CONSULTANCY AGREEMENT
Exhibit
10.1
THIS
CONSULTANCY AGREEMENT
is
entered into as of the 15 day of May 2007, by and between IDO Security Inc.
(formerly The Medical Exchange Inc.), a Nevada company, having its main place
of
business at 00 Xxxxx Xxxxxx Xxx Xxxx, XX 00000 XXX (the “Company”),
and
Xx. Xxxxx Xxxx an individual whose address is be 35 / 6 Xxxxxx Hanassi Xxxxxx
Xxx Xxxx 00000 Xxxxxx (the “Consultant”).
WHEREAS
The
Company designs, develops, manufactures and sells, products, know-how and
technologies used in security applications.
WHEREAS
Consultant wishes to be hired by the Company and Company wishes to hire
Consultant upon the terms and conditions as set out herein.
1.0 Appointment,
Term, Service
1.1 Appointment.
The
Company agrees to hire the Consultant as its manager of business development
upon the terms and conditions contained herein and the Consultant accepts such
appointment.
1.2 Term.
This
Agreement shall continue for an initial term of two years (the “Initial Term”)
unless terminated in accordance with the provisions of this Agreement. This
Agreement shall be renewed for successive two year terms (each a “Renewal Term”)
unless the Company or Consultant indicates in writing, more than 90 days prior
to the termination of this Initial term or any Renewal term, that it does not
intend to renew this Agreement.
1.3 Duties
and Reporting. The
Consultant will report directly to the Chief Executive Officer of the Company
and shall carry out all duties and responsibilities generally associated with
Consultant's position, which are from time to time assigned to him by the Chief
Executive Officer, in writing.
1.4 Scope
of Service.
The
Consultant shall devote 45% of his time during regular business days, Monday
through Thursday, attention and ability to the business of the Company and
shall
well and faithfully serve the Company and shall use his best efforts to promote
the interests of the Company. The Consultant acknowledges that his duties may
involve travel and the Consultant agrees, subject to reasonable prior
coordination, to travel as reasonably required in order to fulfill his
duties.
1.5 During
the Consultancy Period, the Consultant shall not be engaged in any other
business activity that conflicts with Company’s field of activities hereunder.
2.0 Compensation
2.1 Fee.
Company
shall pay to Consultant for all services rendered hereunder a monthly fee in
the
amount of $5,286 per month, payable by wire to the Consultant at the first
business day of each month for the preceding month.
2.2 Stock
Option Plan.
The
Company will adopt a stock option plan no later than July 15, 2007. Furthermore,
the Company intends to have the said plan approved in Israel pursuant to section
102 of the Tax Ordinance (the “Approved Plan”). For all services required to be
performed hereunder by Consultant, the Consultant shall be entitled to
participate in the Approved Plan, pursuant to which he will be granted options
for 400,000 shares of Common Stock of the Company, in the aggregate, which
shall
vest and be exercisable in installments of 50,000 shares at the end of each
ninety day period commencing from the date of this Agreement, provided that,
at
the time of grant the Company shall calculate the first ninety day period and
the subsequent periods as if the first ninety day period has commenced on March
1, 2007. The options shall be exercisable, in whole or in part upon Consultant's
sole discretion, for a period of seven years from the date of this agreement
provided that if Consultant is terminated for cause all vested options must
be
exercised within 90 days of termination. The options shall have standard split
protection. The per share exercise price of the options shall be as
follows:
50,000
Shares per traunch
|
1st
|
2nd
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3rd
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4th
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5th
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6th
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7th
|
8th
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|||||||||||||||||
Per
share price
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$
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0.50
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$
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0.75
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$
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1.25
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$
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1.75
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$
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2.15
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$
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2.85
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$
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3.25
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$
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3.50
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Subject
to this Agreement being in force the Company shall file a registration statement
(form S 8) for all the shares under the employee stock plan by September 30,
2007.
In
the
event that Company or its Subsidiary, IDO Security Ltd. grants to employees
or
directors or consultants or managers (other then related to financings or
investments in the Company or its affiliates) options at a lower exercise price
than Consultant's options which have not yet vested as contained above, the
Consultant’s unvested options shall automatically be re-priced at such lower
exercise price. This section shall not apply to options granted to members
of
Company’s or its affiliates’ board of directors as of April 15,
2007.
The
Parties acknowledge that the above options have been agreed to prior to any
stock split and that the issued and outstanding shares of common stock the
Company prior to the split is approximately 10,800,000.
2.3 Expenses
All
expenses reasonably incurred by the Consultant shall be reimbursed,
together
with any applicable sales and goods and services taxes, by the Company within
10
Business Days after presentation by the Consultant of proper invoices and
receipts in keeping with the policies of the Company as established from time
to
time. Major expenses, as Traveling (flights) Hotels Etc. will be ordered and
paid by the Company in advance.
