CONSULTING AGREEMENT
Exhibit
10.1
This
Consulting Agreement (this “Agreement”) is made as of the 9th
day of August, 2007 (the "Effective Date"), by and between
TraceGuard Technologies Ltd. (the “Company”) a
company registered in Israel, having its principal place of business at 0
Xxxxxxxxx Xxxxxx, P.O. Box 4708, Segula Industrial Park, Petach Tikva, Israel,
and Akis Ltd., a company registered in Israel, having its principal place
of
business at 14Mishol Xxxxxxxx, Xxxxxxxxx, 00000,
Israel, (the “Consultant”). Each of the
Company and the Consultant may be referred to as a "Party" and collectively
as
the "Parties".
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Whereas,
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the
Company is engaged in the business of development, manufacture
and
production of explosives trace detection devices based on technology
that
automatically extracts traces of suspect substances from the interior
and
exterior of checked items, for later analysis (the Company's
"Business"), in the field of homeland security (the
"Field"); and
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Whereas,
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the
Company desires to obtain the Services (as defined below) of Consultant
solely through its employee Avi Kostelitz in connection with the
Company’s
business, and Consultant has agreed to provide such services to
the
Company all as more fully described
herein;
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Now,
therefore, in consideration of the Parties' mutual covenants and other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, the Parties agree as follows:
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1.
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Engagement
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1.1.
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Subject
to the receipt of all approvals required under applicable law,
the Company
hereby engages Consultant solely through its employee Avi Kostelitz,
and
Consultant hereby agrees to hold itself available (solely through
its
employee Avi Kostelitz) to render, at the request of Company, at
such
dates and times as shall be mutually agreed upon between the Parties
from
time to time, non-exclusive, advisory and consulting services,
to the best
of its and Avi Kostelitz's ability, in compliance with all applicable
laws, the Company's policies and the terms and condition set forth
herein.
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1.2.
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Until
otherwise agreed upon between the Parties, the Consultant through
its
employee, Avi Kostelitz, shall devote such time and attention as
may be
required for the performance of the Services. Neither the Consultant
nor
Avi Kostelitz shall, during the term of this Agreement, without
providing
the Company a prior written notice, be engaged, directly or indirectly,
in
any other business or professional activity that directly competes
with
the Company's Business as defined hereinabove, whether or not such
activities are pursued for gain, profit or other pecuniary
advantage.
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1.3.
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Consultant
shall have no authority and shall make no commitment or representation
on
behalf of the Company, without the Company’s prior written
approval.
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2.
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Services
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Within
the framework of this Agreement, Consultant through its employee Avi Kostelitz
undertakes to provide the following services to the Company (the
"Services"):
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2.1.
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Serve
as an advisor with respect to regulatory
affairs.
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2.2.
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Aid
and consult the Company in connection with Company's business related
to
airport security.
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2.3.
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Assist
the Company in the process of receiving the approval of Israeli
Security
Agency (the "ISA") with respect to the CompactSafe Device
(the
"CompactSafe").
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2.4.
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Assist
in business development.
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2.5.
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Dedicate
time to attending meetings, consulting on an ad-hoc basis and rendering
the Services at such times and places to be reasonabley agreed
upon
between the Parties from time to time.
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2.6.
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Utilize
the highest professional skill, diligence, ethics and care to ensure
that
all the Services are performed to the full satisfaction of the
Company.
Consultant acknowledges and agrees that the performance of the
Services
may require domestic and international travel (although such expenses
incurred for such travel shall be borne solely by the Company).
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2.7.
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In
rendering the Services, the Consultant shall comply with all policies
and
procedures of the Company, as may be in effect from time to time,
provided
he has been properly briefed ahead of time of such policies or
procedures.
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3.
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Compensation
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For
and
in consideration of the Services to be performed by Consultant under the
terms
and conditions of this Agreement, the Company agrees to pay Consultant as
follows:
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3.1.
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A
monthly retainer’s fee of One Thousand US Dollars (US$1,000), payable on a
monthly basis no later than the 7th of each month with respect
to the preceding month, for a period of twelve (12) months commencing
as
of the Effective Date (respectively, the "Period", the
“Monthly Fee”).
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3.2.
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An
amount equal of Two Hundred Fifty US Dollars (US$ 250) per each
working
meeting in which Consultant participates, in the Company's matters,
including, but not limited to, Board of Directors meetings, presentations
and meetings with the ISA or similar entities (each, a "Meeting
Fee").
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3.3.
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In
addition, Company shall pay Consultant the following one-time payments
upon achievement of the following milestones (the
"Milestones"), as specified below (collectively, the
"Milestone Fees"):
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3.3.1.
