EXHIBIT 1
BOARD DESIGNATION AND TRUST AGREEMENT
This Board Designation and Trust Agreement (this "AGREEMENT") is dated this 13th
day of May 2007, by and between SVM Star Ventures Managementgesellschaft mbH Nr.
3 ("SVM 3"), a German limited liability company, with a principal business
address at Xxxxxxxxxxxxxx 0, X-00000 Xxxxxx, Xxxxxxx and Xx. Xxxx Bar, an
Israeli Citizen, ID No. [__________] of 82 HANASSIE STREET, XXXXXXX XXXXXXX
00000, XXXXXX ("ELIE").
R E C I T A L S:
WHEREAS SVM 3 is the beneficial owner of approximately 23.6% (on an-as
converted basis) of the issued and outstanding share capital of
Unity Wireless Corporation (the "COMPANY"), a Delaware
corporation whose shares are traded on the Over-the-Counter
Bulletin Board; and
WHEREAS under that certain Purchase Agreement dated July 21, 2006 (the
"PURCHASE AGREEMENT") SVM 3 currently has the right, together
with other third parties, to designate candidates to be appointed
by the holders of the Preferred Stock of the Company (as defined
in the Purchase Agreement) as members of the Board of Directors
of the Company in accordance with and subject to the terms of the
Purchase Agreement (the "BOARD OF DIRECTORS"); and
WHEREAS SVM 3 wishes to designate Elie as one of the candidates to be
appointed by the holders of the Preferred Stock of the Company as
members of the Board of Directors and Elie wishes to be
designated by SVM 3 as aforesaid and to serve as a member of the
Board of Directors.
NOW, THEREFORE, THE PARTIES HERETO HEREBY AGREE AS FOLLOWS:
1. DESIGNATION - SVM 3 hereby undertakes to use its endeavors in order to have
Elie designated as one of the persons to be appointed by the holders the
Preferred Stock of the Company as members of the Board of Directors, and
Elie hereby confirms his willingness to accept such designation and to
serve as a member of the Board of Directors, if and to the extent that he
shall actually be elected to the Board of Directors.
2. THE SERVICES - As from the effective date of Elie becoming a member of the
Board of Directors (the "APPOINTMENT DATE"), and until such appointment is
terminated for any reason whatsoever, Elie agrees and undertakes to (the
"SERVICES"): (i) act as a member of the Board of Directors, including
attending and participating in any meeting of the Board of Directors to be
held in the US or elsewhere; (ii) contribute to the Company from his
expertise and experience in accordance with the Company's needs and
requirements in its capacity as a director of the Company; and (iii) more
generally perform all of the duties and obligations of a director of a
publicly-traded company in accordance with the corporate documents of the
Company and any applicable law.
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3. DUTY OF LOYALTY AND DUTY OF CARE - For the avoidance of any and all doubts,
it is hereby clarified that while acting as a member of the Board of
Directors, Elie's duty of loyalty and duty of care shall be owed to the
Company. It is further clarified that under no circumstances shall Elie
reveal to SVM 3 any information relating to the Company and/or the
Company's business that has not been disclosed the public.
4. COMMENCEMENT OF THE AGREEMENT - The contractual relationship pursuant to
this Agreement will commence on the date hereof (the "COMMENCEMENT DATE"),
provided however, that Elie's obligation to serve as a member of the Board
of Directors, and SVM 3's obligation to pay the Total Consideration (as
defined below), or any part thereof, shall commence on the Appointment
Date.
5. TERM
5.1 This Agreement shall not be limited in time, and either party may
terminate this Agreement for any reason whatsoever ("TERMINATION FOR
CONVENIENCE") upon the delivery of a one-month prior written notice to
the other party (the "PRIOR WRITTEN NOTICE" and the "NOTICE PERIOD",
respectively), provided however, that in the event of Termination for
Convenience by XXX 0, XXX 0 shall have the right to serve the
Resignation Letter (as defined below) upon the Company on behalf of
Elie prior to the expiration of the Notice Period, subject to Elie's
entitlement to receive that portion of the Total Consideration due on
account of the Notice Period. For the avoidance of doubt, it is hereby
clarified that Elie shall not be entitled to resign from its position
as a member of the Board of Directors prior to the expiration of the
Notice Period.