2.4 Consultant
shall be solely responsible for bearing and paying any and all taxes, duties,
fees and/or other impositions that may be levied pursuant to relevant law upon
Consultant with regard to the provision of the Services and the options granted
above under this Agreement, including, but not limited to medicare, social
security, income tax and unemployment insurance.
2.5 The
Company shall include the Consultant in its director’s and officer’s insurance
which shall be obtained prior to June 30, 2007 and shall provide Consultant
confirmation of such.
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3.0 Relationship
3.1 The
Consultant shall perform the Services hereunder as an independent contractor
to,
and not as an employee of the Company.
3.2 Consultant
agrees to indemnify and hold Company harmless to the extent of any obligations
imposed by law on Company to pay any withholding taxes, social security,
unemployment or disability insurance or similar items in connection with any
payment made to Consultant by Company for the Services.
3.3 The
parties hereby agree that in the event a court or tribunal having jurisdiction
over the matter holds that the status of the Consultant is that of an employee
rather than an independent contractor, the monthly salary pursuant to this
Agreement shall be 62% of the monthly compensation that the Consultant is
entitled to receive from Company under this Agreement (the “Reduced
Compensation”).
In
the event that it is claimed by the Consultant or held or ruled that the
Consultant was an employee of Company, the Consultant shall return to Company
all amounts paid to the Consultant exceeding the Reduced Compensation. Nothing
in this paragraph shall directly or by implication be construed or deemed to
constitute the Consultant an employee.
4.0 Consultant’s
Representations and Warranties
4.1 Consultant
represents that it is not a party to any existing agreement that would prevent
it from entering into this Agreement. Consultant agrees to segregate work done
under this Agreement from all work done at, or for, any other company, and/or
other commercial enterprises for which it may render services.
4.2 Consultant
warrants that (a) it/he is not and shall not be during the Consultancy Period
obligated under any other Consultancy, employment, or other agreement which
would affect Company’s rights or the duties of Consultant under this Agreement,
and (b) it/he shall not utilize during the Consultancy Period any proprietary
and/or confidential information of any third party.
4.3 NDA.
The
Parties shall enter into the non disclosure and non competition agreement
attached hereto Exhibit A.
4.4 Company
Policies; Lock-Ups. During
the Initial Term and/ or Renewal Term of this agreement, the Consultant shall
be
subject to all company policies established by the Board of Directors, including
without limitation, xxxxxxx xxxxxxx policies. Additionally, if requested to
sign
any instrument that would ‘lock-up’ or otherwise restrict the Consultant from
selling or otherwise disposing of any Company securities held by him in
connection with a contemplated Company financing, then the Consultant agrees
to
sign such instrument and otherwise take any other action and sign any other
instrument reasonably requested to reflect his agreement. Notwithstanding the
foregoing, in all cases such xxxxxxx xxxxxxx policies, other restrictions on
transfer of securities or other company policies shall terminate as of the
close
of business on the 90th
day
after the termination of the Consultant’s relationship with the Company under
this Agreement; provided that Consultant understands that the foregoing in
no
way absolves him of his responsibility for any actions taken after such 90
day
period in violation of any relevant applicable law.
5.0 Company’s
representation & Warranties
5.1 Company
represents that it is not a party to any existing agreement that would prevent
it from entering into this Agreement.
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5.2 Company represents that it has all the assets, capital and resources it needs, in order to fulfill its obligation by this agreement, include its obligation to pay the Consultant's fees.
5.3 Company
represents that this agreement and all its obligation are approved by the
Company's board.
6.0 Termination
6.1 The
Consultant can terminate this Agreement for any reason upon 30 days notice.
Subsequent to the end of the first Agreement year the Company can terminate
this
Agreement for any reason upon 90 days notice. The Company at its option may
pay
Consultant the fees which would have been due and owing during any notice period
and require the Consultant to cease work at any time prior to the end of the
notice period.
6.2 Ether
party may terminate this Agreement effective upon written notice to the other
if
the other party violates any covenant, agreement, representation or warranty
contained herein in any material respect or defaults or fails to perform any
of
its obligations or agreements hereunder in any material respect, which
violation, default or failure is not cured within 15 business days after notice
thereof from the non-defaulting party stating its intention to terminate this
Agreement by reason thereof.
6.3 Upon
termination for any reason, Consultant shall be entitled to all expenses the
compensation set forth as the fee herein, prorated to the effective date of
such
termination, and in the event of termination by the Company without cause any
stock options which have not vested shall vest immediately.
