EXHIBIT 10.33
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is made effective as of
the __ day of March, 2002 (the "Effective Date") by and between On Track
Innovations Ltd., a company organized under the laws of the State of Israel (the
"Company") and Dionysos Investments Ltd., a company organized under the laws of
the State of Israel (the "Consultant").
W I T N E S S E T H:
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WHEREAS, the Company is engaged in the business of the development,
marketing and sale of contactless microprocessor-based smart card products
worldwide (the "Business");
WHEREAS, the Company has authorized ordinary shares (the "Shares")
certain of which are listed on the Neuer Markt of the Frankfurt Stock Exchange
(the "Neuer Shares") and the Company desires to complete a listing of additional
Shares on the NASDAQ Small Cap Market (the "NASDAQ Shares") and may in the
future, in its discretion, consider other exchange listings in the United
States; and
WHEREAS, in connection with listing the NASDAQ Shares on the NASDAQ
Small Cap Market (the "Project"), the Company desires to retain the Consultant
to provide the Company with the services described in section 1, below, in
accordance with the terms and conditions of this Agreement; and
WHEREAS, the Consultant desires to be retained by the Company to
provide such services in accordance with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the above premises and the mutual
agreements set forth below and for other good and valuable consideration given
by each party to this Agreement to the other, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement, intending to be
legally bound, hereby agree as follows:
1. Consultant's Services.
1.1. The Company hereby engages the Consultant, and the Consultant hereby
agrees to serve, as an independent consultant to the Company, in which capacity
the Consultant shall diligently and competently provide the following services
(collectively, the "Services") in connection with the Project:
1.1.1. provide complete oversight and management of the documentation
process to successfully complete the listing of the NASDAQ Shares on the NASDAQ
Small Cap Market, and, if requested by the Company, on such other exchanges in
the United States as the Company may, in its discretion, designate, including
without limitation, consulting with the Company's management, lawyers and
accountants as may be required;
1.1.2. identify and, subject to the Company's approval, secure the
agreement of no fewer than three (3) NASDAQ market-makers satisfactory to the
Company in its sole discretion (which approval, when given, shall establish the
Company's satisfaction with such market-makers), and the Consultant shall use
its best efforts to assure that two of such market-makers shall be qualified as
market-makers with Xxxxx 0 Xxxxxx Xxxxx Xxxxxx;
1.1.3. assist and consult the Company in the preparation of a Business
Plan;
1.1.4. assist the Company in preparations for the road-show and
participate in the road-show at the request of the President of the Company; and
1.1.5. provide such other services related to the Project as the
Company may reasonably request from time to time, including, for example but
without limitation, responding to inquiries from regulatory bodies and assisting
in composing public relations materials.
1.2. The Consultant shall provide the Services by and through Xxxx
Xxxxxxxxx and such other persons as the Consultant may request and the Company
may agree in writing. In the performance of the Services hereunder, the
Consultant will report to the President of the Company. The Consultant shall use
its best efforts in providing the Services.
1.3. The Consultant shall be available to provide Services no less than 15
hours each week during the Term (as defined below).
1.4. The Consultant shall provide a written report each week during the
Term to the President summarizing the status of the Project, tasks to be
accomplished to complete the Project and timelines. The Consultant shall provide
such other reports to the Company in a timely manner as requested by the
Company.
2. Compensation and Expenses. As the sole and complete consideration to the
Consultant for entering into this Agreement and for the Services and obligations
hereunder during the Term and so long as the Agreement has not been sooner
terminated by either party, the Company shall pay the Consultant as follows (all
dollars are in United States dollars):
2.1. On the Effective Date, the Company shall pay the Consultant eight
thousand dollars (US$8,000.00).
2.2. Forty-five (45) days following the Effective Date, the Company shall
pay the Consultant four thousand dollars (US$4,000.00).
2.3. After at least three (3) registered NASDAQ market-makers agree with
the Company, upon terms and conditions approved by the Company, to make a market
in the NASDAQ Shares, the Company shall pay the Consultant fifteen thousand
dollars (US$15,000.00).
2.4. Upon the successful completion of the listing on NASDAQ of all the
NASDAQ Shares designated by the Company and commencement of active trading of
such NASDAQ Shares (the "Listing Date"), the Company shall pay the Consultant
twenty five thousand dollars (US$25,000.00).
