedule "G" or Schedule "I", there are no agreements or arrangements in
effect with respect to the marketing, distribution, licensing or promotion
of any of the Ingenico Technology, Unicapt Technology or Ingenico Products
or the IVI Technology or IVI Products by any independent sales person,
distributor, sublicensor or other remarketer or sales organization in the
IVI Territory or the Ingenico Territory, as the case may be.
(q) CONFORMITY, PERFORMANCE AND COMPLIANCE: The specifications, program
code and documentation to be delivered by the parties to each other
hereunder have been prepared in a workmanlike manner and with professional
diligence and skill, will function on the appropriate equipment and
operating systems for which they are designed, and will conform to the
specifications and functions relating thereto.
The foregoing representations and warranties are in addition to the
representations and warranties of IVI to Ingenico contained in the Investment
Agreement,
15
ARTICLE ELEVEN
COVENANTS
Section 11.01 COVENANTS OF EACH PARTY: Each Party covenants and agrees
with the other, as follows:
(a) PARTY'S OBLIGATION TO COMPLETE TRANSACTION: Each Party shall take
all necessary steps and proceedings to permit the transactions described
hereunder to be duly and validly completed, and shall do all acts necessary
in order to cause the representations and warranties in Section 10-01 hereof
to be or remain true and correct on and as of the Closing Date and to cause
to be satisfied the conditions in Article Nine.
(b) CORPORATE APPROVAL: On or before the Closing Date each Party shall
take all necessary corporate action for the purpose of approving the
transactions described hereunder.
(c) CONSENTS: Each Party shall obtain and deliver, where required,
consents of all requisite parties to the assignment of the Ingenico Customer
Contracts and IVI Customer Contracts.
(d) RECORDS: Each Party shall provide the other, or its representatives,
access to the records of the Business during normal business hours and upon
reasonable advance notice.
(e) SCHEDULES: At least two days prior to the Closing Date each Party
shall provide the other, with revised Schedules G, H, I, J, K, L, M, N, Q
and R reflecting any changes during the Interim Period or settlement of the
terms of the Schedule in the case of Schedules I, L and R which changes
shall be made only in the ordinary course of the applicable Business and, if
material, shall only be made with the prior consent of the other Party.
(f) CONSENTS OF REGULATORY AUTHORITIES: Each of Ingenico and IVI shall
use their best efforts to obtain all necessary regulatory consents to the
transactions contemplated herein required to be obtained.
Section 11.02 INTELLECTUAL PROPERTY: Nothing contained in this Agreement
or in any of the Schedules hereto shall confer upon or result in Ingenico
obtaining any title or ownership to the IVI Intellectual Property, nor IVI
obtaining any title or ownership to the Ingenico Intellectual Property, which
intellectual property shall remain, both during the term of this Agreement in
any of the Schedules hereto and thereafter the absolute property of the owner
thereto subject to no claims or entitlement whatsoever by the other Party,
except the use thereof as specifically permitted in this Agreement.
ARTICLE TWELVE
INDEMNIFICATION
Section 12.01 INDEMNIFICATION BY INGENICO AND IVI: Each of Ingenico and
IVI (the "Indemnifying Party") covenants and agrees to indemnify and hold
harmless the other and any member of Groupe Ingenico or the IVI Group
respectively (the "Indemnified Party") from and against all ("Claims") demands,
claims, actions or causes of action, assessments, losses, damages, liabilities,
deficiencies, taxes, costs and expenses including, without limitation, interest,
penalties and solicitors' fees and expenses asserted against, relating to,
imposed upon or incurred by the Indemnified Party or its successors or permitted
assigns for any reason in connection with this transaction, including without
limitation:
(a) a breach of any representation, warranty or covenant of IVI and
Ingenico contained in or made pursuant to this Agreement or the schedules
hereto;
(b) the operation of the IVI Business by IVI, or the Ingenico Business
by Ingenico, for the period both before and after the Closing Date; and
(c) the assertion against IVI or Ingenico of any Liabilities of the
other.
16
(collectively, an "Indemnity Event").
