EXHIBIT 10.23
AGREEMENT WITH AN INDEPENDENT CONTRACTOR
----------------------------------------
MADE AND EXECUTED IN TEL AVIV ON THE 5TH OF SEPTEMBER 2002
BETWEEN: ITURAN LOCATION AND CONTROL, LTD.
Of: ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Azor
(hereinafter: "THE COMPANY")
PARTY OF THE FIRST PART;
------------------------
AND MR. EYAL SHERATZKY
ID No. ▇▇▇▇▇▇▇▇▇
Of: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇
(hereinafter: "THE CONTRACTOR")
PARTY OF THE SECOND PART;
-------------------------
AND A. SHERATZKY HOLDINGS LTD.
Private Company No. ▇▇-▇▇▇▇▇▇▇
Of: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
(hereinafter: "THE EMPLOYER")
PARTY OF THE THIRD PART;
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WHEREAS: Until August 1, 2002, the Contractor was employed as an employee
of the Company in the position of its Deputy CEO, and beginning
on this date, subsequent to the express wish of the Contractor to
work as an independent contractor providing his services to the
Company through the Employer, the Company has granted his
request;
AND WHEREAS: The Contractor is an employee of the Employer;
AND WHEREAS: The Company and the Employer wish to establish the terms of the
contractual agreement between them, while taking into
consideration the fact that the Contractor was the party who
requested that the
relationship be founded on an independent contractor basis
through the Employer, compared with that of an employee;
THEREFORE, THE PARTIES DO HEREBY DECLARE, AGREE AND STIPULATE AS FOLLOWS:
1. PREAMBLE AND HEADINGS
1.1 The preamble to this agreement constitutes an integral part thereof.
1.2 The section headings are intended for the convenience of the reader
only, and should not be used for any interpretive purpose whatsoever.
2. SUPERVISION OF THE SERVICES, THEIR QUALITY AND NATURE
In the context of providing the services to be defined below, which the
Employer will provide through the Contractor, the Employer and the
Contractor will be subject to review regarding the quality and nature of
the services. The review will be carried out by the Company's management,
and/or its shareholders and/or a party whom the shareholders indicate,
including the Company's CEO. The Employer undertakes to draw conclusions
from the review and to correct whatever may require correction, as stated
in the review.
3. DEFINITION OF THE SERVICES
The Employer shall provide the Company with administrative services through
the Contractor, similar to those services that the Contractor had provided
the Company as an employee - Deputy CEO. The services will be provided
personally, solely by the Contractor. In the context of the services it
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provides to the Company through the Contractor, the Employer will see to,
inter alia, the following matters (above and hereinafter: "THE SERVICES"):
3.1 Maintaining ongoing and proper work relations with the Company's Board
of Directors, the Contractor's subordinates, and anyone else with whom
the Contractor may be required to be in contact in order to perform
his job.
3.2 Submitting ongoing activity reports to the Company's CEO and its Board
of Directors, as well as any other information that may be required of
him, and providing any assistance needed by the Chairman of the Board
of Directors in running the Board of Directors meetings.
3.3 Promoting a sense of team spirit and values of high quality service
among the Company's employees and his subordinates.
3.4 Quality management, including proposing efficiency initiatives and
measures to the Company's Board of Directors.
3.5 Carrying out any assignment given to him by the CEO and the Company's
Board of Directors.
3.6 Responsibility for the Company's ongoing activity.
4. The Contractor undertakes to immediately notify the CEO concerning any
significant matter within the Company pertaining to his areas of
responsibility, and to report any such matter to the CEO without delay.
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5. The Contractor undertakes to perform his job faithfully and with
dedication, and to use all of his skills, knowledge, experience and time
for Company's benefit and its advancement.
6. The Contractor undertakes to notify the Company's Board of Directors
immediately and without delay, regarding any matter or issue regarding
which he has a personal stake that creates and/or is liable to create a
conflict of interests with the Services and with the good of the Company.