Without derogating from the generality of the aforesaid, Elie hereby
acknowledges and confirms that neither SVM 3 nor the Company, or its
shareholders or directors have undertaken towards him to retain his
services as a director for any guaranteed period of time.
5.2 Notwithstanding the foregoing, SVM 3 may, at any time following the
Commencement Date, terminate this Agreement with immediate effect by
the provision of a written notice (and without the Prior Written
Notice referred to above), in any of the following circumstances:
5.2.1 Commission of a criminal offence, breach of trust or action
adverse to the Company (or any affiliated company thereof), its
monies, property, assets or employees by Elie;
5.2.2 Breach of any of Elie's undertakings as set forth in this
Agreement and/or the Company's corporate documents and/or under
any applicable law;
5.2.3 Elie is unable, due to any reason whatsoever, to serve as a
member of the Board of Directors at a reasonable time as required
by the Company.
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5.3 Notwithstanding anything to the contrary contained herein, this
Agreement shall be terminated automatically upon the first to occur of
the following events:
5.3.1 Elie has not been appointed as a member of the Board of
Directors within 120 (one hundred and twenty) days as from the
Commencement Date for any reason whatsoever. For the avoidance of
doubt, it is hereby clarified that in the event that this
Agreement is terminated in accordance with the provisions of this
Section 5.3.1, Elie shall not be entitled to any compensation of
any kind with respect to such termination or otherwise;
5.3.2 Elie's appointment as a member of the Board of Directors has
been terminated for any reason whatsoever other than Termination
for Convenience (which shall be effectuated in accordance with
the procedure set forth in Section 5.1 hereof).
5.4 Attached hereto as EXHIBIT A is an undated letter of resignation from
the Board of Directors signed by Elie (with the effective date left
blank) (the "LETTER OF RESIGNATION"), which SVM 3 shall be entitled to
serve upon the Company in the event SVM 3 chooses to terminate this
Agreement subject to and in accordance with the provisions of this
Section 5.
6. THE TOTAL CONSIDERATION - In consideration of the performance of the
Services, Elie shall be entitled to the following consideration (the "TOTAL
CONSIDERATION"):
6.1 FIXED MONTHLY FEE - commencing on the Appointment Date and until the
termination of this Agreement in accordance with its terms, Elie shall
be entitled to a monthly fee of US$ 3,000 (three thousand United
States Dollars) (the "MONTHLY FEE"). The Monthly Fee shall be due and
payable at the end of each calendar month for the Services rendered by
Elie during such month against a valid invoice furnished by Elie to,
and approved by, SVM 3. For the avoidance of doubt, it is hereby
clarified that the first Monthly Fee and the last Monthly Fee to be
paid by SVM 3 to Elie in accordance with the provisions of this
Section 6.1 shall be reduced and adjusted proportionally to that
number of days of such months during which Elie actually served as a
member of the Board of Directors (on a 30-day basis). In addition, SVM
3 shall reimburse Elie for reasonable expenses incurred by him in his
capacity as a Director of the Company, promptly after submission of
receipts by Elie to SVM 3, but solely to the extent that such expenses
have not been reimbursed to Elie by the Company after Elie's request
to the Company for such reimbursement. Notwithstanding the foregoing,
any expense in excess of $500 per month shall require the prior
written approval of SVM 3.
6.2 ADDITIONAL CONSIDERATION
6.2.1 Subject to the Company's accepting SVM 3's subscription,
pursuant to the Subscription Agreement attached as EXHIBIT B, SVM
3 shall purchase, in trust for Elie, shares and warrants of the
Company in the Company's current financing round in consideration
for approximately US$ 100,000 (one hundred thousand United States
Dollars) (the "TRUST INVESTMENT" and the "TRUST INVESTMENT
AMOUNT", respectively). The shares and warrants so purchased are
herein defined as the "TRUST SHARES" and the "TRUST WARRANTS",
respectively.
