MANAGEMENT AGREEMENT
Exhibit
10.5
THIS
AGREEMENT
is
entered into as of the 1st day of July 2007, by and between IDO Security Ltd.,
an Israeli company, (the “Company”),
and
Xxxxx Xxxxxx Ltd.,
a
company incorporated under the laws of Israel
with
offices at Kfar Xxxxxx, Xxxxxx (the
"Manager")
WHEREAS
The
Company designs, develops, manufactures and sells products, know-how and
technologies used in security applications.
WHEREAS
Manager
wishes to be hired by the Company and Company wishes to hire Manager upon the
terms and conditions as set out herein.
1.0 Appointment,
Term, Service
1.1 Appointment.
The
Company agrees to hire the Manager to provide a chief operating officer to
the
Company upon the terms and conditions contained herein and the Manager accepts
such appointment. All services to be provided hereunder by the Manager shall
be
provided solely by Xxxxx Xxxxxx (the “COO”).
1.2 Term.
This
Agreement shall continue for an initial term of one year (the “Initial Term”)
unless terminated in accordance with the provisions of this Agreement. This
Agreement shall be renewed for successive one year terms (each a “Renewal Term”)
unless the Company or Manager 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
COO
will report directly to the Chairman of the Board or to whom the Chairman shall
instruct and shall carry out all duties and responsibilities generally
associated with COO's position, which are from time to time assigned to him
by
the Chairman of the board, in writing. Until further notice the Manager shall
report to Xxxxx Xxxx.
1.4 Scope
of Service.
The COO
shall devote 75% of his time , attention and ability during regular business
days, Sunday through Thursday, 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 COO acknowledges that his duties may involve
travel and the COO agrees, subject to reasonable prior coordination, to travel
as reasonably required in order to fulfill his duties.
1.5 During
the term of this Agreement, the COO 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 the Manager for all services rendered hereunder a monthly fee
in
the amount of $6,000 plus VAT per month payable in NIS according to the
representative rate of the US dollar as set by the Bank of Israel, payable
by
wire to the Manager at the first business day of each month for the preceding
month.
2.3 Car.
The
Company shall provide Manager with use of an automobile and the Company shall
pay for registration, gas, maintenance and insurance.
2.2 Stock
Option Plan.
The
Company’s parent company, IDO Security Inc., ("IDO") will adopt a stock option
plan and will have the said plan approved in Israel pursuant to section 102
of
the Tax Ordinance (the “Approved Plan”). The Manager shall be granted options
for 80,000 shares of Common Stock of IDO, in the aggregate, which shall vest
and
be exercisable in installments of 10,000 shares at the end of each ninety day
period commencing from the date of this Agreement,. The options shall be
exercisable, in whole or in part upon Manager 's sole discretion, for a period
of five years from the date of hereof provided that if Manager 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:
|
10,000
Shares per traunch
|
1st
|
2nd
|
3rd
|
4th
|
5th
|
6th
|
7th
|
8th
|
|||||||||||||||||
|
Per
share price
|
$
|
0.50
|
$
|
0.75
|
$
|
1.25
|
$
|
1.75
|
$
|
2.15
|
$
|
2.85
|
$
|
3.25
|
$
|
3.50
|
Subject
to this Agreement being in force the Company shall file a registration statement
(Form S 8)for all the shares under its employee stock plan by September 30,
2007.
In
the
event that Company or XXX xxxxx 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 then Manager’s options which have
not yet vested as contained above, the Manager’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 the date hereof.
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 Manager shall be reimbursed, together with
any applicable sales and goods and services taxes, by the Company within 10
Business Days after presentation by the Manager 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 COO
and
Manager 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 Manager or COO with regard to the provision of the services under
this
Agreement, including, but not limited to medicare, social security, income
tax
and unemployment insurance.
3.0 Relationship
3.1 The
Manager/COO shall perform the services hereunder as an independent contractor
to, and not as an employee of the Company.
3.2 The
Manager and COO agree 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 Manager by Company for the Service.
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 COO or Manager 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 Manager is
entitled to receive from Company under this Agreement (the “Reduced
Compensation”).
In
the event that it is claimed by the COO or Manager or held or ruled that the
COO
or Manager was an employee of Company, the Manager shall return to Company
all
amounts paid to the Manager exceeding the Reduced Compensation. Nothing in
this
paragraph shall directly or by implication be construed or deemed to constitute
the Manager or COO an employee.
