Exhibit 10.2
CONSULTING AGREEMENT
This Consulting Agreement (the “Agreement”) is made effective as of January 28,
2010, by and between TopSpin Medical (Israel) Ltd. (the “Company”) of 65
Rothchild, Tel-Aviv Israel, TopSpin Medical, Inc. (the “Parent”) and Nichsey
F.N. Fatal Ltd. (the “Consultant”).
WHEREAS, Mr. Fufi Fatal, Israeli ID number 56549371, the controlling shareholder
of the Consultant (“Fufi”), is a director of the Company, the Chairman of the
board of the Company as well as a director of the Parent and Chairman of the
Parent’s board of directors; and
WHEREAS, the Company wishes the Consultant, solely through Fufi, to perform
certain Services (as defined below) and the Consultant is willing to provide
such Services through Fufi, all subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, the parties hereby agree as follows:

  1  
Consultancy.

  1.1  
Consulting Period. The Consultant shall serve as a consultant to the Company and
the Parent (collectively, together with the Parent and with any other subsidiary
of the Company or the Parent, the “Group”) in respect of the Services for a
period commencing on the date of this Agreement and continuing until termination
of this Agreement in accordance with Section 8 below (the “Consulting Period”).
    1.2  
Experience. The Consultant represents that it (including Fufi) has the
capability, know-how, expertise and experience necessary to perform the
Services. The Consultant, through Fufi, will devote sufficient time and efforts
to performing the Services under this Agreement, as may be required to
accomplish the duties described below.
    1.3  
No Conflicts. The Consultant represents that the performance of the Services or
any other duties and obligations of the Consultant hereunder do not and will not
conflict with, or breach, any prior agreement, contract, patent disclosure
agreement, non-competition agreement, any restrictive covenant relating to the
involvement whatsoever of each of the Consultant and Fufi with the Group or any
other instrument to which the Consultant or Fufi are a party or by which they
are bound. Consultant shall immediately and without delay inform the Group’s
Boards of Directors (the “Boards”) of any affairs and/or matters that might
constitute a conflict of interest with the provision of Services. Consultant
will inform the Group of any other potential conflict of interests with its
business at the relevant time.
    1.4  
Reliance. Consultant understands that the Group is relying on the
representations made by Consultant in this Section 1 in making its decision to
enter into this Agreement.

  2  
Services. The Consultant agrees and undertakes to provide the Services
exclusively through Fufi. During the Consulting Period, Consultant, solely
through Fufi, shall provide consulting services, as may reasonably be requested
by the Boards (the “Services”). The Consultant shall provide at least 80 hours
of Services per month. The Consultant undertakes to perform its duties and
obligations under this Agreement with the highest degree of professionalism. The
Consultant shall devote its know-how, expertise, talent, experience and best
efforts to the performance of the Services, and shall act to promote the Group’s
business and affairs, and performs and discharges the Services faithfully, with
devotion, honesty and fidelity. The parties agree that during the consulting
period the Consultant and Fufi shall be entitled to engage in any business or
professional activity whatsoever subject to limitation of any applicable law.
The Consultant shall report to, and provide its services under the direction of,
the Company’s Board.

 

 

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  3  
Legal Relationship; Independent Contractor. The parties hereto acknowledge that
the legal relation between the Group and Consultant’s employees, including Fufi
(the “Employees”), is limited in the manner expressly provided herein.
Notwithstanding anything contained herein to the contrary, the parties hereto
acknowledge and agree that neither shall be deemed to be an employee, partner or
a joint venturer of the other. Without limiting the foregoing, the Consultant
shall be solely responsible for all its federal, state and local income taxes,
unemployment insurance tax, social security tax and cell-phone related taxes.
Both parties agree to the following:

  3.1  
The Consultant (including its Employees) is an independent contractor, not an
employee of the Company or any other member of the Group. The Group shall not be
responsible for the Consultant or its Employees’ acts while performing the
Services hereunder, whether on the Group’s premises or elsewhere. By signing
this Agreement, the Consultant acknowledges and agrees that as a Consultant to
the Group neither the Consultant nor it’s Employees’ are entitled to receive
from the Group or any other member of the Group any social benefits (including
without limitation, paid vacation days, paid sick leave, severance payments,
pension funds, etc.).
    3.2  
Whereas the Consultant prefers to be engaged by the Group as a consultant
instead of as its employee, prefers that no employer-employee relations be
established between himself and the Group and prefers to provide the Services,
at his own initiative and free will and based on the Fufi’s and Consultant’s
sole considerations.
    3.2  
Each of the Group and the Consultant (including any of its Employees) is stopped
from making any claim regarding the existence of employer-employee relations
between the Consultant’s Employees and the Company or any other member of the
Group.
    3.3  
If, despite the parties’ express representations and agreements hereunder, it
shall, at any time, be determined by a court of competent jurisdiction or by any
other governmental authority, that employer-employee relations exist between the
any member of the Group and the Consultant’s Employees and, the Consultant’s
Employees shall become entitled to any rights and/or payments resulting from the
existence of such relations, and/or any member of the Group shall be required to
bear any additional expenses or costs (specifically including any taxes or
obligatory payments to the tax authorities, the National Insurance authorities,
etc.), the parties agree and undertake that the aggregated “salary” to which the
Consultant’s Employees are entitled for their services as an such deemed
employee of the Group hereunder shall be equal to 60% of the monthly Fees
(excluding VAT) which the Consultant actually received during the relevant
period together with any applicable Tosefet Yoker increase, to the extent that
such increase has been applied to all salaried employees of the Company
(together, the “Compensation”), and the Consultant undertakes in such event to
immediately repay and return to the Group any amounts in excess of said
Compensation received by its employee from the Group. The Consultant further
undertakes to indemnify the Group for any loss, payment, expense or damage
caused to the any member of the Group as a result of such determination.