In the event that IVI or Ingenico becomes aware of any actual or contingent
Indemnity Event, it shall notify the other of such Indemnity Event and the other
shall forthwith assume all responsibility for such Indemnity Event and shall
reimburse IVI or Ingenico (as the case may be) for any amounts expended by them
with respect to such Indemnity Event. The obligations of IVI or Ingenico to
indemnify the other with respect to an Indemnity Event shall be subject to the
following:
(a) the Indemnifying Party shall have been given a reasonable
opportunity to dispute such Indemnity Event;
(b) the Indemnifying Party shall be entitled to conduct such defense as
it deems appropriate with respect to any Indemnity Event, and in this regard
the Party seeking indemnification shall provide all reasonable assistance
and co-operation to the Indemnifying Party and their duly appointed agents,
including without limitation, access to all relevant books and records
relating to the subject matter of the Indemnifying Event and the right to
make copies thereof as may be reasonably necessary in order that the
Indemnifying Party may properly defend, settle or contest the same; and make
available to the Indemnifying Party all witnesses and original records,
materials and information which may be reasonably required to properly
conduct any litigation or defense relating to an Indemnity Event;
(c) neither Ingenico nor IVI shall be entitled to indemnification prior
to actually sustaining the loss, damage, liability, claim, deficiency,
costs, expense or expenditure so identified in the notice of Indemnity
Event; and
(d) concurrent with payment of the indemnification, such liability or
claim relating to the Indemnity Event shall have been assigned to the
Indemnifying, Party, should it so desire.
Section 12.02 THRESHOLD AMOUNT: A Party shall only be entitled to make a
Claim against the other pursuant to this Article Twelve if the aggregate amount
claimed, together with all amounts previously claimed by the Party so claiming
as applicable exceeds $100,000, in which event the total amount of such Claim
shall be due and owing by the Indemnifying Party.
ARTICLE THIRTEEN
EVENTS OF DEFAULT
Section 13.01 EVENTS OF DEFAULT: This Agreement may be terminated by
Ingenico or IVI, as the case may be, on written notice to the other, in each and
every of the following circumstances (an "Event of Default"):
(a) if either Party fails to make payment of any material amounts owing
hereunder and the same shall continue unremedied for a period of thirty days
following written notice from the other Party; or
(b) if either Party shall admit its inability to pay its debts generally
as they become due or otherwise acknowledge its insolvency or if an order
shall be made or an effective resolution passed for the winding up of either
Party or if a Party shall make an assignment for the benefit of its
creditors or if a receiver or a receiver and manager or liquidator or a
trustee in bankruptcy of a Party shall be appointed or if a Party shall make
a proposal to its creditors under a bankruptcy statute; or
(c) if a proceeding shall be instituted for the winding up a Party or a
petition in bankruptcy presented against a Party under any bankruptcy
statute and if in either case such a proceeding or petition shall not, not
less than three days prior to the date fixed for the hearing of the same,
have been dismissed or withdrawn; or
(d) a Party shall make default (for such purposes a loss of exclusivity
of any rights granted pursuant to the Transaction Documents shall not be
considered to be a default) in observing or
17
performing any covenant or condition in this Agreement on its part to be
observed or performed, including, without limitation, sections 2.06, 2.07,
2.09 and 5.07 and if such default shall continue for a period of sixty days
after a notice in writing, has been given by the other Party to the
nonperforming Party, specifying such default; or
(e) there occurs any change of control of a Party, such that a third
party engaged in business directly competitive to the Ingenico Business or
the IVI Business, as the case may be, takes control of a Party such that it
obtains direct or indirect ownership of not less than 40% of a Party's
outstanding voting shares and the ability to elect not less than a majority
of its Board of Directors; or
(f) a "take-over bid", as defined in Part XX of the Securities Act
(Ontario), is completed for a Party by any third party which is engaged in a
business directly competitive with the Ingenico Business or the IVI
Business, as the case may be; or
(g) the amalgamation or merger of a Party with any other corporation or
entity which is at arm's-length with such Party and which is engaged in a
business directly competitive with the Ingenico Business or the IVI
Business, as the case may be.
