ON TRACK INNOVATIONS LTD.
|
(Name of registrant as specified in its charter)
|
Israel
|
N/A
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Z.H.R. Industrial Zone
P.O. Box 32, Rosh Pina, Israel
|
1200000
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
Ordinary Shares, par value NIS 0.10 per share
|
Name of each exchange on which registered
NASDAQ Global Market
|
None.
|
(Title of class)
|
Large accelerated filer
o
|
Accelerated filer
o
|
Non-accelerated filer
o
(do not check if a smaller reporting company)
|
Smaller reporting company
x
|
2
|
||
2
|
||
14
|
||
27
|
||
27
|
||
27
|
||
28
|
||
28
|
||
28
|
||
29
|
||
29
|
||
39
|
||
39
|
||
39
|
||
40
|
||
|
40
|
|
41
|
||
41
|
||
49
|
||
54
|
||
56
|
||
56
|
||
58
|
||
58
|
·
|
our expectations regarding the growth of the near-field communication, or NFC, market;
|
·
|
the expected development and potential benefits from our existing or future products or our intellectual property, or IP;
|
·
|
increased generation of revenues from licensing, transaction fees and/or other arrangements;
|
·
|
future sources of revenue, ongoing relationships with current and future suppliers, customers, end-user customers and resellers;
|
·
|
our intention to generate additional recurring revenues and transaction fees;
|
·
|
future costs and expenses and adequacy of capital resources;
|
·
|
our intention to continue to expand our market presence via strategic partnerships around the globe;
|
·
|
our expectations with respect to the expansion of our MediSmart product into additional countries in Eastern Africa or elsewhere;
|
·
|
our expectations that revenues from Retail and Mass Transit Ticketing will grow in the next years, and the expected reasons for that growth;
|
·
|
our plans to increase our cash resources, such as by capitalizing on our patent portfolio, sales of assets or parts of our business or raising funds;
|
·
|
our plans to reduce our financial expenses;
|
·
|
our expectations regarding our short-term and long-term capital requirements;
|
·
|
our intention to continue to invest in research and development;
|
·
|
our outlook for the coming months; and
|
·
|
information with respect to any other plans and strategies for our business.
|
Retail
- The high cost of cash, cash related crime and cash impact on creating ‘black economies’ are major forces that drive markets to look for “Cashless Payment Solutions”. Embraced by retail organizations across the globe, mobile payments, NFC and contactless technologies are helping create a cashless, paperless world.
As one of the pioneers of cashless payment technology, we have been working closely with companies in diverse industries and markets for over two decades. During this time, we have honed our skills at designing industry-tailored solutions that enable our banking, mobile operators, unattended solutions, and closed loop payment systems operators to achieve their goals more efficiently and more cost-effectively.
Our cashless payment solutions for the retail market worldwide are managed by our Company from its headquarters in Israel.
|
|
Mass Transit Ticketing
– The growing need for mass transit ticketing systems and services, together with the migration to contactless smart cards as the main mean for mass transit payments, have led to the development of a full unattended mass transit ticketing system by our wholly-owned Polish subsidiary ASEC S.A., or ASEC, initially for the market in Poland.
The system is comprised of attended and unattended point of sale, or POS, terminals and is fully managed by a back office solution for a full end-to-end turnkey service.
Our solutions for the mass transit ticketing market in Poland are managed by ASEC.
|
|
Petroleum
|
|
Volatile fuel costs mean that customers of all types are more cost-conscious when it comes to fueling. Commercial organizations with multiple vehicles are especially sensitive to the impact of fuel expenses on their profitability.
Our petroleum payment solutions enable customers to precisely and effortlessly control and manage refueling operations, including automatic payments for less gas station downtime, complete remote transaction and fuel usage reporting, and tracking of odometer and/or engine operating hours.
Easily deployed and seamlessly integrated with existing gas station infrastructure, our EasyFuel Plus® solution is a wireless, cashless, cardless and paperless refueling tracking and payment solution, providing customers with maximum flexibility and security.
Our solutions for the petroleum market are managed by OTI PetroSmart (PTY) Ltd. (formerly named OTI Africa (PTY) Ltd.), or OTI PetroSmart, a wholly-owned subsidiary based in South Africa.
|
With today’s growing parking needs, municipalities and city drivers need a fast, simple, and seamless on-street and parking lot payment system. Providing such a system raises municipal parking revenues, lowers enforcement overhead, and improves driver satisfaction.
Our EasyPark® System is a fully one-stop-shop integrated parking fee collection and parking management solution. Encompassing the full scope of parking operations from both the municipal and driver sides, EasyPark® enables cities to improve parking services, optimize operations, cut costs, increase compliance, reduce traffic congestion and pollution, and provide better service to drivers and residents.
Our solutions for the parking market worldwide are managed by PARX Ltd., or PARX, a subsidiary of the Company, based in Israel.
Our solutions for the parking market in Israel are managed by Easy Park Ltd., or Easy Park, a subsidiary of PARX, based in Israel.
|
Our innovative and proprietary
WAVE
solution adds NFC, contactless payment and security capabilities to existing iPhone® and Android® mobile devices.
WAVE
is completely Subscriber Identity Module, or SIM, agnostic, and offers banks, loyalty card vendors, mobile network operators, or MNOs, mass transit operators, closed campus operators and other diverse vendors a cost-effective, post-market mobile payment add-on option, with quick time-to-market and cost effective implementation. With
WAVE
, mobile network stakeholders can rapidly rollout new services and create new revenue opportunities, all with minimal investment and implementation overhead.
Flexible as well as cost-effective, attaching the
WAVE
dongle to any handset requires no expertise or special tooling.
WAVE’s
contactless interface supports mobile contactless payment for MasterCard®, Visa®, debit and credit programs, e-Purse, mass transit ticketing, e-coupons, loyalty program and healthcare applications.
|
With a significant growth in the scope of daily online transactions and increasing danger of fraud, organizations are seeking tools that can seamlessly assure secured transactions and customer identification.
As more organizations implement public key infrastructure, or PKI, solutions to authenticate consumers, new challenges arise. The majority of PKI endpoint devices support personal computers, but do not provide a solution for mobile devices, which have become increasingly prevalent in PKI transactions.
Our
WAVE
PKI is a device-agnostic add-on easily attached to the audio jacks of smartphones, tablets and Windows® based PCs.
|
Our
unique and field-proven
oti
Payment NFC Insert
is an innovative bridge to contactless payment – enabling the addition of contactless payment, MIFARE™ and NFC capabilities to most existing handsets, including feature phones. The product is SIM, operating system and handset-agnostic. Our payment NFC insert is a post-market accessory that can be rapidly and cost-effectively deployed with no special technical overhead.
oti
NFC Insert
supports contactless payment for MasterCard®, Visa® and other card associations, debit and credit, e-Purse, mass transit ticketing, e-coupons and loyalty programs. Leveraging oti
NFC Insert
, mobile network operators can gain first mover advantage, using existing subscriber handsets to deliver new services and create new revenue opportunities.
|
·
|
We supply NFC and contactless payment reader solutions. With years of experience, unique IP and know-how, our technology enables unparalleled quality and performance. Our solutions are approved by Underwriters Laboratories, Inc., or UL, and the U.S. Federal Communications Commission, or FCC, and certified by MasterCard TQM (Terminal Quality Management). Also, our reliability and performance are based on over two decades of experience with NFC and contactless solutions.
|
·
|
Our NFC readers are certified by the leading card associations including, amongst others, Visa, MasterCard, Amex, Discover Interac and the Europay, MasterCard® and Visa® association, or EMV, and are compatible as well for use with various NFC mobile payments solutions such as Apple Pay™, MIFARE™, Soft Card™ and others.
|
oti SATURN ® 6700 UNO, or UNO,
is a single interface and contactless reader packed in an ultra-compact form-factor. UNO is a comprehensive solution for meeting a wide range of NFC cashless payment industry requirements. The reader, which supports the major card associations’ applications as well as wallets such as Soft Card™ and Apple pay™, was designed specifically for attended and unattended retail environments. UNO’s unique form-factor and features enable integration and installation in unattended self-service payment stations, including ATMs, Automatic Vending Machines, or AVMs, ticket vending machines, toll roads, gaming and gambling machines, kiosks, access control, mass transit gates and more.
The oti SATURN ® 6700 UNO is available in three main configurations: On Panel, Flat and Countertop configuration.
|
oti SATURN® 6500
is an NFC and contactless reader built specifically for the unattended machine market, such as vending machines, providing quick and easy support for cashless payments.
oti
SATURN® 6500 offers convenient three-in-one cashless payment card options: magnetic strip, contact and contactless, in one small and stylish package. With modular design for easy installation and multiple connection options, the oti SATURN® 6500 is designed for vending, pay-at-the-pump, and unattended payment services.
The oti SATURN® 6500 reads data from a variety of sources, including NFC enabled phones, all types of credit cards, contactless key fobs and smart stickers that comply with ISO/IEC 14443 type A, B and MIFARE
TM
.
|
The oti SCI 6100 global original equipment manufacturer, or OEM, reader module with integrated antenna is a compact and cost-effective contactless card reader board, designed for easy integration into mass transit validators and terminals.
Designed for seamless and simple OEM integration, the oti SCI 6100 includes a full-featured development environment, preloaded on-board payment applications (MasterCard PayPass, Visa PayWave, etc.) and smart or transparent mode options. Delivering price-performance, the oti SCI 6100 supports contactless payments and loyalty programs.
|
Our indoor countertop NFC and contactless payment reader, the oti SATURN® 6000, supports payment and loyalty programs and delivers a price-performance ratio. The enhanced features offered by oti SATURN® 6000 enable faster transactions and support for multiple applications and proprietary programs.
oti SATURN® 6000, as the rest of oti readers, utilizes an enhanced firmware architecture and is based on a multi-layer, multi-application approach wherein the application resides separately and securely, resulting in significant reduction of certification costs.
oti SATURN® 6000 is optimized to read data from a variety of sources, including NFC enabled phones, all types of credit cards and contactless key fobs that comply with ISO/IEC 14443 type A, B and MIFARE
TM
support.
|
Mass Transit Ticketing
|
ASEC has experienced a rapid growth since it was founded. The result is a track record of innovative products that enable our customers to increase the efficiency of their business operations.
Our mass transit ticketing products offer, among others, the following benefits:
● Security for information stored on a card and transferred between the card and the reader;
● Reliable transfer of information to and from a card;
● Durability, ease of use and multiple form factors, including credit card size solutions, key chains, tags, stickers and wristwatches;
● Ease of installation and maintenance;
● Ease of transition from other card technologies to our contactless microprocessor-based technology;
● Support for multiple, independent applications on the same card; and
● Platform and device agnostic technology.
|
Our petroleum payment solutions enable large and small customers to minutely and effortlessly control and manage refueling operations – including automatic payments for less gas station downtime, complete remote transaction and fuel usage reporting, and tracking of odometer and/or engine operating hours.
Easily deployed and seamlessly integrated with existing gas station infrastructure, our EasyFuel Plus® solution is a wireless, cashless, cardless and paperless refueling tracking and payment solution, providing customers with maximum flexibility and security.
|
The core of the EasyPark® PPM system is a durable, adaptable, contactless, multi-application smart card. The EasyPark® PPM contains proprietary software and provides a simple and convenient solution, which can be used for all parking needs, including on-street parking, parking lots, toll roads, etc.
The EasyPark® system can be operated either as a stand-alone system, or can be used on top of traditional parking payment infrastructures, as a means to reduce cash handling and to eliminate fraud.
|
·
|
A proven solution and track record;
|
·
|
Simple to use;
|
·
|
Cashless;
|
·
|
Drivers pay only for the time used;
|
·
|
Efficient and cost effective;
|
·
|
Attractive commercial model for all stakeholders;
|
·
|
Based on reliable, secure and scalable technology;
|
·
|
Friendly to the environment, no visual clutter;
|
·
|
No maintenance or risk of vandalism; and
|
·
|
A flexible and powerful back-office system.
|
The EasyPark® Mobile is a state-of-the-art mobile parking payments system. The EasyPark® Mobile can be used either as a standalone parking payment method or in conjunction with other payment methods such as the EasyPark® PPM, Pay & Display machines and even with single space meters.
|
Our MediSmart® product is designed to securely process and manage medical information by providing doctors, hospital administrators and pharmacies with information regarding a patient’s identity, medical and medicaments history, insurance coverage and payment history. This information can be automatically updated after each treatment or provision of remedies. Treatment information can be automatically transferred to the corresponding medical institutions and/or the insurance provider’s computer systems. This product reduces costs to medical providers, provides increased security for a patient’s medical history and improves the quality and speed of service to patients. We began field tests of the product in South Africa in 2003, and the product was successfully deployed in June 2004 by CareCross Health, the leading primary healthcare provider in South Africa. Since 2007, MediSmart has been deployed in Kenya, through Smart Applications International Ltd., or SMART, and we expect to expand into more countries in Eastern Africa.
|
·
|
More than half of all handsets will have NFC functionality by 2015;
|
·
|
NFC-enabled applications are expected to grow at a 35% Compound Annual Growth Rate, or CAGR, from $7.7 billion in 2011 to $34.5 billion by 2016;
|
·
|
By the end of 2019, there is expected to be more than 500 million mobile users of NFC contactless payment services, up from around 100 million in 2014; and
|
·
|
Visa’s contactless payments have quadrupled over last year, now generating about 13 million transactions per month.
|
●
|
Enhancing our technological position
.
We intend to continue to invest in research and development both through organic growth and where relevant also through acquisitions in order to enhance our technological position, develop new technologies, extend the functionality of our products and services, and offer innovative products to our customers. We will continue to leverage our over twenty years of experience delivering cashless payment solutions to enterprises around the globe.
|
|
●
|
Expanding our global market presence
. We market our products through a global network of subsidiaries in the U.S., Europe, Africa and our headquarters in Israel. We are using these entities to strengthen our presence in existing markets, penetrate new markets, provide local customer service and technical support, and adapt our products to our local customers’ specific needs. In addition to our subsidiaries, we will continue to expand our market presence via strategic partnerships around the globe.
|
|
●
|
Increasing our focus on generating high-margin, recurring revenues
. We currently derive most of our revenues from one-time payments for our products and technologies. We intend to generate additional recurring revenues by receiving service fees for ongoing customer services and technical support and transaction fees from our customers based on the volume of transactions or monthly licensing fees from systems that contain our products. By reducing our customers’ up-front payments for our products in return for receiving on-going participation in the revenue they generate from their customers, we intend to build and maintain long-term relationships with our customers and generate a constant stream of high-margin, recurring revenues.
|
2014
|
2013
|
2012
|
||||||||||
Our expenditures (in millions)
|
$
|
4.7
|
$
|
4.4
|
$
|
5.4
|
||||||
Our net expenditures as a percentage of annual revenues
|
20
|
%
|
22
|
%
|
32
|
%
|
·
|
Implementing our core technologies in microprocessors and readers;
|
·
|
Enhancing the functionality of our components and expanding the range of our products to serve new markets; and
|
·
|
Developing new innovative technologies related to the Cashless Payment Solutions market.
|
·
|
In the Retail Market, our competition includes contactless and NFC readers, and terminal manufacturers such as ID Tech, Ingenico and Verifone. On the NFC add-on products, the competition is mainly with vendors such as DeviceFidelity, Gemalto and new technologies, such as Host Card Emulation, or HCE, developed by larger companies such as Google;
|
·
|
In the Petroleum Market, we are competing with fuel market and fleet management end-to-end solution vendors such as Orpak and Rozman Engineering. As this domain has high entrance barriers, there are not many players in this field; and
|
·
|
In the Parking Market, we are uniquely positioned to provide a variety of innovative technologies including enforcement systems, analytics for parking operators and drivers and asset-less parking payment solutions, which do not require “on street” parking equipment, based on both mobile phone payments and in-vehicle parking meters. We are competing with industry players such as ParkMobile, MobileNow, Milgam Cellular Parking and Pay By Phone (Verrus) for Mobile Parking solutions.
|
Number of employees as of December 31,
|
||||||||||||
Department
|
2014
|
2013
|
2012
|
|||||||||
Sales and marketing
|
17
|
18
|
32
|
|||||||||
Customer service and technical support
|
31
|
28
|
29
|
|||||||||
Research and development
|
45
|
48
|
63
|
|||||||||
Manufacturing and operations
|
30
|
80
|
81
|
|||||||||
Management and administration
|
34
|
60
|
62
|
|||||||||
Total
|
157
|
234(*)
|
267
|
|
·
|
PARX Ltd.
markets our EasyPark® system worldwide. PARX is incorporated under the laws of the State of Israel and its registered office is at Rosh Pina, Israel. We have the right to appoint all of the members of its board of directors.
|
|
·
|
Easy Park Ltd.
markets our EasyPark® system in Israel. Easy Park, a subsidiary of PARX, is incorporated under the laws of the State of Israel and its registered office is at Rosh Pina, Israel. We have the right to appoint all of the members of its board of directors.
|
|
·
|
OTI America Inc.
,
our wholly-owned U.S. subsidiary, is headquartered in New Providence, New Jersey and is incorporated in Delaware. OTI America provides marketing and customer support services for our products in the Americas. We have the right to appoint all of the members of its board of directors.
|
|
·
|
OTI PetroSmart (Pty) Ltd.
