Document:

exhibit_10-19.htm

Exhibit 10.19

 

Secured Debenture

(Lien Over all Assets)

Issued on the ____ day of the month of ________ in the year _______

By: Check-Cap Ltd. Registration No.: 51-425981-1 Whose address is: Aba Hushi Ave, Ussifiya, PO Box 1271 (hereinafter, the "Company")

In favor of: Bank Leumi Le-Israel B.M. (hereinafter, the "Bank")

	
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And in favor of the Bank's subsidiary in Israel and abroad1

(If this option is checked, Bank Leumi Le-Israel B.M. and any subsidiary in Israel and abroad shall hereinafter jointly and severally be called, the "Bank")

NOW THIS DEED WITNESSES AS FOLLOWS:

 

	
1.

	
Secured Amounts

 

	 	
1.1.

	
This Debenture is issued to secure the full and accurate payment of all the amounts, whether in Israeli or foreign currency – principal, interest of any type whatsoever, including interest at the maximum rate (including linkage differentials, if any, resulting from the linkage of the principal and interest or any of them to any exchange rate or the Consumer Price Index or any other index), fees, bank charges and all manners of expenses due or to become due to the Bank from the Company from time to time, with respect to and/or in connection with the Secured Amounts, as defined below.

The term "Secured Amounts" shall mean:

 

	 	
a.

	
A foreign currency loan in the amount of one million US Dollars for a period until April 1, 2015 received and/or to be received by the Company, together with interest, maximum interest, linkage differentials (if any), exchange rate differentials (if any), fees, bank charges and all manner of expenses, all as set forth in the credit/loan documents executed and/or to be executed by the Company.

 

	 	
b.

	
Any debit balance in the Company's current monetary account that is created (or is increased) as a result of debiting such account for the amounts due or to become due to the Bank from the Company with respect to and in connection with the credit/loan set forth in subsection (a) above.

 

	 	
c.

	
Any debit balance in an arrears account used by the Bank at its discretion for the purpose of debiting such account for the amounts due or to become due to the Bank from the Company with respect to and in connection with the credit/loan set forth in subsection (a) above.

 

	 	
d.

	
Any credit/loan designed to discharge all or part of the amounts set forth in subsections (a)-(c) above.

 

Regardless of whether all or a portion of such amounts are due or become due to the Company, alone or together with others, directly or indirectly, in the present or future, in a specific manner or pursuant to a contingent liability, whether originating from banking or other matters, whether or not such amounts or a portion thereof were created under a court ruling, and whether their payment date occurs prior to or following the realization of the rights under this Debenture;

 

In addition, any other expense or amount which the Company is required or shall be required to pay under the terms of this Deed, including the interest as set forth in Section 1.2 below.

 

1 If this option is checked, all the provisions of this Debenture will apply, including with respect to the Bank's subsidiaries in Israel and abroad. See Section 24.5 below.

 

  

  

  

 

	 	
1.2.

	
The Company hereby undertakes to pay the Bank the Secured Amounts on their payment dates as determined and as shall be determined from time to time, including, without limitation, due to a demand for immediate payment and/or acceleration of payment under law and/or as agreed with the Company or – if no payment date has been determined – upon demand.

Any of the Secured Amounts set forth in Section 1.1 above that are not paid to the Bank, as aforementioned, shall bear interest at the maximum rate with respect to the period commencing as of the Company's original payment date and until the actual payment date.

	 	
1.3.

	
It is clarified and agreed that upon payment of all the amounts due and/or to become due to the Bank in connection with the credit line agreement dated January 4, 2015 between the Company and the Bank, including all the expenses, interest and other payments in connection with such amounts, in full, this Debenture and the liens created hereunder shall be cancelled in their entirety, and the Bank undertakes to perform any action and furnish any document reasonably required for the purpose of removing such lien, including from the Registrar of Companies' registers.

	
2.

	
No Early Repayment

 

The Company shall not be entitled to discharge the Secured Amounts prior to their agreed maturity date, unless it has such a right under law and such right may not be made conditional, or the Bank gives its prior written consent thereto.

 

The Bank may make any such early repayment contingent upon various conditions, including payment of an early repayment fee in the maximum amount which the Bank shall be entitled to charge by law, and other conditions upon which the Bank shall be entitled, by law, to condition the early repayment. It is hereby agreed that Section 13(b) of the Pledge Law, 5727-1967 and any section in lieu thereof shall not apply to the early repayment.

	
3.

	
Encumbered Property

 

As security for the full and accurate payment of the Secured Amounts, the Company hereby encumbers in favor the Bank:

 

	 	
3.1. 

	
A first ranking fixed charge over the Company's goodwill.

 

	 	
3.2.

	
A first-ranking floating charge over the activities, businesses and all assets and rights of any type or form whatsoever in the Company's possession at present and/or which it may have at any time whatsoever in the future, subject to the limitations and rights of the Office of the Chief Scientist ("OCS") pursuant to the grant approvals specified on Exhibit A, the Encouragement of Industrial Research and Development Law, 5744-1984 (the "R&D Law") and the regulations promulgated thereunder, and the OCS guidelines and procedures as shall be in effect from time to time (the "Limitations and Rights of the OCS") and the limitations and rights pursuant to the agreement between the Company, the Bird Foundation and Synergy Research Inc. and the BIRD Foundation guidelines and procedure , as shall be in effect from time to time (the "Limitations and Rights of the BIRD Foundation").

 

  

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Notwithstanding the aforementioned, the Bank hereby agrees to existing liens and the creation of future liens by the Company in favor of the First International Bank of Israel Ltd. securing debts/indentures of up to an aggregate amount of US$100,000 )hereinafter "the Charge in favour of the First International Bank of Israel Ltd".); For the sake of clarity, nothing contained herein shall derogate in any manner from the Company's right to create and/or issue any kind of securities free and clear of any liens, encumbrances and third party rights.

 

(All of the foregoing and any portion thereof shall hereinafter be called, the "Encumbered Property").

	
4.

	
Company's Representations With Respect to Encumbered Property

 

The Company represents that:

 

	 	
4.1.

	
The Encumbered Property is and shall at all times be the exclusive possession of the Company.

 

	 	
4.2.

	
The Encumbered Property is not pledged, encumbered, assigned or attached in favor of a third party and no restriction or condition apply, under any law or agreement, to the transfer of ownership therein, or to the pledge or encumbrance thereof, all with the exception of theLimitations and Rights of the OCS and the Limitations and Rights of the Bird Foundation and the Charge in favor of the First International Bank of Israel Ltd.

 

	 	
4.3.

	
The Company has not performed any other action which diminishes or is liable to diminish the value of the Encumbered Property.

	
5.

	
Company's General Representations

 

The Company hereby declares that:

 

	 	
5.1.

	
No event has occurred which, under the terms of this Debenture constitutes grounds for demanding the immediate repayment of the Secured Amounts, and it is not aware of any circumstances which may lead to the occurrence of such an event.

 

	 	
5.2.

	
The execution of this Debenture and the fulfillment of the undertakings contained herein does not contradict or conflict with the Company's incorporation documents, judgments, orders, directives or instructions of a court, quasi-legal body or any administrative authority, nor does it contradict or conflict with any agreement, undertaking or promise to which the Company is a party.

 

	 	
5.3.

	
The status of the Company's shareholdings, as of the date of this Debenture, is as detailed in the Registrar of Companies report of the Company's details, current as of the date of execution of this Debenture.

 

	 	
5.4.

	
The copies of the Company's incorporation documents which were furnished to the Bank by the Company are the full and updated documents.

  

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6.

	
Company's Undertakings With Respect to the Encumbered Property

 

The Company hereby undertakes:

 

	 	
6.1.

	
To maintain, at all times, the Encumbered Property in a good and functional state of repair and to repair any damage, defect or malfunction in or of any portion thereof as a result of the use thereof or for any other reason, and, without derogating from its foregoing obligation, to notify the Bank immediately of any such damage, defect or malfunction;

 

	 	
6.2.

	
To enable the Bank, at any time, to inspect the condition of the Encumbered Property in its then-current location and to receive any information in connection therewith;

 

	 	
6.3.

