EXHIBIT 4.5
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT (the "AGREEMENT") entered into as of the 1st day of
January, 2004, by and among BOS BETTER ONLINE SOLUTIONS LTD., a company
incorporated under the laws of the State of Israel, maintaining its principal
place of business at Rabin House, Teradyon Industrial Park, Misgav (the
"COMPANY"), ADIV BARUCH, Israeli I.D. number 057671398, residing at 9 Avigdor
St. Tel-Aviv, Israel ("BARUCH"), and SIGNUM LTD., a company incorporated under
the laws of the State of Israel, and maintaining its principal place of business
at 22 Maskit Street, Herzliya, Israel (the "Contractor").
WHEREAS The Company desires to engage the Contractor to provide management
services as described below and the Contractor desires to provide such
services, according to the terms and conditions hereinafter set forth.
NOW, THEREFORE, it is hereby agreed as follows:
1. ENGAGEMENT
(a) The Company agrees to engage the Contractor and the Contractor agrees
to be engaged by the Company on the terms and conditions set out in
this Agreement.
(b) The Contractor shall provide management services exclusively through
Baruch, who shall serve in the capacity of President and Chief
Executive Officer of the Company. Baruch shall perform the duties,
undertake the responsibilities and exercise the authority customarily
performed, undertaken and exercised by persons situated in a similar
capacity, subject to the direction of the Board of Directors of the
Company. Baruch shall report regularly to the Board of Directors with
respect to his activities. Without limitations to the above, Baruch
shall also participate in the marketing activities of the Company's
Subsidiary, BOScom Ltd., as directed by the Company's Board of
Directors.
(c) During the term of this Agreement, Baruch shall not be engaged in
employment or perform management services for any third party, without
the prior written consent of the Company.
2. STOCK OPTION GRANT
(a) The Company hereby undertakes to grant to the Contractor, as soon as
practicable, an Option (the "OPTION") to purchase 216,282 Ordinary
Shares of the Company, NIS4.00 par value each ("ORDINARY SHARES")
equal to five percent (5%) of the Company's issued and outstanding
share capital, on a fully diluted and as converted basis, on November
23, 2003. The Contractor shall enter into the Company's standard Stock
Option Agreement and the grant of the Option hereunder shall be
subject to the terms and conditions set forth in the Company's 2003
Israeli Share Options Plan (the "PLAN"). The Options shall be granted
pursuant to Section 3(i) of the Income Tax Ordinance. The Contractor
shall be subject to the Company's Trading Windows policy.
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(b) The Option shall vest and become exercisable in 36 equal monthly
installments of 1/36 of the aggregate number of Ordinary Shares
subject to the Option (fractions shall be rounded up) at the end of
each month following the date of grant and shall be exercisable by the
Contractor at any time during a period of ten (10) years from the date
of adoption of the Plan, subject however to the provisions of the
Company's Stock Option Agreement and Plan. The exercise price of the
Option shall be $3 per Ordinary Share.
(c) The Company undertakes that all Ordinary Shares issued to the
Contractor upon exercise of the Option shall be duly authorized and
validly issued, fully paid and nonassessable, free and clear of liens,
claims, charges, encumbrances, and any third party rights, options to
purchase, proxies, voting agreements, calls or commitments of every
kind.
(d) Notwithstanding the foregoing, the Option shall immediately vest and
become exercisable with respect to the aggregate number of Ordinary
Shares subject to the Option upon (a) the occurrence of a merger,
reorganization, or sale of the Company or a sale all or substantially
all of the Company's shares or assets or (b) upon the termination by
the Company of this Agreement other than for Cause, provided however
that no such immediate vesting shall occur in the event of termination
due to failure of Baruch to reach the annual goals set by the
Company's Board of Directors.