(formerly named OTI Africa (PTY) Ltd.), our wholly-owned South African subsidiary, is headquartered and incorporated in Cape Town, South Africa, and provides marketing, distribution and customer support services for our products in Africa. We have the right to appoint all of the members of its board of directors.
|
|
·
|
ASEC S.A. (Spolka Akcyjna)
, our wholly-owned Polish subsidiary, is headquartered in Krakow, Poland. ASEC provides marketing, distribution and customer support services for some of our products in Europe, and develops and markets card readers and reader modules based on radio frequency identification technologies, including high-end programmable smart cards as well as economically priced readers. We have the right to appoint all of the members of its board of directors.
|
·
|
difficulties in integrating our operations, technologies, products and services with those of the acquired companies and businesses;
|
|
·
|
difficulty in integrating operations that are spread across significant geographic distances;
|
|
·
|
diversion of our capital and our management’s attention away from other ongoing business issues;
|
|
·
|
potential loss of key employees and customers of companies and businesses we acquire;
|
|
·
|
increased liabilities as a result of liabilities of the companies and businesses we acquire; and
|
|
·
|
dilution of shareholdings in the event we acquire companies and businesses in exchange for our Ordinary Shares.
|
·
|
Our payroll expenses are relatively fixed and we would not expect to reduce our workforce due to a reduction in revenues in any particular quarter.
|
|
·
|
The tendency of some of our clients, due to budgetary reasons, to place orders for products toward the last quarter of their financial year.
|
·
·
|
changes in regulatory requirements and communications standards;
changes in external political policies, such as embargos based on manufacturing origin;
|
|
·
|
political and economic instability;
|
|
·
|
required licenses, tariffs and other trade barriers;
|
|
·
|
difficulties in enforcing IP rights across, or having to litigate disputes in, various jurisdictions;
|
|
·
|
difficulties in staffing and managing international operations;
|
|
·
|
potentially adverse tax consequences;
|
|
·
|
the burden of complying with a wide variety of complex laws and treaties in various jurisdictions; and
|
|
·
|
business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.
|
·
|
harm to our reputation;
|
|
·
|
loss of, or delay in, revenues;
|
|
·
|
loss of customers and market share;
|
|
·
|
failure to attract new customers or achieve market acceptance for our products; and
|
|
·
|
unexpected expenses to remedy errors.
|
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Sales
|
$
|
17,286
|
$
|
15,067
|
$
|
11,560
|
||||||
Licensing and transaction fees
|
$
|
5,776
|
$
|
4,801
|
$
|
5,044
|
||||||
Total revenues
|
$
|
23,062
|
$
|
19,868
|
$
|
16,604
|
Year ended December 31,
|
Asia
|
Americas
|
Europe
|
Africa
|
||||||||||||||||||||||||||||
2014
|
$
|
2,843
|
12
|
%
|
$
|
8,868
|
39
|
%
|
$
|
7,486
|
32
|
%
|
$
|
3,865
|
17
|
%
|
||||||||||||||||
2013
|
$
|
1,879
|
9
|
%
|
$
|
6,856
|
34
|
%
|
$
|
7,060
|
36
|
%
|
$
|
4,073
|
21
|
%
|
||||||||||||||||
2012
|
$
|
2,783
|
17
|
%
|
$
|
2,968
|
18
|
%
|
$
|
6,664
|
40
|
%
|
$
|
4,189
|
25
|
%
|
Year ended December 31,
|
Petroleum
|
Parking
|
Retail and Mass Transit Ticketing
|
Other
|
||||||||||||||||||||||||||||
2014
|
$
|
3,838
|
17
|
%
|
$
|
2,392
|
10
|
%
|
$
|
15,042
|
65
|
%
|
$
|
1,790
|
8
|
%
|
||||||||||||||||
2013
|
$
|
4,532
|
23
|
%
|
$
|
2,210
|
11
|
%
|
$
|
11,743
|
59
|
%
|
$
|
1,383
|
7
|
%
|
||||||||||||||||
2012
|
$
|
5,205
|
31
|
%
|
$
|
2,944
|
18
|
%
|
$
|
7,126
|
43
|
%
|
$
|
1,329
|
8
|
%
|
Year ended December 31,
|
||||||||||||
Cost of revenues
|
2014
|
2013
|
2012
|
|||||||||
Cost of sales
|
$
|
12,006
|
$
|
9,140
|
$
|
7,298
|
||||||
Gross profit
|
$
|
11,056
|
$
|
10,728
|
$
|
9,306
|
||||||
Gross margin percentage
|
48
|
%
|
54
|
%
|
56
|
%
|
Year ended December 31,
|
||||||||||||
Operating expenses
|
2014
|
2013
|
2012
|
|||||||||
Research and development
|
$
|
4,664
|
$
|
4,405
|
$
|
5,393
|
||||||
Selling and marketing
|
$
|
8,230
|
$
|
7,132
|
$
|
11,675
|
||||||
General and administrative
|
$
|
6,142
|
$
|
6,939
|
$
|
9,022
|
||||||
Patent litigation and maintenance
|
$
|
1,543
|
$
|
1,351
|
$
|
432
|
||||||
Other operating income, net
|
$
|
(13)
|
$
|
(4,181)
|
$
|
-
|
||||||
Amortization and impairment of intangible assets and goodwill
|
$
|
-
|
$
|
894
|
$
|
99
|
||||||
Total operating expenses
|
$
|
20,566
|
$
|
16,540
|
$
|
26,621
|
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Financing income
|
$
|
82
|
$
|
182
|
$
|
320
|
||||||
Financing expenses
|
$
|
(659)
|
$
|
(1,095
|
)
|
$
|
(813
|
)
|
||||
Financing expenses, net
|
$
|
(577)
|
$
|
(913
|
)
|
$
|
(493
|
)
|
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Net loss from continuing operations
|
$
|
(10,197)
|
$
|
(6,928
|
)
|
$
|
(17,875
|
)
|
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Net income from discontinued operations
|
$
|
315
|
$
|
3,777
|
$
|
313
|
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Net loss
|
$
|
(9,882)
|
$
|
(3,151
|
)
|
$
|
(17,562
|
)
|
1.
|
The business qualifies as a component of an entity, as it comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Company.
|
2.
|
Both of the following conditions are met or expected to be met within one year:
|
i.
|
The operations and cash flows of the business have been or will be eliminated from the ongoing operations of the entity in the disposal transaction; and
|
ii.
|
The Company will not have any significant continuing involvement in the operations of the component after the disposal transaction. The eligibility to receive contingent consideration from future sales of the divested business does not necessarily indicate that there is continuing involvement in the operations of the business.
|
December 31, 2014
|
||||
Long-term loans
|
$ | 2,996 | ||
Less - current maturities
|
835
|
|||
$ | 2,161 |
December 31, 2014
|
||||||||
Interest rate
|
||||||||
U.S. Dollars
|
5.03 | % | $ | 1,159 | ||||
NIS
|
4.67 | % | 778 | |||||
Polish Zloty
|
3.60 | % |
845
|
|||||
2,782 | ||||||||
Current maturities of long-term loans
|
835 | |||||||
$ | 3,617 |
Name
|
Age
|
Position(s) Held
|
||
Dilip Singh (1)
|
64
|
Chairman of the Board of Directors
|
||
Dimitrios J. Angelis
|
45
|
Director;
Chief Executive Officer of OTI America
|
||
William C. Anderson III (2) (3)(4)
|
44
|
Director
|
||
Charles M. Gillman (1)
|
44
|
Director
|
||
John A. Knapp Jr. (1) (3)
|
63
|
Director
|
||
Eileen Segall (2) (3) (4)
|
36
|
Director
|
||
Mark Stolper (1) (3) (4)
|
43
|
Director
|
||
Ofer Tziperman
|
53
|
Chief Executive Officer
|
||
Shay Tomer
|
36
|
Chief Financial Officer
|
|
•
|
an employment relationship;
|
|
•
|
a business or professional relationship maintained on a regular basis;
|
|
•
|
control; and
|
|
•
|
service as an office holder, excluding service as a director in a private company prior to the first offering of its shares to the public, if such director was appointed as a director of the private company in order to serve as an External Director following the public offering.
|
Name
and Principal Position
|
Year
|
Salary
($) (1)
|
Bonus
($)
|
Stock-based Awards
($) (2)
|
Non-equity Incentive Plan Compensation
|
All
Other Compensation
($) (3)
|
Total
($)
|
|||||||||||||||||||
Dimitrios J. Angelis
Director and Chief
|
2014
|
300,000 | - | 48,970 | 50,000 | 61,427 | 460,397 | |||||||||||||||||||
Executive Officer of OTI America (4) |
2013
|
29,003 | - | 222,340 | - | - | 251,343 | |||||||||||||||||||
Ofer Tziperman
|
2014
|
342,779 | - | - | 45,274 | 93,377 | 481,430 | |||||||||||||||||||
Chief Executive Officer (5) |
2013
|
297,790 | 89,691 | 554,530 | 79,571 | 86,475 | 1,108,057 | |||||||||||||||||||
Shay Tomer
|
2014
|
171,809 | 7,713 | 14,352 | 24,985 | 52,767 | 271,626 | |||||||||||||||||||
Chief Financial Officer (6) |
2013
|
120,011 | 13,288 | 28,799 | 13,287 | 47,068 | 222,453 | |||||||||||||||||||
Shlomi Eytan
|
2014
|
138,301 | - | 14,352 | 52,970 | 40,016 | 245,639 | |||||||||||||||||||
Former Chief Sales and Marketing Officer (7) |
2013
|
62,288 | - | 28,799 | - | 20,222 | 111,309 | |||||||||||||||||||
Arie G. Rubinstein
|
2014
|
138,903 | - | 10,764 | 15,091 | 46,947 | 211,705 | |||||||||||||||||||
General Counsel and Corporate Secretary (8) |
2013
|
115,204 | - | 32,400 | - | 46,817 | 194,421 |
(1)
|
Salary payments which were in NIS were translated into U.S. dollars according to annually average exchange rate of 3.58 NIS per U.S. dollar in 2014 and 3.61 NIS per U.S. dollar in 2013.
|
(2)
|
The fair value recognized for the stock-based awards was determined as of the grant date in accordance with FASB ASC Topic 718 (see Note 10C to our consolidated financial statements included elsewhere in this Annual Report).
|
(3)
|
This cost reflects social benefits (as required under applicable Israeli law), car expenses and termination payments.
|
(4)
|
Mr. Dimitrios J. Angelis served as Chairman of the Board of Directors from April 26, 2013, until February 9, 2015, and is currently serving as the as Chief Executive Officer of OTI America since December 6, 2013.
|
(5)
|
The 2014 “All Other Compensation” of Mr. Tziperman, as shown in the table above, is comprised of $23,475 of car expenses and $69,902 of social benefits. The 2013 “All Other Compensation” of Mr. Tziperman, as shown in the table above, is comprised of $23,253 of car expenses and $63,222 of social benefits. The “non-equity incentive plan compensation” granted to Mr. Tziperman in 2013, as shown in the table above, is comprised of $79,570 for serving as President of PARX, and $89,692 for serving as Company’s Chief Executive Officer. The “non-equity incentive plan compensation” of Mr. Tziperman for 2014, as shown in the table above, relates to Mr. Tziperman’s serving as Company’s Chief Executive Officer. On February 10, 2015, Mr. Tziperman provided advance notice of his resignation from his respective positions.
|
(6)
|
The 2014 “All Other Compensation” of Mr. Tomer, as shown in the table above is comprised of $21,798 of car expenses and $30,969 of social benefits. The 2013 “All Other Compensation” of Mr. Tomer, as shown in the table above, is comprised of $21,592 of car expenses and $25,476 of social benefits.
|
(7)
|
Former Chief Sales and Marketing Officer Mr. Shlomi Eytan served in the Company’s from August 1, 2013 until November 10, 2014. The 2014 “All Other Compensation” of Mr. Eytan, as shown in the table above, is comprised of $16,349 of car expenses and $23,667 of social benefits. The 2013 “All Other Compensation” of Mr. Eytan, as shown in the table above, is comprised of $9,000 of car expenses and $11,222 of social benefits.
|
(8)
|
The 2014 “All Other Compensation” of Mr. Rubinstein, as shown in the table above is comprised of $21,600 of car expenses and $25,347 of social benefits. The 2013 “All Other Compensation” of Mr. Rubinstein, as shown in the table above, is comprised of $21,403 of car expenses and $25,414 of social benefits.
|
(1)
|
Agreement with Dimitrios J. Angelis
. The employment agreement of Mr. Angelis with the Company, dated December 22, 2013, provides that Mr. Angelis will act as the Chief Executive Officer of OTI America, in consideration of an annual gross salary of $300,000. The employment agreement is for an initial term of 3 years, commencing December 6, 2013, and may be terminated at any time and without notice. This initial term shall be automatically extended for successive periods of one year each, unless either party submits a 180-day notice prior to the expiration of the initial period. If the Company terminates Mr. Angelis’ employment other than for cause or total disability or if Mr. Angelis terminates his employment for good reason (as such terms are defined in Mr. Angelis’ employment agreement), the Company shall pay Mr. Angelis his unpaid salary earned through the termination date and a separation payment in an amount equal to 12 months’ annual base salary in effect at the time of termination. Under his employment agreement, Mr. Angelis was granted options to purchase 150,000 shares of the Company. On May 26, 2014, Mr. Angelis, together with the then incumbent members of the Board, was granted an additional 50,000 stock options of the Company by the general meeting of shareholders.
In accordance with the Compensation Policy, Mr. Angelis is entitled to an annual bonus of up to 12 months gross base salary. For 2014, 70% of Mr. Angelis’s maximum annual bonus is tied to performance targets (financial and operational) determined by our Compensation Committee and Board. The remaining portion of Mr. Angelis’s maximum annual bonus is discretionary and the payment thereof is determined by our Compensation Committee and our Board.
|
(2)
|
Agreement with Ofer Tziperman
. The employment agreement of Mr. Tziperman with the Company, dated December 22, 2013, provides that Mr. Tziperman will act as the Chief Executive Officer of the Company and the Chief Executive Officer of the Company’s subsidiaries, PARX and EasyPark, in consideration of a monthly gross salary of NIS 90,000. The employment agreement is for an initial three-year term commencing on March 7, 2013 and ending on March 6, 2016. This initial term shall be automatically extended for two successive periods of three years each. Nevertheless, other than in the case of termination of the agreement for cause, the term of the agreement may be terminated by either party upon at least six months’ prior written notice. In the event of termination (by either party), Mr. Tziperman shall be entitled to severance pay equal to the statutory rate of one month’s current salary multiplied by the number of years of employment, unless the termination occurs as a result of circumstances depriving him of the right to severance pay at law. Additionally, in consideration for his commitment to confidentiality and non-competition, Mr. Tziperman shall be entitled to receive a one-time payment equal to twelve months of the then applicable salary, where 50% of this amount shall be paid upon the termination of his employment and the remaining 50% shall be held in escrow and released 12 months after the termination of his employment, provided Mr. Tziperman has complied with his confidentiality and non-competition commitments. Under his employment agreement, Mr. Tziperman was granted options to purchase 266,666 shares of the Company.
In accordance with the Compensation Policy, Mr. Tziperman is entitled to an annual bonus of up to 12 months gross base salary. For 2014, 70% of Mr. Tziperman’s maximum annual bonus is tied to performance targets (financial and operational) determined by our Compensation Committee and Board. The remaining portion of Mr. Tziperman’s maximum annual bonus is discretionary and the payment thereof is determined by our Compensation Committee and our Board.
|
(3)
|
Agreement with Shay Tomer
. The initial employment agreement of Mr. Tomer with the Company, dated April 24, 2007, provides that Mr. Tomer shall act as the Company’s Comptroller in the Company’s finance department. As of June 1, 2013, Mr. Tomer has been promoted and appointed as the Company’s Chief Financial Officer and accordingly a new employment agreement dated August 6, 2013 has been executed by Mr. Tomer for his current position as the Company’s Chief Financial Officer. The latest employment agreement is for an unspecified term and either party may terminate the employment agreement upon 6 months advance notice. In the event of termination (by either party), Mr. Tomer is entitled to receive severance pay equal to the statutory rate of one month’s current salary multiplied by the number of years of employment, unless the termination occurs as a result of circumstances depriving him of the right to severance pay at law or as a result of a breach of trust or a material breach of his undertakings. Additionally, in consideration for his commitment to confidentiality and non-competition, Mr. Tomer shall be entitled to receive a one-time payment equal to 6 months of the then applicable salary, where 50% of this amount shall be paid upon the termination of his employment and the remaining 50% shall be held in escrow and released 12 months after the termination of his employment, provided that Mr. Tomer has complied with his confidentiality and non-competition commitments. Under his employment agreement, Mr. Tomer was granted options to purchase 40,000 shares of the Company.
In accordance with the Compensation Policy, Mr. Tomer is entitled to an annual bonus of up to 9 months gross base salary. For 2014, 70% of Mr. Tomer’s maximum annual bonus is tied to financial performance targets, and 20% is based upon certain employee performance goals, both of which are determined by our Chief Executive Officer. The remaining portion of Mr. Tomer’s maximum annual bonus is discretionary and the payment thereof is determined by our Chief Executive Officer.
|
Number of Securities Underlying Unexercised
|
|||||||||||||||||||||
Option Awards
|
Stock Awards
|
||||||||||||||||||||
Name
|
Number of securities underlying unexercised options (#) exercisable
|
Number of securities underlying unexercised options (#) unexercisable
|
Option exercise price($)
|
Option expiration date
|
Number of shares that have not vested (#)
|
Market value of shares that have not vested ($)
|
|||||||||||||||
Dimitrios Angelis (1)
|
50,000 | 100,000 | $ | 3.23 |
12/06/2018
|
- | - | ||||||||||||||
33,334 | 16,666 | $ | 2.32 |
5/26/2019
|
- | - | |||||||||||||||
Ofer Tziperman (2)(3)
|
55,555
33,333
|
111,111
66,667
|
$
$
|
0.90
3.18
|
12/06/2018
12/30/2018
|
-
-
|
-
-
|
||||||||||||||
Shay Tomer (4)(5)
|
8,333
-
|
26,667
13,333
|
$
$
|
1.46
2.36
|
07/20/2018
05/13/2019
|
-
-
|
-
-
|
(1)
|
On December 6, 2013, 150,000 options were granted to Mr. Angelis under the 2001 Stock Option Plan. The options vest in three equal annual installments, commencing December 6, 2014. On May 26, 2014 50,000 options were granted to Mr. Angelis under the 2001 Stock Option Plan. The options vest in three annual installments as follows: 16,667 options at grant, 16,667 on December 30, 2014, and 16,666 on December 30, 2015.
|
(2)
|
On December 6, 2013, 166,666 options were granted to Mr. Tziperman under the 2001 Stock Option Plan. The options vest in three equal annual installments, commencing March 7, 2014.
|
(3)
|
On December 30, 2013, 100,000 options were granted to Mr. Tziperman under the 2001 Stock Option Plan. The options vest in three equal annual installments, commencing December 30, 2014.
|
(4)
|
On July 20, 2013, 40,000 options were granted to Mr. Tomer under the 2001 Stock Option Plan out of which 5,000 options were exercised by Mr. Tomer as of December 31, 2014 The options vest in three equal annual installments, commencing July 20, 2014.
|
(5)
|
On May 13, 2014, 13,333 options were granted to Mr. Tomer under the 2001 Stock Option Plan. The options vest in three equal annual installments, commencing May 13, 2015.
|
Name (1)
|
Fees Earned or Paid in Cash ($) (2)
|
Option Awards ($) (3) (4)
|
Total ($)
|
||||
William C. Anderson III (5)
|
19,278
|
53,800
|
73,078
|
||||
Richard K. Coleman Jr. (6)
|
5,785
|
-
|
5,785
|
||||
Jeffrey E. Eberwein (7)
|
4,587
|
-
|
4,587
|
||||
Charles M. Gillman
|
31,443
|
48,970
|
80,413
|
||||
Jerry L. Ivy Jr. (8)
|
13,448
|
-
|
13,448
|
||||
John A. Knapp Jr.
|
30,775
|
48,970
|
79,745
|
||||
Eileen Segall
|
31,497
|
48,970
|
80,467
|
||||
Dilip Singh
|
32,613
|
48,970
|
81,583
|
||||
Mark Stolper
|
33,309
|
48,970
|
82,279
|
(1)
|
The table above does not include Mr. Angelis, who is included in the description of compensation of Named Executive Officers above.
|
(2)
|
This column represents the sums that our non-executive directors received according to the Israeli regulations as an annual fee as well as for attendance to Board and Board Committees meetings.
|
(3)
|
This column represents the
fair value of stock options granted during 2014.