	
Not to sell, rent (unless the transaction is within the Company's ordinary course of business and for market value) and not to provide, transfer, assign, lease or grant all or part of a right in any current or future asset, claim or right of the Company without the Bank's prior written consent.

"Market Value" is as defined in the Income Tax Ordinance (New Version).

 

	 	
6.4.

	
Not to waive or relinquish, in full or in part, any current or future asset, claim or right of the Company without the Bank's prior written consent.

 

	 	
6.5.

	
Not to remove from its possession or permit others to hold, use or operate the Encumbered Property without the Bank's prior written consent.

 

	 	
6.6.

	
Not to pledge, encumber or grant a right of lien in the Encumbered Property or any portion thereof, in any manner whatsoever, in rights that take precedence over, are equal or inferior to the rights granted to the Bank pursuant to this Debenture (subject to the Charge in favor of the First International Bank of Israel Ltd.), without the Bank's prior written consent.

 

	 	
6.7.

	
To fulfill all the lawful requirements pertaining to the Encumbered Property, including timely payment to the relevant authorities of all taxes and levies whatsoever, mandatory loans and payments applying or to apply to the Encumbered Property from time to time, and to maintain and renew as necessary all the licenses, patents, trademarks and other necessary rights in connection with its business activities and/or permits under which business is conducted. The Company further undertakes to conduct its business in such manner so as not to jeopardize, suspend or revoke any licenses, patents, trademarks and other rights provided in this Section above, or to cause any fine to be levied or a disqualification in connection therewith.

 

	 	
6.8.

	
To provide the Bank, from time to time and at its request, with a valuation of the Encumbered Property, prepared by a company that specializes in preparing valuations for assets of the type of the Encumbered Property, whose identity shall be approved by the Bank. To the extent the Company fails to furnish to the Bank such a valuation within the time frame stipulated in the Bank's demand – or, if no date is determined, within a reasonable period of time – the Bank may (but is not obligated to) perform its own valuation of the Encumbered Property, at the Company's expense, and it may for such purpose enter, alone or by means of others on its behalf, any place in which the Encumbered Property is located and/or records are kept with respect thereto, receive information and documents from third parties who are in possession of and/or keeping such records, including the Company's debtors, and to perform any action so required in order to perform the valuation.

 

	 	
6.9.

	
To enable the Bank, at its demand, to perform a field audit of the Encumbered Property by means of an auditor on behalf of the Bank and at the Company's expense, and to such end to permit it and/or a party on its behalf access to any place in which the Encumbered Property is located and/or where records are kept thereof, receive information and documents from third parties in possession of and/or who maintain such records, including the Company's debtors, and to perform any action so required for the purpose of the field audit.

 

  

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6.10.

	
At all times to maintain insurance for the Encumbered Property for the full reinstatement value, covering the risks indicated by the Bank, from time to time with the insurance company or companies and in accordance with the terms agreed upon by the Bank. In addition, any time the Bank so determines and immediately upon its first demand, to purchase for the Encumbered Property any additional insurance or purchase insurance therefor from another insurance company or companies (the insurance company or companies to insure the Encumbered Property, as aforementioned, shall hereinafter be called, the "Insurance Companies").

 

	 	
6.11.

	
To comply with all the terms of the insurance, and in particular to pay the insurance premiums in a full and timely manner and to immediately furnish the policies to the Bank, and to furnish the Bank with receipts of the insurance premium payments within seven days of their payment date.

 

	 	
6.12.

	
To provide the Insurance Companies, immediately upon the issuance of this Debenture and upon purchasing any future insurance for the Encumbered Property or any portion thereof, a notice in the form that shall be satisfactory to the Bank, regarding the liens hereby created and the Bank's rights under this Debenture. Such notice shall include, inter alia, irrevocable instructions to the Insurance Companies to indicate the Bank as an irrevocable beneficiary under the insurance policy, to pay the Bank, directly, all the amounts due or to become due from them to the Company with respect to or in connection with the insurance for the Encumbered Property, and not to offset any amount from the insurance benefits payable to the Bank with respect to the Encumbered Property, with the exception of the outstanding insurance premium not yet paid for the current insurance year only. Such notice shall include a request for the insurance companies to furnish the Bank with a letter as set forth in Section 6.13 below.

 

	 	
6.13.

	
To provide the Bank, within seven days of the issuance of this Debenture and within seven days of purchasing any future insurance, as set forth above, a letter in the form that shall be satisfactory to the Bank, containing the Insurance Companies' confirmation to the bank of receiving the notice set forth in Section 6.12 above and their consent to adhere thereto, and their undertaking to notify the Bank, at least thirty days in advance, of the date of cancellation or expiration of any insurance.

 

	 	
6.14.

	
To sign, immediately upon the Bank's Demand, any document which, according to any law or in the Bank's opinion or under the terms of any insurance policy for the Encumbered Property or any portion thereof, are required or desirable for the fulfillment of all or a portion of the Company's undertakings under Sections 6.10, 6.11, 6.12 and 6.13 above, and not to modify any of the terms of any insurance with respect to all or a portion of the Encumbered Property without the Bank's prior written consent.

 

	 	
6.15.

	
To notify the Bank, immediately, of any seizure, recruitment, expropriation or confiscation of the Encumbered Property or any portion thereof.

 

	 	
6.16.

	
To furnish the Bank, immediately upon its first demand, with any license, approval, certificate, receipt or other document which the Bank believes will be required or desirable in proving the fulfillment of the Company's undertakings under this Section.

 

  

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7.

	
Authorization

 

	 	
7.1.

	
The Company hereby irrevocably authorizes the Bank to perform, in its name and place and at its expense, any of the actions enumerated in Sections 6.8, 6.10, 6.11, 6.12, 6.13 and 6.14 above, to the extent any of the aforementioned actions are not performed by the Company or are not performed to the Bank's satisfaction. However, the granting of such authorization shall not exempt the Company from fulfilling any of its undertakings under this Debenture and shall not obligate the Bank to exercise such authorization, in whole or in part.

 

	 	
7.2.

	
Insurances purchased for the Encumbered Property by the Bank pursuant to such authorization may be in the Bank's name or the Company's name, at the Bank's sole discretion.

 

	 	
7.3.

	
In addition to the Bank's authorization as set forth in Section 7.1 above, the Company hereby irrevocably authorizes the Bank to perform, in its name and place and at its expense, any of the following actions: file any claim against the Insurance Companies in connection with the insurance for the Encumbered Property, and to reach an arrangement with them in connection with the insurance claims, as the Bank shall deem fit, including arrangements by way of settlement or waiver of all or part of the Company's rights, execute an arbitration agreement and collect the insurance amounts; all whether the insurance is procured or shall be procured by the Company or in its name or by the Bank.

 

The Company agrees that it shall not be entitled to perform any of the actions enumerated in this Section without the Bank's prior written consent.

 

	 	
7.4.

	
The Company hereby releases the Bank, in advance, from any liability in the event the Bank fails to exercise any of its powers under the aforementioned authorization, in particular, without derogating from the generality of the foregoing exemption, in the event the Bank fails to arrange any insurance, as aforementioned, or it fails to arrange the insurance in a timely and correct manner; and in the event the Insurance Companies fail to pay for any damage or loss due to a defect in the insurance form or due to a low insurance amount or lack of any demand or for any other reason; and the Company hereby waives in advance any argument and response towards the Bank with respect to or in connection with any claim, negotiations or arrangements made by the Bank, as set forth above; whether the insurance is purchased or shall be purchased by the Company or in its name or by the Bank.

 

	 	
7.5.

	
The Company undertakes to return to the Bank, immediately upon its first demand, any amount paid by the Bank pursuant to the aforementioned authorization, without derogating from the rights of lien and setoff available to the Bank under any instrument executed and/or to be executed by the Company towards the Bank and/or under applicable law.

	
8.

	
General Undertakings of Company

 

	 	
8.1.

	
The Company undertakes to provide the Bank immediate notice of the following:

 

	 	
8.1.1.

	
The occurrence of any event entitling or which may entitle the Bank to demand the immediate repayment of the Secured Amounts, as set forth in this Debenture and/or to realize the lien that is the subject of this Debenture. Without derogating from the foregoing, to immediately notify the Bank of any legal proceeding instituted against it and which may affect the content of the Encumbered Property or the ability to realize the rights therein.