2.5. On the ninetieth (90th) day following the Listing Date (the "Issuance
Date"), so long as during such ninety (90) day period no de-listing or
comparable action has been commenced or threatened, the Company shall pay the
Consultant ten thousand dollars (US$10,000.00) and issue to the Consultant
twenty two thousand five hundred (22,500) NASDAQ Shares covered by the
Registration Statement (as defined below), the Consultant expressly
acknowledging that such number of Shares speaks as of the date of this Agreement
and such number of Shares will be adjusted equitably to reflect any subdivision
or combination of the outstanding shares of the Company, including, without
limitation, a proportionate reduction to reflect any reverse stock split, stock
dividend, capital reorganization, reclassification, merger, consolidation or
similar event prior to the Issuance Date (and such adjustment to include any
other bonus or other arrangement provided to other shareholders or optionholders
of the Company, as the case may be).
2.6. In addition to the payments and other consideration described in
sections 2.1 through 2.5, above, the Consultant shall receive from the Company
on the Listing Date the following additional consideration:
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2.6.1. Thirty five thousand (35,000) NASDAQ Shares covered by the
Registration Statement, the Consultant expressly acknowledging that such number
of Shares speaks as of the date of this Agreement and such number of Shares will
be adjusted equitably to reflect any subdivision or combination of the
outstanding shares of the Company, including, without limitation, a
proportionate reduction to reflect any reverse stock split, stock dividend,
capital reorganization, reclassification, merger, consolidation or similar event
prior to the Listing Date (and such adjustment to include any other bonus or
other arrangement provided to other shareholders or optionholders of the
Company, as the case may be);
2.6.2. A Stock Option ("Option I") in form and substance satisfactory
to the Company, pursuant to which the Consultant may purchase seventy thousand
(70,000) NASDAQ Shares at the Base Price (as defined below) multiplied by 1.25
("Option I Exercise Price") such Option I to expire on the earlier of (i) the
close of business on April 1st, 2005, or (ii) ninety (90) days after the
Exercise Trigger Date (as defined below), the Consultant expressly acknowledging
that such number of Shares speaks as of the date of this Agreement and such
number of Shares will be adjusted equitably to reflect any subdivision or
combination of the outstanding shares of the Company, including, without
limitation, a proportionate reduction to reflect any reverse stock split, stock
dividend, capital reorganization, reclassification, merger, consolidation or
similar event (and such adjustment to include any other bonus or other
arrangement provided to other shareholders or optionholders of the Company, as
the case may be); and
2.6.3. A Stock Option ("Option II"), in form and substance
satisfactory to the Company, pursuant to which the Consultant may purchase
twenty-five thousand (25,000) NASDAQ Shares at the Base Price multiplied by two
(2), such Option II to expire on the earlier of (i) the close of business on
April 1st, 2005 or (ii) ninety (90) days after the Exercise Trigger Date, the
Consultant expressly acknowledging that such number of Shares speaks as of the
date of this Agreement and such number of Shares will be adjusted equitably to
reflect any subdivision or combination of the outstanding shares of the Company,
including, without limitation, a proportionate reduction to reflect any reverse
stock split, stock dividend, capital reorganization, reclassification, merger,
consolidation or similar event (and such adjustment to include any other bonus
or other arrangement provided to other shareholders or optionholders of the
Company, as the case may be).
2.7. The Company shall reimburse Consultant for its reasonable and
necessary expenses incurred in connection with the Services hereunder, provided
that, any expense in excess of five hundred (US$500) shall first be approved in
writing by the Company.
2.8. As used in this section 2, the following terms shall have the
following meanings:
2.8.1. "Exercise Trigger Date" with respect to Option I means the date
which is the twentieth (20th) consecutive date the NASDAQ Shares have closed for
trading at a price equal to or higher than Option Exercise Price I multiplied by
two (2), and with respect to Option II means the date which is the twentieth
(20th) consecutive date on which the NASDAQ Shares have closed for trading at a
price equal to or higher than Option Exercise Price II multiplied by two (2);
2.8.2. "Base Price" equals Euro 1.311, (the average trading price of
the Neuer Shares for the twenty trading days prior to 15.2.2002); and
2.8.3. "Registration Statement" means the Company's Registration
Statement on Form F-1, or such other Form as the Company's counsel may determine
is appropriate, filed with the United States Securities and Exchange Commission.
2.9. To all payments made pursuant to this Agreement, including the
issuance of Shares and Stock Options, VAT in the amount of 17% shall be added.
2.10. Any and all payments made pursuant to this Agreement shall be made by
the Company solely upon the receipt of a legal invoice from the Consultant with
respect to each relevant payment.
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2.11. Any and all payments made pursuant to this Agreement are gross
payments from which withholding taxes may be withheld provided necessary by law.