The amounts reflect the grant date fair value, as calculated pursuant to FASB ASC Topic 718, of these option awards (see Note
10C
to our consolidated financial statements included elsewhere in the Annual Report
).
|
(4)
|
As of December 31, 2014, our
directors held options to purchase our ordinary shares as follows:
|
Name
|
Aggregate number of shares Underlying stock options
|
|||
William C. Anderson III
|
50,000
|
|||
John A. Knapp Jr.
|
50,000
|
|||
Charles M. Gillman
|
50,000
|
|||
Eileen Segall
|
50,000
|
|||
Dilip Singh
|
50,000
|
|||
Mark Stolper
|
50,000
|
(5)
|
External director Mr. Anderson was appointed to the Board on May 26, 2014, and the table above represents the compensation paid to Mr. Anderson in 2014.
|
(6)
|
Former director Mr. Coleman resigned from the Board on April 23, 2014, and the table above represents the compensation paid to Mr. Coleman in 2014.
|
(7)
|
Former external director Mr. Eberwein resigned from the Board on March 21, 2014, and the table above represents the compensation paid to Mr. Eberwein in 2014.
|
(8)
|
Former director Mr. Ivy resigned from the Board on October 3, 2014, and the table above represents the compensation paid to Mr. Ivy in 2014. Mr. Ivy was granted 50,000 options in 2014, none of which vested prior to their expiration in October 2014.
|
Name of beneficial owner
|
Position
|
Number of Shares Beneficially Owned (*)
|
% of Class of Shares
|
|||||||
Dilip Singh (1)
|
Director, Chairman
|
792,446
|
1.9%
|
|||||||
Dimitrios J. Angelis (2)
|
Director and Officer
|
118,833
|
**
|
|||||||
William C. Anderson
|
Director
|
-
|
-
|
|||||||
Charles M. Gillman (3)
|
Director
|
549,633
|
1.3
|
%
|
||||||
John A. Knapp Jr.(4)
|
Director
|
254,033
|
**
|
|||||||
Eileen Segall (5)
|
Director
|
33,333
|
**
|
|||||||
Mark Stolper (6)
|
Director
|
30,417
|
**
|
|||||||
Ofer Tziperman (7)
|
Officer
|
154,444
|
**
|
|||||||
Shay Tomer (8)
|
Officer
|
12,777
|
**
|
|||||||
All executive officers and directors as a group (9 persons)
|
1,945,916
|
4.7
|
%
|
|||||||
5% Shareholders
|
||||||||||
Jerry L. Ivy, Jr. (9)
|
Shareholder
|
3,063,916
|
7.5
|
%
|
(*)
|
If a shareholder has the right to acquire shares by exercising options currently exercisable or exercisable within 60 days of the date of this table, these shares are deemed outstanding for the purpose of computing the percentage owned by the specific shareholder (that is, they are included in both the numerator and the denominator), but they are disregarded for the purpose of computing the percentage owned by any other shareholder.
|
(**)
|
Less than 1%
|
(1) |
Based on the information provided by Mr. Singh, includes 324,328 Ordinary Shares held by Value Generation Capital Fund, LP. The general partner of Value Generation Capital Fund, LP is Value Generation Capital, LLC. Mr. Singh is the managing member of Value Generation Capital, LLC, and may be deemed to have voting and dispositive power with respect to the shares held by Value Generation Capital Fund, LP, includes 434,785 Ordinary Shares as to which Mr. Singh has voting rights in his capacity as Chairman of the Board, pursuant to irrevocable proxies previously granted to the Chairman of the Board of the Company and includes options held by Mr. Singh to purchase 33,333 Ordinary Shares currently exercisable or exercisable within 60 days of this table.
|
(2)
|
Includes 35,500 Ordinary Shares held by Mr. Angelis, and, and includes options to purchase 83,333 ordinary shares currently exercisable or exercisable within 60 days of this table.
|
(3)
|
Based on the information provided by Mr. Gillman, includes 516,300 Ordinary Shares purchased by Boston Avenue Capital LLC and Williams Trading LLC at a time when Mr. Gillman was a portfolio manager for Boston Avenue Capital, LLC, to whom Mr. Gillman makes, from time to time, non-binding investment recommendations) and includes options held by Mr. Gillman to purchase 33,333 Ordinary Shares currently exercisable or exercisable within 60 days of this table.
|
(4)
|
Includes 220,700 Ordinary Shares held by Mr. Knapp and includes options held by Mr. Knapp to purchase 33,333 Ordinary Shares currently exercisable or exercisable within 60 days of this table.
|
(5)
|
Consist of options held by Ms. Segall to purchase 33,333 Ordinary Shares currently exercisable or exercisable within 60 days of this table.
|
(6)
|
Consist of options held by Mr. Stolper to purchase 30,417 Ordinary Shares currently exercisable or exercisable within 60 days of this table.
|
(7)
|
Includes 10,000 Ordinary Shares held by Mr. Tziperman and includes options held by Mr. Tziperman to purchase 144,444 Ordinary Shares currently exercisable or exercisable within 60 days of the date of this table.
|
(8)
|
Consists of options held by Mr. Tomer to purchase 12,777 Ordinary Shares currently exercisable or exercisable within 60 days of the date of this table.
|
(9)
|
Information is based solely on Schedule 13G filed by Mr. Ivy with the SEC on January 16, 2015. Includes 2,641,116 Ordinary Shares held by Mr. Ivy and 422,800 Ordinary Shares held in an account with Marlene A. Ivy as joint tenants with rights of survivorship.
|
2014
|
2013
|
|||||||
Audit fees (1)
|
$
|
188
|
$
|
242
|
||||
Audit related fee (2)
|
$
|
27
|
$
|
48
|
||||
Tax fees (3)
|
$
|
22
|
$
|
16
|
||||
All Other Fees (4)
|
$
|
7
|
$
|
-
|
||||
Total
|
$
|
246
|
$
|
306
|
(1)
|
The audit fees for the years ended December 31, 2014 and 2013, are the aggregate fees billed or billable (for the year) for the professional services rendered for the audits of our 2014 and 2013 annual consolidated financial statements, review of consolidated quarterly financial statements of 2014 and 2013, and services that are normally provided in connection with statutory audits of us and our subsidiaries, consents and assistance with review of documents filed with the SEC.
|
(2)
|
The audit-related fees for the year ended December 31, 2014 included services in respect of S-3 and prospectus. The audit-related fees for the year ended December 31, 2013 included services in respect of the carve-out financial report for the SmartID division.
|
(3)
|
Tax fees are the aggregate fees billed (in the year) for professional services rendered for tax compliance and tax advice other than in connection with the audit.
|
(4)
|
All other
fees for the year ended December 31, 2014 included services in respect of the conflict mineral law requires manufacturers to audit their supply chains and report conflict minerals usage.
|
3.1
|
Amended and Restated Articles of Association (incorporated by reference to the Company’s report on Form 6-K filed with the SEC on October 31, 2013).
|
3.2
|
Memorandum of Association, dated February 14, 1990 (incorporated by reference to the Company’s Registration Statement on Form F-1, filed with the SEC on June 14, 2002).
|
10.1
|
Original Section 102 Share Option Plan of the Registrant (incorporated by reference to the amendment to the Company’s Registration Statement on Form F-1, filed with the SEC on September 11, 2002). +
|
10.2
|
Amended and Restated On Track Innovations Ltd. 2001 Share Option Plan (incorporated by reference to the Company’s proxy statement on Schedule 14A filed with the SEC on April 11, 2014). +
|
10.3
|
Long Term Lease Agreement, dated as of March 6, 2002 by and between the Israel Lands Authority and the Company (incorporated by reference to the Company’s Registration Statement on Form F-1, filed with the SEC on June 14, 2002).
|
10.4
|
Form of Letter of Exemption and Indemnification between the Company and its directors and officers (incorporated by reference to the Company’s report on Form 6-K filed with the SEC on October 31, 2013 and Company’s report on Form 6-K filed with the SEC on December 9, 2013.
|
10.5
|
Asset Purchase Agreement, dated August 14, 2013, by and between the Company and SuperCom Ltd. (incorporated by reference to the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 2014).
|
10.6*
|
Personal and Special Employment Agreement, dated August 6, 2013, by and between the Company and Shay Tomer.
(Confidential treatment has been requested for portions of this document. The confidential portions will be omitted and filed separately, on a confidential basis, with the Securities and Exchange Commission.)
+
|
10.7*
|
Personal Employment Agreement, dated December 22, 2013, by and between the Company and Ofer Tziperman.
(Confidential treatment has been requested for portions of this document. The confidential portions will be omitted and filed separately, on a confidential basis, with the Securities and Exchange Commission.)
+
|
10.8
|
Employment Agreement, dated December 22, 2013, by and among the Company, OTI America, Inc. and Dimitrios Angelis (incorporated by reference to the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 2014).
+
|
10.9*
|
Executive Compensation Policy +
|
21.1*
|
List of Subsidiaries of the Company.
|
23.1*
|
Consent of Independent Registered Public Accounting Firm.
|
31.1*
|
Certification pursuant to Rule 13a-14(a)/15d-14(a) of Ofer Tziperman.
|
31.2*
|
Certification pursuant to Rule 13a-14(a)/15d-14(a) of Shay Tomer.
|
32.1**
|
Certification pursuant to 18 U.S.C. Section 1350 of Ofer Tziperman.
|
32.2**
|
Certification pursuant to 18 U.S.C. Section 1350 of Shay Tomer.
|
101 *
|
The following materials from our Annual Report on Form 10-K for the year ended December 31, 2014 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to the Consolidated Financial Statements, tagged as blocks of text and in detail.
|
On Track Innovations Ltd.
|
|||
Dated: March 30, 2015
|
By:
|
/s/ Ofer Tziperman | |
Ofer Tziperman
|
|||
Chief Executive Officer
|
Signature
|
Title
|
Date
|
/s/ Ofer Tziperman
|
Chief Executive Officer (principal executive officer)
|
March 30, 2015
|
Ofer Tziperman
|
||
/s/ Shay Tomer
|
Chief Financial Officer (principal financial officer and
|
March 30, 2015
|
Shay Tomer
|
principal accounting officer)
|
|
/s/ Dilip Singh
|
Chairman of the Board of Directors
|
March 30, 2015
|
Dilip Singh
|
||
/s/ William C. Anderson
|
Director
|
March 30, 2015
|
William C. Anderson
|
||
/s/ Dimitrios J. Angelis
|
Director
|
March 30, 2015
|
Dimitrios J. Angelis
|
||
/s/ Charles M. Gillman
|
Director
|
March 30, 2015
|
Charles M. Gillman
|
||
/s/ John A. Knapp Jr.
|
Director
|
March 30, 2015
|
John A. Knapp Jr.
|
||
/s/ Eileen Segall
|
Director
|
March 30, 2015
|
Eileen Segall
|
||
/s/ Mark Stolper
|
Director
|
March 30, 2015
|
Mark Stolper
|
On Track Innovations Ltd.
and its Subsidiaries
Consolidated Financial Statements
As of December 31, 2014
|
Page
|
|
F-2
|
|
F-3 - F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-8 - F-9
|
|
F-10 - F-39
|
December 31
|
||||||||
2014
|
2013
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 5,351 | $ | 14,962 | ||||
Short-term investments
|
11,048 | 2,601 | ||||||
Trade receivables (net of allowance for doubtful
|
||||||||
accounts of $671 and $610 as of December 31, 2014
|
||||||||
and December 31, 2013, respectively)
|
4,299 | 5,134 | ||||||
Other receivables and prepaid expenses
|
2,530 | 4,632 | ||||||
Inventories
|
3,703 | 3,477 | ||||||
Assets from discontinued operations - held for sale
|
- | 3,919 | ||||||
Total current assets
|
26,931 | 34,725 | ||||||
Long term restricted deposit for employees benefit
|
555 | 623 | ||||||
Severance pay deposits
|
614 | 738 | ||||||
Property, plant and equipment, net
|
9,234 | 9,837 | ||||||
Deferred tax asset
|
47 | 173 | ||||||
Total Assets
|
$ | 37,381 | $ | 46,096 |
December 31
|
||||||||
2014
|
2013
|
|||||||
Liabilities and Equity
|
||||||||
Current Liabilities
|
||||||||
Short-term bank credit and current maturities
|
||||||||
of long-term bank loans
|
$ | 3,617 | $ | 3,842 | ||||
Trade payables
|
7,306 | 9,255 | ||||||
Other current liabilities
|
2,656 | 6,299 | ||||||
Liabilities from discontinued operations - held for sale
|
- | 2,956 | ||||||
Total current liabilities
|
13,579 | 22,352 | ||||||
Long-Term Liabilities
|
||||||||
Long-term loans, net of current maturities
|
2,161 | 3,342 | ||||||
Accrued severance pay
|
1,456 | 1,706 | ||||||
Deferred tax liability
|
302 | 292 | ||||||
Total long-term liabilities
|
3,919 | 5,340 | ||||||
Total Liabilities
|
17,498 | 27,692 | ||||||
Commitments and Contingencies
|
||||||||
Equity
|
||||||||
Shareholders' Equity
|
||||||||
Ordinary shares of NIS 0.1 par value: Authorized –
|
||||||||
50,000,000 shares as of December 31, 2014 and
|
||||||||
December 31, 2013; issued: 41,996,602 and 34,199,511
|
||||||||
shares as of December 31, 2014 and December 31, 2013,
|
||||||||
respectively; outstanding: 40,817,903 and 33,020,812 shares
|
||||||||
as of December 31, 2014 and December 31, 2013, respectively
|
1,055 | 854 | ||||||
Additional paid-in capital
|
224,234 | 212,246 | ||||||
Treasury shares at cost - 1,178,699 shares as of December 31,
|
||||||||
2014 and December 31, 2013.
|
(2,000 | ) | (2,000 | ) | ||||
Accumulated other comprehensive income (loss)
|
(800 | ) | 28 | |||||
Accumulated deficit
|
(202,103 | ) | (192,179 | ) | ||||
Total Shareholder’s equity
|
20,386 | 18,949 | ||||||
Non-controlling interest
|
(503 | ) | (545 | ) | ||||
Total Equity
|
19,883 | 18,404 | ||||||
Total Liabilities and Equity
|
$ | 37,381 | $ | 46,096 |
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Revenues
|
||||||||||||
Sales
|
$ | 17,286 | $ | 15,067 | $ | 11,560 | ||||||
Licensing and transaction fees
|
5,776 | 4,801 | 5,044 | |||||||||
Total revenues
|
23,062 | 19,868 | 16,604 | |||||||||
Cost of revenues
|
||||||||||||
Cost of sales
|
12,006 | 9,140 | 7,298 | |||||||||
Total cost of revenues
|
12,006 | 9,140 | 7,298 | |||||||||
Gross profit
|
11,056 | 10,728 | 9,306 | |||||||||
Operating expenses
|
||||||||||||
Research and development
|
4,664 | 4,405 | 5,393 | |||||||||
Selling and marketing
|
8,230 | 7,132 | 11,675 | |||||||||
General and administrative
|
6,142 | 6,939 | 9,022 | |||||||||
Patent litigation and maintenance
(*)
|
1,543 | 1,351 | 432 | |||||||||
Other operating income, net
|
(13 | ) | (4,181 | ) | - | |||||||
Amortization of intangible assets
|
- | 81 | 99 | |||||||||
Impairment of goodwill and intangible assets
|
- | 813 | - | |||||||||
Total operating expenses
|
20,566 | 16,540 | 26,621 | |||||||||
Operating loss from continuing operations
|
(9,510 | ) | (5,812 | ) | (17,315 | ) | ||||||
Financial expenses, net
|
(577 | ) | (913 | ) | (493 | ) | ||||||
Loss from continuing operations before taxes on income
|
(10,087 | ) | (6,725 | ) | (17,808 | ) | ||||||
|
||||||||||||
Income tax
|
(110 | ) | (203 | ) | (67 | ) | ||||||
Net loss from continuing operations
|
(10,197 | ) | (6,928 | ) | (17,875 | ) | ||||||
Net income from discontinued operations
|
315 | 3,777 | 313 | |||||||||
Net loss
|
(9,882 | ) | (3,151 | ) | (17,562 | ) | ||||||
Net (income) loss attributable to noncontrolling interest
|
(42 | ) | 103 | 168 | ||||||||
Net loss attributable to shareholders
|
$ | (9,924 | ) | $ | (3,048 | ) | $ | (17,394 | ) |
Basic and diluted net profit (loss) attributable to
|
||||||||||||
shareholders per ordinary share
|
||||||||||||
From continuing operations
|
$ | (0.30 | ) | $ | (0.21 | ) | $ | (0.56 | ) | |||
From discontinued operations
|
$ | 0.01 | $ | 0.12 | $ | 0.02 | ||||||
$ | (0.29 | ) | $ | (0.09 | ) | $ | (0.54 | ) | ||||
Weighted average number of ordinary shares used in computing basic and diluted net profit (loss) per ordinary share
|
34,013,870 | 32,673,123 | 32,168,373 |
|
On
Track Innovations Ltd.