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The
receipt during the term of this Agreement of a formal letter from
the ISA
defining the ISA's technical specifications related to the CompactSafe
and
its operational performance (the "Security Requirements"
and the "First Milestone", respectively) - the Company
shall pay Consultant an amount equal to Ten Thousand US Dollars
(US$10,000).
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3.3.2.
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The
receipt during the term of this Agreement of the ISA's written
principle
approval to perform trials of the CompactSafe along with a definitive
timetable for doing so (the "Trials" and the
"Second Milestone", respectively) - the Company shall pay
Consultant an amount equal to Ten Thousand US Dollars
(US$10,000).
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3.3.3.
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Upon
commencement of the Trials (the "Third Milestone") - the
Company shall pay Consultant an amount equal to Thirty Thousand
US Dollars
(US$30,000).
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3.3.4.
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The
receipt of the written confirmation of the ISA that the CompactSafe
meets
the Security Requirements and is qualified for operational use
(the
"Fourth Milestone") - the Company shall pay Consultant an
amount equal to Sixty Thousand US Dollars
(US$60,000).
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3.3.5.
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Consummation
of an agreement with a Business Partner, introduced, pursuant to
Company's
written request, by Consultant or with respect to which Consultant
provided active assistance pursuant to the Company's written request
(the
"Fifth Milestone") - the Company shall pay Consultant an
amount equal to Twenty Thousand US Dollars
(US$20,000).
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For
the
pupose hereof, a "Business Partner" shall mean a partner with
whom the Company enters into an agreement (of any sort or kind) in order
to
promote its business in the Field.
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Notwithstanding
the aforesaid, the right of the Consultant for the payment of Milestone Fees
concerning the Third Milestone, the Fourth Milestone and the Fifth Milestone
shall be in effect during the later of (i) the term of this Agreement or
(ii)
the final termination of Consultant’s activities in the service of the Company,
and twelve (12) months thereafter.
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3.4.
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Payment
of the Fee, the Meeting
Fee and the Milestone Fees, as
applicable, shall be made against the Consultant's itemized invoice,
and
shall be exclusive of VAT as may be applicable (subject to withholding
tax, unless Consultant provides the Company with an appropriate
exemption
of withholding tax).
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3.5.
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The
Company will grant Consultant options to purchase shares of Common
Stock
of TraceGuard Technologies, Inc. (hereinafter, "TG US"
and together with the Company and any of their affiliates "TG
Group"), par value US$0.001 each (the "Shares"),
upon the achievement of the Milestones, as specified in the Grant
Letter
attached hereto as Exhibit A
and in accordance with the terms and conditions specified therein
(the
"Options"). The Options shall be subject to the receipt
of any legal and/or regulartory approvals, registrations or exemptions
from registration required under
law.
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3.6.
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The
Company agrees to reimburse the Consultant for out of pocket expenses
incurred by it in connection with the rendering of the Services
hereunder,
against valid receipts, but only if approved by the Company in
advance and
in writing (the “Expenses”). Subject to the foregoing,
unless otherwise agreed upon by the Parties, such Expenses of exceptional
proportion, e.g. international travel and hotel expenses, at the
election
of the Consultant, shall be borne directly by the Company and not
by the
Consultant.
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3.7.
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For
the avoidance of any doubt, the Fee, the Meeting Fee, the Milestone
Fees
and the Options specified above (subject to their terms) constitute
the
full and final consideration for the Services, and Consultant shall
not be
entitled to any additional consideration, of any sort, for the
Services.
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4.
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Reports
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4.1.
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The
Consultant shall submit to the Chief Executive Officer or the Board
of
Directors of the Company, as reasonably requested from time to
time, oral
reports upon request, subject to the provisions of sec. 4.2
hereunder.
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4.2.
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In
the event that Consultant participates in a conference or meeting
on
behalf of the Company with a party external to TG Group, the Consultant
shall submit to the Company an oral report on the subject matter
of such
conference or meeting as soon as practicable thereafter, unless
otherwise
instructed by the Company, subject to the ISA’s or Israeli Airport
Authority’s expectation of Kostelitz’s discretion and
confidentiality.
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5.
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Confidentiality
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5.1.
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The
Consultant shall not disclose or put to its own use, or to
the use of any
third party, any Proprietary Information (as hereinafter defined)
of the
Company and/or TG US ("TG US" and together with the
Company and any of their affiliates "TG Group") which has
been divulged to the Consultant, whether or not developed by
the
Consultant. For the sake of avoiding any doubt, this Article
5 also binds
Avi Kostelitz individually.
“Proprietary
Information” shall mean confidential and proprietary information
concerning the business and financial activities of TG Group,
including,
inter alia, TG Group’s product research and development, the
Company’s banking, investments, investors, properties, employees,
marketing plans, customers, trade secrets, and test results,
processes,
data, know-how, improvements, inventions, techniques and
products (actual
or planned), whether documentary, written, oral or computer
generated.