 

  

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8.1.2.

	
The imposition of an attachment, institution of enforcement proceedings or the filing of a motion to appoint a receiver for the Encumbered Property, and to provide immediate notification of the lien in favor of the Bank to the authority that imposed the attachment or instituted enforcement proceedings or was requested to appoint a receiver, as aforementioned, and to the third party who initiated or sought any of the foregoing or a portion thereof, and to implement the necessary immediate measures, at the Company's expense, to cancel the attachment, enforcement proceedings or the appointment of the receiver, as applicable.

 

	 	
8.1.3.

	
A decline in the value of the Encumbered Property in any manner whatsoever.

 

	 	
8.1.4.

	
A change in the Company's address.

 

	 	
8.2.

	
Undertakings Pertaining to Interested Parties

 

	 	
8.2.1.

	
It shall not provide interested parties and/or related individuals and/or entities any loans and/or assistance in receiving credit, nor shall it create guarantees in their favor without the Bank's prior written consent.

 

	 	
8.2.2.

	
It shall not return, pay or repay interested parties, in any manner whatsoever, any loan and/or funds which its shareholders loaned and/or shall loan the Company, and funds which the shareholders invested and/or shall invest in the Company, without the Bank's explicit prior written consent, other than payments pursuant to the Credit Line Agreement dated August 20, 2014 in accordance with its terms.

 

	 	
8.2.3.

	
To the extent funds are paid to the Company on account of its share capital, the Company shall provide the Bank with immediate notice thereof and shall transfer such funds to the Bank, and such funds shall be applied towards payment of the Secured Amounts.

 

	 	
8.2.4.

	
It shall notify interested parties in the Company of its undertakings towards the Bank pursuant to Sections 8.2.1 through 8.2.3.

 

	 	
8.3.

	
No Mergers

 

Prior a public offering of the Company's shares, the Company undertakes not to perform, undertake to perform or commence any proceedings for the performance of a merger with another/other company/companies without the Bank's prior written consent.

 

For such purpose, the Company undertakes to immediately furnish to the Bank any information and document which the Bank may require, at its discretion, with respect to the proposed merger, to enable it to determine its position regarding the merger.

 

"Merger" for purposes of this Deed shall mean a merger pursuant to Part Eight or Part Nine of the Companies Law, 5759-1999 and/or any action resulting in the acquisition of the majority of the company's assets by an individual or corporation, or pursuant to which the company acquires, directly or indirectly, the principal assets of another corporation or shares of another corporation which grant it control of such corporation. For purposes of this section, the term "Control" is as defined in the Securities Law, 5728-1968.

 

  

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8.4.

	
Prohibition Against Issuing Bearer Securities

 

The Company shall refrain from issuing bearer securities without the Bank's prior written consent.

 

	 	
8.5.

	
Accounting Books

 

The Company undertakes to keep full and correct accounting books by law, in a regular and ongoing manner, and the Bank may, irrevocably and at any time, inspect and examine such books. Without derogating from the foregoing, the Company undertakes to furnish to the Bank, at its first demand, any balance sheet, statement, accounting ledger, card index, magnetic platform, film, books, supporting documents, additional documents and any information and explanation pertaining to the Company, as well as any information pertaining to its financial and operating state of affairs, and its property and business affairs, as required by the Bank. The Bank may irrevocably contact the Company's accountants and receive from them the foregoing, provided that the Company receives prior notice thereof.

 

	 	
8.6.

	
Furnishing of Financial Statements

 

Without derogating from the generality of the provisions of subsection 8.5 above, the Company undertakes to furnish to the Bank the Company's annual financial statements no later than May 31 of each year, or as determined by applicable law, audited by an auditor and pertaining to December 31 of the preceding year, on both a consolidated and unconsolidated basis, and including, inter alia, a balance sheet, profit and loss statements, cash flow and any other report that is required by the competent authorities (hereinafter, "Financial Statements"). The Company affirms that it has been notified that the failure to submit reports in a timely manner will constitute, inter alia, a violation of the instructions of the Bank of Israel and it agrees, in such instance, to pay the Bank compensation in the amount determined by the Bank to be reflective of the cost increment it incurred as a result of such violation. Nothing in the foregoing grants permission to the Company to delay the submittal of the Financial Statements or derogates from any other right of the Bank in the event of default.

 

	 	
8.7.

	
Furnishing Additional Reports

 

The Company undertakes to provide the Bank with a copy of any approval, notice, report or any other document it is required to furnish to the Registrar of Companies and/or Securities Authority pursuant and subject to applicable law, upon providing it to such entity.

	
9.

	
Independent Liens

 

The liens hereby created in favor of the Bank shall be independent of all collateral or securities which the Bank has already received or shall receive from or for the Company, and they shall not affect or be affected thereby, and shall serve as a continuing security, remaining in full force and effect until such time as the Bank shall confirm to the Company in writing that this Debenture is null and void; including if, at any time prior to the giving of such confirmation, the Company had no indebtedness to the Bank.

  

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10.

	
Grounds for Immediate Repayment

 

In each of the instances specified below, the Bank may demand the immediate repayment of the Secured Amounts or any portion thereof. The Bank's notice to the Company of immediate repayment, as aforementioned, shall indicate the date of the demand (which shall not be earlier than the date of the event with respect to which the immediate repayment of all or a portion of the Secured Amounts is demanded), and the Secured Amounts whose immediate payment was sought, as aforementioned, shall bear interest at the maximum rate. The following are the instances:

	 	
10.1.

	
The Company fails to pay the Bank any amount due from it on account of the Secured Amounts in a timely manner as set forth in Section 1 above, and such default is not remedied within 14 days of its occurrence. It is emphasized that an extension of 14 days to remedy the default shall not be granted in instances in which the Bank believes that there is special urgency in demanding immediate repayment.

 

	 	
10.2.

	
An attachment is imposed on all or part of the Company's assets in an aggregate amount exceeding NIS 30,000 (hereinafter, the "Attachment"), and the Attachment is not removed within 14 days in the case of a permanent attachment or within 30 days in the case of a provisional attachment. It is emphasized that an extension of 14/30 days to remove the attachment shall not be given in instances of recurrent attachments or in instances in which the Bank believes that there is special urgency in demanding immediate repayment, or enforcement proceedings are instituted with respect to all or part of the Company's assets.

 

	 	
10.3.

	
A motion is filed against the Company for the appointment of a receiver over all or part of the Company's property, for liquidation or for the appointment of a preliminary temporary liquidator, liquidator, permanent and/or temporary and/or other receiver or special manager, or such an order is issued or a motion is filed for stay of proceedings or for a receivership order or to institute rehabilitation proceedings or the Company decides upon dissolution or a creditor meeting is convened to settle matters and such motions and/or orders are not vacated within 14 days of being issued. It is emphasized that an extension of 14 days to vacate the motions/orders shall not be given in instances of recurrent motions/orders or instances in which the Bank believes that there is special urgency in demanding immediate repayment.

 

	 	
10.4.

	
The Company's name is deleted or planned to be deleted from any register that is kept in accordance with the law and/or a warning is entered in a register maintained by the Registrar of Companies of the intention to register the Company as a defaulting company and/or the Company is registered in such register as a defaulting company and it fails to remove such entry within 14 days of being entered. It is emphasized that an extension of 14 days to remove such entry shall not be given in instances of recurrent entries or in instances in which the Bank believes that there is special urgency in demanding immediate repayment.

 

"Defaulting Company" – as defined in Section 362a of the Companies Law, 5759-1999.

 

	 	
10.5.

	
Negotiations commence between the Company and any of its creditors and/or shareholders and/or members for reaching a settlement or arrangement, including without limitation, pursuant to Section 350 of the Companies Law, or the Company announces its intention to commence such negotiations, or the court order the convening of meetings to approve a settlement or arrangement, or a motion is filed against the Company for the appointment of an expert to examine an arrangement or rehabilitation request or motion to grant an order for stay of proceedings or motion to appointment a functionary to implement rehabilitation proceedings or an order is issued in accordance with each of such motions.

 

  

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10.6.

	
The Company ceases paying its debts.

 

	 	
10.7.