|
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Total comprehensive loss:
|
||||||||||||
Net loss
|
$ | (9,882 | ) | $ | (3,151 | ) | $ | (17,562 | ) | |||
Foreign currency translation adjustments
|
(435 | ) | 44 | 171 | ||||||||
Foreign currency translation released following
sale of a subsidiary
|
(393 | ) | - | - | ||||||||
Net unrealized gain on available-for-sale securities
|
- | 34 | 43 | |||||||||
Reclassification adjustment for loss on
|
||||||||||||
available-for-sale securities
|
- | (69 | ) | (99 | ) | |||||||
Total comprehensive loss
|
$ | (10,710 | ) | $ | (3,142 | ) | $ | (17,447 | ) | |||
Comprehensive (income) loss attributable to the non-controlling interest
|
(42 | ) | 86 | 172 | ||||||||
Total comprehensive loss attributable to shareholders
|
$ | (10,752 | ) | $ | (3,056 | ) | $ | (17,275 | ) |
|
On
Track Innovations Ltd.
|
Accumulated
|
||||||||||||||||||||||||||||||||
Additional
|
other
|
Non- |
|
|||||||||||||||||||||||||||||
Number of
|
Share
|
paid-in
|
Treasury
|
comprehensive
|
Accumulated
|
controlling
|
Total
|
|||||||||||||||||||||||||
Shares issued
|
capital
|
capital
|
Shares
|
Income (loss)
|
deficit
|
interest
|
equity
|
|||||||||||||||||||||||||
Balance as of January 1, 2012
|
32,313,761 | $ | 808 | $ | 209,741 | $ | (2,000 | ) | $ | (83 | ) | $ | (171,737 | ) | $ | (287 | ) | $ | 36,442 | |||||||||||||
Changes during the year ended
|
||||||||||||||||||||||||||||||||
December 31, 2012:
|
||||||||||||||||||||||||||||||||
Stock-based compensation related to
|
||||||||||||||||||||||||||||||||
options issued to employees and others
|
- | - | 951 | - | - | - | - | 951 | ||||||||||||||||||||||||
Exercise of options
|
624,250 | 12 | - | - | - | - | - | 12 | ||||||||||||||||||||||||
Warrants issued in connection with the purchase of business operation
|
- | - | 147 | - | - | - | - | 147 | ||||||||||||||||||||||||
Adjustment to contingent consideration in connection with the purchase of business operation
|
- | - | 14 | - | - | - | - | 14 | ||||||||||||||||||||||||
Foreign currency translation adjustments
|
- | - | - | - | 175 | - | (4 | ) | 171 | |||||||||||||||||||||||
Change in net unrealized gain on
|
||||||||||||||||||||||||||||||||
available- for-sale securities
|
- | - | - | - | (56 | ) | - | - | (56 | ) | ||||||||||||||||||||||
Net loss
|
- | - | - | - | - | (17,394 | ) | (168 | ) | (17,562 | ) | |||||||||||||||||||||
Balance as of December 31, 2012
|
32,938,011 | $ | 820 | $ | 210,853 | $ | (2,000 | ) | $ | 36 | $ | (189,131 | ) | $ | (459 | ) | $ | 20,119 |
Changes during the year ended
|
||||||||||||||||||||||||||||||||
December 31, 2013:
|
||||||||||||||||||||||||||||||||
Stock-based compensation related to
|
||||||||||||||||||||||||||||||||
options issued to employees and others
|
- | - | 364 | - | - | - | - | 364 | ||||||||||||||||||||||||
Exercise of options
|
1,261,500 | 34 | 1,029 | - | - | - | - | 1,063 | ||||||||||||||||||||||||
Foreign currency translation adjustments
|
- | - | - | - | 27 | - | 17 | 44 | ||||||||||||||||||||||||
Change in net unrealized gain on
|
||||||||||||||||||||||||||||||||
available-for-sale securities
|
- | - | - | - | (35 | ) | - | - | (35 | ) | ||||||||||||||||||||||
Net loss
|
- | - | - | - | - | (3,048 | ) | (103 | ) | (3,151 | ) | |||||||||||||||||||||
Balance as of December 31, 2013
|
34,199,511 | $ | 854 | $ | 212,246 | $ | (2,000 | ) | $ | 28 | $ | (192,179 | ) | $ | (545 | ) | $ | 18,404 |
Changes during the year ended
|
||||||||||||||||||||||||||||||||
December 31, 2014:
|
Stock-based compensation related to
|
||||||||||||||||||||||||||||||||
options issued to employees and others
|
- | - | 875 | - | - | - | - | 875 | ||||||||||||||||||||||||
Exercise of options and warrants
|
609,591 | 16 | 854 | - | - | - | - | 870 | ||||||||||||||||||||||||
Issuance of shares, net of issuance expenses of $365
|
7,187,500 | 185 | 10,259 | - | - | - | - | 10,444 | ||||||||||||||||||||||||
Foreign currency translation adjustments
|
- | - | - | - | (828 | ) | - | - | (828 | ) | ||||||||||||||||||||||
Net income (loss)
|
- | - | - | - | - | (9,924 | ) | 42 | (9,882 | ) |
Balance as of December 31, 2014
|
41,996,602 | $ | 1,055 | $ | 224,234 | $ | (2,000 | ) | $ | (800 | ) | $ | (202,103 | ) | $ | (503 | ) | $ | 19,883 |
|
On
Track Innovations Ltd.
|
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Cash flows from continuing operating activities
|
||||||||||||
Net loss from continuing operations
|
$ | (10,197 | ) | $ | (6,928 | ) | $ | (17,875 | ) | |||
Adjustments required to reconcile net loss to
|
||||||||||||
net cash used in continuing operating activities:
|
||||||||||||
Stock-based compensation related to options and shares issued
|
||||||||||||
to employees and others
|
875 | 307 | 734 | |||||||||
Loss (gain) on sale of property and equipment
|
(10 | ) | 91 | (295 | ) | |||||||
Amortization of intangible assets
|
- | 81 | 99 | |||||||||
Impairment of goodwill and intangible assets
|
- | 813 | - | |||||||||
Loss (gain) from sale and shut down of subsidiaries
(Supplement D)
|
(3 | ) | 231 | - | ||||||||
Depreciation
|
1,307 | 1,135 | 1,099 | |||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accrued severance pay, net
|
(126 | ) | (3,165 | ) | 1,132 | |||||||
Accrued interest and linkage differences
|
87 | (166 | ) | (232 | ) | |||||||
Deferred tax, net
|
108 | 112 | (12 | ) | ||||||||
Decrease (increase) in trade receivables, net
|
432 | (765 | ) | 4,089 | ||||||||
Decrease (increase) in other receivables and prepaid expenses
|
132 | 1,332 | (2,432 | ) | ||||||||
(Increase) decrease in inventories
|
(334 | ) | (11 | ) | 831 | |||||||
(Decrease) increase in trade payables
|
(630 | ) | (181 | ) | 1,598 | |||||||
(Decrease) increase in other current liabilities
|
(1,263 | ) | (3,472 | ) | 4,849 | |||||||
Net cash used in continuing operating activities
|
(9,622 | ) | (10,586 | ) | (6,415 | ) | ||||||
Cash flows from continuing investing activities
|
||||||||||||
Acquisition of business operation (Supplement C)
|
- | - | (100 | ) | ||||||||
Purchase of property and equipment
|
(1,573 | ) | (2,784 | ) | (971 | ) | ||||||
Purchase of short term investments
|
(11,433 | ) | (325 | ) | (10,403 | ) | ||||||
Investment in restricted deposit for employees benefit
|
- | - | (3,891 | ) | ||||||||
Proceeds from restricted deposit for employees benefit
|
- | 3,390 | - | |||||||||
Proceeds from maturity or sale of short term investments
|
2,967 | 6,549 | 17,712 | |||||||||
Proceeds from sale of property and equipment
|
14 | 168 | 299 | |||||||||
Net cash (used in) provided by continuing investing activities
|
(10,025 | ) | 6,998 | 2,646 | ||||||||
Cash flows from continuing financing activities
|
||||||||||||
(Decrease) increase in short-term bank credit, net
|
(25 | ) | (1,073 | ) | 1,822 | |||||||
Proceeds from long-term bank loans
|
52 | 3,184 | 390 | |||||||||
Repayment of long-term bank loans
|
(1,019 | ) | (1,316 | ) | (2,193 | ) | ||||||
Proceeds from issuance of shares, net of issuance expenses
|
10,444 | - | - | |||||||||
Proceeds from exercise of options and warrants
|
965 | 968 | 12 | |||||||||
Net cash provided by continuing financing activities
|
10,417 | 1,763 | 31 | |||||||||
Cash flows from discontinued operations
|
||||||||||||
Net cash (used in) provided by discontinued operating activities
|
(1,430 | ) | (1,391 | ) | 1,768 | |||||||
Net cash provided by (used in) discontinued investing activities
|
1,708 | 9,858 | (72 | ) | ||||||||
Net cash used in discontinued financing activities
|
(154 | ) | (985 | ) | (1,427 | ) | ||||||
Total net cash provided by discontinued operations
|
124 | 7,482 | 269 | |||||||||
Effect of exchange rate changes on cash and cash equivalents
|
(505 | ) | 1 | 256 | ||||||||
(Decrease) increase in cash and cash equivalents
|
(9,611 | ) | 5,658 | (3,213 | ) | |||||||
Cash and cash equivalents at the beginning of the year
|
14,962 | 9,304 | 12,517 | |||||||||
Cash and cash equivalents at the end of the year
|
$ | 5,351 | $ | 14,962 | $ | 9,304 |
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Supplementary cash flows information:
|
||||||||||||
A. Cash paid during the period for:
|
||||||||||||
Interest paid
|
$ | 316 | $ | 286 | $ | 329 | ||||||
Income taxes paid
|
$ | 32 | $ | 194 | $ | - | ||||||
B. Non-cash investing and financing transactions:
|
||||||||||||
Receivables for issuance of equity, collected
|
||||||||||||
immediately after balance sheet date
|
$ | - | $ | 95 | $ | - | ||||||
Other liabilities
|
$ | - | $ | - | $ | (14 | ) | |||||
C. Acquisition of business operations, see note 1C:
|
||||||||||||
Assets acquired and liabilities assumed of the
|
||||||||||||
business at date of acquisition:
|
||||||||||||
Working capital surplus
|
$ | - | $ | - | $ | 9 | ||||||
Technology
|
- | - | (256 | ) | ||||||||
$ | - | $ | - | $ | (247 | ) | ||||||
Issuance of shares and warrants in consideration for the acquisition
|
- | - | 147 | |||||||||
$ | - | $ | - | $ | (100 | ) | ||||||
D. Sale and shutdown of consolidated subsidiaries, see note 1B(3) and 1B(4):
|
||||||||||||
Assets and liabilities of the previously consolidated
|
||||||||||||
subsidiaries at the time ceased being consolidated:
|
||||||||||||
Working capital surplus
|
9 | (4 | ) | - | ||||||||
Property and equipment
|
- | 41 | - | |||||||||
Intangible assets
|
- | 248 | - | |||||||||
Deferred tax liability
|
- | (46 | ) | - | ||||||||
Short term bank credit
|
(12 | ) | - | - | ||||||||
Non-controlling interest
|
- | (5 | ) | - | ||||||||
Other comprehensive loss
|
- | (3 | ) | - | ||||||||
Proceeds from sale of subsidiary
|
- | - | - | |||||||||
Loss (gain) on sale and shutdown of subsidiaries
|
$ | (3 | ) | $ | 231 | $ | - |
A.
|
Introduction
|
B.
|
Divestiture of operations:
|
|
1.
|
In December 2013, the Company completed the sale of certain assets, subsidiaries and intellectual property (“IP”) relating to its Smart ID division, for a total purchase price of $10,000 in cash and an additional $12,500 subject to performance-based milestones (the” SmartID Division Divesture”). Accordingly, the results and the cash flows of this operation for all reporting periods are presented in the statements of operations and in the statements of cash flows, respectively, as discontinued operations separately from continuing operations. The Company recorded a gain from this divesture, net of transaction costs, in the amount of $8,944 in 2013.
|
|
During the year ended December 31, 2014 the Company recorded profit from contingent consideration in the amount of $1,013 according to earn out mechanism. This profit is presented as ‘other income, net’ within income from discontinued operations for the year ended December 31, 2014 (see also Note 13).
|
|
2.
|
During 2013 the Company reached an initial agreement, which eventually closed in February 2014, to sell its wholly owned German subsidiary, Intercard System Electronics GmbH (hereinafter – “Intercard”), for a total purchase price of EURO 700 (approximately, $960) and an additional immaterial contingent consideration based on future sales (the” German Subsidiary Divesture”). Accordingly, assets and liabilities related to Intercard are presented separately in the balance sheet as of December 31, 2013, as assets and liabilities held for sale, which was consummated on February 28, 2014. As of December 31, 2013, the Company recognized a loss from impairment assets in the amount of $2,970 that reflected the difference between the book value of Intercard’s assets, net of liabilities, and the consideration (see also Note 13). The Company recorded the impairment charge of $2,970 in its statement of operations for the year ended December 31, 2013, among “net income from discontinued operations”. The results and the cash flows of this operation for the reporting periods are presented in the statements of operations and in the statements of cash flows, respectively, as discontinued operations separately from continuing operations.
|
B.
|
Divestiture of operations (cont’d):
|
|
The Company recorded a loss from the German Subsidiary Divesture in the amount of $7 on the closing date in 2014. This loss includes transaction costs, in the amount of $343 and a profit in the amount of $336 due to transfer of Intercard’s accumulated foreign currency translation adjustments from other comprehensive loss to the statement of operations.
|
|
Those amounts are included within ‘Other income, net’ from discontinued operations for the year ended December 31, 2014 (see also note 13).
|
|
3.
|
In August 2013, the Company, through its subsidiary, Parx Ltd. entered into a share purchase agreement with a third party for the sale of 100% of the shares of a subsidiary, Parx France, for consideration of 25% of Parx France’s future profits on an EBITDA basis
.
The Company has recorded a loss in the amount of $231 during 2013, presented in the statement of operations among “other operating income, net”.
|
|
4.
|
As of December 31, 2014 the Company shut down the operation of its wholly owned subsidiary Smart Card Engineering Ltd. The Company has recorded a capital gain in the amount of $3 as part of other operating income, net (see Note 11).
|
C.
|
Acquisition of subsidiaries and business operations
|
|
1.
|
In April 2012, the Company completed, through its subsidiary Parx Ltd, the purchase of 100% of the share capital of CPI Communication Ltd. (“CPI”), an Israeli-based company that provides private parking solutions across Israel (hereinafter – the “CPI Transaction"). CPI was purchased in order to expand the Company’s product offering, for a purchase price of $247, comprised of $100 in cash and $147 by issuance of 90,361 warrants to purchase the Company's ordinary shares.
|
|
The 90,361 warrants were issued with a par value exercise price which becomes exercisable in five equal installments over a period of five years.
|
|
The acquisition was accounted for as a business combination, using the purchase method of accounting and the Company allocated the purchase price according to the fair value of the tangible and intangible assets acquired and liabilities assumed. Transaction costs were expensed.
|
|
As part of the purchase price allocation, the Company recognized a technology intangible asset, at an estimated fair value of $256.
|
|
During 2013 the Company’s management decided to abandon the operations of CPI. As a result the Company recorded an impairment of the technology intangible asset.
|
C.
|
Acquisition of subsidiaries and business operations (cont’d)
|
|
2.
|
On January 4, 2011, Parx Ltd., the Company’s subsidiary, entered into an assets acquisition agreement with Ganis Systems Ltd. (“Ganis”) for the acquisition of assets and IP. In consideration for this acquisition, the Company paid Ganis $400 in cash and issued to it 130,521 ordinary shares of the Company. The agreement also consisted of additional earn-out payments, subject to certain milestones, which eventually were not met.
|
|
The acquisition was accounted for as a business combination, using the purchase method of accounting and the Company allocated the purchase price according to the fair value of the tangible and intangible assets acquired and liabilities assumed. Transaction costs were expensed.
|
|
In connection with the acquisition, the Company recognized three intangible assets: (1) customer relationships, having an estimated fair value of $102, with an estimated useful life of 11 years, (2) technology, having an estimated fair value of $43 with an estimated useful life of 14 years, and (3) brand, having an estimated fair value of $28, with an estimated useful life of 12 years. Amortization was computed on a straight line basis over the estimated useful lives of the respective assets. The Company also recognized goodwill in the estimated amount of $485. Amortization of the goodwill is a recognized expense for tax purposes.
|
|
During 2013, due to the Company’s change in its operating segments reporting, the goodwill mandatory annual impairment testing and the operating and cash flow losses combined with negative projections regarding Ganis operations, the Company recorded an impairment of these intangible assets and goodwill.
|
A.
|
Financial statements in U.S. dollars
|
A.
|
Financial statements in U.S. dollars (cont’d)
|
B.
|
Principles of consolidation
|
C.
|
Estimates and assumptions
|
D.
|
Cash equivalents
|
E.
|
Trade receivables
|
F.
|
Short term investments
|
|
(1)
|
Bank deposits whose maturities are longer than three months from the date of purchase, but not longer than one year from the balance sheet date.
|
|
(2)
|
Restricted bank deposits whose maturities are not longer than one year from the balance sheet date (for further details, see note 9C).
|
G.
|
Inventories
|
H.
|
Property, plant and equipment, net
|
Years
|
||||
Leasehold land (over the terms of the lease, see Note 6A(1))
|
49 | |||
Buildings
|
25 | |||
Computers, software and manufacturing equipment
|
3-5 | |||
Office furniture and equipment
|
5-16 | |||
(mainly - 10)
|
I.
|
Impairment of long-lived assets
|
J.
|
Goodwill and purchased intangible assets
|
J.
|
Goodwill and purchased intangible assets (cont’d)
|
K.
|
Revenue recognition
|
K.
|
Revenue recognition (cont'd)
|
L.
|
Research and development costs
|
M.
|
Stock-based compensation
|
N.
|
Basic and diluted net loss per share
|
O.
|
Fair value of financial instruments
|
|
·
|
Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
|
|
·
|
Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
|
|
·
|
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
|
O.
|
Fair value of financial instruments (cont’d)
|
P.
|
Income tax
|
Q.
|
Non-controlling Interest
|
R.
|
Severance pay
|
R.