However, excluded from the above definition with respect
to Consultant's
confidentiality undertaking is any information that (i) is
or later
becomes part of the public knowledge except as a result of
the breach of
Consultant's undertakings towards the Company; (ii) reflects
information
and data generally known in the industries or trades in which
the Company
operates; (iii) as shown by written records, is received
by Consultant
from a third party exempt from confidentiality undertakings
towards the
Company; (iv) the Consultant is compelled to disclose by
court or
government action pursuant to applicable law, provided, however,
that
Consultant provides the Company prompt notice thereof so
that it may seek
a protective order or other appropriate remedy prior to the
compelled
disclosure.
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5.2.
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The
Consultant will use the Proprietary Information solely for
the performance
of the Services for the benefit of the Company. The Consultant
shall use
best efforts to protect all Proprietary
Information.
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| 5.3 |
Upon
termination of its engagement with the Company, the Consultant
will
promptly deliver to the Company all documents and materials of
any nature
pertaining to the Company's Proprietary Information.
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| 5.4 |
Consultant
recognizes that TG Group received and will receive confidential
and/or
proprietary information from third parties subject to a duty
on the part
of TG Group to maintain the confidentiality of such information
and to use
it only for certain limited purposes. At all times, both during
its
engagement and after its termination, Consultant undertakes to
keep and
hold all such information in strict confidence and trust, and
not to use
or disclose any of such information without the prior written
consent of
the Company, except as may be necessary to perform its duties
hereunder
and consistent with TG Group agreement with such third party.
Upon
termination of its engagement with the Company, the Consultant
shall act,
with respect to such information, as set forth in Section 5.2
and 5.3,
mutatis mutandis.
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| 5.5 |
Consultant’s
undertakings under this Section 5 shall remain in full force
and effect
after termination or expiration of this Agreement or of any renewal
thereof.
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6.
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Intellectual
Property Rights
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N/A
7. Term
and Termination
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7.1.
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The
term of this Agreement shall be twelve (12) months, commencing
upon the
Effective Date (the "Original Engagement Period"), unless
terminated at any earlier date as provided in Section 7.3
hereunder.
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| 7.2. |
Following
the Original Engagement Period, the Parties shall be entitled
to extend
this Agreement for an additional twelve (12) months period (the
"Option Period"), under terms and conditions to be agreed
upon by and between the Parties.
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| 7.3. |
This
Agreement may be terminated by either Party, at any time, without
any
further obligation to the other Party under this Agreement (other
than
those obligations surviving termination or expiration hereof
or
compensatory rights to which Consultant is already entitled at
such time),
by ninety (90) days prior written notice to the other Party,
unless
terminated as a result of a material breach, in which case this
Agreement
may be terminated by either Party upon fourteen (14) days prior
written
notice to the other party if such a breach was not cured during
the
aforesaid fourteen (14) days
period.
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8. Assurances;
No Conflict
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8.1.
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Consultant
hereby warrants, represents and confirms to the Company that
on the date
hereof it is free to be engaged by the Company upon the terms
contained in
this Agreement and that there are no engagements, contracts,
consulting
contracts or restrictive covenants preventing full performance
of its
duties hereunder.
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| 8.2. | Consultant hereby further represents warrants and confirms that nothing in this Agreement conflicts with any of Consultant's current affiliations or other current relationships with any other entity. If such conflict shall occur during the term of this Agreement, Consultant shall promptly notify the Company in writing of such conflict. |
| 8.3. | The Services performed hereunder will not be conducted during the same time that is required to be devoted by Consultant to any other third party. Consultant shall not use the funding, facilities and resources of any third party to perform the Services hereunder and shall not perform the Services hereunder in any manner that would give any third party rights to produce such work. Nothing done in the Consultant work for any third party shall be considered part of the Services performed hereunder. |
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9.
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Competitive
Activity;
Non-Solicitation
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9.1.
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Consultant
will not, as long as Consultant provides services to the Company
hereunder
and for a period of twelve (12) months thereafter, directly
or indirectly,
as owner, partner, joint venturer, stockholder, employee, broker,
agent,
principal, corporate officer, director, consultant, licensor
or in any
other capacity whatsoever engage in, become financially interested
in
(except for any form of mutual fund, insurance company investment
portfolio, pension plan investment portfolio etc. with respect
to which
Consultant has no direct or indirect material influence), be
employed by,
or have any connection with any business or venture that is
engaged in any
activities which are in direct competition with the Company's
Business as
defined hereinabove without TG Group prior
consent.
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| 9.2. | During the Term of this Agreement and for a period of twelve (12) months thereafter, Consultant will not solicit or induce any employee, advisor, contractor or customer of TG Group to terminate or breach any employment, contractual or other relationship with TG Group. |
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10.
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Independent
Contractor
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10.1.