 

 

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  3.4  
Consultant undertakes to maintain a proper set of accounting books as required
by applicable law and to open and/or maintain a file with the applicable tax and
other governmental authorities. Consultant is exclusively responsible for filing
any reports with said tax and other governmental authorities, which required to
be filed in connection with and arising out of the Services rendered thereby
under this Agreement. If the Group receives a claim from any government agency
and/or insurance company to make payment on account of the contributions that
Consultant failed to pay, the Group shall have the right to deduct any amount it
actually paid from any amount due to Consultant under this Agreement, and to the
extent that any such claims are made following termination of this Agreement,
Consultant hereby undertakes to fully indemnify the Group for any such amounts
upon its first request.

  4  
Compensation. In consideration for the Services, the Consultant shall be
entitled to a monthly fee of NIS 34,105, plus VAT, against an invoice furnished
by it to the Company (the “Monthly Consideration”). The Consultant shall be
entitled to receive the Monthly Consideration starting March 1, 2010 (the
“Effective Date”). For avoidance of all doubt, the consultant shall not be
entitled to receive any consideration for the Services performed prior to the
Effective Date.
    5  
The Company shall enter into indemnity and release agreement with the
Consultant, substantially in a form attached hereto as Exhibit A.
    6  
Additional Benefits

  6.1  
The Company shall reimburse the Consultant for up to 50% of all fixed and
variable maintenance costs of the cellular phone used by the Consultant.
    6.2  
Subject to receipt of all necessary corporate and regulatory approvals, the
Parent approved to grant to the Consultant options to purchase shares of Common
Stock as follows:

  6.2.1  
The Consultant will be granted options in an amount which shall equal to, at the
time of grant, 10% of the Parents’ issued and outstanding share capital, on a
Fully Diluted basis, before the grant of options to the Consultant (pre-issuing)
(the “Options”). For avoidance of doubt, Fully Diluted shall mean: all issued
shares, outstanding warrants, shares reserved for allocation to employees
pursuant to the Company’s 2003 employee option plan (the “ESOP”) (both allocated
and unallocated), shares issued to a new investor and warrants granted to a new
investor. Fully Diluted shall not include any shares which the Parent will
reserve for ESOP after the date of this Agreement.

 

 

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    6.2.2  
The Options will vest over a period of two years as follows: 50% of the options
will vest on December 17, 2010, and another 50% will vest on December 17, 2011.
The vested Options will expire at the end of seven years following the date of
grant or an M&A Event (defined below), whichever is earlier (the “Option Term”).
It is clarified that in the event of M&A Event, as defined below, 100% of the
unvested options shall be accelerated. The price of exercise per share of stock
will be US $0.001 (the par value of the share) (the “Exercise Price”). For
avoidance of doubt, unvested Options will be cancelled and will cease to vest
only upon termination of this Agreement by the Consultant or termination of this
Agreement by the Group pursuant to Section 8.2 below.
    6.2.3  
An M&A Event shall mean (i) a merger, acquisition or reorganization of the
Company with one or more other entities in which the Company is not the
surviving entity, or (ii) a sale of all or substantially all of the assets or
shares of the Company.
    6.2.4  
The grant of Options is also subject to: (i) the earlier of: an execution of an
investment in the Parent by a third party or a rights offering, and (ii) the
increase of the registered share capital of the Parent, if and as far as
achieved.
    6.2.5  
The Consultant acknowledges that the Options will not be granted under the ESOP,
and that the Consultant shall bear all tax consequences relating to or evolving
out of the grant and/or exercise of the Options.
    6.2.6  
The Consultant and Fufi each separately acknowledge that they: (i) do not hold
any securities of the Parent; (ii) are aware that in accordance with the
provisions of the Israeli Securities Law — 1968, the Securities Law Regulations
(Details with regard to Sections 15A to 15C of the Law), 2000, and applicable
laws of the United States, certain limitations apply with respect to the resale
and transfer of the Options and the shares purchased if exercising the Option
(the “Option Shares”); (iii) are not an “Interested Party” (as defined in
Section 270(5) of the Israeli Companies Law-1999); (iv) are not party to any
agreements, whether in writing or oral, concerning the purchase or sale of the
Parent’s securities or concerning the voting of the Parent’s securities, with
any shareholder of the Parent or with any third party; (v) do not presently have
any contract, undertaking, agreement or arrangement with any person or entity to
sell or transfer to such person or entity or to any third person, with respect
to any of the Options; (vi) are not a “U.S. Person,” as such term is defined
pursuant to the provisions of Regulation S promulgated by the Securities and
Exchange Commission under the 33 Act.