|
Severance pay (cont'd)
|
S.
|
Advertising expenses
|
T.
|
Concentrations of credit risk
|
2014
|
2013
|
2012
|
||||||||||
Allowance for doubtful accounts at beginning of year
|
$ | 610 | $ | 431 | $ | 233 | ||||||
Additions charged to allowance for doubtful accounts
|
88 | 220 | 319 | |||||||||
Write-downs charged against the allowance
|
(27 | ) | (41 | ) | (127 | ) | ||||||
Currency translation differences
|
- | - | 6 | |||||||||
Allowance for doubtful accounts at end of year
|
$ | 671 | $ | 610 | $ | 431 |
U.
|
Commitments and contingencies
|
V.
|
Business divestures
|
|
(i)
|
The business qualifies as a component of an entity, as it comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Company.
|
(ii)
|
Both of the following conditions are met or expected to be met within one year:
|
|
1)
|
The operations and cash flows of the business have been or will be eliminated from the ongoing operations of the entity in the disposal transaction; and
|
|
2)
|
The Company will not have any significant continuing involvement in the operations of the component after the disposal transaction. The eligibility to receive contingent consideration from future sales of the divested business does not necessarily indicate that there is continuing involvement in the operations of the business.
|
V.
|
Business divestures (cont’d)
|
W.
|
Patent litigation and maintenance expenses
|
X.
|
Recent accounting pronouncements
|
|
1.
|
In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the requirements for reporting discontinued operations. Under the ASU, discontinued operations is defined as either a:
|
·
|
Component of an entity, or group of components, that
|
o
|
Has been disposed of meets the criteria to be classified as held-for-sale, or has been abandoned/spun-off; and
|
o
|
Represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results, or a
|
·
|
Business or nonprofit activity that, on acquisition, meets the criteria to be classified as held-for-sale.
|
·
|
All disposals (or classifications as held for sale) of components that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years, and
|
·
|
All business that, on acquisition, are classified as held for sale that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years.
|
X.
|
Recent accounting pronouncements (cont’d)
|
|
2.
|
On May 28, 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which requires an entity to recognize the amount of revenues to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.
|
|
3.
|
On August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). The ASU is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company is currently assessing the impact the adoption of ASU 2014-15 will have on its consolidated financial statements.
|
December 31
|
||||||||
2014
|
2013
|
|||||||
Government institutions
|
$ | 452 | $ | 309 | ||||
Prepaid expenses
|
690 | 818 | ||||||
Receivables under contractual obligations to be transferred to others *
|
695 | 1,288 | ||||||
Receivables related to the Smart ID Division Divestiture
|
- | 1,572 | ||||||
Other receivables
|
693 | 645 | ||||||
$ | 2,530 | $ | 4,632 |
*
|
The Company’s subsidiary in Poland is required to collect certain fees that are to be transferred to local authorities.
|
December 31
|
||||||||
2014
|
2013
|
|||||||
Raw materials
|
$ | 884 | $ | 775 | ||||
Work in progress
|
552 | 665 | ||||||
Finished products
|
2,267 | 2,037 | ||||||
$ | 3,703 | $ | 3,477 |
A.
|
Consist of:
|
December 31
|
||||||||
2014
|
2013
|
|||||||
Cost
|
||||||||
Leasehold land
(1)
|
$ | 272 | $ | 272 | ||||
Buildings on leasehold land
(1)
|
4,355 | 4,339 | ||||||
Buildings
|
1,055 | 1,160 | ||||||
Computers, software and manufacturing equipment
|
15,567 | 15,311 | ||||||
Office furniture and equipment
|
825 | 817 | ||||||
Motor vehicles
|
355 | 393 | ||||||
Total cost
|
22,429 | 22,292 | ||||||
Total accumulated depreciation
|
13,195 | 12,455 | ||||||
$ | 9,234 | $ | 9,837 |
|
(1)
|
The leasehold land consists of two plots owned by the Israel Lands Administration. Rights to leasehold land on the first plot extend over the original period of 49 years ending in the year 2041 with an option to extend for an additional 49 years, and on the second plot for a period of 49 years, which will end in the year 2047 with an option to extend for a further 49 years. The amount includes payments on account of land development and payments of the capitalization of leasing payments. The rent for the initial 49-year term of each of these leases was prepaid in its entirety at the beginning of the lease terms as is customary in Israel for leases of property for industrial purposes from the Israel Lands Administration.
|
B.
|
As to liens - See note 9C.
|
C.
|
Depreciation expenses amounted to $1, 307, $1,135 and $1,099 for the years ended December 31, 2014, 2013 and 2012, respectively.
|
December 31
|
December 31
|
|||||||
2014
|
2013
|
|||||||
Employees and related expenses
|
$ | 1,175 | $ | 2,116 | ||||
Accrued expenses
|
902 | 1,541 | ||||||
Customer advances
|
244 | 877 | ||||||
Government institutions related to the Smart ID Division Divesture
|
- | 1,572 | ||||||
Other current liabilities
|
335 | 193 | ||||||
$ | 2,656 | $ | 6,299 |
A.
|
Composition of long-term loans:
|
December 31
|
December 31
|
|||||||
2014
|
2013
|
|||||||
Long-term loans
|
$ | 2,996 | $ | 4,216 | ||||
Less - current maturities
|
835 | 874 | ||||||
$ | 2,161 | $ | 3,342 |
B.
|
Repayment dates of long-term loans subsequent to December 31, 2014:
|
2015
|
$ | 835 | ||
2016
|
742 | |||
2017
|
456 | |||
2018
|
310 | |||
2019
|
223 | |||
Thereafter
|
430 | |||
$ | 2,996 |
C.
|
Composition of short-term loans, bank credit and current maturities of long-term loans:
|
December 31
|
December 31
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
%
|
%
|
|||||||||||||||
Interest rate
|
||||||||||||||||
In NIS
|
4.67 | 6.49 | $ | 778 | $ | 993 | ||||||||||
In U.S. Dollars
|
5.03 | 4.72 | 1,159 | 1,010 | ||||||||||||
In Polish Zloty
|
3.60 | 3.59 | 845 | 965 | ||||||||||||
2,782 | 2,968 | |||||||||||||||
Current maturities of long-term loans
|
835 | 874 | ||||||||||||||
$ | 3,617 | $ | 3,842 |
D.
|
Liens for short-term and long-term borrowings - see note 9C.
|
E.
|
As of December 31, 2014, the Group has authorized and used credit lines of approximately $2,909 and $2,782, respectively.
|
F
.
|
On November 4, 2014, the Company signed a financial and restrictive covenant with Bank Leumi L’Israel Ltd. (the “Bank”) in order to secure bank services and obtain bank credit and loans. Under the covenants definitions, the Company is obligated to meet the following: (i) total liquid deposits will not be less than $6,000 at any time; (ii) beginning 2015, the annual operational profit on an EBITDA basis will not be less than $1,000; (iii) annual revenues will not be less than $20,000; and (iv) for 2014: equity at a level of 25% of the total assets and equity sum of no less than $9,500, for 2015: equity at a level of 28% of the total assets and equity sum of no less than $10,500, for 2016 and onwards: equity at a level of 30% of the total assets and equity sum of no less than $11,000. As of December 31, 2014, the Company is in compliance with these covenants.
|
A.
|
Commitments and Contingencies:
|
|
1.
|
The Company and its Israeli subsidiary, EasyPark, have entered into several research and development agreements, pursuant to which the Company and EasyPark received grants from the Government of Israel, and are therefore obligated to pay royalties to the Government of Israel at a rate of 3.5% of its sales up to the amounts granted (linked to the U.S. dollar with annual interest at LIBOR as of the date of approval, for programs approved from January 1, 1999 and thereafter). The total amount of grants received until December 31, 2014, net of royalties paid, was approximately $3,367 (including accrued interest). No grants from the Government of Israel were received during the three-year period ended December 31, 2014.
|
|
2.
|
During 2012, based on employment agreements with former executives of the Company, the Company provided for certain post-employment obligations an amount of $4,719.
|
B.
|
Leases
|
2015
|
$ | 330 | ||
2016
|
265 | |||
2017
|
224 | |||
2018
|
151 | |||
2019
|
151 | |||
$ | 1,121 |
C.
|
Liens
|
D.
|
Guarantees
|
E.
|
Legal claims
|
|
1.
|
On January 27, 2013, a former employee of the Company (in this paragraph, the "Plaintiff"), filed a lawsuit against the Company in the District Labor Court of Tel Aviv (in this paragraph the “Court”) in the amount of NIS 1,400 (approximately $375). The Plaintiff alleges that the Company breached its employment agreement with him, and that the Company owes him commission payments for certain sales. On March 2, 2014, the parties filed a settlement agreement with the Court according to which the parties released each other from their respective claims and counter claims, which was approved by the Court on March 4, 2014.
|
|
2.
|
On October 3, 2013, a financial claim was filed against the Company and its then French subsidiary, Parx France (in this paragraph, together the “Defendants”), in the Commercial Court of Paris, France (in this paragraph, the “Court”). The sum of the claim is Euro 1,500 (approximately $1,830), and is based on the allegation that the plaintiff sustained certain losses in connection with Defendants not granting the plaintiff exclusive marketing rights to distribute and operate the Defendants’ PIAF Parking System in Paris and the Ile of France. The Company filed an initial memorandum of defense rejecting the plaintiff’s allegations and claims. On May 19, 2014, during a preliminary Court hearing, it was established that the plaintiff, at all relevant times, was and is insolvent and under receivership, and therefore does not have the legal capacity to pursue the claim. Following a preliminary hearing held on October 7, 2014 the Court scheduled a pre-trial review hearing for November 6, 2014, where the Court heard the parties claims and allegations to decide on the merits. The Court should schedule an additional pre-trial hearing of the claim during 2015.Based on the advice of counsel, the Company currently believes that it has no material obligations to the Plaintiff and that there is no need for a provision for the claim.
|
|
3.
|
On July 29, 2014, a former employee of the Company's Smart ID division filed a financial claim against the Company in the Regional Labor Court in Tel Aviv. The sum of the claim is NIS 4,744 (approximately $1,220), and is based on the allegation that the Company owes the plaintiff certain commissions. On October 29, 2014 the Company filed a statement of defense rejecting the plaintiff’s allegations and claims.
On March 10, 2015, the Court held a pre-trial review hearing where the Court made an initial review of the parties’ allegations. In the course of the hearing the plaintiff was ordered to amend and resubmit his statement of claim, and the Court set an additional pre-trial hearing scheduled for July 16, 2015. Based on the advice of counsel, the Company currently believes that it has no material obligations to the Plaintiff and that there is no need for a provision for the claim.
|
A.
|
Share capital
|
|
1.
|
On January 12, 2009, the Company’s Board of Directors approved the adoption of a Shareholde
r
s Rights Plan (hereinafter – the “Plan”), as amended on January 11, 2012 and on January 9,
2014. Pursuant to the terms of the Plan, each Ordinary Share of the Company shall give its holder one Right, as detailed thereto. Each such Right will become exercisable only after a person or a “Group” become an “Acquiring Person”, by obtaining beneficial ownership of, or by commencing a tender or exchange offer for, 15% or more of the Company’s Ordinary Shares (the Board of Directors may reduce this percentage, but to not less than 10%), unless our Board of Directors approves such “Acquiring Person” or redeems the rights. Each Right, once it becomes exercisable, will generally entitle its holder, other than the “Acquiring Person”, to purchase from the Company either 0.4, half (1/2), one, two or three Ordinary Shares, as shall be determined by the Board of Directors, at par value.
|
|
2.
|
On November 28, 2014, the Company closed a firm commitment underwritten public offering of 7,187,500 ordinary shares, including shares issued pursuant to the underwriter’s over-allotment option, at a public offering price of $1.6 per share. The proceeds to the Company, net of issuance costs and underwriter discount, were approximately $10,444.
|
|
3.
|
As to shares issued as part of business combinations, see note 1C.
|
B.
|
Options to non-employees
|
C.
|
Stock option plans
|
|
In February 2001, Board approved an additional option plan, under which up to 75,000 share options are to be granted to the Company’s employees, directors and consultants and those of the Company’s subsidiaries and affiliates.
|
C.
|
Stock option plans (cont’d)
|
|
1.
|
Dividend yield of zero percent for all periods.
|
|
2.
|
Risk-free interest rate of, 0.79%-1.05%, 0.57%-1.02%, 0.76% for, 2014, 2013 and 2012, respectively, based on U.S. Treasury yield curve in effect at the time of grant.
|
|
3.
|
Estimated expected lives of 2.5-4 years for all periods.
|
|
4.
|
Expected average volatility of 64%-67%, 59%-70%, 73% for 2014, 2013 and 2012, respectively, which represent a weighted average standard deviation rate for the price of the Company's Ordinary Shares on NASDAQ.
|
Number of
|
Weighted
|
|||||||
options
|
average exercise
|
|||||||
outstanding
|
price per share
|
|||||||
Outstanding – December 31, 2013
|
1,789,616 | $ | 1.65 | |||||
Options granted
|
1,056,667 | 2.34 | ||||||
Options expired or forfeited
|
(349,001 | ) | 1.31 | |||||
Options exercised
|
(573,449 | ) | 1.54 | |||||
Outstanding – December 31, 2014
|
1,923,833 | $ | 2.09 | |||||
Exercisable as of:
|
||||||||
December 31, 2012
|
1,690,616 | $ | 1.03 | |||||
December 31, 2013
|
800,616 | $ | 1.53 | |||||
December 31, 2014
|
697,003 | $ | 1.9 |
C.
|
Stock option plans (cont’d)
|
Options outstanding
|
Options Exercisable
|
|||||||||||||||||||||||
Number
|
Weighted
|
Number
|
Weighted
|
|||||||||||||||||||||
outstanding
|
average
|
Weighted
|
Outstanding
|
average
|
Weighted
|
|||||||||||||||||||
as of
|
remaining
|
Average
|
As of
|
remaining
|
Average
|
|||||||||||||||||||
Range of
|
December 31,
|
contractual
|
Exercise
|
December 31,
|
contractual
|
Exercise
|
||||||||||||||||||
exercise price
|
2014
|
life (years)
|
Price
|
2014
|
life (years)
|
Price
|
||||||||||||||||||
$ 0.03
|
18,000 | 1.34 | $ | 0.03 | 18,000 | 1.34 | $ | 0.03 | ||||||||||||||||
0.90
|
231,000 | 3.55 | 0.90 | 120,333 | 3.61 | 0.90 | ||||||||||||||||||
1.08-1.42
|
138,000 | 2.21 | 1.09 | 73,000 | 2.18 | 1.08 | ||||||||||||||||||
1.46
|
155,000 | 3.64 | 1.46 | 18,333 | 3.55 | 1.46 | ||||||||||||||||||
1.67-2.08
|
69,500 | 1.77 | 1.73 | 59,500 | 1.62 | 1.72 | ||||||||||||||||||
2.23-2.84
|
1,062,333 | 3.89 | 2.37 | 324,504 | 3.00 | 2.34 | ||||||||||||||||||
$ 3.18-3.23
|
250,000 | 3.96 | $ | 3.21 | 83,333 | 3.96 | $ | 3.21 | ||||||||||||||||
1,923,833 | 3.62 | 697,003 | 2.99 |
D.
|
Warrants
|
|
1.
|
During 2012, the Company issued 90,361 warrants with a nominal exercise price that vest in five equal installments over a vesting period of five years, as part of acquisition of business operations as described in note 1C(1).
|
|
2.
|
During 2014, 36,142 warrants were exercised.
|
|
3.
|
The number of warrants issued by the Company during the year ended December 31, 2011, as part of its offering of shares from 2011, were 260,869, with a per share exercise price of $3.75.
|
Warrants outstanding
|
Warrants Exercisable
|
|||||||||||||||||||||||
Number
|
Weighted
|
Number
|
Weighted
|
|||||||||||||||||||||
outstanding
|
average
|
Weighted
|
Outstanding
|
average
|
Weighted
|
|||||||||||||||||||
as of
|
remaining
|
Average
|
As of
|
remaining
|
Average
|
|||||||||||||||||||
Range of
|
December 31,
|
contractual
|
Exercise
|
December 31,
|
contractual
|
Exercise
|
||||||||||||||||||
exercise price
|
2014
|
life (years)
|
Price
|
2014
|
life (years)
|
Price
|
||||||||||||||||||
$ 0.03 | 74,719 | 2.1 | $ | 0.03 | 20,500 | 1.36 | $ | 0.03 | ||||||||||||||||
$ 3.75 | 260,869 | 1.11 | 3.75 | 260,869 | 1.11 | 3.75 | ||||||||||||||||||
335,588 | 1.31 | 281,369 | 1.13 |
E.
|
Repurchase program
|
Year ended December 31
|
Year ended December 31
|
|||||||
2014
|
2013
|
|||||||
(Gain) loss from sale and shut down of a subsidiary (see note 1B(3) and 1B(4))
|
$ | (3 | ) | $ | 231 | |||
Termination of employment agreements (see note 9A(2))
|
- | (4,503 | ) | |||||
Loss
(gain) on sale of property and equipment
|
(10 | ) | 91 | |||||
Other operating income, net
|
$ | (13 | ) | $ | (4,181 | ) |
A.
|
The Company and its Israeli subsidiaries
|
|
1.
|
Measurement of taxable income under the Income Tax (Inflationary Adjustments) Law, 1985
|
|
2.
|
Tax benefits under the Law for the Encouragement of Capital Investments, 1959
|
A.
|
The Company and its Israeli subsidiaries (cont’d)
|
|
2.
|
Tax benefits under the Law for the Encouragement of Capital Investments, 1959 (cont’d)
|
|
Amendment to the Law for the Encouragement of Capital Investments – 1959
|
A.
|
The Company and its Israeli subsidiaries (cont’d)
|
|
2.
|
Tax benefits under the Law for the Encouragement of Capital Investments, 1959 (cont’d)
|
|
3.
|
The Law for the Encouragement of Industry (taxes), 1969
|
|
4.
|
Tax rates
|
|
Presented hereunder are the tax rates relevant to the Company in the years 2012-2014:
|
|
2014 – 26.5%
|
|
2012-2013 – 25%
|
B.
|
Non-Israeli subsidiaries are taxed based on the income tax laws in their country of residence.
|
C.
