Document:

Exhibit 10.6

 

 

COMPENSATION
POLICY

 

ZIM INTEGRATED
SHIPPING SERVICES LTD.

 

Compensation
Policy for Officers and Directors

 

(As Adopted by
the Shareholders on December 22, 2020)

 

	1.	Introduction

 

This document
sets forth the Compensation Policy for Officers and Directors (this "Compensation Policy" or "Policy") of
ZIM Integrated Shipping Services Ltd. ("ZIM" or the "Company"), in accordance
with the requirements of the Companies Law of 1999 (the "Companies Law").

 

Compensation
is a key component of ZIM's overall human capital strategy to attract, retain, reward, and motivate highly skilled individuals
that will enhance ZIM's value and otherwise assist ZIM to reach its business and financial long-term goals. Accordingly, the structure
of this Policy is established to tie the compensation of officers and directors to ZIM's goals and performance.

 

For purposes
of this Policy, "Officers" shall have the meaning set forth to such term in Section 1 of the Companies Law,
excluding, unless otherwise expressly indicated herein, ZIM's directors.

 

Each of
the Officers may be engaged as an employee and/or as an independent service provider (including through a company controlled
by him or her, against the issuance of a tax invoice to the Company), provided that if the Officer is engaged as an independent
service provider the total amount paid to him or her (including, but not limited to, value added tax) shall not exceed the maximum
amounts that would have been paid to such Officer had been engaged as an employees as specified in this Policy.

 

This Policy
shall not apply to any subsidiaries of the Company except for an employee of a Company subsidiary who is also an Officer of the
Company.

This policy
is subject to applicable law and is not intended and should not be interpreted as limiting or derogating from provisions of applicable
law to the extent not permitted by such law.

 

This Policy
shall apply to compensation agreements and arrangements which will be approved after the date on which this Policy is adopted and
shall serve as ZIM's Compensation Policy for five (5) years, commencing as of its adoption, unless amended earlier.

 

The Compensation
Committee and the Board of Directors of ZIM (the "Compensation Committee" and the "Board", respectively)
shall review and reassess this Policy from time to time, as required by the Companies Law.

 

Wherever
reference is made to the required approvals in this Compensation Policy, such reference relates to the applicable law as of the
date of approval of this Compensation Policy and in any case is subject to the provisions of sections 23 and 24 below.

 

Amounts
determined in ILS were translated for convenience purposes to U.S. Dollar based on a rate of exchange of 1 U.S. Dollar equals to
3.3190ILS.

Changes
of up to 5% from the maximal amounts set forth in this Compensation Policy shall not be regarded as a deviation from the provisions
of this Compensation Policy.

  

	2.	Objectives

 

ZIM's
objectives and goals in setting this Policy are to attract, motivate and retain highly experienced leaders who will
contribute to ZIM's success and enhance shareholder value, while demonstrating professionalism in a highly
achievement-oriented culture that is based on merit and rewards excellent performance in the long term, and embedding ZIM's
core values as part of a motivated behavior. To that end, this Policy is designed, among others:

 

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	 	2.1.	To closely align the interests of the Officers with those of ZIM's shareholders in order to enhance shareholder value;

 

	 	2.2.	To align a significant portion of the Officers' compensation with ZIM's short and long-term goals and performance;

 

	 	2.3.	To provide the Officers with a structured compensation package, including competitive salaries, performance-motivating cash and equity incentive programs and benefits, and to be able to present to each Officer an opportunity to advance in a growing organization;

 

	 	2.4.	To strengthen the retention and the motivation of Officers in the long term;

 

	 	2.5.	To provide appropriate awards in order to incentivize superior individual excellency and corporate performance; and

 

 

	3.	Compensation Instruments

 

Compensation
instruments under this Policy may include the following:

 

	 	3.1.	Base salary;

 

	 	3.2.	Benefits;

 

	 	3.3.	Cash bonuses;

 

	 	3.4.	Equity-based compensation;

 

	 	3.5.	Change of control terms; and

 

	 	3.6.	Retirement and termination terms.

 

	 	
        For purposes of this Compensation Policy:

        "Base Salary" shall mean
        gross salary, before contributions to social benefits; and

        "Employment Cost" shall
        mean any payment for employment, including contributions to social benefits, car and expenses of the use thereof, bonuses and any
        other benefit or payment.

 

	4.	Overall Compensation - Ratio Between Fixed and Variable Compensation

 

	 	4.1.	This Policy aims to balance the mix of "Fixed Compensation" (comprised primarily of base salary and benefits) and "Variable Compensation" (comprised primarily of cash bonuses and equity-based compensation) in order to, among other things, appropriately incentivize  Officers to meet ZIM's short and long-term goals while taking into consideration the Company's need to manage a variety of business risks.

 

	 	4.2.	The value of the total variable compensation (i.e., annual bonus and equity based compensation) of each Officer shall not exceed 80% of the value of the total compensation package of such Officer on an annual basis as determined by the Compensation Committee or the Board.

 

	5.	Intra-Company Compensation Ratio

 

	 	5.1.	In the process of drafting and updating this Policy, the Compensation Committee and the Board have examined the ratio between Employment Cost associated with the engagement of the Officers and directors, and the average and median Employment Cost associated with the engagement of ZIM's other employees (including contractor employees as defined in the Companies Law) (the "Ratio"). 

 

	 	5.2.	The possible ramifications of the Ratio on the daily working environment in ZIM were examined and will continue to be examined by ZIM from time to time in order to ensure that levels of executive compensation, as compared to the overall workforce will not have a negative impact on work relations in ZIM.