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6.2.2 Subject to the terms of this Section 6, Elie shall be entitled
to the Excess Trust Proceeds (as defined below) with respect to
the vested portion of the Trust Shares. The Trust Shares, the
Trust Warrants, and the proceeds of any sale thereof, shall be
maintained by SVM 3 in trust in accordance with this Section 6 in
a separate securities account.
For the purpose of this Agreement, the term "TRUST INVESTMENT
COSTS" shall mean the Trust Investment Amount plus $10,000.
For the purpose of this Agreement, the term "EXCESS TRUST
PROCEEDS" shall mean the proceeds (net of brokerage commissions)
ACTUALLY generated by the sale of any vested Trust Shares in
EXCESS of the pro rata portion of the Trust Investment Costs
(with such pro rata portion being the proportion of the number of
Trust Shares sold to the total original number of Trust Shares);
provided, however, that as to any Trust Shares which are Trust
Warrant Shares (as defined below), the term "EXCESS TRUST
PROCEEDS" shall mean the proceeds (net of brokerage commissions)
actually generated by the sale of any vested Trust Warrant
Shares.
6.2.3 At any time that the Trust Warrants are "in the money" and are
exerciseable by "cashless exercise" (i.e., at any when there is
no Registration Statement covering the Trust Warrants and the
shares issuable upon exercise thereof in effect), Elie may direct
SVM 3 in writing to exercise the Trust Warrants in full by
cashless exercise. Promptly following receipt of such a written
instruction, SVM 3 shall deliver to the Company notice of
cashless exercise of the Trust Warrants. At any time that the
Trust Warrants are not exerciseable by "cashless exercise" (i.e.,
at any time when a Registration Statement covering the Trust
Warrants and the shares issuable upon exercise thereof is in
effect), Elie may direct SVM 3 in writing to exercise the vested
Trust Warrants, in part or in full, provided that concurrent with
delivery of such notice of exercise Elie transfers to SVM 3 the
full exercise price of the vested Trust Warrants so to be
exercised. Promptly following receipt of such a written
instruction and such full exercise price, SVM 3 shall deliver to
the Company notice of exercise of such Trust Warrants. Any shares
issued upon exercise of Trust Warrants by SVM 3 shall be known as
"Trust Warrant Shares". Trust Warrant Shares shall for all
purposes be treated as Trust Shares, except as set forth in
Section 6.2.2.
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6.2.4 Elie may at any time deliver a written notice to SVM 3
specifying a number of the unsold Trust Shares and instructing
SVM 3 to sell such shares (a "SALE NOTICE"). Promptly following
receipt of a Sale Notice, SVM 3 shall sell such shares in a
broker transaction in the public market, it being understood that
SVM 3 shall bear no responsibility with respect to the price or
other terms of such sale. For purposes of this Agreement, the
proceeds of any such sale shall be treated as follows: first the
Trust Investment Costs as to such Trust Shares shall be
distributed to SVM 3, and then the vested portion of the Excess
Trust Proceeds shall be distributed to Elie. As to any Trust
Shares which are sold prior to vesting, the Excess Trust Proceeds
with respect to such shares shall continue to be held in trust by
SVM 3 until the earlier of vesting or the termination of this
Agreement. In the event that at the time of delivery of a Sale
Notice SVM 3 is holding any Trust Warrant Shares, then the Sale
Notice shall be deemed to be an instruction to sell the aggregate
number of shares described in the Sale Notice such that SVM 3
sells a pro rata number of Trust Shares and Trust Warrant Shares
(with such pro rata portion being the proportion of the number of
total Trust Shares then held by SVM 3 to the total original
number of Trust Warrant Shares then held by SVM 3).
6.2.5 The entitlement of Elie to receive any Excess Trust Proceeds
shall be subject to a vesting period of 36 (thirty six) months
commencing on the Appointment Date (the "VESTING PERIOD"), such
that such entitlement with respect to 1/36 of the Trust Shares
and Trust Warrants (and, if applicable, Trust Warrant Shares)
shall vest at the end of each month from the Appointment Date
(with a full 1/36 vested at the end of the first calendar month),
provided that Elie continues to serve as a member of the Board of
Directors on such dates.