|
Deferred income taxes:
|
December 31
|
December 31
|
|||||||
2014
|
2013
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carryforwards
|
$ | 48,720 | $ | 40,181 | ||||
Other
|
1,777 | 2,683 | ||||||
Total gross deferred tax assets
|
50,497 | 42,864 | ||||||
Less – valuation allowance
|
(50,450 | ) | (42,691 | ) | ||||
Net deferred tax assets
|
$ | 47 | $ | 173 | ||||
Deferred tax liability -
|
||||||||
Other
|
(302 | ) | (292 | ) | ||||
Net deferred tax liability
|
$ | (302 | ) | $ | (292 | ) |
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Balance at beginning of year
|
$ | 42,691 | $ | 42,002 | $ | 37,643 | ||||||
Additions during the year from
Continuing operation
|
2,349 | 1,654 | 4,155 | |||||||||
Changes due to amendments to tax laws
|
||||||||||||
and applicable future tax rates, see note 12A(4)
|
- | 2,394 | - | |||||||||
Discontinued operations - Smart ID Division Divesture and sale of subsidiary,
see note 1B(1) and 1B(2)
|
5,405 | (3,402 | ) | 181 | ||||||||
Other changes
|
5 | 43 | 23 | |||||||||
Balance at end of year
|
$ | 50,450 | $ | 42,691 | $ | 42,002 |
D.
|
As of December 31, 2014, the net operating loss carry forwards for tax purposes relating to Israeli companies amounted to approximately $178,695. Tax loss carry forwards in Israel may be carried forward indefinitely to offset against future taxable operational income. Under the Income Tax (Inflationary Adjustments) Law, 1985, and based on the Company’s election (see note 12A(1)), tax loss carry forwards are denominated in U.S. dollars. Tax loss carry forwards relating to non-Israeli companies aggregate approximately $3,913, which will expire as follows: 2016- $50, 2017- $153, 2026 - $3,106 and 2027- $533. The remaining balance of $71 can be utilized with no expiration date.
|
E.
|
The Company has not recognized a deferred tax liability for the undistributed earnings of its foreign subsidiaries that arose in 2014 and prior years, because the Company considers these earnings to be indefinitely reinvested. A deferred tax liability will be recognized when the Company can no longer demonstrate that it plans to indefinitely reinvest these undistributed earnings. As of December 31, 2014, the undistributed earnings of these foreign subsidiaries were approximately $4,108. These undistributed earnings will be taxed upon distribution, if at all. It is impracticable to determine the additional taxes payable when these earnings are remitted.
|
F.
|
No current or net deferred taxes were recorded in Israel. Non-Israeli income tax expense included in the consolidated statements of operations are as follows:
|
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Current
|
$ | (2 | ) | $ | (265 | ) | $ | (2 | ) | |||
Deferred
|
(108 | ) | 62 | (65 | ) | |||||||
Income tax expense
|
$ | (110 | ) | $ | (203 | ) | $ | (67 | ) |
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Computed “expected” income tax benefit
|
$ | 2,673 | $ | 1,681 | $ | 4,452 | ||||||
Decrease in income tax benefit
|
||||||||||||
resulting from:
|
||||||||||||
Change in valuation allowance, net
|
(2,349 | ) | (1,654 | ) | (4,155 | ) | ||||||
Non-deductible stock-based compensation related to options
|
||||||||||||
issued to employees
|
(232 | ) | (91 | ) | (188 | ) | ||||||
Other non-deductible expenses
|
(113 | ) | (43 | ) | (35 | ) | ||||||
Other
|
(89 | ) | (96 | ) | (141 | ) | ||||||
Reported income tax expense
|
$ | (110 | ) | $ | (203 | ) | $ | (67 | ) |
G.
|
Income (loss) from continuing operations before taxes on income consists of the following:
|
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Israel
|
$ | (10,434 | ) | $ | (8,842 | ) | $ | (16,983 | ) | |||
Non-Israel
|
347 | 2,117 | (825 | ) | ||||||||
$ | (10,087 | ) | $ | (6,725 | ) | $ | (17,808 | ) |
H.
|
Unrecognized tax benefits (cont’d)
|
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Revenues
|
$ | 1,131 | $ | 16,034 | $ | 23,360 | ||||||
Expenses
|
(1,822 | ) | (18,231 | ) | (23,047 | ) | ||||||
Other income, net
|
1,006 | 5,974 | - | |||||||||
Net income from discontinued operations
|
$ | 315 | $ | 3,777 | $ | 313 |
December 31
|
||||
Assets held for sale from discontinued operations:
|
2013
|
|||
Trade receivable, net
|
$ | 223 | ||
Other receivables and prepaid expenses
|
144 | |||
Inventories
|
2,082 | |||
Property, plant and equipment, net of impairment
|
1,470 | |||
Total assets held for sale from discontinued operations
|
$ | 3,919 | ||
Liabilities held for sale from discontinued operations:
|
||||
Short-term credit and current maturities of long term loans
|
$ | 1,354 | ||
Trade payables
|
495 | |||
Other current liabilities
|
177 | |||
Long-term loans, net of current maturities
|
930 | |||
Total liabilities held for sale from discontinued operations
|
$ | 2,956 |
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Costs and expenses*
|
$ | - | $ | 13 | $ | 80 |
—
|
Petroleum - includes manufacturing and selling of fuel payment and management solutions. The Company's solution
is a wireless, cashless, cardless and paperless refueling tracking and payment solution, providing customers with maximum flexibility and security.
|
—
|
Retail and Mass transit Ticketing - includes selling and marketing variety of products for cashless payment solutions for the retail market and mass transit ticketing.
|
·
|
Parking - includes selling of products and managing cashless parking solutions. The Company's parking solution is a fully integrated parking fee collection and parking management solution.
|
Year ended December 31, 2014
|
||||||||||||||||||||
Petroleum
|
Retail and
Mass Transit Ticketing
|
Parking
|
Other
|
Consolidated
|
||||||||||||||||
Revenues
|
3,838 | 15,042 | 2,392 | 1,790 | 23,062 | |||||||||||||||
Reportable segment gross profit *
|
2,213 | 7,143 | 1,543 | 939 | 11,838 | |||||||||||||||
Reconciliation of reportable segment
|
||||||||||||||||||||
gross profit to profit for the period
|
||||||||||||||||||||
Depreciation
|
(747 | ) | ||||||||||||||||||
Stock based compensation
|
(35 | ) | ||||||||||||||||||
Gross profit for the period
|
$ | 11,056 |
Year ended December 31, 2013
|
||||||||||||||||||||
Petroleum
|
Retail and
Mass Transit
Ticketing
|
Parking
|
Other
|
Consolidated
|
||||||||||||||||
Revenues
|
4,532 | 11,743 | 2,210 | 1,383 | 19,868 | |||||||||||||||
Reportable segment gross profit *
|
2,694 | 6,469 | 1,366 | 808 | 11,337 | |||||||||||||||
Reconciliation of reportable segment
|
||||||||||||||||||||
gross profit to profit for the period
|
||||||||||||||||||||
Depreciation and amortization
|
(577 | ) | ||||||||||||||||||
Stock based compensation
|
(32 | ) | ||||||||||||||||||
Gross profit for the year
|
$ | 10,728 |
Year ended December 31, 2012
|
||||||||||||||||||||
Petroleum
|
Retail and
Mass Transit
Ticketing
|
Parking
|
Other
|
Consolidated
|
||||||||||||||||
Revenues
|
5,205 | 7,126 | 2,944 | 1,329 | 16,604 | |||||||||||||||
Reportable segment gross profit *
|
2,704 | 4,837 | 1,661 | 710 | 9,912 | |||||||||||||||
Reconciliation of reportable segment
|
||||||||||||||||||||
gross profit to profit for the period
|
||||||||||||||||||||
Depreciation
|
(557 | ) | ||||||||||||||||||
Stock based compensation
|
(49 | ) | ||||||||||||||||||
Gross profit for the period
|
$ | 9,306 |
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Revenues by geographical areas from external customers
|
||||||||||||
|
||||||||||||
Americas
|
$ | 8,868 | $ | 6,856 | $ | 2,968 | ||||||
Asia
|
1,077 | 99 | 574 | |||||||||
Africa
|
3,865 | 4,073 | 4,189 | |||||||||
Europe
|
7,486 | 7,060 | 6,664 | |||||||||
Total export
|
21,296 | 18,088 | 14,395 | |||||||||
Domestic (Israel)
|
1,766 | 1,780 | 2,209 | |||||||||
$ | 23,062 | $ | 19,868 | $ | 16,604 |
December 31
|
December 31
|
|||||||
2014
|
2013
|
|||||||
Long lived assets by geographical areas
|
||||||||
Domestic (Israel)
|
$ | 2,656 | $ | 3,027 | ||||
Poland
|
5,406 | 5,485 | ||||||
South Africa
|
1,061 | 1,206 | ||||||
America
|
111 | 119 | ||||||
$ | 9,234 | $ | 9,837 |
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
%
|
%
|
%
|
||||||||||
Major Customers by percentage from total revenues
|
||||||||||||
Customer A
|
22 | % | 19 | % | 6 | % | ||||||
Customer B
|
14 | % | 15 | % | 8 | % |
Between:
|
On Track Innovations Ltd. (Reg. No. 52-004286-2)
|
A Public Company registered in Israel
|
|
of Z.H.R. I.Z., Rosh Pina 12000
|
|
(hereinafter: “
the
Company
”)
|
|
And between:
|
Shay Tomer (ID No.
034961284)
|
61 Haerez St., Ramat Yishai
|
|
(hereinafter: “
the
Employee
”)
|
Whereas
|
Since April 24
th
2007, the Employee has been employed by the Company as a Comptroller in the Company’s Finance Department and as of June 1
st
, 2013 (the “
Effective Date
”) the Employee has been promoted and appointed as Chief Financial Officer (“
CFO
”) of the Company (hereinafter “
the Position
”); and
|
Whereas
|
The Company wishes to continue to employ the Employee in the Position, under the terms and conditions set forth below in this agreement (“
this Agreement
”), which were approved by the Company’s Board of Directors (“
the Board
”) on July 20
th
, 2013, as required by law; and
|
Whereas
|
it was agreed that the Employee shall be employed by the Company in the Position while maintaining full continuity of his rights, including his rights to severance pay; and
|
Whereas
|
the Employee gave his consent to hold the Position and to perform the duties required in the Position, and he has declared that he has the ability, experience, qualifications and skills required for performing this position, and there is no legal or contractual hindrance or other hindrance preventing him from serving in this Position and from performing his duties as set forth in the provisions of this Agreement; and
|
Whereas
|
the parties wish to stipulate their mutual rights and obligations and the terms of the employment of the Employee in the Position in this Agreement, all as set forth and stipulated therein;
|
A.
|
Introduction
|
1.
|
The preamble of this Agreement and its appendices constitute an inseparable part thereof.
|
B.
|
The Position, Subordination and Powers
|
2.
|
Subject to the approval of the terms of this Agreement by the Board as mentioned above, the Employee shall continue to perform his roles as CFO of the Company and its subsidiaries or affiliates from the Effective Date and thereafter.
|
3.
|
In the framework of his Position, the Employee shall be responsible, among others, for the Company’s Financial Department activities and any other duties imposed to him from time to time by the Company’s Chief Executive Officer (“
CEO
”) and/or the Board and related activities such role involved.
|
4.
|
In performing the Position the Employee shall be subject to the Company’s CEO, and he shall act in accordance with the instructions and policies as shall be determined from time to time by the CEO and/or the Board.
|
5.
|
Without derogating from the provisions in this Agreement, for the avoidance of any doubt, it is clarified and agreed that in the event that any task shall be imposed on the Employee which could create a contact with another Company’s subsidiary, or a company connected to the Company (hereinafter jointly referred to as: “
the Affiliated Companies
”), then this task will not create any employer-employee relationship between him and any of the Affiliated Companies.
|
6.
|
In the framework of the Employee’s duties, he shall have all the powers required for performing the Position.
|
7.
|
The Employee shall work five days a week, from Sunday to Thursday. Notwithstanding the aforesaid it is clarified and agreed that the Employee could be required by virtue of his Position and if necessary for his work, to work also on weekends including on Saturdays and on holidays, and he gives his consent to the aforesaid.
|
8.
|
In light of his senior position which requires an increased extent of personal trust,
it is agreed between the parties that the provisions of the Work and Rest Hours Law - 1951 shall not apply to his employment, and the Employee shall not be entitled to receive any additional payment or consideration for working beyond a regular working day and working hours.
|
9.
|
It is agreed that in determining the sum of the Employee’s salary the parties have assumed that the Employee shall be required to work far beyond the routine working week in the Company.
|
C.
|
The Employee’s Obligations
|
10.
|
The Employee undertakes to perform the duties and tasks that shall be imposed on him with appropriate faith and diligence and to the Company’s benefit, avoiding any conflict of interests between personal and irrelevant interests, and the Company’s interests.
|
11.
|
The Employee undertakes to lawfully work and act in accordance with the Company’s rules and instructions and to dedicate his best efforts, time and abilities to fulfill the Position efficiently, skillfully and responsibly, all in accordance with the requirements of this agreement. He also undertakes not to engage in any other work or business, whether directly or indirectly, except for his work in the Company, either for salary or without, unless this is according to a written permit from the Company’s CEO.
|
12.
|
The Employee must act in accordance with the Company’s instructions regarding security and business ethics, including not receiving any benefit from any party, as a result and/or with respect to his work and duties in the Company, to protect the information of the Company and to keep confidential any matter that is not within the public domain.
|
13.
|
The Employee undertakes to notify the Company’s CEO immediately and without any delay of any matter or issue and/or any of his activities in respect to which he has a personal interest in and/or that could create a conflict of interests with his duties in the Company.
|
D.
|
The Uniqueness of the Agreement
|
14.
|
The terms of employment of the Employee, in their entirety, are as defined in this Agreement and in it only, and the terms of any other agreement whatsoever shall not apply to the Employee, including any collective agreement or collective arrangement or any custom that applies, if applicable or that shall apply to any of the other employees of the Company.
|
15.
|
Any change in this agreement is contingent on it being in writing and signed by the parties.
|
16.
|
In order to avoid doubt, this Agreement comes instead and replaces any previous arrangement and/or agreement between the parties including prior agreements.
|
17.
|
However, and for the avoidance of any further doubt, it is agreed that the seniority of the Employee for the purpose of calculating his rights shall be as of the beginning of his employment on April 24
th
, 2007.
|
E.
|
The Consideration
|
18.
|
In consideration for performing his duties as set forth in this agreement, the Employee shall receive a salary, annual Bonus, options for shares and other benefits (severance pay, Employees’ insurance, advanced education fund and refund of expenses etc.) as set forth hereafter.
|
19.
|
Except for the granting of options to the Employee, the terms of the Employee’s employment by the Company are subject only to this agreement, and the Employee shall not be entitled to any payment or to any right with respect to his employment in the Company or the termination of his employment, unless it is expressly mentioned in this Agreement.
|
E.1
|
The Salary
|
20.
|
The Company shall pay the Employee as of the Effective Date and thereafter a gross monthly salary in the sum set forth in
appendix A
attached hereto (hereinafter” “
the Salary
”). The salary shall be paid to the Employee no later than the 9
th
day of each month in respect of the previous month. Payment shall be linked to the cost of living allowance in the economy in accordance with an expansion order that shall be announced and applicable to all employers and employees in Israel.
|
21.
|
The above salary shall constitute the basis for all allocations made on behalf of the Employee and in respect of his employment, to Employee’s Insurance for redemption of accumulated vacation and any other social benefit in accordance with the law.
|
22.
|
Not later than the 31
st
of January each year, the CEO and/or the Board shall consider and set the Employee’s salary for the following year.
|
E.2
|
Annual Bonus
|
23.
|
The Company shall have absolute discretion to pay the Employee an annual bonus (hereinafter: “
the Bonus
”). The Bonus shall be decided on an annually basis by the Company’s CEO, subject to the approval of the Board considering the Company’s Compensation Policy for Executive Officers and in accordance with the achievement of the Employee’s targets as determined on an annual basis from time to time by the Company’s CEO. The targets of the Employee will be determined by the Company’s CEO not later than the 31
st
January of each year with respect to the following year (however in the first year of this Agreement, the targets for the Bonus shall be set forth by September 30
th
, 2013).
|
24.
|
The gross Bonus for each year shall be paid to the Employee the following month after the publishing of the annual Financial Statements for the corresponding year. All taxes and levies on the Bonus shall be borne by the Employee.
|
25.
|
Notwithstanding the foregoing, according to the full discretion of the Company’s CEO, and subject to the cash flow of the Company and the financial results as shall be reflected in the quarterly statements of the Company, the Company may extend to the Employee an advance payment on account of a Bonus. Such an advance shall be offset from the then current and future annual Bonuses.
|
E.3
|
Option Package
|
26.
|
In order to encourage the long-term success of the Company, without derogating from the aforesaid in chapter E.2 above and subject to the approval of Company’s Compensation Committee and the Board, and the provisions of the law, the Company shall issue to the Employee an options package (hereinafter” “
the Options Package
”) in accordance with the terms and mechanism set forth in
appendix A
of the agreement.
|
E.4
|
Vacation, Sick Days and Convalescence Pay
|
27.
|
The Employee shall be entitled to 24 work days of annual vacation for each year of his employment. The Employee shall be required to exploit at least 7 vacation days each year. The balance of vacation days may be accumulated, provided they do not exceed 100 days in total.
|
28.
|
The Employee is entitled to sick days, and to payment in respect thereof in accordance with the provisions of the Sick Pay Law. The Employee is entitled to accrue up to 90 sick days at the most. Sick days that shall not be actually used are not redeemable.
|
29.
|
The Employee shall be entitled to an annual 10 days payment of convalescence pay (“Dmei Havraa”) in accordance with the provisions of the expansion order in respect of convalescence pay as published by the Labor Authorities.
|
E.5
|
Employees’ Insurance
|
30.
|
The Company shall continue to insure the Employee with his current Employees insurance policy in the Employee’s name. Each month the Company shall pay and/or deduct in respect of the above policy the following sums:
|
|
30.1.
|
An amount equal to 8 1/3 % of the salary shall be transferred by the Company on account of severance pay.
|
|
30.2.
|
An amount equal to 5% of the salary for pension shall be transferred by the Company in respect of pension (Provident Fund). An equal amount of 5% shall be deducted from the Employee’s salary and transferred as the Employee’s contribution to such fund.