 

 

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  6.2.7  
The Option shall be exercisable, in whole or in part, by providing written
notice to the Parent, stating the amount of Option Shares being exercised (the
“Exercise Notice”).
    6.2.8  
Once an Exercise Notice has been sent, it shall be irrevocable and not subject
to change. The Consultant hereby agrees to sign any and all documents required
under any applicable law in order for the Parent to issue the Option Shares upon
the exercise of any of the Option.
    6.2.9  
The Exercise Price shall be paid in full to the Parent together with the
delivery of the Exercise Notice for the exercise of such Option Shares.
    6.2.10  
The Option will not be registered for trade on the TASE and is non-transferable.
    6.2.11  
The Options and Option Shares will not be, registered under the Securities Act
and the rules and regulations promulgated thereunder (the “33 Act”), by reason
of a specific exemption from the registration provisions of the 33 Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of the Consultant’s representations as expressed herein. The
Consultant understands that the Securities are “restricted securities” under
applicable U.S. federal and state securities laws and that, pursuant to these
laws, the Consultant must hold the Securities indefinitely unless they are
registered with the U.S. Securities and Exchange Commission and qualified by
state authorities, or an exemption from such registration and qualification
requirements is available and such Securities are permitted to be transferred
under this Agreement. The Consultant acknowledges that the Company nor the
Parent have no obligation to register or qualify the Securities. The Consultant
further acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the securities,
and on requirements relating to the Parent which are outside of the Consultant’s
control, and which the Company and/or the Parent are under no obligation and may
not be able to satisfy.
    6.2.12  
The Option Shares shall be subject to the following limitations:
       
Although the Option Shares will be approved by the TASE for registration, it
will not be permitted, except as specifically permitted herein upon any such
sale or transfer being permitted under the applicable laws of the United States,
including under the applicable provisions of the 33 Act (as defined below)
listed below that limit the transfer of securities, to transfer the Option
Shares to The Nominee Company of Bank Hapoalim Ltd. (the “Registration
Company”). Therefore the Consultant hereby declares and confirms its agreement
that it shall not be able to sell or otherwise transfer any of the Option Shares
on the TASE following their issuance and shall only be able to do so upon
fulfillment of the conditions set forth herein. The Consultant hereby agrees
that he shall have no claim against the Company, the Parent, the TASE or anyone
acting on their behalf, in connection with the Consultant’s inability to sell or
otherwise transfer the Option Shares through the TASE. In the event the sale or
transfer of the Purchased Shares or the Option Shares through the TASE is
permitted under the applicable laws of the United States, then the Consultant
shall execute any and all documentation and any and all information that the
Company or the Parent may request evidencing that such sale or transfer is
permissible, including without limitation, providing opinions of counsel
(qualified either in Israeli and/or United States) and written representations
as may be required by the Company, the Parent, the TASE or any other
governmental authority. Following receipt of all documentation and information
the Parent requires in connection therewith, the Parent shall take action in
order to remove the legend from the stock certificates of the shares for which
it is permissible under all applicable laws of the United States in a manner
that will permit the transfer and registration of the shares in the name of the
Registration Company and the sale of such shares through the TASE and Consultant
shall bear and all costs that the Company and/or the Parent may incur in
connection with such transfer.

 

 

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  6.2.13  
The Option Shares may bear one or all of the following legends:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

    6.2.14  
The Option Shares and Exercise Price are subject to the following adjustment
provisions:

6.2.14.1 If the Parent distributes bonus shares where the record date is prior
to the conclusion of the Option Term, then in addition to the Option Shares that
the Consultant is entitled to receive upon exercise of the Option in full and
payment of the aggregate Exercise Price therefore, shares in such number and
class that the Consultant would have been entitled to receive as bonus shares if
it had exercised the Option immediately prior to the record date for such
distribution.
6.2.14.2 The Exercise Price shall not change as a result of the addition of
shares described above. The provisions concerning Option Shares shall apply to
the shares that were added as aforesaid, mutatis mutandis. In the event of any
adjustment made pursuant to this Section, the Consultant shall not be entitled
to receive fractional shares.
6.2.14.3 If the Parent’s stockholders are offered to purchase, by way of a
rights offering, any securities, then the number of Option Shares shall be
adjusted to take into account the component of the benefit in the rights
offering as is expressed in the ratio of the price of the Parent’s share on the
TASE on the record date for such rights to the basis rate “ex-rights”. In the
event of any adjustment made pursuant to this Section, the Consultant shall not
be entitled to receive fractional shares.
6.2.14.4 The number of Option Shares shall only be adjusted in the event of a
bonus share distribution and rights offering as set forth above, but not in the
event of any other offering (including offerings made to interested parties).
6.2.14.5 The Exercise Price shall not be adjusted in such case that the Parent
distributes a dividend to its stockholders.
6.2.14.6 If the Parent shall combine or subdivide its shares, the number of
Options Shares shall be increased or decreased, as applicable, following such
combination or subdivision. In such event, the aggregate Exercise Price shall
remain unchanged.

