Exhibit 10.2
This Marketing Platform Agreement
(hereinafter, the “Agreement”) is effective as of June 25 2008, by and
between Structure Financial Group Ltd., with offices at Amot Xxxxxxx Xxxxx 0xx
Xxxxx, 0 Xxxxx Xxxxxxx Xxxx., Xxx Xxxx, 00000 Israel (hereinafter,
“SFG”), and On Track Innovations Ltd., having its principal place
of business at X.X.X. Xxxxxxxxxx Xxxx, X.X. Xxx 00 Xxxx-Xxxx 00000, Xxxxxx
(hereinafter,“OTI”).
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WHEREAS |
OTI
is a global leader in contactless microprocessor-based smart card solutions for Smart ID
solutions, homeland security, micropayments, petroleum payments and other applications;
and |
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WHEREAS |
SFG,
either by itself or through one of its related companies, is in the business of supplying
marketing platform services, including but not limited to, promotion of and consulting in
marketing business relations for its customers (“Marketing Platform”),
inter alia, for promotion of OTI’s participation in substantial projects in
OTI’s area of occupation; and |
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WHEREAS |
In
order to implement such Marketing Platform, OTI has opened a bank account at the Export
Import (EXIM) Bank, to be used for OTI’s existing and future projects for OTI’s
clients or suppliers, as the case may be; and |
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WHEREAS |
the
parties wish to set forth the terms and conditions of their relationship with respect to
the purchase of the Marketing Platform and the opening of the EXIM account, all in
accordance with the terms and conditions set forth herein. |
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Now
therefore the parties have agreed and declared as follows: |
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1.1. |
The
preamble to this agreement constitutes an integral part of this Agreement. |
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1.2. |
Section
headings contained in this Agreement are inserted for convenience of
reference only, shall not be deemed to be a part of this Agreement for any
purpose, and shall not in any way define or effect the meaning,
construction or scope of any of the provisions hereof. |
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1.3. |
The
schedules constitute an integral part of this Agreement. |
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2.1. |
OTI
warrants as follows: |
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2.1.1. |
This
Agreement constitutes a legally binding obligation of OTI and is
enforceable against OTI in accordance with its terms. The execution and
delivery of this Agreement by OTI, and the performance of its obligations
hereunder, have been duly and validly authorized by all necessary
corporate or other action, if required, and there is no impediment, either
at law or by agreement to OTI’s entering into this Agreement and
performing all of its obligations hereunder. |
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2.1.2. |
No
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority on its part is required in connection with the
consummation of the transactions contemplated by this Agreement. |
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3. |
SFG
Warrants and Undertake |
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3.1. |
SFG
warrants as follows: |
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3.1.1. |
This
Agreement constitutes a legally binding obligation of SFG and its related
companies and is enforceable against SFG in accordance with its terms. The
execution and delivery of this Agreement by SFG, and the performance of
its obligations hereunder, have been duly and validly authorized by all
necessary corporate or other action, if required, and there is no
impediment, either at law or by agreement to SFG’s entering into this
Agreement and performing all of its obligations hereunder. |
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3.1.2. |
No
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority on its part is required in connection with the
consummation of the transactions contemplated by this Agreement. SFG shall
be deemed to have obtained on its own responsibility any additional
information, which it considers necessary for entering into this
Agreement. |
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3.2. |
SFG
will make efforts in order to promote of OTI’s business for the purpose
of obtaining the following objectives and services: |
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3.2.1. |
Promoting
OTI’s participation in substantial projects in OTI’s area of
occupation, either by SFG or by one of its related companies, including
but not limited to, consultation regarding business opportunities,
business networking between OTI and various entities, including but not
limited to, government ministries (including Israel), municipalities and
others (the “Project/s”); |
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3.2.2. |
Assisting
OTI in presenting and promoting the Projects for the purpose of
identifying and entering into binding agreements, and assisting the