 

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B. Base
Salary and Benefits

 

	6.	Base Salary

 

	 	6.1.	A Base Salary provides stable compensation to Officers and allows ZIM to attract and retain competent executive talent and maintain a stable management team. The Base Salary varies among Officers, and is individually determined according to the educational background, prior vocational experience, qualifications, role at the company, business responsibilities and the past performance of each Officer.

 

	 	6.2.	
        The monthly Base Salary shall not exceed the
        amounts specified below:

        CEO: ILS 240,000 (approximately $72,311)

        CFO: ILS 190,000 (approximately $57,246)

        Officers other than the CEO and CFO: ILS 130,000
        (approximately $39,168)

        The Company may link
        the Base Salary of an Officer to the Israeli Consumer Price Index or to the exchange rate of any currency.

        The exchange rate
        of US dollar to ILS shall be the representative rate of exchange determined by the Bank of Israel as of the date of approval of
        the compensation of the relevant Officer by the Board.

        The maximum monthly
        Base Salary set forth in this section is based on the Officer's full-time position. With respect to an Officer employed by the
        Company on a part-time basis, the maximum Base Salary shall be reduced proportionately, with the Compensation Committee and the
        Board having the authority to determine the scope of the position of the Officer and change it from time to time.

        The total annual
        cost of any Officer shall not exceed an amount equal to 150% of 12 times the gross monthly salary of the said Officer.

 

	 	6.3.	The Compensation Committee and the Board may periodically consider and approve Base Salary adjustments for Officers. The main considerations for Base Salary adjustment are similar to those used in initially determining the Base Salary, but may also include change of role or responsibilities, recognition for professional achievements, regulatory or contractual requirements, budgetary constraints or market trends, or such other factors as determined by the Compensation Committee or the Board. The Compensation Committee and the Board shall also consider the previous and existing compensation arrangements of the Officer whose base salary is being considered for adjustment.

 

	7.	Benefits

 

	 	7.1.	The following benefits may be granted to the Officers in order, among other things, to comply with legal requirements:

 

	 	7.1.1.	Vacation days in accordance with market practice, including redemption of vacation days;

 

	 	7.1.2.	Sick leave in accordance with market practice;

 

	 	7.1.3.	Convalescence pay according to applicable law;

 

	 	7.1.4.	Monthly remuneration for a study fund, as allowed by applicable law and with reference to ZIM's practice and the practice in peer group companies (including contributions on bonus payments);

 

	 	7.1.5.	ZIM may contribute on behalf of the Officer to an insurance policy, a pension fund or retirement fund, as allowed or required by applicable law and with reference to ZIM's policies and procedures and the practice in similar companies (including contributions on bonus payments); and

 

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	 	7.1.6.	ZIM shall contribute on behalf of the Officer towards work disability insurance and life insurance, as allowed or required by applicable law and with reference to ZIM's policies and procedures and the practice in similar companies (including contributions on bonus payments).

 

	 	The above list is non-exclusive, and ZIM may grant its Officers other similar, comparable or customary benefits. 

 

	 	7.2.	ZIM may offer additional benefits to its Officers to the extent such benefits are reasonable or comparable to customary market practices, such as, but not limited to: company car, telecommunication and electronic devices, business related expenses, insurances and other benefits (such as newspaper subscriptions, academic and professional studies (including participation in those of children), periodic medical examinations, gifts on holidays and special occasions), etc., including tax gross-up for such benefits.  

 

	 	7.3.	ZIM may reimburse its Officers for reasonable work-related expenses incurred as part of their activities, including without limitations, meeting participation expenses, reimbursement of business travel, including a daily stipend when traveling and accommodation expenses. ZIM may provide advance payments to its Officers in connection with work-related expenses.

 

 

	 	7.4.	Non-Israeli Officers may receive other similar, comparable or customary benefits as applicable in the relevant jurisdiction in which they are employed. Such benefits shall be determined based on the methods described in Section 6.2 of this Policy (with the necessary changes and adjustments).

 

	 	7.5.	In events of relocation or repatriation of an Officer to another geography, such Officer may receive other similar, comparable or customary benefits as applicable in the relevant jurisdiction in which he or she is employed or additional payments to reflect adjustments in cost of living. Such benefits may include reimbursements, stipends or other payments for out-of-pocket one-time payments and other ongoing expenses, such as housing allowance, car allowance, home leave visit, tax equalization payments, travel expenses for family members and other similar costs.

 

C. Cash
Bonuses

 

	8.	Cash Bonuses - The Objective

 

	 	8.1.	Compensation in the form of an annual or other periodic cash bonus is an important element in aligning the Officers' compensation with ZIM's objectives and business goals. Therefore, ZIM's compensation philosophy reflects a pay-for-performance element, in which bonus payout eligibility and levels are generally determined based on actual financial or operational results, as well as individual performance.

 

	 	8.2.	A cash bonus may be awarded to an Officer upon the attainment of pre-set periodic objectives and individual targets determined by the Compensation Committee (and, if required by law, by the Board) at the beginning of each calendar or fiscal year or bonus period, or upon engagement, in case of newly-hired Officers, or upon establishment of a new bonus program, taking into account ZIM's short and long-term goals, as well as its compliance and risk management policies. The Compensation Committee and the Board shall also determine applicable minimum thresholds that must be met for entitlement to a cash bonus (all or any portion thereof) and the formula for calculating any such cash bonus payout. In special circumstances, as determined by the Compensation Committee and the Board (e.g., regulatory changes, significant changes in ZIM's business environment, a significant organizational change, a significant merger and acquisition events, or other similar events etc.), the Compensation Committee and the Board may modify the objectives and/or their relative weights and the amount of bonus payouts (up to their entirety) during the applicable bonus period.