(e) The Contractor will have PRO RATA preemptive rights (taking into
account all of the Ordinary Shares subject to the Option as if the
Option had vested and the Contractor had exercised such Option with
respect to all of the Ordinary Shares subject to such Option) with
regard to any future issuance of securities of the Company, made at a
price per Ordinary Share of no less than $3.00, on the same price and
other terms and conditions as such issuance, other than issuances of:
(i) Ordinary Shares or options to purchase Ordinary Shares issued to
employees, directors and/or consultants and approved by the Company's
Board of Directors; (ii) Ordinary shares issued as dividends, (iii)
securities issued pursuant to a stock split or other reclassification,
(iv) securities issued pursuant to a business or asset acquisition or
other similar transaction, (v) securities issued to a strategic
partner, as designated by the Company's Board of Directors. The
Contractor's right hereunder shall expire upon termination of this
Agreement for any reason whatsoever.
3. MANAGEMENT FEES
(a) MONTHLY MANAGEMENT FEE. In consideration for the services provided to
the Company hereunder, the Company agrees to pay the Contractor and
the Contractor agrees to accept a monthly gross management fee (the
"MANAGEMENT FEE") in an amount equal to NIS 79,698, plus Value Added
Tax, based on a NIS - US Dollar exchange rate of NIS4.4 to 1 US
Dollar. The Management Fee shall be adjusted at the beginning of every
calendar quarter in accordance with the NIS - US Dollar exchange rate
on the last day of the previous quarter.
(b) PAYMENT PROCEDURES. At the beginning of each calendar month, the
Contractor shall provide the Company with an itemized invoice
detailing the services rendered to the Company and the Management Fee
due the Contractor therefor. The Company shall pay the Management Fee
to the Contractor within 5 business days from its receipt of said
invoice. All payments required to be made by the Company to the
Contractor hereunder (other than as required by applicable tax laws)
will be made by wire transfer to the Contractor's bank account number
646665 at Bank Mizrachi of Israel, Branch 410, Israel.
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(c) In connection with the preparation by the Board of Directors of the
annual work plan and budget of the Company, the Board of Directors
shall annually establish an annual bonus to be paid to the Contractor
provided that the Contractor shall have satisfied or exceeded the
goals or milestones established by the Board of Directors for the
respective year.
(d) OUT OF POCKET EXPENSES. The Company shall pay or reimburse the
Contractor for all reasonable expenses incurred by the Contractor in
discharge of its responsibilities hereunder, whether in Israel or
outside Israel, including costs related to the lease, under the
Company's operative leasing plan, of an automobile (mutually agreed on
by the Company and Contractor) for Baruch's use and costs of a
dedicated telephone line and cellular telephone (including usage
charges) both telephones to be used exclusively by Baruch. The Company
shall obtain a Company credit card for the use of Baruch in discharge
of his responsibilities hereunder.
4. TERM AND TERMINATION OF AGREEMENT
(a) Contractor's engagement under this Agreement shall commence as of
January 1, 2004 and shall end on the earliest of: (i) the death or
Disability (as defined herein) of Baruch; (ii) the termination of the
Contractor's engagement as provided below.
The term "DISABILITY" shall mean: any physical or mental illness or
injury as a result of which Baruch remains absent from work for a
period of three (3) successive months. Disability shall be deemed to
have occurred upon the end of such three-months period.
(b) The Company may terminate this Agreement without Cause (as defined
below) at any time upon written notice of one hundred eighty (180)
days to the Contractor, and the Contractor may terminate this
Agreement at any time upon written notice of thirty (30) days (each
such period, the "NOTICE PERIOD") specifying the effective date of
termination (such date, and the date of termination pursuant to
sub-Section (d) below, the "TERMINATION DATE").
(c) During such Notice Period (except in the event of termination for
Cause) the Contractor shall be entitled to Management Fees pursuant to
Section 3.
(d) Notwithstanding the above, The Company may, at any time, terminate
this Agreement with Cause upon written notice to Contractor.
(e) The term "Cause" shall mean: (a) Contractor's or Baruch's material
breach of trust and/or fiduciary duties including but not limited to
prohibited disclosure to unauthorized persons or entities of
confidential or proprietary information of or relating to the Company,
(b) Contractor's or Baruch's material breach of the terms of this
Agreement; or (c) conviction of Baruch and/or a principal of the
Contractor for the commission of a felony.