2
4.0 COO’s
and Manager’s Representations and Warranties
4.1 COO
and
Manager represent that it is not a party to any existing agreement that would
prevent it from entering into this Agreement. COO and Manager agree 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 COO
and
Manager warrant that (a) it/he is not and shall not be during the term of this
Agreement be obligated under any other or other agreement which would affect
Company’s rights or the duties of Manager or COO under this Agreement, and (b)
it/he shall not utilize during the term of this Agreement 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 IDO
Policies; Lock-Ups. During
the term of this agreement, the Manager shall be subject to all company policies
established by the Board of Directors of IDO, including without limitation,
xxxxxxx xxxxxxx policies. Additionally, if requested to sign any instrument
that
would ‘lock-up’ or otherwise restrict the Manager from selling or otherwise
disposing of any IDO securities held by him in connection with a contemplated
IDO financing, then the Manager 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 Manager’s relationship with the Company under this
Agreement; provided that Manager 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.
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 Manager’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
Manager can terminate this Agreement for any reason upon 30 days notice and
the
Company can terminate this Agreement for any reason upon 60 days notice. The
Company at its option may pay Manager the fees which would have been due and
owing during any notice period and require the Manager 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, Manager shall be entitled to all expenses and the
compensation set forth as the fee in section 2.1 herein, prorated to the
effective date of such termination.
6.4 COO
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
COO’s responsibilities and to transfer any and all material in COO’s possession
relating to Company, during a period of two weeks following the termination
date, as COO’s schedule permits. The Company shall compensate the COO for such
period pro rata to the fees paid under this Agreement.
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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 Manager may assign this Agreement without the written
consent of the other, and any attempted assignment without such consent shall
be
void.
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 COO 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 Friday or Saturday or any statutory holiday 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.
4
IN
WITNESS WHEREOF,
the
parties hereto have duly executed this Agreement as of the date first above
written.
IDO
Security Ltd.
By:
/s/ Xxxx
Xxxxxx
Name:
Director
_________________________
Print
Name of Manager
Signature:
/s/ Xxxxx
Xxxxxx
Name:
Xxxxx Xxxxxx
Title:
I
agree
to be bound by the terms of the above Agreement.
____________________
Xxxxx
Xxxxx
0
Exhibit
A
Confidentiality,
Non-Compete; Poaching; Development Rights Agreement
This
agreement forms part of the Management 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 Manager’s and COO’s agreement with the
Company, COO and Manager 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 Manager or COO 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 Manager
or COO or similar agreements by other Company employees or service providers
(c)
shall have been received by the Manager or COO 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 Manager or COO.
(ii) Subject
to the provisions of Section (iii) below, the Manager and COO agree to hold
in
trust and confidence all Information disclosed to the Manager or COO 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
Manager’s and COO’s work with the Company, unless otherwise consented to in
writing by the Company.
(iii) The
Manager and COO agree to disclose the Information only to persons necessary
in
connection with Manager’s and COO’s work with the Company or who have undertaken
the same confidentiality obligations set forth herein in favor of the Company.
The Manager and COO agree to assume full responsibility for the confidentiality
of the Information disclosed to Manager or COO 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
Manager and COO acknowledge and agree 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.
(v) The
Manager and COO acknowledge 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 Manager and COO 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.
6
b. Non-Compete;
Poaching;
Development Rights
(i) Unless
otherwise expressly consented to in writing by the Company, during the term
of
the Manager’s or COO's work for the Company, and for a period of twelve (12)
months following the date on which Manager’s or COO's termination of work with
the Company becomes effective, Manager or COO will not, directly or indirectly,
for his own account or as an employee, officer, director, joint venture,
shareholder, investor, or otherwise (except as an investor in a corporation
whose stock is publicly traded and in which the Manager or COO 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 Employees.
During
the term of the Manager’s and COO's work for the Company, and for a period of
twelve (12) months following the date on which Manager’s or COO's termination of
work with the Company becomes effective, the Manager or COO 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 Manager’s or COO's knowledge was employed or retained 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) Manger’s
and COO'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 Manager
or
COO last represented him/herself as an employee, agent or representative of
the
Company or any of its affiliates, subsidiaries or successors.
(iv) Manager
and COO 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 Manager’s and COO'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.
[remainder
of page left blank]
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(v) Development
Rights.
The
Manager and COO 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 Manager’s or COO's
efforts during his work with the Company shall be the sole property of the
Company. Manager and COO 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
Manager or COO. Manager and COO 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 Manager’s and COO's obligation hereunder
Agreed
to
by the Parties as of the 1st day of July 2007.
IDO
Security Ltd.
By:
/s/
Xxxx Xxxxxx
Name:
_____________________
/s/
Xxxxx
Xxxxxx
Xxxxx
Xxxxxx
0