 

	 	8.3.	In the event the employment of an Officer is terminated prior to the end of a bonus period, the Company may (but shall not be obligated to) pay such Officer a full cash bonus for the applicable period (based on achievement of bonus targets during such period) or a prorated one, or no bonus.

 

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	 	8.4.	The actual cash bonus with respect to a bonus period to be awarded to Officers shall be recommended by the CEO and approved by the Compensation Committee and the Board.

 

	9.	Annual Cash Bonuses - The Formula

 

Officers
other than the CEO

 

	 	9.1.	The annual cash bonus opportunity of ZIM's Officers, other than the chief executive officer (the "CEO"), will generally be based on performance objectives and a discretionary evaluation of the Officer's overall performance by the CEO and subject to minimum thresholds. The performance objectives will be determined by ZIM's CEO and approved by the Compensation Committee and the Board on or about the commencement of each calendar year (or upon engagement, in case of newly hired Officers or in special circumstances as determined by the Compensation Committee and the Board) on the basis of, but not limited to, Company, division and individual objectives. The performance objectives and the weight to be assigned to each achievement in the overall evaluation, will be based on overall Company performance measures, which may be based on actual financial and operational results, such as (but not limited to) EBITDA, Adjusted EBITDA, EBIT, Adjusted EBIT, EBIT margin compared to the industry, net income, operating income and cash flow and may further include, divisional or personal objectives which may include operational objectives, such as (but not limited to) cost per carried TEU,  income derived from engine growth, market share, initiation of new markets and operational efficiency, customer focused objectives, project milestones objectives and investment in human capital objectives, such as employee satisfaction, employee retention and employee training and leadership programs.

 

	 	9.2.	In addition, a less significant portion of the annual cash bonus opportunity granted to an Officer, other than the CEO, and in any event not more than 30% of the annual cash bonus, may be based on a discretionary evaluation of the relevant Officer's overall performance by the Compensation Committee and the Board based on quantitative and qualitative criteria or such other criteria as determined by the Compensation Committee and the Board. 

 

	 	9.3.	The maximum annual cash bonus that an Officer, other than the CEO, will be entitled to receive for any given calendar year, will not exceed 11 monthly Base Salaries of such Officer.

CEO

 

	 	9.4.	The annual cash bonus opportunity of ZIM's CEO will be mainly based on performance measurable objectives and subject to minimum thresholds as provided in Section 8.2 above. Such performance measurable objectives will be determined annually by the Compensation Committee and the Board on or about the commencement of each calendar year (or upon engagement, in case of newly hired CEO or in special circumstances as determined by Compensation Committee the Board). The performance measurable objectives (which include the objectives and the weight to be assigned to each achievement in the overall evaluation, will be based on overall Company performance measures, which may be based on, Company and personal objectives. Company objectives may include actual financial and operational results, such as (but not limited to) EBITDA, Adjusted EBITDA, EBIT, Adjusted EBIT, EBIT margin compared to the industry, net income, operating income, cash flow or Company's annual operating plan and long-term plan.

 

	 	9.5.	In addition, a less significant portion of the annual cash bonus opportunity granted to ZIM's CEO, and in any event not more than 25% of the annual cash bonus, may be based on a discretionary evaluation of the CEO's overall performance by the Compensation Committee and the Board based on quantitative and qualitative criteria or such other criteria as determined by the Compensation Committee and the Board. 

 

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	 	9.6.	The maximum annual cash bonus that the CEO will be entitled to receive for any given calendar year, will not exceed 18 monthly Base Salaries of the CEO.

 

	10.	Other Bonuses

 

	 	10.1.	Special Bonus. ZIM may grant its Officers a special bonus as an award for special achievements (such as in connection with mergers and acquisitions, offerings, achieving target budget or business plan under exceptional circumstances or special recognition in case of retirement) or as a retention award at the Compensation Committee's and Board's discretion), subject to any additional approval as may be required by the Companies Law (the "Special Bonus"). The Special Bonus will not exceed 5 monthly Base Salaries of such Officer.

 

	 	10.2.	Signing Bonus. ZIM may grant a newly recruited Officer a signing bonus, at the Compensation Committee's and Board's discretion, subject to any additional approval as may be required by the Companies Law (the "Signing Bonus"). The Signing Bonus will not exceed 12 monthly Base Salaries of such Officer.

 

	 	10.3.	Relocation/ Repatriation Bonus. ZIM may grant its Officers a special bonus in the event of relocation or repatriation of an Officer to another geography (the "Relocation Bonus"). The Relocation bonus will include customary benefits associated with such relocation and its monetary value will not exceed 6 monthly Base Salaries of such Officer.

 

 

	11.	Compensation Recovery ("Clawback")

 

	 	11.1.	In the event of an accounting restatement, ZIM shall be entitled to recover from its Officers the bonus compensation or performance-based equity compensation in the amount in which such compensation exceeded what would have been paid under the financial statements, as restated, provided that a claim is made by ZIM prior to the second anniversary of fiscal year end of the restated financial statements.

 

	 	11.2.	Notwithstanding the aforesaid, the compensation recovery will not be triggered in the following events:

 

	 	11.2.1.	The financial restatement is required due to changes in the applicable financial reporting standards; or

 

	 	11.2.2.	The Compensation Committee and Board have determined that Clawback proceedings in the specific case would be impossible, impractical or not commercially or legally efficient.