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Consultant
agrees and acknowledges that it is performing the Services
hereunder as an
independent contractor and that no employer-employee relationship
exists
or will exist between the Consultant and/or any one on its
behalf
(including its employee Avi Kostelitz) and the
Company.
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10.2.
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If, despite the parties' explicit intent as reflected in this agreement, a competent court determines the existence of an employer-employee relationship between the Company and the Consultant and decides that the Consultant, or any one on its behalf, is entitled to payments and/or other benefits in connection with such employment relationship, then Consultant shall indemnify the Company and hold it harmless from any loss or damage incurred by the Company as a result of, or in connection with, such court decision, including reasonable expenses and legal fees. |
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11.
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Resolution
of Disputes
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11.1.
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All
disputes between the parties related to this Agreement shall
be resolved
amicably by the Parties within fourteen (14) days. In the event
the
Parties fail to settle such dispute, the dispute shall be resolved
exclusively by arbitration proceedings to be held in Tel Aviv
before a
mutually agreed upon arbitrator, or in the event that the parties
cannot
reach such mutual agreement within 14 days of an initial request
to this
effect, an arbitrator named by the Chairman of the Tel Aviv
District
Council of the Israeli Bar Association (the
"Arbitrator").
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| 11.2 |
The
Arbitrator shall decide the matters in dispute in accordance with
the
substantive laws of the State of Israel, without reference to the
conflict
of laws rules thereof, and in accordance with the provisions of
this
Agreement, but will not be subject to the procedures and evidence
law and
the Arbitrator must substantiate his decision, including interim
decisions
within forty five (45) days with an option to extend this period
by
additional forty five (45) days. In addition to the provisions
of sec. 24
of the Arbitration Law, 5728-1968, the Arbitrator’s final decision shall
be subject to full judicial appellate review as if such decision
was the
decision of the Court of Peace (Beit Mishpat Hashalom) in Tel Aviv.
This
Section constitutes an arbitration agreement in terms of the Arbitration
Law, 5728-1968.
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| 11.3 |
The
cost of arbitration shall be borne by the Party whose contention
was not
upheld by the arbitration proceedings, unless otherwise provided
in the
arbitration award.
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| 11.4 |
Nothing
in this section shall prevent the Parties from applying to court
for
interim orders at any time.
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12.
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Miscellaneous
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12.1.
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The
Consultant shall not assign this Agreement or any of its
rights and
privileges hereunder, whether voluntarily or by operation
of law, to any
person, firm or corporation without the prior written consent
of the
Company.
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| 12.2 |
The
Consultant shall be solely responsible for the payment of any
taxes,
including all business taxes arising out of the Consultant's
activities.
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| 12.3 |
Except
as otherwise provided herein, this Agreement constitutes the
entire
agreement between the Parties with respect to the matters referred
to
herein, and no other arrangement, understanding or agreement,
verbal or
otherwise, shall be binding upon the parties hereto. This Agreement
may
not be amended, modified or supplemented in any respect, except
by a
subsequent writing executed by the
Parties.
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| 12.4 |
No
failure, delay or forbearance of either party in exercising any
power or
right hereunder shall in any way restrict or diminish such Party's
rights
and powers under this Agreement, or operate as a waiver of any
breach or
non-performance by either Party of any of the terms or conditions
hereof.
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| 12.5 | If any term or provision of this Agreement shall be declared invalid, illegal or unenforceable, then such term or provision shall be enforceable to the extent that a court shall deem it reasonable to enforce such term or provision and if such term or provision shall be unreasonable to enforce to any extent, such term or provision shall be severed and all remaining terms and provisions shall be unaffected and shall continue in full force and effect. |
| 12.6 | Any notice from one party to the other shall be effectively served if sent in writing by recorded delivery to the address of the receiving Party as stated in the preamble of this Agreement, unless said Party informs the other Party in writing on a change of address. |
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and
year first hereinabove written.
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TRACEGUARD
TECHNOLOGIES LTD.
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AKIS
LTD.
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/s/
Xxxxx Xxx-Xxxx
By:
Xxxxx Xxx-Xxxx
Its:
Chief Financial Officer
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/s/
Avi Kostelitz
Name:
Avi Kostelitz
Date:
August 9, 2007
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I,
the
undersigned, Avi Kostelitz, residing at 14 Mishol Hakitron, Jerusalem, hereby
represent, warrant and undertake that I fully agree to this Agreement
(including, but not limited to, Sections 1, 5, 6, 9-11 therein), as if I
entered
into this Agreement myself and I undertake to fully comply with all such
provisions.
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/s/
Avi Kostelitz
Avi
Kostelitz
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Date:
August 9, 2007
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EXHIBIT
"A"
GRANT
LETTER
[
SEE EXHIBIT 10.2 ]