(f) During the period following notice of termination by any party, Baruch
shall transfer his position to his replacement in an orderly and
complete manner and shall return to the Company all documents,
professional literature and equipment belonging to the Company, which
may be in his possession at such time.
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5. COMPETITIVE ACTIVITY
During the term of this Agreement and until 12 months thereafter,
Contractor and/or Baruch will not directly or indirectly:
(a) Carry on or hold an interest in any company, venture, entity or other
business (other than a minority interest in a publicly traded
company), which competes with the products or services of the Company
or its subsidiaries, including those products or services contemplated
in a plan adopted by the Board of Directors of the Company or its
subsidiaries (a "competing business");
(b) Act as a consultant, executive, officer, employee, agent, or in any
managerial or other capacity in a competing business or supply, in
competition with the Company or its subsidiaries, services
("restricted services") to any person who was provided with services
by the Company or its subsidiaries at any time during the twelve (12)
months immediately prior to the Termination Date;
(c) Solicit, canvass or approach or endeavor to solicit, canvass or
approach any person who, was provided with services by the Company or
its subsidiaries at any time during the twelve (12) months immediately
prior to the Termination Date, for the purpose of offering restricted
services or products which compete with the products supplied by the
Company or its subsidiaries at the Termination Date; or
(d) Employ, solicit or entice away or endeavor to solicit or entice away
from the Company or its subsidiaries any person employed by the
Company or its subsidiaries any time during the twelve (12) months
immediately prior to the Termination Date with a view to inducing that
person to leave such employment and to act for another employer in the
same or a similar capacity.
(e) If any one or more of the terms contained in this Section 5 shall, for
any reason, be held to be excessively broad with regard to time,
geographic scope or activity, such term shall be construed in a manner
to enable it to be enforced to the maximum extent compatible with
applicable law. The Contractor and Baruch acknowledge that the Company
has entered into this Agreement in reliance on the undertakings set
forth in this Section 5, and that given Baruch's access to information
regarding the Company and its position, the provisions of Section 5
are reasonable and necessary to protect Company's business and the
rights of the parties hereto. The Contractor and Baruch further
acknowledge that the terms herein and the Management Fee payable to
the Contractor by the Company include fair and reasonable
consideration for Contractor's and Baruch's non-competition
undertakings herein.
6. CONFIDENTIALITY
Contractor and Baruch acknowledge that this Agreement creates a
relationship of confidence and trust between the Contractor and/or Baruch
and the Company with respect to any information: (i) applicable to the
business of the Company; or (ii) applicable to the business of any
supplier, client or customer of the Company, which may become known or
learned by Baruch, the Contractor, its directors, officers, controlling
shareholders, and employees during the term of this Agreement.
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For the Purposes of this Agreement, "Confidential Information" shall mean
the following: (i) information that has been created, discovered,
developed, or otherwise become known to the Company (including without
limitation information created, discovered, developed, or made known by
Baruch and/ or the Contractor, its directors, officers, controlling
shareholders, and employees during the term of this Agreement, arising out
of the Contractor's engagement by the Company or disclosed by the Baruch
and/or the Contractor, its directors, officers, controlling shareholders,
and employees to the Company prior to the date hereof) or in which
proprietary rights have been assigned or otherwise conveyed to the Company,
including but not limited to trade secrets, processes, formulas, data,
know-how, improvements, inventions, techniques, business and marketing
plans, strategies, forecasts, and customer lists ("Proprietary
Information"); (ii) information that is disclosed in the furtherance of the
business of the Company including, without limitation, the area of activity
in which the Company is involved, the Company's technical, business and
financial information, documentation, records, files, memoranda, reports,
drawings, plans, price lists, customer lists, and the like; (iii)
information that contains financial projections and forecasts concerning
developments of the Company's future business; and (iv) any other
information of a confidential nature relating to the Company. For the
purpose of this Section 6 references to the Company shall include also the
Company's subsidiaries.