 

 

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  7  
Confidentiality and Assignment.

  7.1  
Consultant and each of its Employees providing the Services shall execute the
Proprietary Information and Confidentiality Agreement, in the form attached
hereto as Exhibit B.
    7.2  
Consultant acknowledges that the Parent is a publicly traded company and as such
Consultant and each of its Employees providing the Services shall abide by all
applicable laws in connection therewith, including relating to insider trading
and the like.

  8  
Term and Termination.

  8.1  
Either party may terminate this Agreement at any time, and for any reason or for
no reason, upon at least 45 days prior written notice to the other party.
    8.2  
This Agreement may be terminated immediately by the Group in the event of:

  8.2.1  
Breach by the Consultant of any material provision of this Agreement which is
not curable or is not cured by the Consultant within 14 days after its receipt
of notice thereof from the Group containing a description of the breach or
breaches alleged to have occurred (it being understood that the provisions of
Exhibit B of this Agreement are deemed to be material provisions);
    8.2.2  
Persistent neglect by the Consultant or material failure by the Consultant to
adequately perform the Services;
    8.2.3  
Any act of moral turpitude by the Consultant or action by the Consultant to
intentionally harm the Group;
    8.2.4  
The Consultant becoming bankrupt; the filing by or against the Consultant of a
petition in bankruptcy, or a composition with creditors or any similar action in
consequence of debt.

  8.3  
This Agreement may be terminated immediately by the Consultant in the event of:

  8.3.1  
If the Group ceases doing business as a going concern, makes an assignment for
the benefit of creditors, files a voluntary petition in bankruptcy, is
adjudicated bankrupt or insolvent, files a petition seeking for itself any
reorganization, liquidation, dissolution or similar arrangement under any
statute, law or regulation, or files an answer admitting the material
allegations of a petition filed against it in any such proceeding, consents to
or acquiesces in the appointment of a trustee, custodian, receiver or liquidator
of all or any substantial part of its assets or properties; or

  8.3.2  
If the Group fails to pay any sum when due to the Consultant or otherwise is in
material breach or default of this Agreement and fails to cure such breach or
default within fourteen (14) days in the case of non- payment or within thirty
(30) business days in the case of any other material default after receipt of
written notice from the non-defaulting party.

 

 

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  9  
Miscellaneous.

  9.1  
Notices. All notices or other communications hereunder shall be in writing and
shall be given in person, by registered mail, or by facsimile transmission
(provided that written confirmation of receipt is provided), at the above
address or at such address as a party may from time to time designate in writing
to the other parties. Notices shall be deemed to be received 4 days after being
sent or 24 hours after being faxed.
    9.2  
No Assignment. The performance of the Consultant’s obligations hereunder may not
be transferred or assigned by the Consultant. The Group may assign this
Agreement to any successor in interest with the written consent of the
Consultant.
    9.3  
Governing Law. This Agreement shall be exclusively governed by and construed in
accordance with the laws of the State of Israel without giving effect to the
principles of conflict of law thereof. Any action instituted by any of the
parties shall be brought in the appropriate court in the State of Israel, which
shall have exclusive jurisdiction over such actions, and each party hereto
submits itself to the personal jurisdiction of the courts in Israel.
    9.4  
Enforcement. If it is necessary for either party to enforce the terms of the
Agreement through legal action, the prevailing party in said legal action shall
be entitled to recover its reasonable attorneys’ fees and costs incurred in such
enforcement against and from the non prevailing party.
    9.5  
Preamble; Annexes/Titles. The preamble to this Agreement and the Exhibits
attached hereto form integral parts hereof. The titles in this Agreement are
intended for convenience purposes only and they do not have and shall not be
ascribed any weight in the interpretation hereof.
    9.6  
Entire Agreement; Amendment, etc. This Agreement and its Exhibits are the entire
agreement between the parties with respect to the subject matter hereof, and
supersede all prior understandings, agreements and discussions between them,
oral or written, with respect to such subject matter. This Agreement shall not
be modified or amended except by a written instrument, signed by the parties
hereto. All remedies specified herein or otherwise available shall be cumulative
and in addition to any and every other remedy provided hereunder or now or
hereafter available at law or in equity. No waiver or failure to act with
respect to any breach or default hereunder, whether or not the other party has
notice thereof, shall be deemed to be a waiver with respect to any subsequent
breach or default, whether of similar or different nature.
    9.7  
Severability. 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.
    9.8  
Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.

 

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

                      TOPSPIN MEDICAL (ISRAEL) LTD.       NICHSEY F.N. FATAL
LTD.    
 
                   
By:
  /s/ Zvi Linkovski       By:   /s/ Fufi Fatal    
 
                   
 
  Title: Director           Title: CEO    
 
                    TOPSPIN MEDICAL, INC.       TOPSPIN MEDICAL, INC.    
 
                   
By:
  /s/ Zvi Linkovski       By:   /s/ Eldad Yehiely    
 
                   
 
  Title: Director           Title: Manager of Finance    

The undersigned hereby agrees to be bound by the provisions of the Agreement.