6.2.6 During the term of this Agreement, any vested portion of the
Excess Trust Proceeds shall be due and payable to Elie, within 30
(thirty) days from (a) the actual sale by SVM 3 of any vested
Trust Share; or (b) as to any Trust Share sold prior to the
vesting thereof, the last day of the month at the end of which
such Trust Share was vested. In the event of the termination of
this Agreement for any reason whatsoever prior to full vesting,
the unvested Trust Shares or Trust Warrants, along with the
unvested portion of any Excess Trust Proceeds, shall be
distributed to SVM 3. Upon the earlier to occur of full vesting
or the termination of this Agreement for any reason whatsoever,
any vested but unexercised portion of the Trust Warrants shall be
distributed to Elie.
6.2.7 Any provision of this Section 6 to the contrary notwithstanding,
SVM 3 shall only be obligated to sell Trust Shares or Trust
Warrant Shares if at the time of such sale SVM 3 concludes (in
its sole discretion) that such sale may be made in the public
market in compliance with applicable law and regulations and
without the incurrence of any expense other than standard
brokerage commissions.
6.2.8 Notwithstanding anything to the contrary contained in this
Agreement, it is hereby agreed and understood, that in the event
that SVM 3 elects not to, or is not allowed by the Company to,
purchase the Additional Shares and/or the Additional Warrants,
this Agreement, with the exclusion of the provisions of this
Section 6.2 (which shall automatically expire), shall remain in
full force and effect and the parties hereto shall re-negotiate
in good faith the scope of the Total Consideration.
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6.3 SUCCESS BONUS. In addition, SVM 3, at its sole discretion, may elect
to xxxxx Xxxx a success bonus in an amount of up to US$ 50,000 (fifty
thousand United States Dollars) (the "SUCCESS BONUS") based on
parameters to be determined by SVM 3, at its sole discretion. Elie
acknowledges that one of the aforementioned parameters may be the full
recovery by the Star Entities (as defined below), as a group, of the
"ORIGINAL AGGREGATE PURCHASE COST" (as defined below).
For the purpose of this Section 6.3, the term "STAR ENTITIES" shall
mean (i) SVM Star Ventures Managementgesellschaft mbH Nr. 3 & Co.
Beteiligungs KG Nr. 2, (ii) SVE STAR Ventures Enterprises No. VII, a
German Civil Law Partnership (with limitation of liability), (iii) SVE
Star Ventures Xxxxxxxxxxx XxxX & Xx. Xx. XXXx XX, (xx) Star Seed
Enterprise, a German Civil Law Partnership (with limitation of
liability), (v) SVM Star Ventures Managementgesellschaft mbH Nr. 3 &
Co. Beteiligungs KG Nr. 3, (vi) SVE Star Ventures Enterprises GmbH &
Co. No. IX KG, (vii) Star Management of Investments No. II (2000)
L.P., and/or any of their respective affiliates.
For the purpose of this Section 6.3, the term "ORIGINAL AGGREGATE
PURCHASE COST" shall mean the original purchase price of any
securities on any kind or nature whatsoever (including, without
limitations, shares, warrants, debentures and alike) of Celerica,
Inc., Celletra Ltd. and Unity Wireless Corporation (the "ORIGINAL
SECURITIES") purchased by any Star Entity.
6.4 Notwithstanding the above, SVM 3 shall have the right to withhold any
amounts from the Total Consideration, or any part thereof, to the
extent necessary to comply with any applicable tax law and any other
applicable law.
6.5 Except as expressly set forth in this Section 6, SVM 3 shall not be
obliged to pay to Elie any additional consideration or fees
whatsoever.
7. NO CONFLICT OF INTEREST - Elie further warrants and represents that, prior
to the execution of this Agreement, he obtained all necessary approvals for
entering this Agreement and entering this Agreement is not inconsistent or
incompatible with any of his prior obligations. Elie will not disclose to
SVM 3 any confidential information of the Company.
8. INDEPENDENT CONTRACTOR RELATIONSHIP - Elie's relationship with SVM 3 will
be that of an independent contractor and nothing in this Agreement should
be construed to create a partnership, joint venture, or employer-employee
relationship. Elie is not the agent of SVM 3 and is not authorized to make
any representation, contract, or commitment on behalf of SVM 3. Elie will
not be entitled to any of the benefits that SVM 3 may make available to its
employees, such as group insurance, profit-sharing or retirement benefits.