6.4 Consultant
agrees to cooperate with Company and use his best efforts to assist the
integration into Company’s organization of the person or persons who will assume
Consultant’s responsibilities and to transfer any and all material in
Consultant’s possession relating to Company, during a period of two weeks
following the termination date, as Consultant’s schedule permits. The Company
shall compensate the Consultant for such period pro rata to the fees paid under
this Agreement.
7.0 Miscellaneous
7.1 Severability.
If a
court finds any provision of this Agreement invalid or unenforceable
as
applied to any circumstance, that provision shall be enforced to the maximum
extent permitted by law, and the other provisions will remain in full force
and
effect.
7.2 Notice.
All
notices under this Agreement, for any purpose whatsoever, shall be in writing
and delivered by electronic mail, or by facsimile transmittal, receipt
acknowledged. The parties will be entitled to send back up notices by overnight
courier service, in which case, notices shall be deemed delivered two business
days following the day on which notice was given. For purposes of this Section,
notices shall be addressed according to the details provided above and shall
be
deemed delivered on the day which delivery was made.
7.3 No
Assignment. Neither
the Company nor the Consultant may assign this Agreement without the written
consent of the other, and any attempted assignment without such consent shall
be
void.
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7.4 Governing
Law and Jurisdiction. This
Agreement shall be governed by and enforced in accordance with the laws of
Israel, and the courts of Tel - Aviv, shall have the exclusive jurisdiction
over
any dispute relating to this Agreement.
7.5 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
Agreement.
7.6 Entire
Agreement. This
Agreement together with the agreements and other documents to be delivered
pursuant to this Agreement (or other agreements pertaining to Consultant
benefits, including, without limitation, stock option and bonus plan
agreements), constitute the entire agreement between the parties pertaining
to
the subject matter of this Agreement and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties and there are no warranties, representations or other agreements between
the parties in connection with the subject matter of this Agreement except
as
specifically set forth in this Agreement and any document delivered pursuant
to
this Agreement. No supplement, modification or waiver or termination of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby.
7.7 Sections
and Headings. The
division of this Agreement into parts and sections and the insertion of headings
are for convenience of reference only and shall not affect the construction
or
interpretation of this Agreement. The terms “this Agreement”, “hereof”,
“hereunder” and similar expressions refer to this Agreement and not to any
particular article, section or other portion hereof and include any agreement
or
instrument supplemental or ancillary hereto. Unless something in the subject
matter or context is inconsistent therewith, references herein to parts and
sections are to parts and sections of this Agreement.
7.8 Number
& Gender. Words
importing the singular number only shall include the plural and vice versa
and
words importing the masculine gender shall include the feminine and neuter
genders and vice versa.
7.9 Currency.
Unless
otherwise specified, all references herein to currency shall be references
to
currency of the United States of America.
7.10 Business
Day:
means
a
day other than a Saturday or Sunday or any statutory holiday in the United
States of America or in Israel
7.10 Calculation
of Time. When
calculating the period of time within which or following which any act is to
be
done or step taken pursuant to this Agreement, the date which is the reference
date in calculating such period shall be excluded. If the last day of such
period is a non Business Day, the period in question shall end on the next
Business Day.
IN
WITNESS WHEREOF,
the
parties hereto have duly executed this Agreement as of the date first above
written.
By: /s/ Xxxxxxx Xxxxxxxx | By: /s/ Xxxxx Xxxx | ||
Acting Chief Executive Officer/Director | Xxxxx Xxxx | ||
Title: _____________________ |
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Exhibit
A
Confidentiality,
Non-Compete; Poaching; Development Rights Agreement
This
agreement forms part of the Consultancy Agreement being entered into by the
Parties as of this date and all capitalized terms herein shall have the meaning
set forth therein. The Company values the protection of its confidential
information and proprietary materials essential to the survival of the Company.
Therefore, as a mandatory condition of Consultant’s agreement with the Company,
Consultant agrees to comply with the following provisions.
a. Confidentiality
(i) The
term
"Information" as used in this section means any and all confidential and
proprietary information including but not limited to any and all specifications,
formulae, prototypes, software design plans, computer programs, and any and
all
records, data, methods, techniques, processes and projections, plans, marketing
information, materials, financial statements, memoranda, analyses, notes, and
other data and information (in whatever form), as well as improvements and
know-how related thereto, relating to the Company or its products. Information
shall not include information that (a) was already known to or independently
developed by the Consultant prior to its disclosure as demonstrated by
reasonable and tangible evidence satisfactory to the Company; (b) shall have
appeared in any printed publication or patent or shall have become part of
the
public knowledge except as a result of breach of this Agreement by the
Consultant or similar agreements by other Company employees or service providers
(c) shall have been received by the Consultant from another person or entity
having no obligation of confidentiality to the Company or (d) is approved in
writing by the Company for release by the Consultant.