     
/s/ Fufi Fatal
 
   
Date: January 28, 2010
   

 

 

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Exhibit A
to Consulting Agreement by and between TopSpin Medical (Israel) Ltd., Topspin
Medical, Inc. and the Consultant whose name is set forth herein
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT (the “Agreement”) is made as of
                    , 2010 by and between TopSpin Medical, Inc., a Delaware
corporation (the “Company”), and Fufi Fatal (“Indemnitee”).

     
WHEREAS,
  The Company desires to attract and retain qualified directors, officers,
employees and other agents (hereinafter collectively “Office Holders”, and
individually “Office Holder”), and to provide them with protection against
liability and expenses incurred while acting in that capacity;
 
   
WHEREAS,
  The Amended and Restated Certificate of Incorporation of the Company (the
“Certificate”) and the Amended and Restated Bylaws of the Company (the “Bylaws”)
contain provisions for indemnifying Office Holders of the Company, and the
Bylaws and Delaware law contemplate that separate contracts may be entered into
between the Company and its Office Holders with respect to their indemnification
by the Company, which contracts may provide greater protection than is afforded
by the Certificate and Bylaws;
 
   
WHEREAS,
  The Company understands that Indemnitee has reservations about serving or
continuing to serve the Company without adequate protection against personal
liability arising from such service, and that it is also of critical importance
to Indemnitee that adequate provision be made for advancing costs and expenses
of legal defense; and
 
   
WHEREAS,
  The Board of Directors of the Company has approved as being in the best
interests of the Company indemnity contracts substantially in the form of this
Agreement for directors and officers of the Company and its subsidiaries and for
certain other employees and agents of the Company designated by the Board of
Directors.

NOW, THEREFORE, in order to induce Indemnitee to serve or to continue to serve
as an Office Holder of the Company, and in consideration of Indemnitee’s service
to the Company, the parties agree as follows:

I.  
Contractual Indemnity. In addition to the indemnification provisions of the
Bylaws, the Company hereby agrees, subject to the limitations of Sections 2 and
5 hereof:

A. To indemnify, defend and hold Indemnitee harmless to the greatest extent
possible under applicable law from and against any and all judgments, fines,
penalties, amounts paid in settlement and any other amounts reasonably incurred
or suffered by Indemnitee (including attorneys’ fees) in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Company, to which Indemnitee is, was or at any time becomes a
party, or is threatened to be made a party, by reason of the fact that
Indemnitee is, was or at any time becomes an Office Holder of the Company or is
or was serving or at any time serves at the request of the Company as an Office
Holder of another corporation, partnership, joint venture, trust or other
enterprise (collectively referred to hereafter as a ”Claim”), whether or not
arising prior to the date of this Agreement.

 

 

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B. To pay any and all expenses reasonably incurred by Indemnitee in defending
any Claim or Claims (including reasonable attorneys’ fees and other reasonable
costs of investigation and defense), as the same are incurred and in advance of
the final disposition of any such Claim or Claims, upon receipt of an
undertaking by or on behalf of Indemnitee to reimburse such amounts if it shall
be ultimately determined that Indemnitee: (i) is not entitled to be indemnified
by the Company under this Agreement, and (ii) is not entitled to be indemnified
by the Company under the Certificate or the Bylaws.
The termination of any action or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that: (i) Indemnitee did not act in good faith and
in a manner which Indemnitee reasonably believed to be in the best interests of
the Company, or (ii) with respect to any criminal action or proceeding,
Indemnitee had reasonable cause to believe that Indemnitee’s conduct was
unlawful.

II.  
Limitations on Contractual Indemnity. Indemnitee shall not be entitled to
indemnification or advancement of expenses under Section 1:

A. if a court of competent jurisdiction, by final judgment or decree, shall
determine that (i) the Claim or Claims in respect of which indemnity is sought
arise from Indemnitee’s fraudulent, dishonest or willful misconduct, or
(ii) such indemnity is not permitted under applicable law; or
B. on account of any suit in which judgment is rendered for an accounting of
profits made from the purchase or sale by Indemnitee of securities of the
Company in violation of the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law; or
C. for any acts or omissions or transactions from which an Office Holder may not
be indemnified under the Delaware General Corporation Law; or
D. with respect to proceedings or claims initiated or brought voluntarily by
Indemnitee and not by way of defense, except (i) with respect to proceedings
brought in good faith to establish or enforce a right to indemnification under
this Agreement or any other statute or law, or (ii) at the Company’s discretion,
in specific cases if the Board of Directors of the Company has approved the
initiation or bringing of such suit; or
E. for expenses or liabilities of any type whatsoever (including, but not
limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid
in settlement) which have been paid directly to Indemnitee by an insurance
carrier under a policy of directors’ and officers’ liability insurance
maintained by the Company; or
F. on account of any suit brought against Indemnitee for misuse or
misappropriation of non-public information, or otherwise involving Indemnitee’s
status as an “insider” of the Company, in connection with any purchase or sale
by Indemnitee of securities of the Company.