2.12. For the avoidance of doubt, the parties acknowledge that compensation
paid under this Agreement to the Consultant shall not be deemed payment of any
fees or other amounts owing to the market-makers or any government agencies,
exchange or self-regulatory organizations.
3. Term and Termination.
3.1. This Agreement shall commence at the later of (i) the Effective Date
or (ii) the approval of this Agreement by the Company's Board of Directors, and
shall terminate ninety (90) days following the Listing Date (the "Term") unless
sooner terminated by either party as set forth in section 3.2, below.
3.2. This Agreement shall terminate with immediate effect as follows:
3.2.1. The Company may terminate this Agreement without cause for any
reason upon thirty (30) days' written notice to the Consultant;
3.2.2. The Consultant may terminate this Agreement without cause for
any reason upon thirty (30) days' written notice to the Company;
3.2.3. The Company may terminate this Agreement without further action
or notice in the event that the Consultant shall have breached a material term
of this Agreement and such breach shall continue without cure for thirty (30)
days following written notice of such breach;
3.2.4. The Consultant may terminate this Agreement without further
action or notice in the event that the Company shall have breached a material
term of this Agreement and such breach shall continue without cure for thirty
(30) days following written notice of such breach;
3.2.5. This Agreement shall terminate without further action or notice
if the listing of the NASDAQ Shares on the NASDAQ Small Cap Market is denied by
NASDAQ or any regulatory authority for any reason or if listing on any other
exchange designated by the Company is denied by such exchange or any regulatory
authority for any reason, and in each such case such denial is final and not
subject to appeal.
3.3. In the event this Agreement is terminated pursuant to sections 3.2.1
or 3.2.4, above, prior to the Listing Date, the Company shall be obligated to
comply with sections 2.5 and 2.6 in accordance with their respective terms if
the Company completes the listing of the NASDAQ Shares on the NASDAQ Small Cap
Market and the Company elects to use any one of the three market-makers
identified by the Consultant pursuant to Section 1.1.2 of this Agreement. In the
event this Agreement is terminated pursuant to sections 3.2.1 or 3.2.4, above,
on or after the Listing Date, the Company shall be obligated to comply with
sections 2.5 and 2.6 in accordance with their respective terms.
3.4. In the event this Agreement is terminated pursuant to sections 3.2.2,
3.2.3 or 3.2.5, above, the Company shall have no further obligation to pay any
amount to, or issue any NASDAQ Shares or Option I or Option II to, the
Consultant, and to the extent any NASDAQ Shares or Option I or Option II shall
have been issued to the Consultant prior to such termination, they shall be
deemed to be cancelled and forfeited and the Consultant shall return all
evidence thereof to the Company without any further action or notice by the
Company.
3.5. In the event the Company elects in its discretion to delay the Project
but does not elect to terminate this Agreement, and thereafter elects in its
discretion to proceed with the Project, the Consultant shall, upon such election
to proceed, continue to perform its obligations under and in accordance with
this Agreement.
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4. Other Covenants, Representations and Warranties.
4.1. The Consultant represents and warrants that the Services, as
contemplated by this Agreement, will not violate, conflict with or infringe upon
any other agreement, instrument or document to which he is a party or by which
he is bound, or any other right of any entity, or otherwise give rise to any
claim of misappropriation or unfair competition.
4.2. The Consultant represents and warrants that it shall not represent
itself as an agent of the Company, in general, and in particular shall not
represent itself as having the authority to bind the Company in any matter
whatsoever.
4.3. The Company and the Consultant each represents and warrants that each
has, respectively, the full right and authority to enter into this Agreement.
4.4. The Consultant represents, warrants and covenants that it and Xxxx
Xxxxxxxxx shall comply with all federal, state and local laws and all rules and
regulations of NASDAQ and the NASD in connection with providing Services
hereunder and shall not provide any untrue or misleading information about or
relating to the Company to any person, including, without limitation, the
market-makers. The Consultant represents and warrants that it and Xxxx Xxxxxxxxx
have all licenses, permits and approvals as may be required and any such laws,
rules and regulations to permit them to perform the Services.