	
The Company adopts a resolution for voluntary dissolution, merger as defined in Section 8.3 above prior to a public offering of the Company's shares, split or restructuring, or the Company otherwise breaches it undertakings under Section 8.3 above without receiving the Bank's prior written approval therefor.

 

"Split" within its meaning in Part E(2) of the Income Tax Ordinance (New Version) or any provision of law in lieu thereof.

 

	 	
10.8.

	
There is a change in the control of the Company, directly or indirectly, in comparison to the state of affairs as of the date of execution of this Debenture, other than as a result of the issuance of shares of the Company to the public, if and to the extent such occurs and/or as a result of the issuance of securities pursuant to the Credit Line Agreement dated August 20, 2014 in accordance with its terms.

 

	 	
10.9.

	
Upon the occurrence of one of the following events to an individual controlling shareholder of the Company, directly or indirectly: a motion is filed for receivership of all or a portion of its property and/or such a receivership order is issued and/or a permanent and/or temporary and/or other receiver is appointment over all and/or a portion of its property, or it declares bankruptcy or a bankruptcy request or a motion for receivership is filed against it or it is declared bankrupt, and in the event of his death, or he is declared legally incompetent, is imprisoned or leaves the country.

 

	 	
10.10.

	
A transaction is performed with controlling shareholders of the Company in a manner that is likely to materially affect the Company's profitability, its property or its undertakings.

 

	 	
10.11.

	
The Company's business activities and/or production work or commercial activities are interrupted and not renewed within sixty days of such interruption or the majority of the Company's assets are sold.

 

	 	
10.12.

	
The Company materially alters its business activity or directs such activity to new areas of risk (such as activity oversees in high-risk sectors/areas) without the Bank's prior written consent.

 

	 	
10.13.

	
The Company breaches or fails to perform any of its undertakings towards the Bank and such breach is not remedied within 7 days of its occurrence, provided that the breach is not one of the other breaches specified in this Section (it is clarified that an extension of 7 days to remedy the breach shall not apply in instances of recurrent breach and/or in instances in which the Bank believes that there is special urgency in demanding immediate repayment) or an event or condition occur which constitute grounds for demanding immediate repayment, or it becomes apparent that any of the Company's declarations or approvals – whether the foregoing are included in this Debenture or another document which the Company signed or shall sign vis-à-vis the Bank – are incorrect or inaccurate.

 

	 	
10.14.

	
An event or circumstances occur at any time whatsoever which, in the Bank's opinion, worsen or jeopardize the Bank's ability to collect full and timely payment of the Secured Amounts (including a material adverse change in the Company's financial situation and/or activities and/or business affairs and/or its customers are downgraded by a credit rating company) and/or the Bank believes that such event or circumstances have potential to occur, whether or not such event or circumstances are dependent on the Company.

 

  

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10.15.

	
The Bank discovers that the Encumbered Property has lost or is likely to lose a considerable percentage of its value, or the Company adopts a resolution or performs another action which may harm the Bank's rights in the Encumbered Property or the possibility of realizing such property.

 

	 	
10.16.

	
The Company issues bearer securities without the Bank's prior written consent.

 

	 	
10.17.

	
Any license/franchise received by the Company is revoked or modifications are made to any of the terms of such license/franchise. Notwithstanding the foregoing, if the license/franchise received by the Company is renewed within 7 days, the foregoing shall not be deemed to be a breach of this Section other than in instances in which the Bank believes that there is special urgency in demanding immediate repayment.

 

	 	
10.18.

	
The Company uses the proceeds of the credit it received from the Bank for purposes other than the purpose for which the Bank agreed to provide such credit, without the Bank's prior written consent.

 

	 	
10.19.

	
The Company fails to provide the Bank with a valuation pursuant to Section 6.8 above.

 

	 	
10.20.

	
The Company fails to enable the Bank to perform a field audit pursuant to Section 6.9 above.

 

	 	
10.21.

	
The Company fails to fulfill its undertakings with respect to insurance for the Encumbered Property in accordance with Sections 6.10, 6.11, 6.12, 6.13 and 6.14 above.

 

	 	
10.22.

	
The Company fails to provide the Company with financial statements under Section 8.6 above.

 

	 	
10.23.

	
An event occurs, the outcome of which is likely to entitle any entity in Israel and/or abroad, pursuant to any instrument executed and/or to be executed by the Company, to the right to demand immediate payment of all or part of the Company's obligations and undertakings toward such party, including in the event such party does not exercise such right.

 

	 	
10.24.

	
One of the circumstances enumerated in this Section above occurs, mutatis mutandis, to any guarantor who has guaranteed repayment of the Secured Amounts and/or any party who has provided collateral to secure such amounts in favor of the Bank and/or a company held by the Company and whose activity is material to the Company.

 

	
11.

	
Proceedings and Realization

 

	 	
11.1.

	
The Bank affirms and consents that the granting of a floating lien with respect to the Company's intellectual property which was developed through grants the Company received from the OCS and, and its realization in favor of the Bank, will be implemented exclusively subject to the provisions of the Encouragement of Industrial Research and Development Law, 5744-1984.

 

	 	
11.2.

	
Subject to the provisions of Section 11.1 above, upon the occurrence of one of the events specified in the previous section, the Bank shall be entitled to employ all the means it deems appropriate in order to collect the Secured Amounts from the Company and to institute any proceeding so required, in the Bank's opinion, to safeguard its rights under this Debenture. This includes, without derogating from the generality of its rights, realization of the rights in the Encumbered Property, whether by means of appointing a receiver or manager or in any other manner it may determine.

 

  

11

  

 

The Company hereby agrees that the receiver and/or manager so appointed shall be deemed to be the attorney-in-fact of the Company and it shall be vested with all the powers afforded to the Company, including the powers specified below:

 

	 	
11.1.1.

	
To receive the Encumbered Property or any portion thereof, to take possession thereof and to remove any person or object located thereon on behalf of the Company.

 

	 	
11.1.2.

	
To manage the Company's business affairs as it deems fit.

 

	 	
11.1.3.

	
To sell or agree to the sale of the Encumbered Property, in whole or in part, or to transfer it in any other manner in accordance with the terms it so determines, and to use the proceeds from such sale to cover the Secured Amounts.

 

	 	
11.1.4.

	
To realize, collect and take any action necessary vis-à-vis the various authorities to realize the Company's tax-related rights with respect to the Encumbered Property, including receiving any exemption and/or discount and/or dispensation and/or right to offset losses of any type whatsoever.

 

	 	
11.1.5.

	
To take any other action in connection with all or part of the Encumbered Property, as it so determines.

 

	 	
11.2.

	
All amounts to be collected by the Bank from the realization of the rights in the Encumbered Property, as well as all the amounts paid to the Bank as set forth in Sections 7.3 and 8.2.3 shall, to the extent they suffice, be applied  for the purposes detailed below, in the order in which they appear:

 

	 	
11.2.1.

	
In discharge of the expenses incurred as a result of the realization of the rights in the Encumbered Property, including the appointment and payment of the fees of the receiver or manager, and any expense incurred in the institution of any proceedings by the Bank to safeguard its rights under the Debenture, as set forth in Section 13 below;

 

	 	
11.2.2.

	
In discharge of all other expenses, fees, bank charges, interest and additional amounts resulting from linkage of interest, whose due date has arrived and which have not been paid to the Bank by the Company;

 

	 	
11.2.3.

	
In discharge of principal amounts and additional amounts resulting from the linkage of principal, whose due date has arrived and have not yet been paid to the Bank by the Company;

 

	 	
11.2.4.

	
For deposit in a special account or other account with the Bank in the Company's name, which shall serve as collateral for the full discharge of the remaining Secured Amounts, without derogating from the rights of lien and offset available to the Bank under any instrument executed and/or to be executed by the Company vis-à-vis the Bank and/or under applicable law. Unless otherwise agreed in writing between the Company and the Bank, the aforementioned amounts shall be deposited in an interest-bearing shekel deposit, payable upon demand, in the manner that is then-customary for the Bank with respect to customers' shekel deposits. In the event such deposit is not customary at the Bank at the time, the amounts shall be deposited from time to time in an interest-bearing shekel deposit for the shortest time period then-customary in the Bank with respect to customers' shekel deposits. The Company shall not be entitled to withdraw the amounts deposited in such special or other account, or otherwise take action in or with respect thereto other than with respect to such portion of the amounts that exceeds the Secured Amounts.