 

 

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III.  
Continuation of Contractual Indemnity. Subject to the termination provisions of
Section 11, all agreements and obligations of the Company contained herein shall
continue for so long as Indemnitee shall be subject to any possible action,
suit, proceeding or other assertion of a Claim or Claims.
  IV.  
Expenses; Indemnification Procedure. The Company shall advance all expenses
incurred by Indemnitee in connection with the investigation, defense, settlement
or appeal of any civil or criminal action or proceeding referenced in Section 1
hereof (but not amounts actually paid in settlement of any such action or
proceeding). Indemnitee hereby undertakes to repay such amounts advanced if, and
to the extent that, it shall ultimately be determined that Indemnitee is not
entitled to be indemnified by the Company as authorized hereby. The advances to
be made hereunder shall be paid by the Company to Indemnitee within twenty
(20) days following delivery of a written request therefor by Indemnitee to the
Company.
  V.  
Notification and Defense of Claim. If any action, suit, proceeding or other
Claim is brought against Indemnitee in respect of which indemnity may be sought
under this Agreement:

A. Indemnitee will promptly notify the Company in writing of the commencement
thereof, and the Company and any other indemnifying party similarly notified
will be entitled to participate therein at its own expense or to assume the
defense thereof and to employ counsel reasonably satisfactory to Indemnitee.
Notice to the Company shall be directed to the Chief Executive Officer of the
Company at the address shown on the signature page of this Agreement (or such
other address as the Company shall designate in writing to Indemnitee). Notice
shall be deemed received three (3) business days after the date postmarked if
sent by domestic certified or registered mail, properly addressed; otherwise
notice shall be deemed received when such notice shall actually be received by
the Company. Indemnitee shall have the right to employ its own counsel in
connection with any such Claim and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of Indemnitee
unless (i) the Company shall not have assumed the defense of the Claim and
employed counsel for such defense, or (ii) the named parties to any such action
(including any impleaded parties) include both Indemnitee and the Company, and
Indemnitee shall have reasonably concluded that joint representation is
inappropriate under applicable standards of professional conduct due to a
material conflict of interest between Indemnitee and the Company, in either of
which events the reasonable fees and expenses of such counsel to the Indemnitee
shall be borne by the Company upon delivery to the Company of the undertaking
referred to in Section 1.2. However, in no event will the Company be obligated
to pay the fees or expenses of more than one firm of attorneys representing
Indemnitee and any other Office Holders of the Company in connection with any
one Claim or separate but substantially similar or related Claims in the same
jurisdiction arising out of the same general allegations or circumstances.
B. The Company shall not be liable to indemnify Indemnitee for any amounts paid
in settlement of any Claim effected without the Company’s written consent, and
the Company shall not settle any Claim in a manner which would impose any
penalty or limitation on Indemnitee without Indemnitee’s written consent;
provided, however, that neither the Company nor Indemnitee will unreasonably
withhold its consent to any proposed settlement and, provided further, that if a
Claim is settled by the Indemnitee with the Company’s written consent, or if
there be a final judgment or decree for the plaintiff in connection with the
Claim by a court of competent jurisdiction, the Company shall indemnify and hold
harmless Indemnitee from and against any and all losses, costs, expenses and
liabilities incurred by reason of such settlement or judgment.
C. Indemnitee shall give the Company such information and cooperation as it may
reasonably require and as shall be within Indemnitee’s power.

 

 

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D. Any indemnification provided for in Section 1 shall be made no later than
forty-five (45) days after receipt of the written request of Indemnitee. If a
Claim under this Agreement, under any statute, or under any provision of the
Certificate or Bylaws providing for indemnification, is not paid in full by the
Company within forty-five (45) days after a written request for payment thereof
has first been received by the Company, Indemnitee may, but need not, at any
time thereafter bring an action against the Company to recover the unpaid amount
of the claim and, subject to Section 13 of this Agreement, Indemnitee shall also
be entitled to be reimbursed for the expenses (including attorneys’ fees) of
bringing such action. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in connection with any
action or proceeding in advance of its final disposition) that Indemnitee has
not met the standards of conduct which make it permissible under applicable law
for the Company to indemnify Indemnitee for the amount claimed but the burden of
proving such defense shall be on the Company, and Indemnitee shall be entitled
to receive interim payments of expenses pursuant to Section 4 unless and until
such defense may be finally adjudicated by court order or judgment from which no
further right of appeal exists. It is the parties’ intention that if the Company
contests Indemnitee’s right to indemnification, the question of Indemnitee’s
right to indemnification shall be for the court to decide, and neither the
failure of the Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel, or its
stockholders) to have made a determination that indemnification of Indemnitee is
proper in the circumstances because Indemnitee has met the applicable standard
of conduct required by applicable law, nor an actual determination by the
Company (including its Board of Directors, any committee or subgroup of the
Board of Directors, independent legal counsel, or its stockholders) that
Indemnitee has not met such applicable standard of conduct, shall create a
presumption that Indemnitee has or has not met the applicable standard of
conduct.
E. If, at the time of the receipt of a notice of a Claim, the Company has
director and officer liability insurance in effect, the Company shall give
prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The Company
shall thereafter take all necessary or desirable action to cause such insurers
to pay, on behalf of the Indemnitee, all amounts payable as a result of such
proceeding in accordance with the terms of such policies.