execution and implementation of Projects, as the case may be. SFG shall
identify and recruit third parties for the fulfillment of other parts of
the Projects, subject to the OTI’s approval. |
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3.2.3. |
Obtaining
from EXIM Bank financing for such Projects (“EXIM Account”),
and obtaining from EXIM bank funding for existing and future OTI Projects,
for clients or suppliers as the case may be, including but not limited to,
analysis coverage services of OT’s clients or suppliers; |
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3.3. |
OTI
shall at its sole discretion determine whether to submit a proposal, or to
enter into any agreements for any Project suggested by SFG, and nothing in
this Agreement shall be construed as an undertaking of OTI, whether
express or implied, to enter into such agreements. Prior to the execution
of any written agreements, OTI may reasonably decide to discontinue any
proposals or ventures with SFG at any time and SFG shall have no demands
or claims towards OTI. |
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In
consideration for the Marketing Platform and for SFG’s consulting and promoting
services as detailed above, SFG shall be entitled to success based compensation, in the
form of warrants for the purchase of OTI’s Ordinary Shares, as follows: |
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4.1 |
In
accordance with OTI’s board of director’s approval which shall not be
unreasonably withheld, OTI shall grant SFG and TheSpearhead Capital Ltd. (“TheSpearhead”)
equally, warrants to purchase 1,000,000 (one million) of OTI’s Ordinary Shares,
which OTI is entitled to issue to third parties under and subject to any and all
applicable US regulations and securities laws governing OTI’s shares (the “Warrants”).
The Warrants shall be at an exercise price of USD3.0 (three US dollars) per each Warrant.
In accordance with the above detailed, SFG shall be entitled to 50% of the Warrants and
TheSpearhead shall be entitled to 50% of Warrants. It is also clarified that this
paragraph may be amended only by the written consent of OTI, SFG and TheSpearhead. |
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4.2 |
The
Warrants shall expire 10 years from the date of grant unless this Agreement is terminated
earlier. |
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4.3 |
The
Warrants shall not be exercisable until May 30, 2010, all as detailed in the Warrant
Agreement attached hereto as Schedule A to this Agreement. It is
agreed that when a certain amount of Warrants is exercisable and/or vested, SFG shall be
entitled to exercise 50% of such amount and TheSpearhead shall be entitle to exercise the
other 50% of such amount. |
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4.4 |
In
the event that the Warrants shall be exercised into shares held by SFG and/or
TheSpearhead, SFG and/or TheSpearhead shall grant proxies for such shares according to OTI’s
instructions. |
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4.5 |
If
SFG shall contribute, to a cumulative sum of sales and/or funding and/or proceeds of
USD10,000,000 (ten million US dollars), then the exercise price of the Warrants which
were not been exercised by SFG shall be reduced by USD½ (half a US dollar) until
the lower limit of the par value of OTI’s Shares. In the event of a dispute between
the parties in regards to the cumulative amount, the parties shall attempt to resolve the
dispute first through good faith negotiations and if necessary, mediation. Failing
mediation, the Parties may turn to an approved arbitrator acceptable to both sides to
resolve the dispute. |
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(e.g.:
at the cumulative sum of USD 8,000,000 (Eight million US dollars) the exercise price
shall be USD3 (Three US dollars). At the cumulative sum of USD 30,000,000 (Thirty million
US dollars) the exercise price of the non exercised Warrants shall be USD1.5 (One and a
half US dollar), and at the cumulative sum of USD 60,000,000 (Sixty million US Dollars)
and above, the exercise price shall be NIS 0.10 (one tenth of one New Israeli Shekels). |
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4.6 |
The
Options shall be vested in quantities of 200,000 (Two hundred thousand) Warrants each
time, upon OTI receiving a firm order or a tender award, of which SFG has been directly
involved in the promotion and/or funding of, in the amount of no less than the sum of USD
1,000,000 (One million US dollars) with a potential of the amount of no less than USD
5000,000 (Five million US dollars), all as detailed in the Warrant Agreement attached
hereto as Schedule A. |
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4.7 |
It
is hereby clarified and agreed that at the date hereof, none of the Warrants nor the Ordinary
Shares underlying thereto (“Shares”), have been registered with the SEC
under the United States Securities Act of 1933 as amended (the “Securities Act”)
and such Shares may not be sold, transferred, used as collateral or otherwise
disposed of until and unless they are registered under the Securities Act
(and, where required, under the laws of one or more other jurisdictions), except