Baruch, the Contractor, its directors, officers, controlling shareholders,
and employees shall treat all Confidential Information as follows:
(a) Use all Confidential Information received solely in furtherance of the
business of the Company;
(b) Take strict precautions to maintain the confidentiality of all
Confidential Information received from the date of receipt, and take
appropriate action, by instruction, agreement or otherwise with any
person permitted access to any Confidential Information received, to
ensure that the Contractor will be able to satisfy its obligations
under this Agreement;
(c) Refrain from copying or disclosing any Confidential Information to any
unauthorised third party;
(d) Upon the written request of the Company, promptly destroy or return to
the Company any and all copies on any media containing Confidential
Information.
In the event of termination of this Agreement, the Contractor and/or Baruch
will deliver to the Company all documents and data of any nature pertaining
to its engagement with the Company, and the Contractor and/or Baruch will
not retain any documents or data of any description or any reproduction of
any description containing or pertaining to any Proprietary Information or
other Confidential Information.
7. OWNERSHIP OF INVENTIONS AND WORK PRODUCT
The Contractor and/or Baruch will promptly disclose to the Company, or any
persons designated by it, all improvements, inventions, formulae, ideas,
processes, techniques, know-how and data, whether or not patentable or
otherwise registerable, made or conceived or reduced to practice or learned
by Baruch, the Contractor, its directors, officers, controlling
shareholders, and employees, either alone or jointly with others, during
the term of this Agreement, prior thereto (to the extent that the same is
related to or useful in the business of the Company) or as a result of
tasks assigned by the Company or as a result of the use of premises and/or
equipment owned, leased, or contracted for by the Company (all such
improvements, inventions, formulas, processes, techniques, know-how, and
data are hereinafter referred to as "Inventions").
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The Contractor and/or Baruch agree that all Inventions are and shall be the
sole property of the Company and its assigns, and the Company and its
assigns shall be the sole owner of all patents and other rights in
connection with such Inventions. The Contractor and/or Baruch hereby assign
to the Company any rights the Contractor and/or Baruch may have or acquire
(if any) in such Inventions. The Contractor and/or Baruch further agree to
assist the Company in every reasonable and proper way (at the Company's
expense) to obtain and from time to time enforce patents on such Inventions
in any and all countries, including the execution of all documents required
in applying for and enforcing patents on such Inventions, as the Company
may desire, together with any assignments of such Inventions to the Company
or persons designated by it. Such assistance shall include, without
limitation, the execution and delivery of any requested affidavits and
documents of assignment and conveyance and the provision of testimony in
connection with any proceeding affecting the right, title or interest of
the Company in any Invention. The Contractor's and/or Baruch's obligation
to assist the Company in obtaining and enforcing patents for such
Inventions in any or all countries shall continue beyond the term of this
Agreement, but the Company shall compensate the Contractor at a reasonable
rate for time actually spent by Baruch, after termination and at the
Company's request, in rendering such assistance.
8. REPRESENTATIONS AND WARRANTIES
a. Baruch, the Contractor, its directors, officers, controlling
shareholders, and employees shall inform the Company, immediately upon
becoming aware of every matter in which such person or, if applicable,
a member of his immediate family has a personal interest which might,
in such person's reasonable opinion, create a conflict of interests
with the Contractor's duties under this Agreement.
b. Contractor represents and warrants that it is a corporation duly
organized and validly existing under the laws of the State of Israel.
Contractor has all requisite power and authority to execute, deliver
and perform this Agreement, and to consummate the transactions
contemplated hereby. This Agreement constitutes valid and legally
binding obligations of Contractor, enforceable against it in
accordance with its terms.
c. Each of Baruch and the Contractor represents and warrants that the
execution and delivery of this Agreement and the fulfilment of the
terms hereof will not constitute a default under or breach of any
agreement or other instrument to which it is a party or by which it is
bound, including without limitation, any confidentiality or non
competition agreement, and do not require the consent of any person or
entity.
9. NOTICES
For the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to
have been duly given when personally delivered or sent by registered mail,
postage prepaid, addressed to the respective addresses set forth below or
last given by each party to the other, except that notice of change of
address shall be effective only upon receipt.