VI.  
Scope. Notwithstanding any other provision of this Agreement, the Company hereby
agrees to indemnify the Indemnitee against any Claim to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Certificate, the
Bylaws or by statute. In the event of any change, after the date of this
Agreement, in any applicable law, statute or rule which expands the right of a
Delaware corporation to indemnify its Office Holders, such changes shall be,
ipso facto, within the purview of Indemnitee’s rights and Company’s obligations,
under this Agreement. In the event of any change in any applicable law, statute,
or rule which narrows the right of a Delaware corporation to indemnify its
Office Holders, such changes, to the extent not otherwise required by applicable
law to be applied to this Agreement, shall have no effect on this Agreement or
the parties’ rights and obligations hereunder.

VII.  
Partial Indemnification. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the
expenses, judgments, fines or penalties actually or reasonably incurred by him
in the investigation, defense, appeal or settlement of any civil or criminal
action or proceeding, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion of such
expenses, judgments, fines or penalties to which Indemnitee is entitled.
  VIII.  
Public Policy. Both the Company and Indemnitee acknowledge that in certain
instances, Federal law or applicable public policy may prohibit the Company from
indemnifying its Office Holders under this Agreement or otherwise. Indemnitee
understands and acknowledges that the Company has undertaken or may be required
in the future to undertake with the Securities and Exchange Commission to submit
the question of indemnification to a court in certain circumstances for a
determination of the Company’s right under public policy to indemnify
Indemnitee.

 

 

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IX.  
Insurance. Although the Company may from time to time maintain insurance for the
purpose of indemnifying Indemnitee and other Office Holders of the Company
against personal liability, including costs of legal defense, nothing in this
Agreement shall obligate the Company to do so.
  X.  
No Restrictions. The rights and remedies of Indemnitee under this Agreement
shall not be deemed to exclude or impair any other rights or remedies to which
Indemnitee may be entitled under the Certificate or Bylaws, or under any other
agreement, provision of law or otherwise, nor shall anything contained herein
restrict the right of the Company to indemnify Indemnitee in any proper case
even though not specifically provided for in this Agreement, nor shall anything
contained herein restrict Indemnitee’s right to contribution as may be available
under applicable law.
  XI.  
Termination. The Company may terminate this Agreement at any time upon 90 days
written notice, but any such termination will not affect Claims relating to
events occurring prior to the effective date of termination.
  XII.  
Severability. Each of the provisions of this Agreement is a separate and
distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or enforceability
of the other provisions hereof.
  XIII.  
Attorneys’ Fees. In the event of any litigation or other action or proceeding to
enforce or interpret this Agreement, the prevailing party as determined by the
court shall be entitled to an award of its reasonable attorneys’ fees and other
costs, in addition to such relief as may be awarded by a court or other
tribunal.
  XIV.  
Further Assurances. The parties will do, execute and deliver, or will cause to
be done, executed and delivered, all such further acts, documents and things as
may be reasonably required for the purpose of giving effect to this Agreement
and the transactions contemplated hereby.
  XV.  
Acknowledgment. The Company expressly acknowledges that it has entered into this
Agreement and assumed the obligations imposed on the Company hereunder in order
to induce Indemnitee to serve or to continue to serve as an Office Holder of the
Company, and acknowledges that Indemnitee is relying on this Agreement in
serving or continuing to serve in such capacity.
  XVI.  
Construction of Certain Phrases.

A. “Company”: For purposes of this Agreement, references to the “Company” shall
also include, in addition to the resulting corporation in any consolidation or
merger to which TopSpin Medical, Inc. is a party, any constituent corporation
(including any constituent of a constituent) absorbed in consolidation or merger
which, if its separate existence had continued, would have had power and
authority to indemnify its Office Holders, so that if Indemnitee is or was an
Office Holder of such constituent corporation, or is or was serving at the
request of such constituent corporation as an Office Holder of another
corporation, partnership, joint venture, trust or other enterprise, Indemnitee
shall stand in the same position under the provisions of this Agreement with
respect to the resulting or surviving corporation as Indemnitee would have with
respect to such constituent corporation if its separate existence had continued.

 

 

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B. Benefit Plans: References to “fines” contained in this Agreement shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to “serving at the request of the Company” shall
include any service as an Office Holder of the Company which imposes duties on,
or involves services by, such Office Holder with respect to an employee benefit
plan, its participants, or beneficiaries.

XVII.  
Notice. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed duly given (i) if delivered by
hand and receipted for by the party addressee, on the date of such receipt, or
(ii) if mailed by domestic certified or registered mail with postage prepaid, on
the third business day after the date postmarked. Addresses for notice to either
party are as shown on the signature page of this Agreement, or as subsequently
modified by written notice.
  XVIII.  
Governing Law; Binding Effect; Amendment.