(ii) Subject
to the provisions of Section (iii) below, the Consultant agrees to hold in
trust
and confidence all Information disclosed to Consultant and further agrees not
to
exploit or disclose the Information to any other person or entity or use the
Information directly or indirectly for any purpose other than for Consultant’s
work with the Company, unless otherwise consented to in writing by the
Company.
(iii) The
Consultant agrees to disclose the Information only to persons necessary in
connection with Consultant’s work with the Company or who have undertaken the
same confidentiality obligations set forth herein in favor of the Company.
The
Consultant agrees to assume full responsibility for the confidentiality of
the
Information disclosed to Consultant and to prevent its unauthorized disclosure,
and shall take appropriate measures to ensure that such persons acting on his
behalf are bound by a like covenant of secrecy.
(iv) The
Consultant acknowledges and agrees that the Information furnished hereunder
is
and shall remain proprietary to the Company. Unless otherwise required by
statute or government rule or regulation, all copies of the Information, shall
be returned to the Company immediately upon request without retaining copies
thereof.
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(v) The
Consultant acknowledges that the Company has received and in the future will
receive from third parties confidential or proprietary information (whether
or
not so marked) (“Third Party Information”) subject to a duty on the Company’s
part to maintain the confidentiality of such information and to use it only
for
certain limited purposes. The Consultant shall hold Third Party Information
in
the strictest confidence and will not disclose to anyone (other than Company
personnel who need to know such information in connection with their work for
the Company) or use, except in connection with my work for the Company, Third
Party Information unless expressly authorized by an officer of the Company
in
writing.
b. Non-Compete;
Poaching;
Development Rights
(i) Unless
otherwise expressly consented to in writing by the Company, during the term
of
the Consultant's work for the Company, and for a period of twelve (12) months
following the date on which Consultant's termination of work with the Company
becomes effective, Consultant will not, directly or indirectly, for his own
account or as an Consultant, officer, director, consultant, joint venture,
shareholder, investor, or otherwise (except as an investor in a corporation
whose stock is publicly traded and in which the Consultant holds less than
5% of
the outstanding shares) interest him/herself or engage, directly or indirectly,
in the design, development, production, sale or distribution of any product
or
component that directly or indirectly competes with a product or component
(i)
being designed, produced, sold or distributed by the Company or any of its
affiliates (ii) or to which the Company or any of its affiliates shall then
have
proprietary rights.
(ii) Hiring
of Company Consultants.
During
the term of the Consultant's work for the Company, and for a period of twelve
(12) months following the date on which Consultant's termination of work with
the Company becomes effective, the Consultant shall not, except in the course
of
the performance of his duties hereunder or with the prior approval of the Board,
in any way directly or indirectly, with respect to any person who to the
Consultant's knowledge was employed by the Company or its affiliates ("Company
Employee") at any time during the period commencing 12 months prior to the
date
of the hiring of such Company Employee, hire or cause to be hired any Company
Employee, or contract the services of any closely held private corporation
or
other entity in which such Company Employee is an officer or director or holds
a
25% or greater equity ownership interest.
(iii) Consultant's
undertakings herein under this Section 6(b) shall be binding upon until the
later of (i) the expiration of one year from the date of execution of this
Agreement or (ii) the expiration of one year from the date the Consultant last
represented him/herself as an Consultant, agent or representative of the Company
or any of its affiliates, subsidiaries or successors.
(iv) Consultant
acknowledges that the restricted period of time specified under this Section
6(b) are reasonable, in view of the nature of the business in which the Company
is engaged and Consultant's knowledge of the Company's business and products.
If
such a period of time or geographical location should be determined to be
unreasonable in any judicial proceeding, then the period of time and area of
restriction shall be reduced so that this Agreement may be enforced in such
an
area and during such a period of time as shall be determined to be reasonable
by
such judicial proceeding.
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(v) Development
Rights.
The
Consultant agrees and declares that all proprietary information including but
not limited to trade secrets, know-how, patents and other rights in connection
therewith developed by or with the contribution of Consultant's efforts during
his work with the Company shall be the sole property of the Company. Consultant
shall keep and maintain adequate and current records (in the form of notes,
sketches, drawings and in any other form that may be required by the Company)
of
all such proprietary information developed by Consultant. Consultant shall
at
Company's request do all things and execute all documents as Company may
reasonably require to vest in Company the rights and protection herein referred
to. It is hereby acknowledged and agreed that the fees payable under this
Agreement also constitutes sufficient consideration for the Consultant's
obligation hereunder
Agreed
to
by the Parties as of the 15 day of May 2007.
By:
_________________________
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By:
________________________
|
Name:
_____________________
|
Xxxxx
Xxxx
|
Title:
_____________________
|
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