5. Indemnification. Consultant shall indemnify, hold harmless and defend the
Company and its parents, subsidiaries and affiliates and its and their officers,
directors, agents and employees and their successors and assigns (individually
and collectively, the "Company Indemnitees") from and against any and all
losses, liabilities, costs, damages and expenses, including, without limitation,
reasonable attorneys' fees, with respect to which a claim, whether or not
frivolous, and whether claiming negligence or otherwise, is made by a third
party against any of the Company Indemnitees arising directly out of or in
connection with the breach by Consultant of Sections 4.2, 4.4 and 6 of this
Agreement. Upon receipt of a claim indemnified hereunder, the Company Indemnitee
shall give Consultant notice thereof and shall, at no out-of-pocket expense to
the Company Indemnitee, cooperate with the Consultant with respect to the
defense of such matter. The Company Indemnitee shall have the right, without
affecting its indemnity hereunder, to participate in the administration, defense
or settlement of any such matter at its own expense and with counsel of its own
choosing. The Consultant shall not settle any claim indemnified hereunder
without the consent of the Company Indemnitee unless solely for money and in no
event shall any such settlement be made unless the Company Indemnitee is given a
full and unconditional release in respect of such matter and any related
matters.
6. Confidential Information and Intellectual Property.
The Consultant and the Company acknowledge that they have executed and
delivered the Mutual Confidentiality Agreement attached hereto as Exhibit 1,
that such Agreement is in full force and effect, that they shall comply with its
terms and that a breach by either party of such Agreement shall be a breach by
such party of this Agreement.
7. Relationship of the Parties. The Consultant shall at all times be an
independent contractor of the Company and, as such, will not by reason of this
Agreement be eligible to participate in any of the Company's employee benefits.
The Company shall not make deductions or withhold funds from compensation paid
under this Agreement either for the purpose of Social Security or Federal Income
Tax; however, the Company may be required by law to file information returns
with the U.S. Internal Revenue Service or other governmental agencies regarding
payment to the Consultant under this Agreement. Nothing contained in this
Agreement shall constitute the creation of an employer-employee relationship
between the Consultant and the Company. Nothing in this Agreement shall be
deemed to authorize the Consultant to act as an agent of the Company or to bind
or purport to bind the Company in any matter or manner whatsoever.
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8. Governing Law; Dispute Resolution.
8.1. The construction, interpretation and enforcement of the terms,
conditions, rights and liabilities set forth in this Agreement shall be in
accordance with the internal laws of the State of Israel, excluding its
conflict-of-laws principles.
8.2. Except as set forth in section 6.4 with respect to the availability of
injunctive, any controversy or claim arising out of or relating to this
Agreement or the breach thereof, whether common law or statutory, including,
without limitation, claims asserting violations of the antitrust laws, will be
settled exclusively by arbitration in Tel Aviv, before a single arbitrator of
the Institute for Business Arbitration.
8.3. The arbitrators will apply the Rules of the Institute for Business
Arbitration and the internal law of the State of Israel as set forth in
paragraph 8.1, except that the arbitrator will not have the power to alter,
modify, amend, add to or subtract from any term or provision of this Agreement,
nor to grant injunctive relief, including, without limitation, interim relief,
of any nature. Judgment on the award of the arbitrator may be entered by any
court in Tel Aviv having jurisdiction to do so, and the parties to this
Agreement hereby irrevocably consent and submit to the personal jurisdiction and
venue of the Tel Aviv courts. The parties hereby irrevocably waive any and all
claims and defenses either might otherwise have in any such action or proceeding
in any of such courts based upon any alleged lack of personal jurisdiction,
improper venue, forum non conveniens or any similar claim or defense.
8.4. The failure or refusal of the Company or the Consultant to submit to
arbitration as required by section 8.1 will constitute a material breach of this
Agreement. If judicial action is commenced in order to compel arbitration, and
if arbitration is in fact compelled, the party that resisted arbitration will be
required to pay to the other party all costs and expenses, including, without
limitation, reasonable attorneys' fees, that they incur in compelling
arbitration. The prevailing party in arbitration shall be entitled to its
reasonable attorneys' fees and costs. All other fees and charges of the
Institute of Business Arbitration will be borne as the arbitrator will determine
in the award.
9. Entire Agreement. This Agreement, including, without limitation, its
recitals, sets forth the entire agreement and understanding of the parties in
respect of the subject matter hereof and supersedes all prior agreements,
arrangements, presentations and understandings relative to the subject matter
hereof, whether written or oral, express or implied. No oral or written
statement, representation, warranty or promise made prior to or
contemporaneously with the execution of this Agreement shall be binding upon
either party with respect to the subject matter hereof or shall otherwise
affect the enforceability of this Agreement in accordance with its terms.
10. Amendment and Waiver. This Agreement may be amended or modified only by a
written instrument executed by each party hereto. The failure of a party at any
time or times to require performance of any provision hereof shall in no manner
affect the party's right at a later time to enforce the same. No waiver by any
party of the breach of any term contained in this Agreement, in any one or more
instances, shall be deemed or construed as a further or continuing waiver of
any such breach or of the breach of any other terms of this Agreement. No
waiver shall be effective unless in writing, signed by the party waiving
compliance.