 

	 	11.3.	Nothing in this Section 11 derogates from any other "Clawback" or similar provisions regarding disgorging of profits imposed on Officers by virtue of applicable laws.

D. Equity
Based Compensation

 

	12.	The Objective

 

	 	12.1.	The equity-based compensation for Officers is designed to enhance the alignment between the Officers' interests with the long-term interests of ZIM and its shareholders, and to strengthen the retention and the motivation of Officers in the long term. As equity-based awards are structured to vest over several years, their incentive value to recipients is aligned with longer-term strategic plans.

 

	 	12.2.	The equity-based compensation offered by ZIM is intended to be in a form of share options and/or other equity-based awards, such as restricted stock unit awards or restricted shares award, in accordance with the Company's equity incentive plan in place as may be updated from time to time.

 

	 	12.3.	All equity-based incentives granted to Officers shall be subject to vesting periods in order to promote long-term retention of the awarded Officers. Unless determined otherwise in a specific award agreement approved by the Compensation Committee and the Board (and in the case of the CEO – also by the Company's general meeting of shareholders), grants to Officers, other than non-employee directors, shall vest gradually over a period of between one (1) to four (4) years. The Compensation Committee and Board shall have the discretion to shorten the vesting period under special circumstances (such as a grant that was delayed not as a result of the Officer's actions) provided that the vesting period shall not be less than one (1) year. 

 

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	 	12.4.	
        The exercise price of options shall be determined
        in accordance with ZIM's policies, and in any event will not be less than the average closing price per a share of the Company
        on the stock exchange in which the Company's shares are principally traded over the thirty (30) day calendar period the Board’s
        decision (or shareholders' decision to the extent required by law) on the grant of the relevant option (excluding with respect
        to awards granted subject to the Company's initial public offering in which case the exercise price may be the price of the Company's
        share as determined in the pricing in the initial public offering). Unless otherwise determined by the Company (subject to the
        approvals of the Compensation Committee and the Board, and with respect to the Company's CEO- also the Company's general meeting
        of shareholders), and subject to the provisions of any applicable law, the exercise price of restricted shares and restricted share
        units (RSUs) is zero.

        Awards may also be exercised by a method of
        "Cashless" exercise.

 

	 	12.5.	Subject to any applicable law, ZIM may determine, at the discretion of the Compensation Committee and the Board (and with respect to the Company's CEO - also the Company's general meeting of shareholders), the tax regime under which equity-based compensation may be granted, including a tax regime which will maximize the benefit to the Officers.

 

	 	12.6.	All other terms of the equity awards shall be in accordance with ZIM's equity incentive plans and other related practices and policies. Accordingly, the Compensation Committee and Board (and in the case of the CEO - also the Company's general meeting of shareholders) may extend the period of time for which an award is to remain exercisable and make provisions with respect to the acceleration of the vesting period of any Officer's awards, including, without limitation, in connection with a corporate transaction involving a change of control, and may otherwise modify or amend outstanding awards in accordance with ZIM's equity incentive plans and other related practices and policies, subject to any additional approval as may be required by the Companies Law.

 

	13.	General Guidelines for the Grant of Awards

 

	 	13.1.	The equity-based compensation shall be granted from time to time and be individually determined and awarded according to the performance, educational background, prior business experience, qualifications, role and the personal responsibilities of the Officer, and such other criteria as determined by the Compensation Committee and the Board (and in the case of the CEO - also the Company's general meeting of shareholders).

 

	 	13.2.	In determining the equity-based compensation granted to each Officer, the Compensation Committee and Board shall consider the factors specified in Section 13.1 above, and in any event the total annual fair market value of any equity-based compensation at the time of grant shall not exceed: (i) with respect to the CEO – 12 monthly Base Salaries of the CEO; and (ii) with respect to each of the other Officers - 9 monthly Base Salaries of the Officer. 

 

	 	13.3.	The fair market value of the equity-based compensation for the Officers shall be determined according to acceptable valuation practices at the time of grant by dividing the fair market value by the number vesting years. 

 

	 	13.4.	The Board considered the possibility of determining a ceiling for the exercise value of the  equity-based compensation and decided, taking into account the purpose of the equity-based compensation, not to set such a ceiling in this Policy.

 

E. Retirement
and Termination of Service Arrangements

 

	14.	Advanced Notice Period

 

ZIM
may (but is not obligated to, unless otherwise required by applicable law) provide an Officer, according to his/her seniority
in the Company, his/her contribution to the Company's goals and achievements and the circumstances of retirement, a prior
notice of termination (or equivalent value in cash and other severance benefits) of up to six (6) months during which
the Officer may be entitled to all of the compensation elements, and to the continuation of vesting of his/her equity-based
compensation.

 

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	15.	Adjustment Period

 

ZIM may
(but is not obligated to, unless otherwise required by applicable law) provide an additional adjustment period (or equivalent value
in cash and other severance benefits) of up to twelve (12) months to the CEO, according to his/her seniority in the Company,
his/her contribution to the Company's goals and achievements and the circumstances of retirement, during which the CEO may be entitled
to all of the compensation elements, and to the continuation of vesting of the CEO's equity-based compensation.

 

	16.	Additional Retirement and Termination Benefits

ZIM may
provide additional retirement and terminations benefits and payments as may be required by applicable law (e.g., mandatory severance
pay under Israeli labor laws), or which will be comparable to customary market practices as well as increased severance pay to
the CEO of up to two times the applicable amounts.