7. As the Contractor is an independent contractor employed through the
Employer and since, even if the Contractor were to be considered a Company
employee for any reason whatsoever - the Contractor's job pursuant to this
agreement is considered to be one of those positions that requires a
special degree of personal trust, as defined in the Hours of Work and Rest
Law, 5711 - 1951; therefore, the provisions of such law shall not apply to
the Contractor nor will he be entitled to any additional consideration
whatsoever for his work, other than that which is expressly set out in this
agreement.
8.
8.1 The Employer undertakes to provide the Contractor's Services anywhere
they may be required, either in Israel or abroad, and without limiting
the hours and within reason.
8.2 If the Contractor is required to provide services abroad, the terms
regarding the performance of such service (expenses) shall be agreed
upon with him.
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9. Upon the termination of its Services to the Company through the Contractor,
for any reason whatsoever, the Employer and the Contractor undertake to
transfer their job in an orderly fashion to the person the Company shall so
instruct them, and to surrender to the Company all documents, information
and any other material he has received or prepared in connection with the
Services, until the end of the agreement.
10. THE CONSIDERATION FOR THE SERVICES
As final and absolute consideration for providing the Services to the
Company and for fulfilling all of the Employer's and the Contractor's
obligations pursuant to this agreement, the Employer and the Contractor
shall be entitled to the following:
10.1 The Company shall pay monthly consideration to the Employer in the
amount of 48,892 (forty-eight thousand, eight hundred and ninety two)
New Israeli Shekels, which constitutes the cost of employing the
Contractor as an employee of the Company, as of July 2002 (less the
cost of a car and its "grossing-up"), plus Value Added Tax
(hereinafter: "THE CONSIDERATION"), to be paid against the receipt of
a proper tax invoice and an exemption from tax withholding at the
source. In the absence of verification of such an exemption, the
Company may deduct from the Consideration any tax liability imposed on
the Employer, and which it is required by law to withhold at the
source. It is hereby clarified that the Consideration is final and
absolute consideration for the Services, and any tax liability that
applies to the Contractor in connection with the said Consideration
shall be paid by him.
The Employer alone (on behalf of the Contractor) shall bear the
payment of income tax, National Insurance payments, health
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insurance payments and any other payment to any tax authority
whatsoever regarding the Consideration.
10.2 The Contractor shall be entitled to a cellular telephone at the
Company's expense. The Contractor will return the telephone to the
Company immediately upon the conclusion of the provision of the
Services by the contractor.
10.3 The Contractor will be entitled to reimbursement for expenses,
including per diem expenses in Israel and abroad, upon presentation of
receipts and/or a report in accordance with the Company's accepted
procedures.
10.4 The Contractor will be entitled to a car at the Company's expense, of
the same standard that he received as a Company employee, and the
Company will gross up the value of the said car for the Contractor.
11. CONFIDENTIALITY AND NON-COMPETITION
11.1 The Contractor undertakes to keep absolutely confidential any
information that he receives during and upon the provision of the
Services to the Company pursuant to this agreement. "Information"
shall, in this section: include prices, costs, lists of suppliers,
customer lists, plans, quantities, profit and loss calculations,
market research, computer software, information systems and any other
Company information that is not in the public domain. The Contractor
also undertakes not to damage the Company's and/or the shareholders'
reputation in any manner whatsoever. The Contractor's undertaking
pursuant to this section shall remain in effect even after the
conclusion of this agreement.
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11.2 For a period of twelve months from the date on which the provision of
the Services to the Company shall be terminated, the Contractor will
not engage, neither within the territory of the State of Israel nor
within the territory of any country in which the Company is active, in
any business that does or that could directly compete with the Company
- either by himself and/or through any other agent whatsoever acting
on his behalf, either as a salaried employee or as an independent
worker, either directly or indirectly, unless the Company gives its
advance written consent thereto.