Section 13.02 REMEDIES ON AN EVENT OF DEFAULT: If an Event of Default
shall occur and be continuing, the non-defaulting Party may in its sole
discretion terminate this Agreement on written notice to the defaulting Party.
The Parties shall forthwith upon termination, or as soon as is practicable
thereafter;
(a) pay over to the other Party all monies collected and held for the
account of such other Party pursuant to the Agreement or any of the
Schedules hereto;
(b) effect a final and complete accounting to the other Party of all
amounts as may be due and owing under this Agreement, and any of the
Transaction Documents which the non-defaulting Party elects to terminate in
accordance with Section 14.01.
(c) deliver to, and where applicable, transfer into the name of the
other Party (or as it may direct in writing) all property, documents and
agreements of such other Party held in the name or possession of the
transferring Party;
(d) unless the non-defaulting Party has exercised the buy sell clause
contained in the Latin America Shareholder Agreement, dissolve Latin Newco,
such that its net assets (after satisfaction of all of its liabilities)
shall be distributed to the Parties in proportion to their respective
shareholdings of Latin Newco, all property, information and technology
belonging to a Party shall be returned to it by Latin Newco;
(e) return all Confidential Information of either Party to such Party;
(f) subject to Section 13.03, retransfer and reassign all rights to the
Ingenico Technology or the IVI Technology, and return all Products or; and
(g) take all necessary steps to discontinue use of the Intellectual
Property of the other Party.
Following any such termination, each Parry shall provide ongoing product
support and spare parts to the other with respect to any Products sold by the
other prior to termination.
Section 13.03 CHANGE OF CONTROL OR TAKE-OVER BID: Notwithstanding Section
13.02(f), in the event of termination of this Agreement due to an Event of
Default as described in subsection 13.01(e), 13-01(f) or 13.01(g), the
defaulting Party shall not be obliged to retransfer and reassign all rights to
the Ingenico Technology or the IVI Technology, or return all Ingenico Products
or IVI Products, but in such event the defaulting Party shall:
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(a) offer in writing to repurchase from the non-defaulting Party on a
cash basis all equity interests, including without limitation any shares in
IVI acquired pursuant to the Investment Agreement, at a price equal to the
cost base thereof to the non-defaulting Party, and upon acceptance by the
other Party of such offer, complete such purchase; and
(b) pay to the non-defaulting Party, as liquidated damages and not as a
penalty, a lump sum payment in an amount equal to three times the dollar
value of targeted sales volumes for the Products of the non-defaulting Party
in the Territory of the defaulting Party pursuant to the applicable
Performance Criteria for the most recently completed fiscal year;
provided that, in addition, the non-defaulting Party may, in its sole
discretion and at any time, elect to sell its equity interest or tender into any
take-over bid for the equity securities of the other Parry.
ARTICLE FOURTEEN
CROSS DEFAULT
Section 14.01 CROSS DEFAULT: Each of Ingenico and IVI acknowledge and
agree that any Event of Default by either of them pursuant to the provisions of
this Agreement, or any material default by either of them under the Marketing
and Distribution Agreement, the Technology License Agreement, the Latin America
Shareholder Agreement or the Investment Agreement, shall for all purposes be
deemed to constitute an Event of Default by such defaulting party under this
Agreement and each of such other agreements with the result that the
non-defaulting Party shall be entitled, at its election, to exercise all rights
and remedies available to it under any and all of such agreements. Each of
Ingenico and IVI acknowledge and agree that this cross-default provision is a
fundamental component of the transactions contemplated herein, and accordingly
waive all defenses to strict enforcement of each and every agreement in the
event of an Event of Default by either of them.
ARTICLE FIFTEEN
NO PARTNERSHIP
Section 15.01 NO PARTNERSHIP: Nothing contained in this Agreement shall
constitute IVI and Ingenico as partners, and from and after the Closing Date,
Ingenico shall carry on the Ingenico Business and IVI shall carry on the IVI
Business. No Party shall have or shall represent that it has the authority or
power to act for or to undertake or create any obligation or responsibility on
behalf of the other Party, or shall represent that it is the agent or legal
representative of the other Party, except as otherwise specifically provided in
this Agreement.