in accordance with Regulation S (“Regulation S”) under the Securities
Act, or unless another exemption from registration is then available. |
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4.8 |
SFG
acknowledges and agrees that the certificates representing the Shares shall bear a
restrictive legend as counsel to OTI may determine are necessary or appropriate under
applicable securities laws, substantially to the effect of the following: |
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“The
securities represented by this certificate have not been registered under the
Securities Act of 1933 and may not be transferred, sold or otherwise disposed of
in the absence of an effective registration statement with respect to the shares
evidenced by this certificate, filed and made effective under the
Securities Act of 1933, or an opinion of counsel satisfactory to On Track
Innovations Ltd. to the effect that registration under such Act is not required.” |
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4.9 |
SFG
acknowledges and agrees that, until such time as a registration statement with respect to
the Warrants has been declared effective by the SEC, all certificates, if any,
representing the Warrants shall bear, and shall be subject to, a restrictive legend. |
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4.10 |
Until
such time as a registration statement with respect to the Warrants has been declared
effective by the SEC, SFG undertakes not to engage in hedging transactions in the United
States of America with regard to OTI Warrants unless such transactions are conducted in
compliance with the Securities Act and the United States Securities Exchange Act of 1934,
as amended (the “Exchange Act”), and the rules and regulations
promulgated thereunder. |
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4.11 |
OTI
hereby undertakes to complete, by no later than 180 days from the execution of this
Agreement, the necessary actions required to file a registration statement covering the
Shares with the SEC. |
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4.12 |
As
soon as practically possible, OTI hereby undertakes to deliver to SFG a notice confirming
that a registration statement with respect to the Shares has been declared effective by
the SEC once it is so declared effective. |
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4.13 |
Each
of SFG, TheSpearhead and OTI, will be responsible and liable for their own individual tax
liabilities arising out of or in connection with the exercise of the Warrants and the
sale of the Shares. |
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4.14 |
The
parties hereby irrevocably waive, relinquish and release each other from any and all
claims, rights, demands or causes of action asserted or non-asserted which a party may
have had, now has or hereafter may have against the other party, its directors, officers,
employees, agents and/or consultants, in connection with; (i) the issuance of the
Warrants, their exercise into Shares and the sale of the Shares, including without
limitation, any fluctuations in Shares’ prices; and/or (ii) any matter concerning
the Agreement between SFG and OTI, including without limitations, failure to implement
such Agreement. |
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4.15 |
SFG
has sufficient knowledge and experience in financial and business matters to make an
informed decision about an investment in the Shares pursuant to this Agreement. SFG has
read and reviewed the documents filed by OTI with the SEC, including, without limitation,
the Annual Report on Form 20-F filed by OTI with the SEC. |
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4.16 |
The
Parties shall not be entitled to any reimbursement of costs and expenses incurred and
resulted from one another’s activities as under this Agreement unless agreed to in
writing by OTI |
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5. |
REPORTING
REQUIREMENTS |
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5.1. |
SFG
shall provide written quarterly reports to OTI concerning its activities on its
behalf. |
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5.2. |
For
each report that is made, OTI shall acknowledge in writing within 30 business
days, any sales, business, projects or other undertakings that SFG has procured
on behalf of OTI which amounts procured shall be conclusive in determining
remuneration pursuant to this Agreement. If not such acknowledgement is
provided by OTI within 30 business days, the reports submitted by SFG to OTI
detailing any business it has procured shall be deemed conclusive. |
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6. |
Right
of First Refusal |
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OTI
hereby provides and grants to SFG the right of first refusal during the three year period
commencing immediately after the execution of this Agreement to allow SFG sufficient time
to procure and secure financing for its Projects contemplated by this Agreement. |
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The
terms of this Agreement shall be governed by the confidentiality agreement signed by the
parties and attached hereto as Schedule B. |