 

  

12

  

 

	
12.

	
Interest in Legal Claims

 

In the event that the Bank files a claim against the Company for payment of any amount due or to become due to the Bank on account of the Secured Amounts, such amount shall bear interest at the maximum rate with respect to the period commencing as of the date of filing the claim and up to the actual date of full payment, and the Company hereby agrees that the judicial authority may award such interest against it.

	
13.

	
Expenses

 

All the reasonable expenses pertaining to stamp duty related to this Debenture, the registration of this Debenture with the Registrar of Companies or its realization or cancellation, in whole or in part, or with respect to any claim that is filed by the Bank with respect to amounts due or to become due to the Bank from the Company on account of the Secured Amounts, reasonable expenses related to the actions which the Bank shall perform as part of its authority under this Debenture, as well as expenses in connection with proceedings instituted by the Bank to safeguard its rights under this Debenture, including the fees of the Bank's attorney, shall be borne by the Company (subject to applicable law). The attorney fees to apply shall be as determined in a ruling or decision by a court or quasi-judicial entity, and, in the absence of any such ruling or decision – as agreed upon between the Bank and the Company. In the absence of any such agreement – in accordance with the minimum rate quoted by the Israel Bar Association, whether or not such right is mandatory, and if no such minimum rate is published – fees that are reasonable under the circumstances of the matter. Without derogating from the Bank's right under the rights of offset afforded to the Bank under any instrument executed and/or to be executed vis-à-vis the Bank by the Company and/or by law, the Company hereby undertakes to pay the Bank, immediately upon its first demand, any such expense, together with Maximum Interest as defined below, with respect to the period commencing as of the date of issuance thereof by the Bank and up to the actual date of payment. The Bank may debit any account of the Company with the Bank for any payment due to it under this Section, whether it is in credit or in overdrawn, on the debit date, and regardless of whether it becomes overdrawn as a result of such debit.

	
14.

	
Interest Accrual

 

Any interest mentioned in this Debenture which is due from the Company to the Bank, including Maximum Interest and arrears interest which accrues each month, as is customary at the Bank from time to time, during any other period of time with respect to which the accrual of interest shall be permitted under law, shall itself bear interest at the same rate.

  

13

  

 

	
15.

	
Books of the Bank

 

	 	
15.1.

	
All Entries in the Bank's books, a copy of such Entries or of any section thereof or the last page thereof shall serve as admissible evidence of the veracity of the contents thereof.

 

	 	
15.2.

	
The Company shall examine every copy of all invoices, notices and letters furnished or otherwise sent to it by the Bank or by means of an automatic device, or via computer terminal, and shall submit to the Bank its written comments thereon, if any, within 60 (sixty) days of the date of delivery or dispatch by the Bank. Copies of invoices, notices or letters transmitted to the Company via an automatic device or computer terminal, as stated above, shall be deemed to have been provided to the Company by the Bank.

	
16.

	
Waivers

 

A waiver by the Bank in favor of the Company of a prior breach of, or non-compliance with, any one or more of their undertakings towards the Bank, whether such undertaking be contained in this Debenture or in any other instrument, shall not be construed as a justification or a pretext for another breach or non-compliance with any such terms or undertakings. The abstention by the Bank from exercising any right granted thereto under this Debenture or any other instrument or under law shall not be deemed to be a waiver of such right. No waiver or settlement by the Bank shall bind the Bank unless made in writing.

	
17.

	
Other Instruments

 

Nothing in this Debenture affects and/or derogates from the Company's undertakings towards the Bank under instruments of any type whatsoever which the Company has executed and/or shall execute vis-à-vis the Bank or from the Bank's rights under such instruments.

	
18.

	
Addresses and Notices

 

The Company's address for purpose of sending mail, including court pleadings, shall be the address designated above as the mailing address or any other Israeli address of which the Bank shall provide the Bank written notice. With the Bank's consent, the Company may also provide the Bank an e-mail address for purposes of sending mail, which address shall be deemed to be the Company's address for all intents and purposes.

The Bank may, at its election, send or deliver any notice, demand, copies of invoices or any other instrument whatsoever (including a marketable instrument) to the Company via regular mail or in another manner (including via an automatic device or computer terminal or e-mail), and instruments sent to the Company to the above address via regular mail shall be deemed to have been received by the Company within 72 hours of being sent. The Bank's written confirmation of any delivery or transmittal and the date and delivery method thereof shall serve as prima facie proof towards the Company of the delivery, transmittal and date specified therein.

	
19.

	
Applicable Law

 

The laws of the State of Israel shall govern this Debenture and the instruments referenced herein or related hereto and the interpretation hereof.

 

  

14

  

 

	
20.

	
Place of Jurisdiction

 

The Company hereby consents that exclusive jurisdiction for purposes of this Deed shall be given to the court in the city that is in closest proximity to the branch at which its account is managed, of the following cities: Jerusalem, Tel Aviv, Haifa, Beersheba, Nazareth or Eilat, or – at the claimant's election – the court in closest proximity to the branch at which the Company's account is managed.

 

	
21.

	
Definitions

 

In this Debenture, the following terms shall be interpreted as set forth below, unless another interpretation is ascribed to them in the relevant section:

 

	 	
21.1.

	
"Bank" – any of its branches or offices, in Israel or abroad.

 

	 	
21.2.

	
"Bank's Customary Rate" means the "Agreed Rate" or "Bank Leumi Rate" as defined below, as determined by the Bank from time to time in light of the type and sum of the purchase or sale of the relevant foreign currency.

 

Exchange commissions, and any tax, levy, mandatory payment or other payment shall apply to any such purchase or sale.

 

Notwithstanding, the Company may submit to the Bank, a reasonable time in advance, a request to transact such purchase or sale in accordance with the Agreed Rate in lieu of the Bank Leumi Rate, and to the extent the Bank's then-current practice is to perform a transaction of the same type and amount as the purchase or sale of the relevant foreign currency in accordance with the Agreed Rate, such acquisition or sale shall be transacted in accordance with the Agreed Rate.

 

"Bank Leumi Rate" – with respect to each sale of foreign currency by the Company or crediting of the Company's account in Israeli currency for the counter value of the foreign currency – shall mean the rate of checks and transfers or banknotes, as applicable, to be determined by the Bank at the relevant time as the "Bank Leumi Rate" at which the Bank will purchase from its customers the relevant foreign currency against Israeli currency;

With respect to any purchase of foreign currency by the Company or debiting of its account in Israeli currency against a foreign currency conversion, the term shall mean the rates of checks and transfers or banknotes, as applicable, as shall be determined at the relevant time by the Bank as being the Bank Leumi Rate at which the Bank will sell to its customers the relevant foreign currency against Israeli currency.

 

"Agreed Rate" – with respect to any purchase or sale of foreign currency by the Company in exchange for Israeli currency, the last sale or purchase rate, as applicable, of checks and transfers or banknotes, as applicable, which is determined by the Bank prior to such sale or purchase for actions of the same type and amount, and which the Company agreed would apply with respect to such purchase or sale.

 

	 	
21.3.

	
"Interested Party" – as defined in the Securities Law, 5728-1968.

 

	 	
21.4.

	
"Subsidiary" – as defined in the Securities Law, 5728-1968.

 

	 	
21.5.

	
The term "Bank's Books" shall be construed to include any book, register, bank account or deposit statement, loan agreement, letter of undertaking, deed signed by the Company, ledger sheet, tape, any methods of data storage for purpose of electronic computers and any other data storage methods made during the Bank's ordinary course of business;

 

  

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21.6.

	
"Maximum Interest" or "Interest at the Maximum Rate" shall mean the highest interest rate customary at the Bank, from time to time (including the increment for exceptional interest) with respect to the then-current debit balance in checking accounts/current loan accounts/current savings/foreign currency accounts (according to account type and circumstances) with overextended credit and/or outstanding balances that have not been paid to the Bank in a timely manner. However, to the extent that the law has prescribed a maximum rate of arrears interest with respect to a particular amount out of the Secured Amounts which is not paid in a timely manner, such amount shall bear interest at the maximum rate permitted under such law.