ARTICLE SIXTEEN
GENERAL
Section 16.01 EXPENSES: Each party hereto is responsible for its own
legal, audit and due diligence fees and other charges incurred in connection
with the preparation of this Agreement, all negotiations between the parties
hereto, and the consummation of the transactions contemplated hereby.
Section 16.02 TIME OF THE ESSENCE: Time shall be of the essence in respect
of this Agreement and the agreements and transactions contemplated herein.
Section 16.03 FURTHER ASSURANCES: Each of the parties hereto shall from
time to time at the other's request and expense and without further
consideration, execute and deliver such other instruments of transfer,
conveyance and assignment and take such further action as the other may require
to more effectively complete any matter provided for herein.
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Section 16.04 ENTIRE AGREEMENT: This Agreement, together with the
Schedules hereto, constitutes the entire agreement between the parties and,
except as herein stated and in the instruments and documents to be executed and
delivered pursuant hereto, contains all of the representations and warranties of
the respective parties. There are no oral representations or warranties among
the parties of any kind. This Agreement may not be amended or modified in any
respect except by written instrument signed by all parties hereto.
Section 16.05 APPLICABLE LAW: This agreement shall be interpreted in
accordance with the laws of the State of New York, United States of America, and
shall be treated in all respects as a New York contract.
Section 16.06 NOTICES: Any notices required or permitted to be given
hereunder shall be in writing and shall be effectively given by delivering same
by prepaid mail, delivery by courier or sending same by telecopy or other
similar form of electronic communication, addressed:
(a) if to Ingenico, to it at:
Ingenico Societe Anonyme
▇, ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
Telecopy: 33(l) 47 72 56 95
Attention: ▇▇▇▇-▇▇▇▇▇▇▇ Poutrel, President du Conseil
with a copy to:
▇. ▇. ▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ Plaza
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
(b) if to IVI, to it at:
International Verifact Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ lG5
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: L. ▇▇▇▇▇ ▇▇▇▇▇▇▇
President and CEO
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Barristers and Solicitors
▇▇▇ ▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Tower
▇▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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Any such notice if sent by prepaid mail or courier shall be deemed to have been
received by the addressee seven days and two days, respectively, following the
day on which the notice was so sent, or if by telecopy or other similar form of
communication on the day following the day on which the notice was so sent
provided that an acknowledgment of transmission is received by the sender. Any
party hereto or others mentioned above may change any particulars of its address
for notice from time to time by notice to the others in the manner aforesaid.
Section 16.07 SUCCESSORS AND ASSIGNS: This Agreement inures to the benefit
of and is binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
Section 16.08 ASSIGNMENT: Subject to the rights of Groupe Ingenico and the
IVI Group specified herein, this Agreement may not be assigned by either Party
hereto without the prior written consent of the other.
Section 16.09 SEVERABILITY: The invalidity or unenforceability of any
particular provision of this Agreement shall not affect or limit the validity or
enforceability of the remaining provisions of this Agreement.
Section 16.10 SURVIVAL: All of the representations and warranties of each
of IVI and Ingenico contained herein shall survive the Closing and not merge,
and shall further continue in full force and effect for the benefit of each
other until December 31, 1999 with the following exceptions:
(a) the representations and warranties contained in the Marketing and
Distribution Agreement, the Joint Development and Procurement Agreement, the
Technology License Agreement, the Investment Agreement and the Latin America
Shareholder Agreement shall survive the Closing Date for the period
described therein;
(b) the covenants and agreements described in Article Twelve hereof
shall survive the Closing Date and continue in full force and effect for the
concurrent period of time as the underlying representation, warranty,
covenant or agreement of Ingenico or IVI which is so indemnified; and
(c) the covenants and obligations of each Party described in this
Agreement and the Marketing and Distribution Agreement, the Joint
Development and Procurement Agreement, the Technology License Agreement, the
Investment Agreement and the Latin America Shareholder Agreement shall
survive the Closing Date and remain in full force and effect concurrent with
the duration of such agreements.