11.3 To remove all doubt, the parties hereby declare that all existing
and/or future developments, improvements in the Company's products and
any intellectual property that may result from the provision of the
Contractor's Services to the Company, including
registered/unregistered rights, whether developed by the Contractor
during work hours or outside of work hours, whether at the Company's
offices or outside of them - including in the Contractor's home -
whether in Israel or abroad, shall be the Company's exclusive property
and possession.
12. VALIDITY OF THE AGREEMENT
12.1 This agreement will enter into effect beginning on August 1, 2002.
12.2 Each of the parties may inform the other parties regarding termination
of the agreement, by way of written notification that shall be given
at least six months in advance (hereinafter: "THE ADVANCE NOTIFICATION
PERIOD"). During the Advance Notification Period, the provisions of
this agreement shall
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continue to bind the parties, but the Company has the right to notify
the Contractor that it does not wish to receive the Contractor's
services and that he should not come to the Company's offices. In such
a case, the Contractor shall be entitled to all of his rights pursuant
to this agreement. At the end of the Advance Notification Period, the
Contractor will return the Company's cellular phone, the car and any
Company equipment that may be in his possession.
12.3 Notwithstanding the provisions of section 12.2 above, the Company may
terminate the Contractor's employment immediately, without prior
notice and without any compensation, upon the occurrence of any one of
the following:
12.3.1 The Contractor's conviction for a dishonorable offense.
12.3.2 The Contractor's breach of his fiduciary duty to the Company.
12.3.3 The Contractor's breach of this Agreement through the
disclosure of the Company's secrets or by competing with the
Company.
12.3.4 The Contractor's breach of this Agreement through the
disclosure of the Company's secrets or competition with the
Company.
12.4 Without derogating from the generality of the above provisions of this
section, this Agreement will be automatically cancelled upon
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the dissolution of the Company - as soon as the dissolution shall take
effect.
13. THE CONTRACTOR - AN INDEPENDENT CONTRACTOR
13.1 The Contractor hereby declares and undertakes that his status
vis-a-vis the Company is that of an independent contractor, and that
there is no employee-employer relationship between him and the
Company.
13.2 The Contractor is aware that the Consideration paid to him as
described above is paid to the Employer by the Company on the basis of
his being an independent contractor and on the basis of there being no
employee-employer relationship with regard to this matter; if such a
relationship existed, it would significantly reduce the amount of the
Consideration the Company would be paying to the Contractor.
13.3 Based on the above, the parties agree that if, in the future, a
judicial body determines that notwithstanding the provisions of this
agreement, there is an employee-employer relationship between the
parties (or with one of the companies in the Ituran Group,
hereinafter: "ITURAN"), an alternative arrangement will apply between
the parties whereby 40% of the Consideration received by the
Contractor from the Company in accordance with this agreement will be
considered an indexed loan, at an annual interest rate of 5%, and
given to the Employer and the Contractor by the Company (hereinafter:
"THE LOAN"), and the remaining balance of 60% will be considered as
wages for labor, along with the additional conditions usually paid to
a Company employee.
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13.4 The Loan and its proceeds will be viewed as being immediately payable
the day on which the Company or Ituran is first requested to recognize
the existence of an employee-employer relationship between the
Contractor and the Company and/or Ituran. In such a case, the
Contractor will be required to repay to the Company, immediately upon
its first written request, the Loan and its proceeds less the sum of
all the payments owed to the Contractor as severance pay and
additional social benefits, according to a final court ruling.
13.5 Without derogating from the above, if for any reason whatsoever, the
tax and/or National Insurance Institute and/or health and/or any other
authorities demand the payment of any tax provisions whatsoever from
the Company resulting from the Company's contractual arrangement
pursuant to this agreement with the Employer and the Contractor, the
Employer and the Contractor undertake to indemnify the Company for any
such payment, immediately upon the Company's first written request.