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11. Notices. All notices required to be made hereunder shall be sent to the
respective addresses of the parties set forth below by certified mail, return
receipt requested:
If to the Company: X.X. Xxx 00 X.X.X Xxxxxxxxxx Xxxx, Xxxx Xxxx 00000,
Israel
If to the Consultant 00X Xxxxxxxxx Xx., Xxxxxxxx 00000, Xxxxxx
Service of notices shall be deemed complete upon delivery if hand delivered
or upon the expiration of the third day after the date of mailing. The Company
and the Consultant may change their respective addresses for notices by a notice
given in accordance with this section 11.
12. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of the parties hereto. The
Consultant may not assign its rights or obligations under this Agreement in
whole or in part without the prior written consent of the Company. Any
assignment or purported assignment by the Consultant without such consent shall
be null and void.
13. Headings. Headings inserted in this Agreement are for the convenience of the
parties and shall not govern any conclusion or interpretation of this Agreement
or any of its provisions. Plurals shall include the singular and vice versa.
14. Severability. In case any provision or part thereof in this Agreement shall,
for any reason, be held invalid, illegal or unenforceable, such invalidity,
illegality or unenforceability shall not affect any other provision or part
thereof, and this Agreement shall be construed as if such invalid or illegal or
unenforceable provision or part thereof had been reformed so that it would be
valid, legal and enforceable to the maximum extent permitted.
15. Miscellaneous. (a) References to paragraphs are to paragraphs in this
Agreement and in each case include references to all subparagraphs under the
referenced paragraph. (b) Words denoting the singular tense or person shall
include the plural and vice versa and references to the masculine gender shall,
where the context permits, include the feminine and/or neuter genders and vice
versa. The words "including," "includes," and "include," mean respectively,
"including without limitation," includes without limitation" and "included
without limitation;" (c) The obligations of the Company and the Consultant that
expressly survive the expiration or termination of this Agreement, or which, by
their nature are intended to survive such expiration or termination, shall so
survive in accordance with their terms or as is required to give effect to such
intention, respectively. (d) This Agreement is the result of negotiation and,
accordingly, no presumption or burden of proof will arise with respect to any
ambiguity or question of intent concerning this Agreement favoring or
disfavoring any party to this Agreement by virtue of the authorship of any
provision of this Agreement. (e) This Agreement may be signed in counterparts,
each of which shall be deemed an original and all of which shall be deemed one
and the same instrument, and may be delivered by facsimile.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement effective on the Effective Date.
ON TRACK INNOVATIONS LTD.
By: ____________________________
Name:
Title: President
DIONYSOS INVESTMENTS LTD.
By: ____________________________
Name:
Title: President
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I, Xxxx Xxxxxxxxx do hereby personally guarantee the fulfillment of any and all
undertakings of Dionysos Investments Ltd. pursuant to the above agreement with
On Track Innovations Ltd.
___________________
Xxxx Xxxxxxxxx
Date: _____________
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DIONYSOS INVESTMENTS LTD.
00X XXXXXXXXX XX., XXXXXXXX
XXXXXX 00000
July _____, 2002
On Track Innovations Ltd.
Z.H.R. Industrial Xxxx
X.X. Xxx 00
Xxxx Xxxx, 00000 Xxxxxx
Ladies and Gentlemen:
This letter will serve as Amendment No. 1 to that certain Consulting
Agreement dated March, 2002 (the "Agreement") between On Track Innovations Ltd.
(the "Company") and Dionysos Investments Ltd. Capitalized terms used herein and
not otherwise defined shall have the meanings assigned to them in the Agreement.
The parties agree that the Agreement is hereby amended as follows:
Section 2.6.1 of the Agreement is amended and restated in its entirety
as follows:
"2.6.1. Options to acquire 3,500 shares of the Company's
ordinary shares at an exercise price equal to $0.1 per share,
such options to expire on July 10, 2007 and such shares to be
included in the Company's F-1 Registration Statement filed
with the United States Securities and Exchange Commission;"
Except as otherwise set forth herein, the Agreement shall remain in
full force and effect in accordance with its terms.
Please confirm the foregoing by signing below.
Very truly yours,
DIONYSOS INVESTMENT LTD.
By:_______________________
Name:
Title:
AGREED:
ON TRACK INNOVATIONS LTD.
By:__________________________
Name: Xxxx Xxxxxx
Title: Chairman, President & CEO