|
31.
|
In addition, the Company shall insure the Employee with Employee’s Insurance Policy’s insurers for disability at a cost that shall not exceed 2.5% of his salary.
|
32.
|
The tax levied on the above Company’s allocations to the Employee’s insurance, if any, shall be borne by the Employee.
|
33.
|
Further to Section 30 - 32 above, the Company hereby forfeits any right it may have in the reimbursement of sums paid by Company into the above mentioned executive insurance policy, except in the event: (i) that employee withdraws such sums from the executive insurance policy, other than in the event of death, disability or retirement at the age of 60 or more; and/or (ii) of the occurrence of any of the events provided for in Sections 16 and 17 of the Severance Pay Law, 1963.
|
34.
|
It is further agreed that such payment contribution made by the Company towards the executive insurance policy as mentioned above, and any interest and/or profit accumulated thereto, shall be on account of severance payment due to Employee under any circumstances in which Employee shall be entitled to severance payment subject to the applicable law, including but not limited to the Severance Pay Law, 1963.
|
E.6
|
Provident Fund
|
35.
|
The Company shall continue to allocate payments to the Employee’s current provident fund. 7.5% of the salary shall be allocated by the Company and 2.5% of the salary shall be deducted from the Employee’s salary as his share in the payments. The tax owed with respect to the above payment to the Provident Fund shall be borne by the Employee.
|
36.
|
The Company shall release the Provident Fund upon termination of the employment hereunder, for any reason except for in the circumstances provided in section 46.2 hereafter.
|
E.7
|
Refund of Costs, Vehicle, Company, Meals, Mobile Telephone
|
37.
|
The Company shall reimburse the Employee all of the reasonable costs spent by him in the execution of his duties in accordance and subject to the reimbursement policy of costs adopted by the Company.
|
38.
|
Company Car. During the Term of the Employment, the Company shall place at the Employee’s exclusive disposal a car for his use at the level detailed in
Annex A
hereto. All the expenses in connection with the maintenance and use of the said car shall be borne and paid by the Company, excluding fines. The Employee hereby undertakes to use the car that shall be placed at his disposal as aforesaid reasonably and properly qua an owner who cares for his property, and in the absence of another arrangement in writing between him and the Company he undertakes to return the said car to the Company immediately upon the termination of the Prior Notice Period. The Company shall gross up the value of the benefit to the Employee in placing the car at his disposal as aforesaid in the amount of the tax applicable to him is respect of the said benefit.
|
39.
|
The Employee shall be entitled to eat lunches at the Company’s dinner-room or at restaurants with arrangement for Company’s employees. The tax in respect of that benefit shall be grossed up and paid by the Company..
|
40.
|
The Company shall provide the Employee with a mobile telephone (an extension of which shall be installed, if required, in the vehicle). The Company shall cover all the operating costs thereof and all taxes shall be grossed up and paid by the Company.
|
41.
|
For the sake of caution it is agreed and declared that all the grossed up payments for tax purposes include the entire sum of severance pay in respect to these payments. The parties to this agreement shall request the approval of the Minister of Labor for their agreement as mentioned according to section 28 of the Severance Pay Law – 1963.
|
F.
|
The Term of the Agreement and the Manner of its termination
|
42.
|
The continuance of the employment of the Employee is for an unspecified period (the: “
Employment Period”
).
|
43.
|
The Employment Period shall terminate within six (6) months of a Termination Notice (“
Prior Notice Period
”). Each party is entitled to give a termination notice at any time and for any reason or without any reason to the other party of its wish to terminate the employment and the employment hereunder shall terminate at the expiration of the Prior Notice Period.
|
44.
|
During the Prior Notice Period the Employee must continue to fulfill his Position and perform all of his duties according to this agreement and according to the Company’s request to make a maximum effort to perform the full and organized transfer of his Position to his replacement.
|
45.
|
Notwithstanding the aforesaid, it is clarified and agreed that the Company shall be entitled at all times, according to its discretion to request the Employee to immediately terminate his Position (or within a shorter period than the Prior Notice Period) and in such case the employer-employee relationship shall end at the time stipulated in the Company’s request and this is without derogating from the Employee’s rights in accordance with this agreement and the law, to receive payment in lieu of the Prior Notice Period, severance pay and any other payments that are due to him, if at all, for the period of his employment in the Company and its termination.
|
46.
|
In the event of the termination of this agreement the following provisions shall apply:
|
|
46.1.
|
If the termination of employment was as a result of the Employee’s dismissal (except for dismissal on the background of circumstances set forth in section 46.2 hereafter) or as a result of the Employee’s resignation, or God forbid as a result of circumstances that prevent the continuation of the Employee’s employment in the Company (including his death), the Employee shall be entitled (or his heirs respectively):
|
|
46.1.1.
|
To receive from the Company: a monthly salary in respect of the Prior Notice Period or the end of his employment period, whichever is later. However, if at the request of the Company, the employment terminated earlier, then the Employee shall receive for the months for which the employment during the Prior Notice Period was shortened, and this is when the Employee was requested to continue his work during the Prior Notice Period. Should the Employee, at the request of the Company, refrain from working during the part of the Prior Notice Period, the Company shall pay in respect of those months the payment in lieu of Prior Notice Period as per paragraph 45 hereinabove, and
|
|
46.1.2.
|
Subject to the provisions in chapter E.2 above, the Company shall pay the pro rata Bonus in respect of the proportional part of the year. The sum of the Bonus to which he is entitled (if any). Should the employment terminate (including the Prior Notice Period) before the end of the year, a pro rata Bonus in respect thereof; and
|
|
46.1.3.
|
To receive from the Company severance payments according to the applicable law, including but not limited to the Severance Pay Law, 1963, calculated based on the Employee’s last month salary prior the termination of employment, of which it will transferred to the Employee and into his name, the Employee’s Insurance and the Provident Fund and to allow the Employee the use of Company’s car including the payment of the expenses thereof until the end of the Prior Notice Period and/or the end of the Employment Period, whichever is the later;
|
|
46.1.4.
|
Compensation for non-compete – a one-time compensation sum against the Employee’s undertaking in chapter G hereafter “Secrecy and Non – Competition”. Such compensation shall be in the sum equal to six (6) salaries as the salary is defined in chapter E.1 above. 50% of the above compensation shall be paid at the end of the employment and the remaining balance shall be deposited in trust with the Company’s attorney with instructions to release it to the Employee 12 months after the end of his employment, provided that the Employee has fulfilled all of his undertakings, as set forth in the confidentiality and non–competition chapter hereafter. This payment shall be refunded to the Company if and when the non-compete and confidentiality undertaking has been breached in any way and the Company shall have the right to offset such a refund from any obligation and/or payment to which the Employee is entitled.
|
|
46.2.
|
It is agreed and declared that in the event of the Employee’s dismissal as a result of a breach of trust or material breach of the Employee’s confidentiality and non–competition undertakings as set forth in the confidentiality and non- competition chapter hereafter and in appendix B hereafter, or in the event of dismissal in circumstances that deny the Employee’s right to severance pay in accordance with the law – the Employee shall not be entitled to receive a Prior Notice Period to his dismissal or payment in place of a Prior Notice Period, and he shall not be entitled to the payment of severance pay or any other payment that the Company is not required to pay, including any payment that is due to the Employee as a Bonus payment. In accordance with the law, the Company shall be entitled to offset the sum of the advance payments from any payment that is due to the Employee from the Company.
|
G.
|
Confidentiality and Non Competition
|
47.
|
The Employee shall sign the undertakings to maintain confidentiality set forth in appendix B which constitutes an integral part of this agreement.
|
48.
|
The Employee undertakes that during the employment period and for a period of 12 months after the termination of the employment agreement he shall refrain from being in direct or indirect contact with a customer of the Company or of the subsidiaries of the Company in any matter that relates to the Company’s business or the businesses of its subsidiaries or affiliates unless it is with the specific approval of the Company; and or
|
|
48.1.
|
Being in direct or indirect contact with a customer of the Company or of the Subsidiaries or of the Affiliated companies (whether as an employee, consultant or any other way), in any matter that refers to the Company’s business, the business of the Subsidiaries or of the Affiliated companies, unless it is within the framework of his employment in the Company.
|
|
48.2.
|
Engage, directly or indirectly, for any reason, in Israel or anywhere in the world, in any business, work or any other engagement in the field of contactless smart cards that compete with the Company’s business, the business of the Subsidiaries or Affiliated companies, and/or
|
|
48.3.
|
Solicit the Company’s employees or suppliers, the Subsidiaries’ or Affiliated companies’ employees or suppliers to any business association with him.
|
H.
|
Deductions and Taxes
|
49.
|
The payments and benefits of whatsoever description granted to the Employee pursuant to this agreement are subject to the deduction of income tax and other compulsory deductions which the Company has to deduct according to any law, and nothing stated in this Agreement shall be interpreted as imposing upon the Company the burden of paying tax or any other compulsory payment for which the Employee is liable, other than the value of the benefit of placing the car and mobile phone at the Employee’s disposal and providing the Employee with meals, which shall be grossed up by the Company as provided in Section E.7 above.
|
I.
|
Waiver or Precedent
|
50.
|
No Waiver made by the Company (if any) shall constitute a precedent with respect to any other case, similar or otherwise, and no inference shall be made in respect thereof. The Company shall be entitled to exercise any of its rights hereunder that have not been specifically waived in writing.
|
J.
|
Notices
|
51.
|
The parties’ addresses set in the preamble thereof would be the relevant address of this agreement and any notice sent to that address shall be considered as if received, within five days of its posting.
|
K.
|
The Law and Jurisdiction
|
52.
|
This agreement is governed by the Laws of the State of Israel, and the Labor Court shall have jurisdiction with respect to all matters concerning and/or arising thereof.
|
/s/ Shay Tomer
|
/s/ On Track Innovation Ltd
|
Employee
|
The Company
|
1.
|
Salary
|
|
1.1.
|
Monthly Gross Salary:
Forty Thousands (40,000) New Israeli Shekels
.
|
|
1.2.
|
Company Car:
Level 5
.
|
|
1.3.
|
Mobile phone: Mobile phone and expenses according to the Company’s Policy for executives.
|
|
1.4.
|
Bonus payable per Section E.2 of the Agreement and in the amounts detailed below.
|
2.
|
Annual Bonus Plan
|
|
2.1.
|
Max annual bonus that can be achieved is six (6) Base Salaries (the “Max Bonus”).
|
|
2.2.
|
Financial Performance Targets (60% of Max Bonus):
|
|
2.2.1
|
15% of Max Bonus –Total Annual Revenue Target of
[***]
% growth on continuing operations;
|
|
2.2.2
|
25% of Max Bonus –EBITDA Target of $
[***]
USD or higher;
|
|
2.2.3
|
20% of Max Bonus - Free Cash Flow Target of $
[***]
USD or higher;
|
|
2.3.
|
MBO (20% of Max Bonus)
|
|
2.3.1
|
2% - reorganize the finance team including hiring highly skilled controller and assimilate him/her smoothly
|
|
2.3.2
|
2% - Ensure on time payments to all vendors
|
|
2.3.3
|
3% - Build and maintain annual 2013 budget for OTI and all subsidiaries and maintain on going control of it
|
|
2.3.4
|
2% - complete 2014 WW budget planning by November 31st 2013
|
|
2.3.5
|
2% - Manage the financial aspects of the Farx France sale
|
|
2.3.6
|
3% - Manage the financial aspects of the BEE partner in OTI Africa
|
|
2.3.7
|
3% - Manage credit line and/or loans from Banks to secure cash flow and working capital
|
|
2.3.8
|
3% - Manage the financial aspects of Project Ottawa
|
|
2.4.
|
Discretionary (20% of Max Bonus)
|
|
2.4.1
|
10% -support business challenges such as: selling or Partnering for Parx France, Intercard exit,
[***]
.
|
|
2.4.2
|
10 % - Internal (team) and external (customers and vendors) satisfaction from finance dept. performance
|
|
2.4.3
|
For each score -the payment is linear between any 2 points. All financial performance calculations shall exclude the bonus costs.
|
3.
|
General notes
:
|
|
3.1.
|
Employee shall be entitled to receive full or a fraction of each bonus target according to actual results achieved per each item.
|
|
3.2.
|
Total Annual Revenue Growth, EBITDA, and Free Cash Flow will be defined at the discretion of the Compensation Committee and based on the Company’s financial statements. The financial performance targets are intended to incentivize profitability on continuing operations.
|
|
3.3.
|
Bonus terms for each new fiscal year shall be negotiated and approved no later than January 31
st
of each year.
|
4.
|
Stock Options plan per Section E.3 of the Agreement
:
|
1.
|
In this Undertaking:
|
|
1.1.
|
the term “Confidential Information” means any and all information relating to the Company’s proprietary technology or business including, without limitation, information, data, know-how, formulas, concepts, tests, drawings, specifications, applications, designs and trade secrets, patents, know-how, technology data and all other information, design methodology, engineering and manufacturing processes and data and information related to Company’s products or their development, equipment, suppliers, sales, customers, potential customers, business operations and plans, financial situation, members, employees and investors.
|
|
1.2.
|
the term “Confidential Documents” means any documents containing Confidential Information, including without limitation: (i) any documents, notes, memoranda, summaries, analyses, paper works, sketches, designs, charts, specifications, prints, compilations, or any other writings relating to the Confidential Information, and any other materials embodied in drawings, floppy discs, tapes, CD ROM, software or in any other possible way containing or relating to the Confidential Information or any part thereof, whether or not prepared by the Company or on it’s behalf, (ii) all documents received, used, or that shall be received or used, by me in relation with my employment in the Company, and/or (iii) the contents of such Confidential Documents as stored in my memory.
|
|
1.3.
|
the term “Competing Goods” means any goods sold in competition with the prescribed goods;
|
|
1.4.
|
the term “Competing Services” means any services rendered in competition with the prescribed services;
|
|
1.5.
|
the term “Prescribed Areas” means Israel or in any other part of the world in which the Company conducts its business;
|
|
1.6.
|
the term “Prescribed Customers” means any person who is or was a customer of the Company at the termination date; or who is or was a customer of the Company at the termination date or who was a potential customer with which I had been engaged in negotiations with a view to doing business on behalf of the Company within the period of 6 (six) months preceding the termination date;
|
|
1.7.
|
the term “Prescribed Goods” means any products sold by the Company in the ordinary course of business as at the termination date or which is then included in any strategic plan of the Company;
|
|
1.8.
|
the term “Prescribed Services” means any services rendered by the Company in the ordinary course of business as at the termination date or which is then included in any strategic plan of the Company;
|
|
1.9.
|
the term “Prescribed Suppliers” means any person who is or was a supplier of prescribed goods and/or prescribed services to the company at the termination date; or is or was a supplier of prescribed goods and/or prescribed services to the company at the termination date with which I had been engaged in negotiations with a view to doing business on behalf of the company within the period of 6 (six) months preceding the termination date;
|
|
1.10.
|
the term “Restraint Period” means a period of 12 (twelve) months calculated from the termination date;
|
|
1.11.
|
the term “Termination Date” means the date upon which my employment by the company ceases or is terminated for any reason whatsoever;
|
2.
|
I am fully aware that the Confidential Information and Confidential Documents are the exclusive property of the Company, and that they were made or shall be made available to me and for my use solely for the purpose of my work as an employee of the Company.
|
3.
|
I undertake towards the Company as follows:
|
|
3.1.
|
to maintain as fully confidential all Confidential Information and Confidential Documents;
|
|
3.2.
|
not to disclose or divulge to any third party, or allow any third party access to any of the Confidential Information or Confidential Documents, or use any of thereof, whether directly or indirectly, save exclusively for the purposes of my work as an employee of the Company.
|
|
3.3.
|
not to misuse any of the Confidential Information or Confidential Documents, or any part thereof, in a manner other than the usual use of the Confidential Information and Confidential Documents and for a purpose other than the purpose for which the Confidential Information and Confidential Documents were divulged to me.
|
|
3.4.
|
not to make public or divulge in any way the Confidential Information and Confidential Documents or any part thereof.
|
|
3.5.
|
not to duplicate, copy, scan, or create in any other way copies of the Confidential Documents or any part thereof, except for the purpose for which the Confidential Information and Confidential Documents were divulged to me.
|
|
3.6.
|
Not not challenge the Company’s intellectual property rights in any way, including without limitation, by filing to any court, patent or other authority, a claim, opposition or request for cancellation against such rights. The provisions of this Section 3.6 shall survive termination.
|
|
3.7.
|
upon demand from the Company, at any time whatsoever, to return to the Company the Confidential Information and Confidential Documents or any part thereof or copies thereof in any form whatsoever, and to, if so required, confirm in writing to the Company that all the Confidential Information and Confidential Documents or any copies thereof in any form whatsoever which had been in my possession have been returned to the Company, and that I did not retain any copies of it, including copies made by electronic forms.
|
|
3.8.
|
not to remove from the Company’s premises or take for my use any of the Confidential Information and Confidential Documents without the Company’s prior written approval, unless if such removal is made strictly for the purposes of performing my undertakings towards the Company.
|
4.
|
I agree and accept that:
|
|
4.1.
|
The Company reserves all rights in any inventions, patents, copyrights, designs, and any other intellectual property invented or devised by it in relation to the Confidential Information and Confidential Documents.
|
|
4.2.
|
Any invention including any patent or patent application and any copyrights or any other intellectual property (the “IP”) invented or created by me during my employment with the Company or as a result of my employment with the Company, shall be the exclusive property of the Company, and I do not have and shall not have any demand or claim against the Company relating to the IP. I undertake to sign any document and to do any other act required in order to register the said rights in the name of the Company, or to prove the Company’s rights, if and to the extent that this is required in the opinion of the Company and/or the Company’s legal advisors.
|
|
4.3.
|
I shall not challenge the Company’s IP in any way, including without limitation, by filing to any court, patent or other authority, a claim, opposition or request for cancellation against such rights
|
5.
|
The restrictions of use and disclosure set forth in this undertaking shall not apply to any Confidential Information and Confidential Documents which after they were disclosed became, available to the general public, through no breach of a confidentiality undertaking towards the Company.
|
6.
|
It is recorded that in the course of his my duties I (i) have acquired and/or will acquire considerable know-how in and will learn of the Company’s techniques relating to the business; (ii) will have access to names of customers with whom the Company does business whether embodied in written form or otherwise; (iii)will have the opportunity of forging personal links with customers of the company; and (iv) generally will have the opportunity of learning and acquiring the trade secrets, business connections and other confidential information appertaining to the Company’s business.