13.6 Mr. Izzy Sheratzky will be a personal guarantor for the fulfillment of
the Contractor's and the Employer's obligations pursuant to this
section.
14. GENERAL
14.1 This agreement is an individual and special labor agreement between
the Company, and the Employer and the Contractor, and it fully
regulates all of the terms of the Contractor's employment by the
Company. The Employer and the Contractor undertake to keep the
contents of this agreement completely confidential.
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14.2 Any promise, obligation, undertaking, declaration, representation or
the like that were given or made on behalf of the Company and/or its
shareholders prior to the signing of this agreement - if any such were
made - are hereby null and void, unless and to the extent that they
are expressly included in this agreement.
14.3 If any provision whatsoever of this agreement is revoked by any court
whatsoever, or is declared to be invalid for any reason whatsoever,
the other provisions of this agreement shall remain in effect.
14.4 The parties' addresses are as specified in the preamble to this
agreement. Any notice sent by one party to another via registered mail
will be considered to have been received by the addressee at the end
of 72 hours from the time of its receipt by the post office for
delivery, and if it is hand delivered - at the time of actual
delivery. If any party changes its address, he shall notify the other
parties in writing.
14.5 The parties are signing this agreement after reviewing it carefully,
and they declare that they are aware of the substance of the
obligations they are taking upon themselves and according thereto, and
of their meanings.
AND IN WITNESS THEREOF THE PARTIES HAVE AFFIXED THEIR SIGNATURES:
(Signature) (Stamp and signature)
----------------------------- -----------------------------
THE CONTRACTOR THE COMPANY
(Stamp and signature)
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THE EMPLOYER
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I the undersigned Izzy Sheratzky, ID Number ▇▇▇▇▇▇▇▇▇, of ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Tel
Aviv, do hereby guarantee to the Company, through a personal guarantee, the
Employer's and the Contractor's undertakings as stated in Paragraph 13 above.
(Signature)
-----------------------------
Izzy Sheratzky
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ADDENDUM TO THE AGREEMENT WITH AN INDEPENDENT CONTRACTOR,
DATED SEPTEMBER 5, 2002
MADE AND EXECUTED IN TEL AVIV ON OCTOBER 28, 2002
BETWEEN: ITURAN LOCATION AND CONTROL, LTD.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Azor
(hereinafter: "THE COMPANY")
PARTY OF THE FIRST PART;
------------------------
AND MR. EYAL SHERATZKY
ID No. ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇
(hereinafter: "THE CONTRACTOR")
PARTY OF THE SECOND PART;
-------------------------
AND A. SHERATZKY HOLDINGS LTD.
Private Company No. ▇▇-▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
(hereinafter: "THE EMPLOYER")
PARTY OF THE THIRD PART;
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WHEREAS: On September 5, 2002, the parties signed an independent
contractor agreement (hereinafter: "THE AGREEMENT"), pursuant to
which, inter alia, the cost of the Contractor's employment will
remain as is without change, as it was prior to the signing of
the Agreement (hereinafter, "THE COST");
AND WHEREAS: The parties wish to add to the Agreement provisions protecting
the Company against cases in which it is required to make
additional payments to any party whatsoever and as a result of
which the Cost increases, through the receipt of
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indemnification from the Contractor as described below;
THEREFORE THE PARTIES HAVE AGREED AND STIPULATED AS FOLLOWS:
1. The preamble to this agreement constitutes an integral part thereof.
2. The provisions of the agreement shall remain in effect, unless and to the
extent they are expressly amended in this Addendum.
3. The Contractor undertakes vis a vis the Company that in any event wherein
the Company is required to pay to the tax authorities, or to other
authorities, any tax provisions or other payments whatsoever, as a result
of the payment of which the Cost increases, and if such additional payments
derive from the signing of the Agreement and from the Contractor's change
from the status of an employee to that of an independent contractor
(including pursuant to the manner in which the Consideration is paid), the
Contractor will indemnify the Company for the sums for which the Company is
liable (if it is liable) immediately upon its first written request.