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The initial addresses of the parties for purposes of this Agreement shall
be as follows:
The Company: Rabin House, Teradyon Industrial Park, Misgav
The Contractor: 22 Maskit Street Herzliya
10. INDEPENDENT CONTRACTOR
a. The Contractor will serve as an independent contractor to and not as
an agent or employee of the Company or any of its affiliates. The
Contractor will be solely responsible for any and all taxes and other
such assessments made or imposed by any governmental authority in
connection with the any payments made by the Company pursuant to this
Agreement. In the event that pursuant to any law or regulation, tax is
required to be withheld at source from any payment made to Contractor,
the Company shall withhold said tax at the rate set forth in the
certification issued by the appropriate taxing authority and provided
to Company by the Contractor, or in the absence of such certification,
at the Contractor or at the rate determined by said law or regulation.
b. Contractor undertakes to maintain a proper set of accounting books as
required by law, to open and/or maintain a file with the Israeli
Income Tax Authorities and with the Israel National Insurance
Institute and to pay all required taxes and make other compulsory
payments in accordance with the law.
c. It is agreed between the parties that in the event that, despite the
aforestated, as a result of demand and/or request of the Contractor,
Baruch, any of his representatives, his successors, or any person or
entity acting on Baruch's behalf or for Baruch's benefit, a duly
authorized legal body or other authorized forum, orders the Company to
grant Baruch the rights and privileges of a salaried employee for the
services rendered in accordance with this Agreement, the following
provisions shall apply:
(i) For the period as to which it is determined than an
employer-employee relationship existed between the Company and the
Baruch (the "Relevant Period") Baruch's total monthly salary shall be
that sum which is equal to 55% of the monthly Management Fees (not
including Value Added Tax) which the Contractor actually received
during the Relevant Period (the "Monthly Wage") together with any
applicable Tosefet Yoker increase, to the extent that such increase
has been applied to all salaried employees of the Company.
(ii) The Contractor shall immediately return to the Company all
amounts paid to it in excess of the Monthly Wage for the Relevant
Period, linked to the Consumer Price Index from the date of payment by
the Company up to the date of return by the Contractor. It is hereby
expressly agreed that any further payment by the Company to
Contactor/Baruch shall be contingent on the full repayment of the
aforementioned amounts.
(iii) The aforesaid shall also be deemed as a settlement and
admission of payment for purposes of Section 29 of the Severance Pay
Law- 1963.
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11. MISCELLANEOUS
a. No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing
and signed by the Contractor, Baruch and the Company. No waiver by any
party hereto at any time of any breach by any other party hereto of,
or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
b. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Israel.
c. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
d. This Agreement constitutes the entire agreement between the parties
hereto and supersedes all prior agreements, understandings and
arrangements, oral or written, between the parties hereto with respect
to the subject matter hereof, provided however that this Agreement is
subject to and contingent upon the approval by the Company's Audit
Committee, Board of Directors and Shareholders. In the event such
approval is not obtained, this Agreement shall be deemed null and
void.
e. This Agreement shall be binding upon and shall inure to the benefit of
the Company, its successors and assigns, and the Company shall require
such successor or assign to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession or assignment
had taken place. The term "SUCCESSORS AND ASSIGNS" as used herein
shall mean a corporation or other entity acquiring all or
substantially all the assets and business of the Company (including
this Agreement) whether by operation of law or otherwise.
f. Each of Contractor and/or Baruch undertakes not to assign any of its
rights and obligations hereunder without the prior written consent of
Company, and any attempt to assign without such consent shall be null
and void.
g. The provisions of Sections 5, 6, 7 and 10 of this Agreement shall
survive the rescission or termination, for any reason, of this
Agreement.
h. The section headings contained herein are for reference purposes only
and shall not in any way affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
BOS BETTER ONLINE SOLUTIONS LTD. SIGNUM LTD.
By: ____________ By: ____________
Title: _________ Title: _________
________________
ADIV BARUCH
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