Section 16.11 CONFIDENTIALITY:
(a) the covenants and agreements contained in this Agreement shall be
maintained in strict confidence by each of Ingenico and IVI, and no public
announcement, disclosure or notification to any third parties with respect
to the terms and conditions hereof shall be made prior to the Closing Date
without the prior written consent of both Ingenico and IVI, provided that
both Parties acknowledge that the other is subject to regulatory
requirements and may accordingly be required to disclose the existence of
this Agreement if determined necessary to comply with such regulatory
requirements.
(b) Each Party shall disclose to the other Party such Confidential
Information as is necessary for the purpose of this Agreement including
Confidential Information on security. Such Confidential Information shall be
used only for the purpose of this Agreement and for no other purpose without
the prior written permission of the owner of the Confidential Information.
(c) Each Party to this Agreement shall not disclose at any time any
Confidential Information of the other Party which the Party obtains during
the Term of this Agreement, without the prior written authorization of the
Party.
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(d) The confidentiality obligations set out above shall survive the
termination of this Agreement and remain in force so long as the particular
information remains confidential.
Section 16.12 ARBITRATION:
(a) Best Endeavours to Settle Disputes: In the event of any dispute,
claim, question or difference arising between Ingenico and IVI in respect of
the provisions, the subject matter, the interpretation, or the effect of
this Agreement or any breach hereof, the Parties shall use their best
endeavours to settle such dispute, claim, question or difference. To this
effect, they shall consult and negotiate with each other, in good faith and
understanding of their mutual interests, to reach a just and equitable
solution satisfactory to both Parties;
(b) Arbitration: Except as is expressly otherwise provided in this
Agreement, if the parties do not reach a solution pursuant to Section
16.12(a) within a period of 30 days, then upon written notice by either
Party to the other, the dispute, claim, question or difference shall be
finally settled by arbitration in accordance with the America Arbitration
Association Rules for the conduct of Arbitrations in effect at the date of
commencement of such arbitration, based upon the following:
(i) the arbitration tribunal shall consist of one arbitrator
appointed by each of the Parties who is qualified by education and
training, to pass upon the particular matter to be decided, together with
a third arbitrator appointed by the first two-selected arbitrators;
(ii) the arbitrators shall be instructed that time is of the essence
in proceeding with their determination of any dispute, claim, question or
difference and, in any event, the arbitration award must be rendered
within 30 days of the submission of such dispute to arbitration;
(iii) the arbitration shall take place in New York, New York;
(iv) the arbitration award shall be given in writing and shall be
final and binding on the Parties, not subject to any appeal, and shall
deal with the question of costs of arbitration and all matters related
thereto; and
(v) judgment upon the award rendered may be entered in any court
having jurisdiction, or, application may be made to such court for a
judicial recognition of the award or an order of enforcement thereof, as
the case may be.
Section 16.13 All taxes imposed as a result of the existence of this
Agreement or the performance of the parties hereunder shall be borne and paid by
the party required to do so by applicable law; provided that if so required by
applicable law and relevant tax treaty, a Party shall withhold the amount of any
income taxes levied by the applicable governmental authority on any payment to
be made by such Party to the other Party pursuant to this Agreement, shall
promptly effect payment thereof to the appropriate tax authorities of such
government and shall transmit to the other Party official tax receipts or other
evidence issued by said tax authorities as support for the other Party to claim
any national or federal income tax credit in respect of any such taxes so
withheld and paid by the first party to the applicable governmental authority.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as
of the date first above written.
INGENICO
Per: /s/______________________________________
Per: /s/______________________________________
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INTERNATIONAL VERIFACT INC.
Per: /s/______________________________________
Per: /s/______________________________________
For purposes of Section 2.9 of the Master Alliance Agreement dated December
5, 1996, a "reasonable return" to IVI shall be in excess of the average gross
margin for the prior twelve month period on Ingenico Products and/or Ingenico
Future Products as the case may be.
Dated at Puteaux this 17th day of December, 1996
INGENICO S.A.
Per: /s/______________________________________
INTERNATIONAL VERIFACT INC.
Per: /s/______________________________________
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