 

	 	
21.7.

	
"Entries" shall be construed to include any entry or copy thereof, whether recorded or copied in handwriting or by typewriter and whether recorded or copied by any method of printing, duplication or photography (including microfilm or microfiche) or by means of any mechanical, manual, magnetic, optical, electrical or electronic device or by means of electronic computer recording or by any other method of recording or displaying words or figures or other symbols customary among banks.

 

	 	
21.8.

	
"Control" is as defined in the Securities Law, 5728-1968.

 

	
22.

	
Cooperative Society

 

In the event this Debenture is executed by a cooperative society (hereinafter, "Society"), the following shall apply:

 

	 	
22.1.

	
Wherever the term "Company" appears in this Debenture, it shall refer instead to "Society." The foregoing shall also be the case, accordingly, with respect to any word deriving from the word "Company."

 

	 	
22.2.

	
Wherever the words, "Registrar of Companies" appear in this Debenture, such term shall refer instead to "Registrar of Cooperative Societies."

 

	
23.

	
Headings

 

The headings of the sections of this Debenture are for convenience only and are not to be construed in interpreting this Debenture.

 

IN WITNESS WHEREOF, the Company has affixed its signature on the date above-written:

 

______________________________________________________

Check-Cap Ltd.

 

  

16

  

 

Exhibit A

 

Grant Approvals

 

The following Grant Approvals of the OCS: 41122, 43950,44720 ,45895, 46810, 47598 and 52736.

 

  

17

  

 

Addendum A

 

Existing liens and the creation of future liens by the Company in favor of the First International Bank of Israel Ltd. securing debts or indentures of up to an aggregate amount of US$100,000.

 

18EXHIBIT 10.1

 

W. P. CAREY INC.

EMPLOYMENT AGREEMENT

 

 

THIS EMPLOYMENT AGREEMENT, made the 15th day of January, 2015 by W.  P. Carey Inc.  (the “Company”), a Maryland corporation, with its principal place of business at 50 Rockefeller Plaza, New York, NY 10020, and Trevor P. Bond (“Executive”).

 

W I T N E S S E T H:

 

WHEREAS, Executive has served as Chief Executive Officer of the Company and its predecessor in which capacity his services have contributed materially to the successful operation of the Company’s business; and

 

WHEREAS, the Company’s predecessor and Executive entered into an Employment Agreement dated as of March 1, 2012, which was amended and restated February 25, 2013 (the “Original Agreement”), the term of which is currently scheduled to expire on March 31, 2015, unless renewed in accordance with its terms;

 

WHEREAS, the renewal of the Original Agreement would occur subject to certain conditions, including the requirement that the Company make certain specified equity grants to Executive (the “Renewal Grants”);

 

WHEREAS, the Company and Executive wish to continue Executive’s employment as Chief Executive Officer, but desire to modify the terms of such employment from those applicable under the Original Agreement, and to eliminate any requirement for the Company to have to make any Renewal Grant to Executive and to make corresponding revisions to the restrictive covenants applicable hereunder.

 

NOW, THEREFORE, intending to be legally bound hereby, the Company hereby agrees to employ Executive, and Executive hereby agrees to be employed by the Company upon the following terms and conditions:

 

1.                                    Office and Duties.  Executive shall service the Company full time as its Chief Executive Officer and in such other positions and have such duties and power with the Company and its subsidiaries consistent with Executive’s positions and experience and abilities as may from time to time be determined by the board of directors of the Company (the “Board”) or its designee.  Executive will devote his full business time, except for vacation time and reasonable periods of absence due to sickness, personal injury or other disability, to the duties assigned to him and shall use his best efforts, judgment, skill and energy to perform such services faithfully and diligently to further the business interests of the Company; provided that nothing contained herein shall preclude Executive from (i) serving on the board of directors of any business corporation with the consent of the Board or (ii) serving on the board of, or working for, any charitable or community organization, so long as such activities, individually or collectively, do not interfere with the performance of Executive’s duties hereunder.

 

 

2.                                    Term.  This Agreement shall be for a term commencing on April 1, 2015, that is, following the expiration of the current term of the Original Agreement (the “Commencement Date”) and ending on March 31, 2018 unless sooner terminated as hereinafter provided.  The period during which Executive is employed pursuant to this Agreement shall be referred to as the “Employment Period.” For the avoidance of doubt, the parties confirm the execution hereof shall be deemed to be a mutual notice by the parties not to have the term of the Original Agreement extend on the terms and conditions thereof, and to have this Agreement serve to continue the employment of Executive on the terms and conditions set forth herein.

 

3.                                    Compensation.

 

(a)                               Base Salary.  During the Employment Period, Executive shall receive an annual base salary (“Base Salary”) at the same rate as in effect on the date hereof, which shall be payable in accordance with the Company’s generally applicable payroll practices and policies.  The Compensation Committee of the Board of Directors (the “Committee”) or its designee shall periodically review Executive’s Base Salary in light of the salaries paid to other officers of the Company, the performance of Executive, and Executive’s total compensation from the Company and the Committee or its designee, as applicable, may, in its sole discretion, authorize an increase in such Base Salary by such amount it determines to be appropriate.  Any such increase shall not reduce or limit any other obligation of the Company hereunder.

 

(b)                              Incentive Compensation.  During the term of the Employment Period, Executive shall be eligible to participate in the Company’s cash-based incentive compensation programs (including, without limitation, any program for the payment of commission income, disposition fees, and bonuses), as the same may be amended by the Company from time to time, at a level determined by the Committee.

 

(c)                               Equity Compensation.  The Committee may in its discretion determine to grant the Executive equity-based compensation at such times and subject to such terms and conditions as the Committee shall determine.

 

4.                                    Benefits, Perquisites and Expenses.

 

(a)                               Benefits.  During the Employment Period, Executive shall be eligible to participate in each employee benefit plan sponsored or maintained by the Company, subject to the generally applicable provisions thereof.  Nothing in this Agreement shall in any way limit the Company’s right to amend or terminate any such plan in its discretion, so long as any such amendment does not impair the rights of Executive without treating similarly situated executives in a similar fashion.

 

(b)                              Business Expenses.  The Company agrees to reimburse all reasonable expenses incurred or paid by Executive in the performance of Executive’s duties hereunder, upon presentation of expense statements or vouchers and such other information as the Company may require and in accordance with the generally applicable policies and procedures of the Company, for the period beginning upon the

 

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Commencement Date and ending upon the termination of the Agreement.  Such expenses shall be reimbursed in due course in accordance with the Company’s standard practices, and all reimbursement payments with respect to expenses incurred within a particular year shall be made no later than the end of the Executive’s taxable year following the taxable year in which the expense was incurred.  The amount of reimbursable expenses incurred in one taxable year of the Executive shall not affect the amount of reimbursable expenses in a different taxable year and such reimbursement shall not be subject to liquidation or exchange for another benefit.  Notwithstanding the foregoing, solely in the event that reimbursement of such expenses is conditioned upon a separation from service, such reimbursement shall be made to Executive upon the first day following the six (6) month anniversary of the date of such separation from service.

 

(c)                               Indemnification.  The Company shall indemnify Executive and hold Executive harmless from and against any claim, loss or cause of action arising from or out of Executive’s performance of services as an officer, director or Executive of the Company or any of its subsidiaries or in any other capacity in which Executive serves at the request of the Company on the same basis as it indemnifies its other officers pursuant to and in all circumstances subject to the terms and conditions of the Director and Officer Indemnification Policy of W.P. Carey Inc. (or any successor policy thereto), as in effect at the relevant time, and as the such policy may be amended from time to time.

 

5.                                    Early Termination of the Employment Period.  Notwithstanding Paragraph 2, the Employment Period shall end upon the earliest to occur of (i) a termination of Executive’s employment on account of Executive’s death, (ii) a Termination due to Disability, (iii) a Termination for Cause, (iv) a Termination Without Cause or (v) a Termination with Good Reason.