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8. |
Intellectual
Property Rights |
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8.1 |
The
parties agree and acknowledge that any and all of the patents, copyrights, trademarks and
other intellectual property rights used or embodied in or in connection with the Projects
or any part thereof, including all documentation, are, and shall remain the respective
property of each Party , and will not at any time be, or construed as being, the property
of the other Party, and each Party shall not during, or at any time after the expiration
or termination of this Agreement in any way question or dispute the ownership or any
other such rights unless it contributed in any way to the development of new products
that are utilized by OTI. |
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8.2 |
The
parties also agree and acknowledge that such patents, trademarks, copyrights and other
intellectual property rights belonging to each Party may only be used by the other Party
with the mutual consent of both Parties during the term of this Agreement. Upon
expiration or termination hereof, The Parties shall forthwith discontinue such use,
without receipt of compensation for such discontinuation. |
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9.1 |
This
Agreement shall become effective on the execution of this Agreement (the “Commencement
Date”), and shall continue to be in full force for a period of ten (10) years
(the “Term”), subject to the terms of this Agreement |
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9.2 |
The
Termination of this Agreement may be effected as follows: |
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9.2.1 |
By
one party, effective immediately, upon written notice to the other party, in the event
that the other party shall become insolvent or bankrupt, discontinue its business or
adopt a resolution providing for its dissolution or liquidation. |
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9.2.2 |
By
SFG, upon written notice to OTI, if OTI shall breach the Agreement and not remedy such
breach, where it is capable of being remedied, within thirty (30) days after notice of
the breach is received by OTI, in case of a material breach, or within sixty (60) days in
case of any other breach after notice of the breach is received by OTI. |
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9.2.3 |
By
OTI, upon written notice to SFG, upon the occurrence of any one of the following events:
(1) no Project was secured or procured by SFG within a period of 12 months from the
Commencement Date; (2) SFG becomes engaged or involved in any activity which directly
xxxxx or is likely to directly harm OTI or any of its affiliated companies; (3) In case
SFG shall breach the Agreement and not remedy such breach, where it is capable of being
remedied, within thirty (30) days after notice of the breach is received by SFG, in case
of a material breach, or within sixty (60) days in case of any other breach after notice
of the breach is received by SFG. |
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9.3 |
If
this Agreement expires or terminates, the Parties shall cease to use one another’s
trademarks or logos, unless such use was previously authorized in writing by the other
Party to continue after such expiration or termination. |
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9.4 |
Each
party shall return all documentation and materials and all copies thereof, which are of a
confidential nature, in its possession or control, within thirty (30) after the
expiration or termination of this Agreement |
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9.5 |
The
expiration or termination of this Agreement for any reason shall not prejudice any rights
or obligations of either of the parties accrued up to and including the date of
expiration or termination. |
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9.6 |
All
covenants, representations and warranties made in this Agreement shall continue to remain
in full force and effect for as long as this Agreement is still in effect pursuant to its
terms, provided however, that the rights and obligations of the parties under this
Agreement that by their nature continue beyond the expiration of this Agreement, shall
survive any termination or expiration of this Agreement, including but not limited to
provisions concerning confidentiality and intellectual property rights. |
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10.1. |
Neither
party is authorized to act for or on the behalf of the other party under
this Agreement. Without limiting the generality of the foregoing, each
party is an independent contractor, and no principal/agent or partnership
relationship is created between them by this Agreement. |
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10.2. |
SFG
shall not be entitled to commit OTI or act as its legal representative
unless specifically authorized to do so by a written instrument, signed by
OTI. It is expressly agreed between the Parties that the activities of SFG
are restricted to the rights and obligations under this Agreement. SFG
will not be entitled to incur any obligation of any nature on behalf of