  

F. Exculpation,
Indemnification and Insurance

 

	18.	Exculpation

ZIM may
exculpate its directors and Officers in advance for all or any liability (including expense) imposed on them in connection with
a breach of the duty of care vis-a-vis ZIM, to the fullest extent permitted by applicable law.

 

	19.	Insurance and Indemnification

 

	 	19.1.	ZIM may indemnify its directors and Officers to the fullest extent permitted by applicable law, for any liability (including expense) that may be imposed on the director or the Officer, as provided in the indemnity agreement between such individuals and ZIM.

 

	 	19.2.	ZIM may provide its directors and Officers with directors' and officers' liability insurance (the "Standard Policies") and coverage for directors and Officers for non-indemnifiable losses (the "Side A Policies"), including as directors or officers of the Company's Subsidiaries, in Israel or overseas. 

 

	 	19.2.1.	The maximum coverage amount shall not exceed $200 million for each Standard Policy and $100 million for each Side A Policy. 

 

	 	19.2.2.	The purchase of each of the Standard Policies and the Side A Policies (including its extension or renewal) shall be approved by the Compensation Committee and the Board which shall determine that each of the Standard Policies and the Side A Policies reflect the current market conditions (at the time of purchase, extension or renewal, as the case may be), and it shall not materially affect the Company's profitability, assets or liabilities.

 

	 	19.3.	Upon circumstances to be approved by the Compensation Committee and the Board, ZIM shall be entitled to purchase a "run off" Insurance Policy of up to seven (7) years, as follows:

 

	 	19.3.1.	The coverage amount shall not exceed $200 million; and 

 

	 	19.3.2.	The purchase of the "run-off" Insurance Policy (including its extension or renewal) shall be approved by the Compensation Committee and the Board which shall determine that the "run-off" Insurance Policy reflects the current market conditions and that it shall not materially affect the Company's profitability, assets or liabilities.

 

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	 	19.4.	ZIM may extend its Standard Policy and/or Side A Policy in place to include coverage for liability pursuant to a future public offering of securities, or purchase new policies (either standard policies or side A policies) for that purpose. Such extension or purchase shall be approved by the Compensation Committee and the Board which shall determine that the extension reflects the current market conditions, and it does not materially affect the Company's profitability, assets or liabilities.

 

G. Arrangements
upon Change of Control

 

	20.	The following benefits may (but are not required to) be provided to the Officers following a "Change of Control" as shall be defined in the respective incentive plan or employment agreement:

 

	 	20.1.	Up to 100% vesting acceleration of outstanding options or other equity-based awards;

 

	 	20.2.	Extension of the exercising period of equity-based compensation for ZIM's Officers for a period of up to one (1) year in case of an Officer other than the CEO and two (2) years in case of the CEO, following the date of employment termination; and

H. Board
of Directors' Compensation 

 

	21.	The following benefits may be provided to ZIM's Board members:

 

	 	21.1.	All ZIM's Board members, excluding the chairperson of the Board, may be entitled to an annual cash fee retainer of up to $100,000 as well as payment per participation in meetings of the Board and its committees in a maximum amount of $2,000 per meeting, subject to value added tax to the extent applicable. The directors are also entitled to reimbursement for reasonable expenses incurred as part of their service as directors, including among other things, travel expenses, allowance for daily living expenses and air travel business expenses. The chairperson of ZIM's Board may be entitled to a monthly cash fee payment of up to ILS 200,000 (approximately $60,259). 

 

	 	21.2.	The compensation of the Company's external directors, if elected, shall be in accordance with the Companies Regulations (Rules Regarding the Compensation and Expenses of an External Director) of 2000, as amended by the Companies Regulations (Relief for Public Companies Traded in Stock Exchange Outside of Israel) of 2000, as such regulations may be amended from time to time, including by way of comparative compensation within the meaning of such term under the aforesaid regulations.

 

	 	21.3.	Notwithstanding the provisions of Sections 22.1 above, in special circumstances, such as in the case of a professional director, an expert director or a director who makes a unique contribution to the Company, such director's compensation may be different than the compensation of all other directors and may be greater than the maximal amount allowed under Section 22.1 and in no event more than 150% of such amount. 

 

 

	 	21.4.	It is hereby clarified that the compensation (and limitations) stated under Section H will not apply to directors who serve as Officers.

 

I. Miscellaneous

 

	22.	Nothing in this Policy shall be deemed to grant any of ZIM's Officers or employees or any third party any right or privilege in connection with their employment by the Company. Such rights and privileges shall be governed by the respective personal employment agreements. The Board may determine that none or only part of the payments, benefits and perquisites detailed in this Policy shall be granted, and is authorized to cancel or suspend a compensation package or part of it.

 

	23.	In the event that new regulations or law amendment in connection with Officers' and directors' compensation will be enacted following the adoption of this Policy, ZIM may follow such new regulations or law amendments, even if such new regulations are in contradiction to the compensation terms set forth herein.

 

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	24.	This Policy is subject to applicable law and is not intended, and should not be interpreted as limiting or derogating from, provisions of applicable law to the extent not permitted, nor should it be interpreted as limiting or derogating from the Company’s Articles of Association.

 

	25.	This Policy shall be governed by the laws of the State of Israel, excluding its conflict of law rules, except with respect to matters that are subject to tax or labor laws in any specific jurisdiction, which shall be governed by the respective applicable law of such jurisdiction.

 

 

***

 

    10EXHIBIT
10.5

 

 

 

 

 

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Master
Software Development Agreement Software Development Agreement

 

This
Software Development Agreement is made on March 1oth, 2020 (the “Effective Date”) between Teknowland Inc., a California
corporation with its principal place of business located at 1551 McCarthy Blvd, Milpitas, CA 95035 (the “Developer”),
and Creative Learning Corporation, a Delaware corporation with its principal place of business located at P.O. BOX 3402, Boise,
ID 83711 (the “Customer”).