 

(b)                              Benefits Payable Upon Termination.  Following the end of the Employment Period pursuant to Paragraph 5(a), Executive (or, in the event of his death, Executive’s surviving spouse, if any, or estate) shall in all events be paid the Earned Basic Compensation and Accrued Employee Benefits.  In the event of a Termination Without Cause or Termination with Good Reason, so long as Executive executes (and has not revoked) a general release of claims in favor of the Company and its affiliates in a form acceptable to the Company (the “Required Release”) not later than 60 days following Executive’s termination of employment, Executive shall also be entitled to receive the Severance Benefit, as defined below.  The Earned Basic Compensation, Accrued Employee Benefits and, if applicable, the Severance Benefit shall be payable at the times established pursuant to Paragraph 5(c).

 

(c)                               Timing of Payments.  Earned Basic Compensation shall be paid in a single lump sum as soon as practicable, but in no event more than 30 days, following the end of the Employment Period; provided that with respect to any amounts governed by a program that contains a stated payment provision, payment shall occur in accordance with the timing specified in the applicable program governing such element of compensation.  Accrued Employee Benefits shall be payable in accordance with the terms of the plan, policy, practice, program, contract or agreement under which such benefits have accrued.  Subject to the provisions of the special timing rules set forth in

 

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the two immediately following sentences, Severance Benefits shall be paid, subject to the delivery (and non-revocation) of the Required Release, on the same regularly-scheduled payroll dates as Executive would have received his base salary had he continued to be employed for the period during which the Severance Benefits are payable hereunder.  If Executive is a specified employee within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), no taxable amounts payable by the Company to Executive pursuant to Paragraph 5 and other Company separation pay plan amounts, including bonus and other amounts that are conditioned upon a separation from service and not compensation Executive could receive without separating from service, shall be paid during the six (6) month period following his separation from service and, to the extent otherwise payable during such six (6) month period, shall be accumulated and paid on the first business day following the six (6) month anniversary of his separation from service, with interest for such period at a rate equal to the one-year Treasury bill rate as quoted in The Wall Street Journal (or in such other reliable publication as the Executive Committee, in its reasonable discretion, may determine to rely upon) from the date they would otherwise have been payable to the date actually paid; provided further, that taxable amounts remaining due pursuant to Paragraph 5 following the expiration of the six (6) month delay period shall be paid on regularly-scheduled payroll dates as described in this Paragraph 5(c).  If Executive is not a specified employee (as described in the immediately preceding sentence), but the latest date by which the Required Release must be delivered is in a different calendar year than the date on which Executive’s employment terminates, any payment of Severance Benefits that, pursuant to such normal payroll schedule, would have been made earlier than such latest date for delivery of the Required Release shall be made on the 61st day following the date on which Executive’s employment terminates.

 

(d)                             Definitions.  For purposes of Paragraphs 5 and 6, capitalized terms have the following meanings:

 

“Accrued Employee Benefits” means amounts which are vested or which Executive is otherwise entitled to receive under the terms of or in accordance with any plan, policy, practice or program of, or any contract or agreement with, the Company or any of its subsidiaries, at or subsequent to the date of his termination without regard to the performance by Executive of further services or the resolution of a contingency.

 

“Earned Basic Compensation” means any salary or other compensation (including, but not limited to, any deferred commission payments) due and payable, but unpaid, for services rendered to the Company on or prior to the date on which the Employment Period ends.

 

“Severance Benefits” means bi-weekly payments until the earliest of the following dates:

 

(i)                                  the second anniversary of Executive’s Termination Without Cause or Termination with Good Reason and

 

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(ii)                              the date the Company’s obligation to pay Severance Benefits ceases as a result of Executive’s breach any of the provisions of Paragraph 6;

 

in an amount equal to the sum of (x) the Executive’s bi-weekly base salary as in effect immediately prior to his termination of employment and (y) an amount equal to one-twenty-sixth of the average of the last three annual bonuses (or all annual bonuses, if less than three) previously received by the Executive for services to the Company, whether or not payable for services during the Employment Period.

 

“Termination for Cause” means a termination of Executive’s employment by the Company as a result of Executive’s (i) conviction of a felony or the entering by Executive of a plea of nolo contendere to such a felony charge; (ii) gross neglect, willful malfeasance or willful gross misconduct in connection with his employment hereunder which has had or could reasonably be expected to have a material adverse effect on the business of the Company and its subsidiaries; (iii) a substantial and continual refusal by Executive in breach of this Agreement to perform Executive’s duties, responsibilities or obligations assigned to Executive in accordance with the terms hereof that continues after receipt by Executive of written notice from the Company identifying the duties, responsibilities or obligations not being performed; (iv) a material violation by Executive of any policy of the Company that is generally applicable to all employees or all officers of the Companies including, but not limited to, policies concerning insider trading or sexual harassment, or the Company’s code of conduct; (v) Executive’s failure to cooperate, if requested by the Board, with any investigation or inquiry into his or the Company’s business practices, whether internal or external, including, but not limited to Executive’s refusal to be deposed or to provide testimony at any trial or inquiry; or (vi) any material breach by Executive of the provisions of Paragraph 6; provided, however, that in the case of subclauses (iv), (v) and (vi), Cause shall not exist if, such violation, failure to cooperate or breach, if capable of being cured, shall have been cured by Executive within 30 days after receipt of notice thereof from the Company.

 

“Termination due to Disability” means a termination of Executive’s employment by the Company because Executive has been incapable of substantially fulfilling the positions, duties, responsibilities and obligations set forth in this Agreement because of physical, mental or emotional incapacity resulting from injury, sickness or disease for a period of (i) at least four consecutive months or (ii) more than six months in any twelve month period.  Any question as to the existence, extent or potentiality of Executive’s disability upon which Executive and the Company cannot agree shall be determined by a qualified, independent physician selected by the Company.  The determination of any such physician shall be final and conclusive for all purposes of this Agreement.

 

“Termination with Good Reason” by the Executive means within 90 days following (i) a material adverse change in Executive’s duties and responsibilities; (ii) a material reduction in Executive’s base salary (other than a proportionate adjustment applicable generally to similarly situated Company Executives); or (iii) the relocation of Executive’s principal place of business to a location more than thirty-five miles outside of Manhattan; provided that a termination shall not be treated as a Termination with Good Reason if Executive shall have consented in writing to the occurrence of the event

 

5

 

giving rise to the claim of Termination with Good Reason.  A Termination with Good Reason must be effected by a written notice from Executive setting forth in reasonable detail the conduct or event alleged to be the basis for such termination, provided that, Executive shall not have the right to terminate his employment hereunder pursuant to a Termination with Good Reason (A) if, within the 30-day period following receipt of Executive’s written notice, the Company shall have substantially cured the conduct alleged to have caused the activities giving rise to the basis for such Termination with Good Reason and (B) unless Executive actually terminates employment within 30 days following the end of the Company’s cure period.

 

“Termination Without Cause” means any termination by the Company of Executive’s employment with the Company other than (i) a Termination due to Disability, (ii) a Termination due to death or (iii) a Termination for Cause.

 

6.                                    Non-Solicitation, Confidential Information, Etc.

 

(a)                               Non-Solicitation of Employees.  During the Executive’s employment with the Company and, upon a termination of the Executive’s employment with the Company, during the following post-termination periods, to the extent applicable to such termination: (x) if such termination occurs during the term of this Agreement, the 24 month period following the termination of Executive’s employment or (y) if such termination occurs after the expiration of this Agreement in accordance with its terms (a “Contract Expiration”), the period, if any, following termination of the Executive’s employment and through the first anniversary of the Contract Expiration, Executive agrees that he will not and will not assist or encourage any other person to (i) employ, hire, engage or be associated (as a shareholder, partner, employee, consultant or in a similar capacity) with any employee or other person connected with the Company or any of its affiliates who rendered services in a management position that afforded such person the opportunity to earn an incentive bonus or in any other position that afforded such person the opportunity to receive commissions, advisory fees or similar incentive payments in respect of the person’s services (the “Restricted Employees”), at the time of such termination or during any part of the six months (three months, in the case of any employee who was not also an officer of the Company) preceding such termination of employment, (ii) induce any Restricted Employees to leave the employ of the Company or any of its affiliates, or (iii) solicit the employment of any Restricted Employees on his own behalf or on behalf of any other business enterprise.  For the avoidance of doubt, it shall not be a violation of this Paragraph 6(a) for an entity to which the Executive provides services to hire or otherwise retain the services of a Restricted Employee unless Executive provides such entity assistance in the recruiting, hiring or retention of such Restricted Employee.