A. This Agreement shall be interpreted and enforced in accordance with the laws
of the State of Delaware applicable to contracts entered into in Delaware and
any dispute arising from or in connection with this Agreement shall be submitted
to the sole and exclusive jurisdiction of the competent court in the State of
New York.
B. This Agreement shall be binding upon Indemnitee and the Company, their
successors and assigns, and shall inure to the benefit of Indemnitee, his heirs,
personal representatives and assigns and to the benefit of the Company, its
successors and assigns.
C. No amendment, modification, termination or cancellation of this Agreement
shall be effective unless in writing signed by both parties hereto.

 

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

                      “Company”    
 
                    TopSpin Medical, Inc.
a Delaware corporation    
 
               
 
  By:                          
 
      Name:        
 
               
 
      Title:        
 
               
 
                    “Indemnitee”    
 
                              (Signature of Indemnitee)
   
 
                              (Social Security Number)
   
 
               
 
  Address:        
 
               
 
               
 
               

 

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Exhibit B
to Consulting Agreement by and between TopSpin Medical (Israel) Ltd., Topspin
Medical, Inc. and the Consultant whose name is set forth herein

     
Name of Consultant:
   Nichsey F.N. Fatal Ltd.
Company No. of Consultant:
   512088808

  1  
General
       
Capitalized terms not defined herein shall have the meanings ascribed to them in
the Consulting Agreement to which this Exhibit is attached (together with this
Exhibit, the “Agreement”). For purposes of any undertaking of the Consultant
toward the Group shall include all subsidiaries and affiliates of the Group.
    2  
Confidentiality; Proprietary Information.

  2.1  
Consultant acknowledges and agrees that Consultant had and will have access to
confidential and proprietary information concerning the business and financial
activities of the Group, including information relating to the Group’s research
and development, banking, investments, investors, properties, employees,
marketing plans, customers, suppliers, trade secrets, test results, processes,
data, know-how, improvements, inventions, techniques and products (actual or
planned), and any confidential information received by the Group from third
parties. Such information, whether documentary, written, oral or computer
generated, shall be referred to as “Proprietary Information”.
    2.2  
Proprietary Information shall be deemed to include any and all proprietary
information relating to the Group’s business, financial condition or activities,
which is disclosed by or on behalf of the Group and irrespective of form but
excluding information that is or shall become part of the public knowledge
(including without limitation the industries or trades in which the Group
operates) except as a result of the breach of the Agreement or this Exhibit by
the Consultant. For the removal of doubt, general skills and experience gained
during the Consultant’s engagement by the Group shall not be considered
Proprietary Information hereunder.
    2.3  
Consultant recognizes that the Group received and will receive confidential or
proprietary information from third parties, subject to a duty on the Group’s
part to maintain the confidentiality of such information and to use it only for
certain limited purposes. In connection with such duties, such information shall
be deemed Proprietary Information hereunder, mutatis mutandis.
    2.4  
Consultant agrees that all Proprietary Information, and patents, trademarks,
copyrights and other intellectual property and ownership rights in connection
therewith and applications therefor shall be the sole property of the Group and
its assigns. At all times, both during Consultant’s engagement by the Group and
after Consultant’s termination, Consultant will keep in confidence and trust all
Proprietary Information, and the Consultant will not use or disclose any
Proprietary Information or anything relating to it without the written consent
of the Group, except as may be necessary in the ordinary course of performing
Consultant’s duties under the Agreement.
    2.5  
Upon termination of Consultant’s engagement with the Group, Consultant will
promptly deliver to the Group all documents and materials of any nature
pertaining to Consultant’s work with the Group, and will not take with
Consultant any documents or materials or copies thereof containing any
Proprietary Information.
    2.6  
Consultant’s undertakings set forth in this Section 2 shall remain in full force
and effect after termination of the Agreement or any renewal thereof.

 

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  3  
Enforcement.

The Company or the Parent may enforce the Agreement and any of its provisions by
injunction, specific performance or other equitable relief, without prejudice to
any other rights and remedies that the Company and/or the Parent may have for
the breach of the Agreement. The Agreement shall be enforced to the fullest
extent permissible under the laws of the State of Israel, without regard to its
conflict of law principles, and inure to the benefit of any successor to all or
substantially all of the Group’s business. If any portion of the Agreement shall
be adjudicated to be invalid or unenforceable, it shall be deemed to be amended
to delete such portion. The Consultant’s rights and obligations hereunder shall
be in addition to the Consultant’s obligations towards the Group pursuant to
applicable law or in equity. Consultant expressly consents to the exclusive
personal jurisdiction and venue of Tel Aviv labor courts for any lawsuit arising
from or relating to the Agreement.

                  TOPSPIN MEDICAL (ISRAEL) LTD.       NICHSEY F.N. FATAL LTD.
 
               
By:
  /s/ Zvi Linkovski       By:   /s/ Fufi Fatal
 
               
 
  Title: Director           Title: CEO
 
                TOPSPIN MEDICAL, INC.     TOPSPIN MEDICAL, INC.
 
               
By:
  /s/ Zvi Linkovski       By:   /s/ Eldad Yehiely
 
               
 
  Title: Director           Title: Manager of Finance

The undersigned hereby agrees to be bound by the provisions of the Agreement.

     
/s/ Fufi Fatal
 
    
Date: January 28, 2010