 

WHEREAS,
the Client has conceptualized the development and maintenance of the online Franchise Management Tool, Website/Mini Site and
any new software tool (the “Software System Software, Application Software, Programming Languages”), and the
Developer is a contractor with whom the Client has come to an agreement to enhance, develop and maintain the Software. The Software
will not include any new development and maintenance for an online subscription model portal.

 

The
parties agree as follows:

 

		1.	Definitions.
                                         In addition to the terms defined above, the following definitions apply:

 

		1.	“Confidential
                                         Information” means all non-public and business-related information, written or
                                         oral, that the Customer discloses or makes available to the Developer, directly or indirectly,
                                         through any means of communication or observation.

		2.	“Software”
                                         means Customer’s web-based Franchise Management Tool, Website/Min Site and any
                                         new software tools., and all associated documentation and other instructions.

		3.	“Specifications”
                                         has the meaning given to it in section 3.1.

 

		2.	Software
                                         Development Services. The Customer engages the Developer, and the Developer agrees, to
                                         perform services for the Customer to develop, modify, improve, deliver and install the
                                         Software in accordance with the terms of this agreement.

 

		3.	Developer’s
                                         Duties and Responsibilities

 

		1.	Specifications.
                                         The Customer shall define the specifications, requirements, and deliverables (the “Specifications”)
                                         with input from the Developer to make sure each specification conforms to the Developer’s
                                         written guidelines. Each specification must be able to be worked Independently.
                                         The goals of all specifications must be Negotiable. Every specification
                                         must be Estimable by the Developer. Scope of specifications should be Small
                                         to Medium for lowering the risk associated with changes to code. Tests
                                         must be defined for every functional requirement. Finally, Example cases
                                         and outcomes must be defined when possible.

		2.	Development.
                                         The Developer shall design, develop, modify, improve and install the Software in accordance
                                         with the Specifications.

		3.	Delivery.
                                         The Developer shall grant the Customer access to the source code of the Software from
                                         the Effective Date of the agreement or as soon as practicable thereafter. The initial
                                         installation of the Software and any updates shall be installed as soon as is practicable
                                         and according to agreements between the Customer and Developer during periodic project
                                         management meetings.

		4.	The
                                         developer acknowledges and agrees that the source code and the software shall, at all
                                         times both during and after the term of this agreement, belong exclusively to the Customer.

		5.	Installation.
                                         The Developer will be responsible for conducting at least one installation of the Software
                                         and producing documentation outlining the steps required for the Customer to install
                                         the Software.

 

		4.	Acceptance

 

		1.	Acceptance
                                         Period. The Customer will have 14 days following each date of delivery OR installation
                                         to assess and test the Software.

		2.	Completion.
                                         If the Developer delivers the Software in accordance with the Specifications, then the
                                         Developer will be deemed to have completed its delivery obligations.

		3.	Rejection.
                                         If the Developer fails to deliver the Software in accordance with the Specifications,
                                         the Customer shall detail in writing its grounds for rejection using the Jira tool. In
                                         that case, the Developer shall use reasonable efforts to correct the Software, in which
                                         case upon delivery of the corrected Software, the process of acceptance testing will
                                         restart.

		4.	Continued
                                         Failure. If the Developer’s corrections fail to deliver the Software in accordance
                                         with the Specifications, then the Customer may elect to terminate this agreement or adjust
                                         the Specifications accordingly.

 

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		5.	Change
                                         Orders

 

		1.	Changes.
                                         The Customer may at any time request changes to the Specifications. Changes must be submitted
                                         in writing into the Developer’s issue tracking system (JIRA), or to the Developer’s
                                         project management contact.

		2.	Additional
                                         Time. If the proposed change will, in the Developer’s reasonable opinion, require
                                         a delay in the delivery OR installation of the Software, then the Customer and the Developer
                                         shall confer. The Customer may in that case elect to either:

		1.	withdraw
                                         its proposed change, or

		2.	require
                                         the Developer to deliver the Software with the proposed change, subject to the delay.

 

		6.	Training

 

		1.	Scope.
                                         The Developer shall provide the Customer with training on how to use the Software during
                                         weekly project management meetings. Additional training can be requested by the Customer.

		2.	Dates
                                         and Locations. The Developer shall conduct the training on the dates and at the locations
                                         that the parties agree upon.

 

		7.	Support
                                         and Maintenance

 

		1.	The
                                         Customer may obtain support and maintenance services from the Developer from 6 am to
                                         6 pm Pacific Time. Support will also be available over the weekends for any production
                                         defect that needs to be fixed.

 

		8.	Fees
                                         and Expenses

 

		1.	Fees.
                                         The Customer shall pay for four (4) Full time Developers according to a fixed monthly
                                         rate of $12,900 only.

		2.	Expenses.
                                         The Customer shall reimburse the Developer for all reasonable travel expenses that are
                                         pre-approved by the Customer in writing.

		3.	Payment
                                         Due Date. All fees under this agreement will be due and payable in full to the Developer
                                         no later than Thirty (30) days after the date of the Developer’s invoice.

		4.	Late
                                         Payments. Any amount not paid when due will bear interest from the due date until paid
                                         at a rate equal to 5.0% annually. or the maximum allowed by law, whichever is less.