 

(b)                              Nonsolicitation of Business Associates.  Executive agrees that, during the term of this Agreement and for a period of 24 months after his termination of employment with the Company, he will not engage in any business activities in which the Company is then engaged or to which the Company has committed significant resources to expand its presence, or to enter into or otherwise commence (“Business Activities”), during the two year period prior to Executive’s termination of employment and that the

 

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Company is still actively pursuing at the date of Executive’s termination of employment in which Executive solicits for himself or for any third party the business of any person who at any time during the twelve month period ended on the date Executive’s employment with the Company terminates was (i) a Corporate Client (as defined below) during the twenty-four month period ended on the date Executive’s employment with the Company terminates (the “Prior Contact Period”); (ii) an investor (a “Fund Investor”) in any fund or investment vehicle managed or maintained by any of the Company, its subsidiaries or its affiliates, including, without limitation, each of the Sponsored Funds (as defined below) (a “Fund Vehicle”) who satisfied the conditions to qualify as a “qualified institutional buyer” as defined in Rule 144A as promulgated under the Securities Act of 1933, as amended, with whom the Executive had dealings, contact or involvement during the Prior Contact Period; (iii) a person or entity who served as a representative of investors in connection with the investments in any Fund Vehicle or who was otherwise engaged in raising capital or other financing for any such Fund Vehicle; or (iv) a person or entity which (x) materially assisted or provided other material services or support that substantially facilitated or otherwise contributed to the Company’s ability to pursue or effect its Business Activities, and (y) had direct and substantial dealings, contact or involvement while acting on behalf of the Company or its affiliates or any Fund Vehicle with any Corporate Client or Fund Investor during the Prior Contact Period.  For purposes of this Paragraph 6(b), the term “Corporate Client” means (i) any business entity, regardless of form, which obtains financing or liquidity through effecting any transaction with the Company or any of its subsidiaries or affiliates, (ii) any business entity, regardless of form, which engaged as a principal in any transaction with the Company, (iii) any Company sponsored trust, fund or other collective investment vehicle, including, without limitation, Corporate Property Associates 17 – Global Incorporated, Corporate Property Associates 18 – Global Incorporated, Carey Watermark Investors Incorporated, Carey Watermark Investors 2 Incorporated; Carey Credit Income Fund and any successors to any of them (the “Sponsored Funds”), and (iv) each affiliate of any such business entity identified in subclause (i), (ii) or (iii), but specifically excluding its private equity sponsors.

 

(c)                               Confidential Information.  During the term of this Agreement and at all times thereafter, Executive shall not, without the written consent of the Company, use for his personal benefit, or disclose, communicate or divulge to, or use for any company other than the Company or its subsidiaries or affiliates, any Confidential Information (as defined below) that had been made known to Executive or learned or acquired by Executive while in the employ of Company or its subsidiaries or affiliates, unless such information has become public other than by reason of Executive’s breach of this covenant.  Confidential Information shall mean

 

(i)                                  information not in the public domain (or in the public domain as a result of a breach by Executive or another executive of the Company who is also bound by a similar confidentiality clause) regarding the business methods, business policies, procedures, techniques, research or developments projects or results, trade secrets, or other processes of or developed by the Company;

 

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(ii)                              any names and addresses of customers or clients or any data on or relating to past, present or prospective customers or clients not in the public domain (or in the public domain as a result of a breach by Executive or another executive of the Company who is also bound by a similar confidentiality clause); and

 

(iii)                          any other material information not in the public domain (or in the public domain as a result of a breach by Executive or another executive of the Company who is also bound by a similar confidentiality clause) relating to or dealing with the business operations or activities of the Company which has been designated by the Company as confidential or which, if disclosed to any third party, would result in a material adverse effect to the Company.

 

(d)                             Company Property.  Promptly following Executive’s termination of employment, Executive shall return to the Company all property of the Company, and all copies thereof in Executive’s possession or under his control.

 

(e)                               Injunctive Relief.  Executive agrees and acknowledges that the remedies at law for any breach by him of the provisions of this Paragraph 6 will be inadequate and that the Company shall be entitled to obtain injunctive relief against him from a court of competent jurisdiction in the event of any such breach.  If any such court of competent jurisdiction shall determine that the restrictions contained in this Paragraph 6 are unreasonable as to time or geographical area, such court shall reform said restrictions to the extent necessary in the opinion of such court to make them reasonable and enforceable.

 

7.                                    Miscellaneous.

 

(a)                               Waiver.  Neither the failure nor any delay on the part of either party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.

 

(b)                              Controlling Law.  This Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws of the State of New York notwithstanding any conflicting choice-of-law provisions.

 

(c)                               Notices.  All notices, requests, demands and other communications required or permitted under this Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been given when delivered in person or when deposited in the United States mail in a postpaid envelope by registered or certified

 

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mail, return receipt requested, by overnight courier service or by facsimile (with receipt confirmed and followed by delivery of an original via overnight courier service).

 

(d)                             Binding Effect.  This Agreement shall be binding on, and shall inure to the benefit of, the Company and any person or entity that succeeds to the interest of the Company (regardless of whether such succession does or does not occur by operation of law) by reason of the sale of all or a portion of the Company’s stock, a merger, consolidation or reorganization involving the Company or a sale of the assets of the business of the Company in which Executive performs a majority of his services, unless the Company otherwise elects in writing to retain responsibility for the duties and obligations of the Company (and the benefits conveyed to the Company) under this Agreement.  This Agreement shall also inure to the benefit of Executive’s heirs, executors, administrators and legal representatives.

 

(e)                               Assignment.  Except as provided under Paragraph 7(d), neither this Agreement nor any of the rights of obligations hereunder shall be assigned or delegated by any party hereto without the prior written consent of the other party.

 

(f)                                Execution in Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original as against the party whose signature appears thereon, and both of which shall together constitute one and the same instrument.  This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

 

(g)                              Severability; Reformation.  In the event that one or more of the provisions of this Agreement shall become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.  In the event any of Paragraph 6(a), (b), (c) or (d) is not enforceable in accordance with its terms, Executive and the Company agree that such Paragraph shall be reformed to make such Paragraph enforceable in a manner which provides the Company the maximum rights permitted at law.

 

(h)                              Entire Agreement.  This Agreement is structured to take effect following the expiration of the term of the Original Agreement.  Except to the extent that the letter agreement between the Company and Executive relating to his recommencement of employment is expressly incorporated herein, this Agreement contains the entire understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements and understandings, including, without limitation, any provision of the Original Agreement that would have continued in effect after March 31, 2015, inducements or conditions, express or implied, oral or written, except as herein contained.  The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.  This Agreement may not be modified or amended other than by an agreement in writing.

 

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(i)                                  Paragraph Headings.  The paragraph headings in this Agreement are for convenience only; they form no part of this Agreement and shall not affect its interpretation.

 

(j)                                  Gender, Etc.  Words used herein, regardless of the number and gender specifically used, shall be deemed construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires.

 

(k)                              Number of Days.  In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or holiday.

 

(l)                                  409A Compliance.  This Agreement is intended to comply with the requirements of Section 409A of the Code, including good faith, reasonable statutory interpretations of Section 409A that are contrary to the terms of the Agreement, if any.  Consistent with that intent, this Agreement shall be interpreted in a manner consistent with Section 409A.  In the event that any provision that is necessary for the Agreement to comply with Section 409A is determined by the Company, with the consent of the Executive, to have been omitted, such omitted provision shall be deemed to be included herein and is hereby incorporated as part of the Agreement.

 

(m)                          Any “separation from service” within the Employment Agreement shall be construed consistent with Section 409A of the Code and the regulations thereunder.  The

 

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term “termination,” when used within the Employment Agreement in the context of a condition to, or timing of, payment shall be interpreted to mean a “separation from service” as that term is used in Section 409A of the Code.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered on the date first above written.

 

	
 
    	
W. P. CAREY INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/Catherine D. Rice
    	
 
    
	
 
    	
Catherine D. Rice
    
	
 
    	
Managing Director and   Chief
    
	
 
    	
Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
  /s/ Trevor P. Bond
    	
 
    
	
 
    	
Trevor P. Bond
    

 

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