OTI, unless agreed to in writing. |
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10.3. |
For
the avoidance of doubt, it is hereby agreed that this Agreement shall not
constitute and shall not be construed as a partnership, joint venture, a
commercial agency relationship, employer’s–employee relationship
or the like between OTI and SFG or any of its key persons. SFG performs
its obligations pursuant to this Agreement as an independent contractor, a
fact that has been taken into account in determining the consideration
under this Agreement. |
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10.4. |
This
Agreement constitutes the entire understanding between the parties with
respect to the subject matter hereof. Any prior understandings,
undertakings or representations, written or oral, shall be of no force or
effect. Neither this Agreement nor any terms hereof may be modified,
amended, waived or terminated except by an instrument in writing signed by
both parties. |
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10.5. |
Should
any dispute arise between the parties in connection with this Agreement,
they shall make their best efforts to resolve such a dispute amicably
amongst themselves. This Agreement shall be governed by and construed
according to the laws of the State of Israel, without regard for the
choice of law provisions thereof. All disputes, controversies, differences
or questions arising out of or relating to this Agreement, or to the
validity, interpretation, breach, violation of term thereof, will be
finally and solely determined and settled only by the competent courts in
Tel-Aviv. |
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10.6. |
None
of the rights, privileges or obligations set forth in or created by this
Agreement may be assigned or transferred without the prior consent in
writing of each party to this Agreement, with the exception of assignments
and transfers from OTI to any entity which controls, is controlled by or
is under common control with OTI. No assignment or transfer under this
Agreement shall be made unless the transferee agrees to be bound by all
agreements binding upon the transferor immediately prior to such transfer. |
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10.7. |
All
notices and other communications required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been duly
given and received: (a) ninety six (96 ) hours after being deposited in
the mail, postage prepaid for registered airmail and addressed to the
addressee at its address as indicated herein above; (b) when receipt
acknowledged, if sent by fax or e-mail, or (c) at the time delivered, if
delivered by hand. |
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10.8. |
NOTICE
TO SFG shall be to: |
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Structured
Financial Group Ltd. |
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Attn:
Xx. Xxxxx Xxxxxxxxxx |
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Amot
House, 8 Xxxxx Hamelech Ave. 2nd floor, Xxx Xxxx 00000 XXXXXX |
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Tel:
x000-0-0000000; Fax: x000-0-0000000 |
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NOTICE
TO OTI shall be to: |
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Attn:
Xx. Xxxx Xxxxxx, CEO with a copy to the legal department, |
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Z.H.R. Industrial
Zone, X.X.Xxx 00 Xxxx Xxxx 00000, XXXXXX |
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Tel:
x000-0-0000000; Fax: x000-0-0000000 |
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NOTICE
TO TheSpearhead Capital shall be to: |
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TheSpearhead
Capital Ltd. |
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Attn:
Mr. Yitzchak Babayov |
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0
Xxxxxx xxxxxx, Xxx-Xxxxxxxx, Xxxxxx, 00000 |
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Tel:
x000-00-0000000; Fax: x000-00-0000000 |
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10.9. |
The
invalidity of any term, condition or stipulation of this Agreement shall not
affect the validity of the remaining terms, conditions or stipulations of
this Agreement or the validity of the Agreement itself. This Agreement
embodies the entire understandings and obligation between the parties and
supersedes all prior agreements and undertakings in respect of the subject
matter hereof. |
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IN WITNESS WHEREOF, each of the
parties hereto has caused this Agreement to be signed as of the date first written
above.
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| Structure Financial Group Ltd. |
On Track Innovations Ltd. |
TheSpearhead Capital Ltd. |
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| By: /s/ Xxxxx Xxxxxxxxxx |
By: /s/ Xxxx Xxxxxx |
By: /s/ Yitzchak Babayov |
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| Name & Title:__________ |
Name & Title: _________ |
Name & Title: _________ |
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| Date: 25/6/08 |
Date: 25/6/08 |
Date: 25/6/08 |
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