 

		9.	Term.
                                         This agreement shall be for a period of six (6) months and automatically renew until
                                         the Developer has performed all its obligations under this agreement. Regardless, the
                                         Parties retain the right to terminate this agreement at anytime pursuant to Section 18
                                         below.

 

		10.	Representations.
                                         The Developer represents and warrants to the Customer as follows, acknowledging that
                                         the Customer is relying on these representations and warranties:

 

		1.	Right
                                         to Assign. The Developer acknowledges and agrees that the Customer owns all right, title
                                         and interest in and to the software and the source code, including any and all improvements,
                                         modifications, developments, enhancements and other software developed for Customer.

		2.	No
                                         Infringement. The Developer’s use of the Software will not infringe upon the intellectual
                                         property, contractual, or other proprietary or personal rights of any person.

 

		11.	Warranties

 

		1.	Limited
                                         Media Warranty. The Developer warrants that, for a period of 60 days following the termination
                                         of this agreement the Developer will be able to provide the Customer with a copy of the
                                         Software’s source code via Internet file transfer as soon as practicable and when
                                         given written notice. Developer will not retain any copies of the source code or any
                                         confidential information following the expiration or earlier termination of this agreement.

		2.	Limited
                                         Support Warranty. For a period of 60 days following the delivery OR installation of the
                                         Software, the Developer shall perform its maintenance and support services consistent
                                         with generally accepted industry standards, but only if the Software is installed and
                                         operated in accordance with the Developer’s documentation and written other instructions.

		3.	Limited
                                         Performance Warranty. The Developer warrants that, for a period of 60 days starting on
                                         the date of delivery OR installation of the Software, the Software will perform in accordance
                                         with the functional Specifications set forth in the documentation, but only if the Software
                                         is installed and operated in accordance with the Developer’s documentation and
                                         other written instructions.

		4.	Disclaimer.
                                         The Developer does not warrant that the functions contained in the Software will meet
                                         the Licensee’s requirements or operate in the combination desired by the Licensee,
                                         or that the Software’s operation will be uninterrupted or error free. The Developer
                                         does not make and will not be liable for any warranties other than those expressly included
                                         in this agreement.

 

		12.	Acknowledgments

 

		1.	Independent
                                         Contractor. The Developer is an independent contractor. Nothing contained in this agreement
                                         creates a partnership, joint venture, employer/employee, principal-and-agent, or any
                                         similar relationship between the parties.

		2.	Proprietary
                                         Rights. The parties acknowledge that the development of the Software is “work for
                                         hire” within the meaning of the Copyright Act of 1976, as amended on one or more
                                         occasions, and that the Software written under this agreement will be the Customer’s
                                         property.

		3.	Consent
                                         to Use of Data. The Developer may collect and use technical information gathered as part
                                         of its support services but may only use this information to improve its products and
                                         services and for no other purpose. The Developer shall not disclose any of this information
                                         in a form that personally identifies the Customer or it clients.

		4.	Government
                                         End Users. If the Software and related documentation are supplied to or purchased by
                                         or on behalf of the United States Government, then the Software is deemed to be “commercial
                                         software” as that term is used in the Federal Acquisition Regulation system. The
                                         rights of the United States will not exceed the minimum rights set forth in FAR 52.227-19
                                         for “restricted computer software”. All other terms and conditions of this
                                         agreement otherwise apply.

 

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		13.	Confidentiality

 

		1.	Confidentiality
                                         Obligations. During the term of this agreement for 25 years afterward, the Developer
                                         shall hold all Confidential Information in confidence in accordance with the terms of
                                         this agreement.

		2.	Use
                                         Solely for Purpose. The Developer shall use the Confidential Information in accordance
                                         with, and solely for the purpose of providing its services under, the terms of this agreement.

 

		14.	Source
                                         Code Management. Delivery and Update of Source Code. The Developer shall provide access
                                         to the source code to the Customer during the entire term of the agreement and maintain
                                         backups for a minimum of 90 days after the termination of the agreement. At all times
                                         during and after the term of this agreement, the source code does and will belong to
                                         the Customer. Developer must provide the source code to Customer at all times during
                                         the term of this Agreement, as well as upon termination or expiration of this agreement.

 

		15.	Intellectual
                                         property rights. The Parties acknowledge and agree that the Customer will hold all intellectual
                                         property rights in the Software including, but not limited to, copyright and trade mark
                                         rights. The Developer agrees not to claim any such ownership in the Software’s
                                         intellectual property at any time prior to or after the completion and delivery of the
                                         Software to the Customer.

 

		16.	Indemnification

 

		1.	Developer’s
                                         Indemnity. The Developer shall indemnify the Customer and its officers, directors, employees,
                                         agents, and affiliates, against all claims, liability, costs, and expenses (including
                                         attorneys’ fees) arising from any third party claim or proceeding against the Customer

		1.	based
                                         on any claim that the Software infringes or violates any intellectual or other property
                                         right, or

		2.	that
                                         alleges any negligent act or omission or willful conduct of the Developer or its directors,
                                         officers, employees, agents, or affiliates.

		3.	Developer’s
                                         breach of its obligation under this Agreement or violation of any application law, rule
                                         or regulation.

 

		2.	Notice
                                         of Claim. The Customer shall give prompt written notice to the Developer of any claim
                                         or potential claim for indemnification under this agreement.

 

		17.	Limitation
                                         of Liability

 

		1.	Neither
                                         party will be liable for breach-of-contract damages that the breaching party could not
                                         reasonably have foreseen upon entering into this agreement.