4. Upon receiving the request for payment of the tax provisions as stated
above, the Company shall notify the Contractor immediately and will
transfer to him all of the material relevant to the request. The Contractor
will undertake, at his responsibility and at his expense, the proceedings
with the tax authorities, and the Company may not reach a compromise with
the tax authorities without the Contractor's advance written consent.
5. The Employer will be a guarantor of the Contractor's obligation pursuant to
this addendum.
6. The Contractor and the Employer hereby authorize the Company to offset any
amount with which it is charged by the tax authorities, and which the
Contractor has not had reduced or cancelled as stated in Paragraph 4 above,
from the
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Consideration owed to them pursuant to the agreement, to the extent that
the amount of the debt is not paid within 7 days from the date of the
request.
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AND IN WITNESS THEREOF THE PARTIES HAVE AFFIXED THEIR SIGNATURE:
(Signature) (Stamp and signature)
----------------------------- -----------------------------
THE CONTRACTOR THE COMPANY
(Stamp and signature)
-----------------------------
THE EMPLOYER
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ITURAN
CAR COMMUNICATION & LOCATION
ITURAN LOCATION AND CONTROL LTD.
--------------------------------
"THE COMPANY"
MINUTES
FROM A SPECIAL GENERAL MEETING THAT TOOK PLACE AT THE COMPANY'S OFFICES
ON 2.24.04 AT 3:30PM
IN ATTENDANCE: SHAREHOLDERS LISTED IN ATTACHMENT A OF THESE MINUTES.
ELECTED CHAIRMAN: ADV. ▇▇▇ ▇▇▇▇▇▇▇▇.
ON THE AGENDA:
1. Discussing and making a decision on adding an annual bonus to the terms of
employment of the company's co-CEOs as of 2004. The inspection committee and
the directorate indicated in their arguments that so far the two co-CEOs
have not received any monetary bonus in accordance with the company's
operations and that their terms of employment have not been changed over the
past four years. If was further indicated that awarding bonuses to CEOs as
percentage of the company's profits is customary among public companies in
general and among subsidiary companies of the group in particular, as part
of an encouragement plan for the co-CEOs and strengthening the connection
between the company's operations and the compensation that they are given.
In addition, it was indicated that the salary of the co-CEOs of the company
is significantly lower that the salary of the CEOs of the subsidiary
companies.
There is a quorum and the meeting started.
IT WAS DECIDED WITH A MAJORITY OF VOTES ACCORDING TO A QUORUM VOTING AS STATED
IN ATTACHMENT A OF THESE MINUTES:
After the approval of the inspection committee and the company's directorate, it
was decided to approve a change in the employment terms of the company's co-CEOs
so that each one of the co-CEOs (Eyal and Nir Sheratzky) would be entitled to a
1% (one percent) annual bonus from the company's profits before taxes plus the
company's share in the profits (or losses) of included companies, based on its
consolidated and inspected financial reports that are executed according to
customary accounting rules on 12/31 of each calendar year in which he is
employed (or any relative part of it, respectively) as of 2004.
IN FAVOR - 3,477,079 SHARES (75.69%); AGAINST - 1,097,594 SHARES (23.9%);
ABSTAIN - 19,193 SHARES (0.41%). TOTAL NUMBER OF PARTICIPANTS AND VOTES -
4,593,866 SHARES.
WITHOUT ANY ADDITIONAL SUBJECTS ON THE AGENDA, THE MEETING HAS ENDED.
[Signature]
Adv. ▇▇▇ ▇▇▇▇▇▇▇▇, Chairman
Minutes 1164
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇. Mailing address:
▇.▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Israel.
Telephone: ▇▇▇▇-▇-▇▇▇▇▇▇▇;
Fax: ▇▇▇▇-▇-▇▇▇▇▇▇▇
[Attachment A, which contains the shareholders in attendance in the meeting has
been omitted]