Furthermore, no title that Elie shall carry while acting as a member of the
Board of Directors, nor any conduct by SVM 3 and/or the Company or Elie,
shall derogate from this Section 8.
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Elie will be solely responsible for all tax returns and payments required
to be filed with or made to any tax authority with respect to Elie's
performance of the Services and receipt of fees under this Agreement.
Because Elie is an independent contractor, SVM 3 will not withhold or make
payments for National Insurance Institute (or similar body); make
unemployment insurance or disability insurance contributions; or obtain
worker's compensation insurance on Elie's behalf.
8.1 Elie hereby agrees to indemnify and defend SVM 3 against any and all
such taxes or contributions, including penalties and interest, and
against any other expense in connection therewith.
9. CONSULTANT REPRESENTATION AND WARRANTIES - Elie hereby represents and
warrants that he has full right and power to enter into and perform this
Agreement without the consent of any third party.
10. GENERAL PROVISIONS -
10.1 SEVERABILITY - In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this
Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. If
moreover, any one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to
duration, geographical scope, activity or subject, it shall be
construed by limiting and reducing it, so as to be enforceable to the
extent compatible with the applicable law as it shall then appear.
10.2 GOVERNING LAW - This Agreement shall be exclusively governed by and
constructed in accordance with the laws of the State of Israel
exclusively. Elie hereby expressly consents to the exclusive
jurisdiction of the court located in Tel Aviv, Israel, and all
disputes or claims arising out of or related to this Agreement shall
be exclusively resolved by the courts located in Tel Aviv, Israel.
10.3 NO ASSIGNMENT - This Agreement may not be assigned by the Elie without
SVM 3's prior and written consent, and any such attempted assignment
shall be void and of no effect.
10.4 WAIVER - No waiver by SVM 3 of any breach of this Agreement shall be a
waiver of any preceding or succeeding breach. No waiver by SVM 3 of
any right under this Agreement shall be construed as a waiver of any
other right.
10.5 ENTIRE AGREEMENT - This Agreement (including its Exhibits) is the
final, complete and exclusive agreement of the parties with respect to
the subject matter hereof and supersedes and merges all prior
discussions between the parties hereto.
10.6 NOTICES - All communications under this Agreement shall be in writing
and shall be delivered by hand or facsimile or mailed by registered or
certified mail, postage prepaid:
(i) If to Elie, at 00 XXXXXXXX XXXXXX,XXXXXXX XXXXXXX 00000, XXXXXX
(facsimile: 09-957-7173), or at such other address or facsimile number
as Elie may have furnished SVM 3 in writing,
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(ii) If to SVM 3, at XXXXXXXXXXXXXX 0; X-00000 XXXXXX; GERMANY
(facsimile: 0049-89-4194-3030, email: xx@xxxx-xxxxxxxx.xx), marked for
the attention of Xxxxxxx Xxxxxxxx or at such other address or
facsimile number as it may have furnished Elie in writing.
Any notice so addressed shall be deemed to be given: if delivered by
hand or by facsimile, on the date of such delivery; if mailed by
courier, on the second business day following the date of such
mailing; and if mailed by registered or certified mail, on the fifth
business day after the date of such mailing.
10.7 SURVIVAL - The following provisions shall survive termination of this
Agreement: Section 7, Section 8 and Section 10.
10.8 SECTION HEADINGS - The headings of the sections and subsections of
this Agreement are inserted for convenience only and shall not be
deemed to constitute a part thereof.
[SIGNATURES PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written above.
-------------------------------- ----------------
SVM STAR VENTURES ELIE BAR
MANAGEMENTGESELLSCHAFT MBH NR. 3
BY:
TITLE
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EXHIBIT A
LETTER OF RESIGNATION
Date: ________
Unity Wireless Corporation
Dear Sirs,
RE: LETTER OF RESIGNATION
This is to inform you that effective as of delivery of this letter, I hereby
resign from my position as a Director of Unity Wireless Corporation.
Sincerely yours,
Elie Bar
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