		2.	Neither
                                         party will be liable to the other for any indirect, special, punitive, exemplary or consequential
                                         damages, or incidental losses or damages of any kind, including, but not limited to,
                                         lost profits, lost savings or loss of use of facilities or equipment, regardless of whether
                                         arising from breach of contract, warranty, tort, strict liability or otherwise, even
                                         if advised of the possibility of such loss or damage, or if such loss or damage could
                                         have been reasonably foreseen.

		3.	Developer’s
                                         liability for any negligent acts, errors, or omissions is limited to the Developer's
                                         insurance policy agreement.

		4.	At
                                         all times during the term of this Agreement, the Developer shall maintain liability insurance
                                         policies in the minimum coverage and limit requirements [ General Liability $ 1,000,000
                                         EACH OCCURRENCE| DAMAGE TO RENTED PREMISES (Ea occurrence) $1,000,000 | General Liability
                                         MED EXP (Any one person) $10,000 |PERSONAL & ADV INJURY $1,000,000 | GEN'L AGGREGATE
                                         LIMIT APPLIES PER: GENERAL AGGREGATE $2,000,000 | Product and Completed Operations $2,000,000
                                         | Workers Compensation EACH ACCIDENT $1,000,000]. Developer will cause the Customer to
                                         be named as an additional insured under such policies and will provide to Customer on
                                         an annual basis and also upon request from Customer, a copy of Developer Certificate
                                         of Insurance establishing Developer's compliance with its obligations under this Agreement.
                                         Developer’s failure to comply with its obligations under this Section will be deemed
                                         a material default giving Customer the right to terminate this Agreement if not cured
                                         within 5 business days following Developer’s receipt of written notice from Customer.

 

		18.	Termination

 

		1.	Termination
                                         upon Notice. Either party may terminate this agreement for any reason upon 30 days’
                                         notice to the other party.

		2.	Termination
                                         for Cause. If either party

		1.	commits
                                         a material breach or material default in the performance or observance of any of its
                                         obligations under this agreement, and

		2.	the
                                         breach or default continues for a period of 30 days after delivery by the other party
                                         of written notice reasonably detailing such breach or default, then the non-breaching
                                         or nondefaulting party may terminate this agreement, with immediate effect, upon written
                                         notice to the breaching or defaulting party.

		3.	Termination
                                         upon Insolvency. This agreement will terminate immediately upon the Developer’s
                                         insolvency, bankruptcy, receivership, dissolution, or liquidation.

		4.	Effect
                                         of Termination

		1.	Termination
                                         for Customer’s Breach. In the event of termination of this agreement due to a material
                                         breach or default committed by the Customer,

		2.	the
                                         assignment of rights to the Customer in this agreement will terminate, and

		3.	Termination
                                         for any other Reason. In the event of termination of this agreement for any other reason,

		4.	the
                                         Customer will continue to exercise all rights to the Software that it has acquired under
                                         this agreement,

		5.	the
                                         Developer shall immediately deliver in the format specified by the Customer, to the Customer
                                         all Software, documentation, source code, and other Customer property in its possession
                                         relating to the Software and then destroy all copies in its possession or control.

		6.	the
                                         Customer shall pay the Developer for all services rendered and work performed up to the
                                         effective date of termination, unless the Customer has terminated for cause, in which
                                         case it will only be required to pay fair value. The Developer shall provide the Customer
                                         with an invoice for its fees within 30 days of the effective date of the termination,
                                         and the Client shall pay the invoice within 15 days of receipt.

		7.	the
                                         Developer will not develop for any client the same functional software system for a period
                                         of 10 years.

 

    4

     

    

 

		19.	General

 

		1.	Entire
                                         Agreement. This agreement contains all the terms agreed to by the parties relating to
                                         its subject matter. It replaces all previous discussions, understandings, and agreements.

		2.	Amendment.
                                         This agreement may only be amended by a written document signed by both parties.

		3.	Assignment.
                                         The Developer may not assign this agreement or any of its rights under it. The Customer
                                         may assign this agreement or any of its rights without notice or the need for the Developer’s
                                         consent.

		4.	Remedies
                                         Cumulative. The rights and remedies available to a party under this agreement are cumulative
                                         and in addition to, not exclusive of or in substitution for, any rights or remedies otherwise
                                         available to that party.

		5.	Survival.
                                         Sections 13 (Confidentiality), 15 (Assignment of Rights), 16 (Indemnification), 17 (Limitation
                                         of Liability), and 18.4 (Effect of Termination), survive the termination or expiration
                                         of this agreement.

		6.	Sever-ability.
                                         If any part of this agreement is declared unenforceable or invalid, the remainder will
                                         continue to be valid and enforceable.

		7.	Waiver.
                                         A party’s failure or neglect to enforce any of rights under this agreement will
                                         not be deemed to be a waiver of that party’s rights.

		8.	Governing
                                         Law. This agreement will be governed by and construed in accordance with the laws of
                                         the State of California, without regard to its conflict of laws rules.

		9.	Waiver
                                         of Jury Trial. The parties waive their respective rights to trial by jury in any action
                                         or proceeding involving this agreement or the transactions relating to its subject matter.

		10.	Headings.
                                         The headings used in this agreement and its division into articles, sections, schedules,
                                         and other subdivisions do not affect its interpretation.

 

This
agreement has been signed by the parties. Teknowland, Inc.

 

Signed
: /s/ Christopher Rego                                     

 

Name
: Christopher Rego

Title
: CEO

Date
:

 

Creative
Learning Corporation

 

Signed
: /s/ Bart Mitchell                                             

 

Name
:Bart Mitchell

Title
: CEO

Date:
3/21/2020

 

    5

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