|
|
6.1.
|
carry on or be interested or engaged in or concerned with or employed by any company, close corporation, firm, undertaking or concern which carries on, in the Prescribed Areas any business which sells Prescribed Goods and/or Competing Goods or renders Prescribed Services or Competing Services or in the course of which Prescribed Goods or Competing Goods are sold and/ or Prescribed Services or Competing Services are rendered; provided that I shall not be deemed to have breached my undertaking by reason of my – (i) holding shares in the Company; or (ii) holding shares in any company the shares of which do not in aggregate constitute more than 5% (five per cent) of any class of the issued share capital of such company and which are listed on a recognised stock exchange if the shares owned by me or by my relatives (as defined in the Israeli Companies Act 1999) which do not in the aggregate constitute more than 5% (five per cent) of any class of the issued share capital of such company.
|
|
6.2.
|
|
6.2.1
|
not to solicit, on my own account or for any other person, the services of, or endeavor to entice away from the Company any director, employee, consultant or a subcontractor of, or any other person related to the Company, who during the period of 12 months prior to such termination occupied a senior or managerial position in relation to the Company, and/or who was likely (in the opinion of the Company) to be: (i) in possession of Confidential Information; or (ii) able to influence the customers’ connections of the Company (whether or not such person would commit any breach of his contract of employment or engagement with the Company).
|
|
6.2.2
|
furnish any information or advice (whether oral or written) to any prescribed customer that I intend to or will, directly or indirectly, be interested or engaged in or concerned with or employed by any company, close corporation, firm, undertaking or concern carried on in any of the Prescribed Areas which sells Prescribed Goods and/or Competing Goods or renders Prescribed Services and/or Competing Services or in the course of which Prescribed Goods and/or Competing Goods are sold and/or Prescribed Services or Competing Services are rendered during the Restraint Period; or
|
|
6.2.3
|
furnish any information or advice (whether oral or written) to any Prescribed Customer or use any other means or take any other action which is directly or indirectly designed, or in the ordinary course of events calculated, to result in any such Prescribed Customer terminating his association with the company and/or transferring his business to or purchasing any Prescribed Goods or Competing Goods or accepting the rendering of any Prescribed Services or Competing Services from any person other than the company, or attempt to do so.
|
|
6.3.
|
solicit orders from Prescribed Customers for the Prescribed Goods and/or any Competing Goods and/or the Prescribed Services and/or any Competing Services; or canvass business in respect of the Prescribed Goods and/or any Competing Goods and/or the Prescribed Services and/or Competing Services from Prescribed Customers; or sell or otherwise supply any Prescribed Goods and/or Competing Goods to any Prescribed Customer; or render any Prescribed Services and/or Competing Services to any Prescribed Customer; or purchase any Prescribed Goods and/or Competing Goods from any Prescribed Supplier or accept the rendering of any Prescribed Services and/or Competing Services from it; or solicit appointment as a distributor, licensee, agent or representative of any Prescribed Supplier in respect of Prescribed Goods and/or Prescribed Services, including on behalf of or for the benefit of a Prescribed Supplier.
|
|
6.4.
|
Each of the undertakings set out in this Section 6 (including those appearing in a single sub-section) is severable inter alia as to (i) the nature of interest, act or activity; (ii) the categories of persons falling within the definition of prescribed customers; (iii) the categories of goods falling within the definition of the Prescribed Goods and Competing Goods; (iv) the categories of services falling within the definition of the Prescribed Services and Competing Services; and (v) the categories of persons falling within the definition of Prescribed Supplier;
|
7.
|
It is agreed and recorded that, without prejudice to any right or remedy which is available to the Company under any law or agreement, the unauthorized disclosure or use of any Confidential Information and Confidential Documents or a breach of my undertakings pursuant to Section 6 above, will cause immediate or irreparable injury to the Company and that the Company can not be adequately compensated for such injury in monetary damages, then, in order to safeguard the Company from any possible breach of confidentiality, I consent in advance that the Company will be permitted to obtain, from any Court or Tribunal, any temporary or permanent injunctive relief necessary to prevent such unauthorized disclosure or use, or threat of unauthorized disclosure or use.
|
8.
|
This Undertaking shall form an integral part of my employment agreement with the Company and a breach of any of my obligations hereunder, shall also constitute a material breach of such employment agreement.
|
9.
|
This Undertaking shall be governed by the laws of the State of Israel and the competent courts in Tel-Aviv shall have exclusive jurisdiction in all matters pertaining or relating thereto.
|
10.
|
If any condition, term or covenant of this Agreement shall at any time be held to be void, invalid or unenforceable, such condition, covenant or term shall be construed as severable and such holding shall attach only to such condition, covenant or term and shall not in any way affect or render void, invalid or unenforceable any other condition, covenant or term of this Agreement, and this Agreement shall be carried out as if such void, invalid or unenforceable term were not embodied herein.
|
11.
|
Unless specifically limited herein, my undertakings hereunder shall be valid: (i) during the term of my employment in the Company, and unless the Company waived such right in writing, following termination of my employment with the Company without time limitation; (ii) in Israel or outside Israel, and - (iii) whether such undertakings may or may not be registered under any register prescribed by law.
|
Between:
|
On Track Innovations Ltd. (Reg. No. 52-004286-2)
|
a public company registered in Israel
|
|
of Z.H.R. I.Z., Rosh Pina 12000 (the “
Company
”)
|
And:
|
Ofer Tziperman (ID No.057438244)
|
of 2 Leshem St., PO Box 204, Shimsheet 17906, Israel
|
|
(the “
Employee
”)
|
Whereas
|
the Employee has been employed by the Company’s subsidiary PARX Ltd., since January 16
th
, 2011 as President of PARX and EasyPark Ltd. (hereunder referred to as the “
Subsidiaries
”), and the Company wishes to employ the Employee, in addition to his foregoing roles in the Subsidiaries, as its Chief Executive Officer (the “
Position
”) from the date of the approval of his appointment to the Position by the Company’s board of directors on March 7, 2013 (the “
Effective Date
”) and thereafter, subject to the terms and conditions set forth below in this Agreement, and provided the terms of employment according this Agreement shall be approved by the Company’s General Meeting as required by the law; and
|
Whereas
|
the Employee warrants that he has the qualifications and skills required for the purposes of performing the Position and that there is no hindrance - legal, contractual or otherwise - for the execution by him of this Agreement.
|
1.
|
Nature of the Agreement - General and Applicability
|
|
1.1.
|
Subject to the approval of the Company’s General Meeting as aforesaid this Agreement exhaustively prescribes the terms and conditions applicable to the Employee’s terms of employment with the Company and its Subsidiaries from the Effective Date and thereafter, and accordingly this Agreement shall replace any prior arrangements or terms of employment of the Employee and no collective or other special agreements, including his existing employment agreement in regards the Employee’s employment at the Subsidiaries, shall apply to the employment relations between the Employee and the Company and its Subsidiaries. It is herein clarified the employment terms set forth herein shall apply to the employment of the Employee in the Position, even if his employment at any of the Company’s subsidiaries is expired or terminated.
|
|
1.2.
|
It is hereby warranted and agreed that the Employee, whose employment started on January 16
th
2011 as President of the Subsidiaries, unless otherwise agreed in writing by the Parties, will continue to perform his roles and duties in the Subsidiaries as prescribed hereunder; however, the provisions of this Agreement shall replace the existing terms of employment of the Employee in the Subsidiaries and only this Agreement shall apply to the Employee from the Effective date and thereafter relating to the employment of the Employee in the Position and his employment at the Subsidiaries. For the avoidance of doubt it is herein agreed that for the purposes of this Agreement and the calculation of the Employee’s seniority and employment rights according to it, all and any of the Employee’s rights will be calculated from the commencement of the Employee’s work on January 16, 2011.
|
|
1.3.
|
Notwithstanding the foregoing, the Parties agree that section 15 of the Employee’s employment agreement with Parx Ltd shall remain in full force and effect for purposes of this Agreement, under which the Employee was granted stock options of the Company equivalent to the four percent (4%) of the then total outstanding shares of Parx Ltd., vested in equal annual installments during a four year vesting term, each installment to be vested at the end of a vesting period of 12 months of employment, excluding in the event Parx Ltd. perform a public offering (IPO), or is merged, acquired or sold to a third party (“Sell Event”), where in such event the aforesaid vesting period shall be accelerated and the Employee shall be entitled to exercise forthwith his then remaining outstanding stock options. The Parties acknowledge it was also agreed that if Parx Ltd., before such Sell Event, shall allocate additional outstanding shares of Parx Ltd. to third parties, within such transaction it will allocate to the Employee any additional number of stock options necessary to preserve that the Employee is entitled to hold up to four percent (4%) of the outstanding shares of Parx Ltd after such Sell Event.
|
2.
|
The Employee’s Duties
|
|
2.1.
|
The Employee shall be employed in the position of Chief Executive Officer (“
CEO
”) of the Company and CEO of the Subsidiaries. By virtue of the Position the employee shall be responsible for the day to day and routine management of the Company and the operations involved therein, and supervise the activities of the Subsidiaries. In the performance of the Position, the Employee shall be subject to the directions and policies prescribed from time to time by the Company’s board of directors.
|
|
2.2.
|
For avoidance of doubt, it is warranted and agreed that, without derogating from the provisions of this Agreement, in the event that any position whatsoever is imposed upon the Employee which involves engagement with another subsidiary of the Company and/or other companies forming or which shall form part of the Company’s group (collectively the “Related Companies”), such position shall not create employer-employee relations between him and any of the Related Companies and that notwithstanding any such position, the Employee shall be considered solely as the Company’s and the Subsidiaries employee.
|
3.
|
The Employee’s Undertakings
|
|
3.1.
|
To perform the duties and assignments imposed upon him in the scope of his employment with the Company with devotion, honesty and fidelity, subject to the Company’s policy in existence from time to time, and to dedicate to the performance of the said duties all his know-how, qualifications and experience and all the time, diligence and attention required for the performance thereof efficiently, with fidelity and in accordance with the requirements of this Agreement, and to use his best endeavors in order to advance the affairs and business of the Company and the realization of its objectives.
|
|
3.2.
|
Not to engage, during the Term of Employment (as defined in Section 10.1 below), in any engagement not within the scope of his employment with the Company pursuant to this Agreement other than with the Company’s prior written consent, provided however, that such consent shall not be required for voluntary, cultural, sportive or lecturing activities or for holding of securities of any company other than companies which are in competition with the Company and in which the Employee shall not hold more than 1%.
|
|
3.3.
|
The Employee hereby declares and commits that his current involvement in other businesses as stated in
Annex C
hereto, shall not adversely affect or come on the account of the time and efforts he shall need to devote to fulfill his obligations under this Agreement.
|
4.
|
Monthly Salary
|
|
4.1.
|
In consideration for the Employee’s employment and the performance his other undertakings to the Company and the Subsidiaries pursuant to this Agreement, the Company shall pay the Employee, by no later than the 9
th
of each month in respect of the preceding month, a monthly salary (gross) of NIS in the amount stated in
Annex A
hereto (the “
Monthly Salary
”).
|
|
4.2.
|
By no later than December 31
st
of each year, the Company’s board of directors shall determine the Employee’s salary for the following year.
|
|
4.3.
|
The Monthly Salary does not include convalescence pay (“Dmei-Havraa”), which will be paid in addition to the Salary in amounts prescribed by applicable law.
|
|
4.4.
|
The Monthly Salary alone shall be considered for the purpose of calculating the amounts to be deposited in the Employee’s executive insurance policy and vocational fund, as set forth in Section 8 below, as well as other social rights available at law, and no Bonus (defined below) or additional entitlement will be considered to be part of the Monthly Salary for such intents and purposes.
|
5.
|
Bonus
|
|
5.1.
|
The Company, pursuant to a resolution of its compensation committee and the resolution of the Board, in its sole discretion, subject to the provisions of the applicable law, is entitled to give the Employee, in accordance with targets to be determined by such compensation committee by no later than December 31 of each calendar year (“
Year
”) in respect of the next Year (but in its first meeting following April 1, 2013 in respect of 2013), a monetary annual bonus (the “
Bonus
”). In determining such Bonus, the compensation committee shall relate to the Company’s Executive Officers Compensation Plan, the Company’s revenues, and/or the Company’s profits, as applicable to the Employee. Such Bonus plan shall be detailed in
Annex A
hereto as may by changed from time with mutual consent.
|
|
5.2.
|
To tie the Employee’s performance with the long term success of the Company and without derogating from the provisions of Section 5.1 above, the Company, subject to the approval of the Compensation Committee and the Board, and the applicable provisions of the law, shall allocate stock options (the “
Stock Options
”) to the Employee according to the amount and mechanism as shall be detailed in
Annex A
hereto.
|
|
5.3.
|
The Bonus for each Year shall be paid to the Employee within 30 days from the publication of the audited annual financial statements of the Company of such Year.
|
|
5.4.
|
When, in the sole discretion of the Board, feasible in light of the Company’s cash flow situation and financial results as reflected in the quarterly financial statements of the Company, the Company may make allowances to the Employee, pursuant to a resolution of the Board, on account of earned Bonuses which allowances shall be deducted from the Yearly computed amount of Bonus payable to the Employee in respect of the Year in which such allowances were made (the “
Allowances
”).
|
6.
|
Car and Additional Expenses
|
|
6.1.
|
Car and Meals. During the Term of the Employment, the Company shall place at the Employee’s exclusive disposal a car for his use at the level detailed in
Annex A
hereto and shall provide him with lunch meals at the Company’s premises. All the expenses in connection with the maintenance and use of the said car shall be borne and paid by the Company, excluding fines. The Employee hereby undertakes to use the car that shall be placed at his disposal as aforesaid reasonably and properly qua an owner who cares for his property, and in the absence of another arrangement in writing between him and the Company he undertakes to return the said car to the Company immediately upon the termination of the Prior Notice Period (as defined in Section 10.1 below). For avoidance of doubt, the Company shall gross up the value of the benefit to the Employee in placing the car at his disposal and providing him with meals as aforesaid in the amount of the tax applicable to him is respect of the said benefits.
|
|
6.2.
|
Expense Reimbursement. The company shall reimburse the Employee for all out-of-pocket business expenses, reasonably and necessarily incurred in connection with, or related to, the performance of his duties under this Agreement, subject to and in accordance with the Company’s then current expense reimbursement policy, if any. To the extent the Company has not adopted an expense reimbursement policy, reimbursement of expenses in accordance with the provisions of this Section 6.2 shall be made within ten (10) days from the beginning of each month, for the preceding month, against submission by the employee of receipts or other appropriate supporting documentation, but expenses exceeding NIS 10,000 per item or in total shall be subject to prior approval by the Board. The Board may reasonably request additional documentation or a further explanation to substantiate any business expense submitted for reimbursement, and retains the discretion to approve or deny a request for reimbursement or part of it. Employee must submit any request for reimbursement no later than ninety (90) days following the date that such business expense was incurred. Except as stated in this Section 6.2 or unless otherwise agreed to between the Company and the Employee in writing, with respect to the performance of specific duties, the Company shall have no liability to reimburse Employee for any expenses incurred by Employee in connection with his employment by the Company. A reimbursement (or right thereto) may not be exchanged or liquidated for any other benefit or payment.
|
7.
|
Annual Leave, Sick Leave
|
|
7.1.
|
The Employee shall be entitled to payment of 24 (twenty four) annual leave days in respect of each year of employment pursuant to this Agreement.
|
|
7.2.
|
The annual leave days to which the Employee is entitled are accruable, provided always that the Employee shall not be entitled to accrue in any working year seven of the annual leave days to which he is entitled and in total the Employee shall not be entitled to accrue more than 100 days for the purposes of redemption and 30 days for the purposes of taking actual leave. Employee shall not be entitled to redeem any outstanding leave days remaining at his disposal during the term of his employment, and such, if any, shall be redeemable only upon the Employee’s termination of employment.
|
|
7.3.
|
The Employee is entitled to sick leave and sick pay at the rates and times prescribed by law. Sick leave shall not be redeemable. The Employee shall be entitled to accrue up to 90 (ninety) days for the purpose of taking actual sick leave. The Employee shall be entitled to convalescence pay at the rates and times prescribed by law.
|
8.
|
Executives’ Insurance and Vocational Studies Fund
|
|
8.1.
|
The Company shall continue the Employee’s existing executive insurance policy in the Employee’s name. Each month during the Term of Employment the Company shall transfer and pay to the executive insurance policy the following amounts:
|
|
8.1.1.
|
An amount equal to 8-1/3% (eight and one third percent) of the Monthly Salary on account of the severance pay fund.
|
|
8.1.2.
|
An amount equal to 5% (five percent) of the Monthly Salary on account of provident fund.
|
|
8.1.3.
|
An amount of up 2.5% (two and a half percent) of The Monthly Salary on account of loss of working capacity insurance.
|
|
8.2.
|
Further to Section 8.1 above, Company hereby forfeits any right it may have in the reimbursement of sums paid by Company into the above mentioned executive insurance policy, except in the event: (i) that employee withdraws such sums from the executive insurance policy, other than in the event of death, disability or retirement at the age of 60 or more; and/or (ii) of the occurrence of any of the events provided for in Sections 16 and 17 of the Severance Pay Law, 1963.
|
|
8.3.
|
Should the employment be terminated by resignation of the Employee (excluding under such circumstances that employee’s resignation is deemed by applicable law as dismissal by the employer) the Employee shall be entitled to said executives’ insurance fund and the vocational studies fund (including all the amounts, which have accrued to his benefit in such funds, whether from his own provisions or from provisions of the Company and/or the Related Companies, including all linkage differentials, interest and profits that have accrued in the said fund in respect of the said provisions.
|
|
8.4.
|
Should the employment be terminated by the Company’s dismissal of the Employee (excluding under such circumstances depriving for severance payment as prescribed in article 10.2.2 below) the Company shall assign the Employee upon termination of his employment any and all rights accrued in the executives’ insurance fund and the vocational studies fund (including all the amounts, which have accrued to his benefit in such funds, whether from his own provisions or from provisions of the Company and/or the Related Companies, including all linkage differentials, interest and profits that have accrued in the said fund in respect of the said provisions on account of his severance payments) and shall pay the Employee the difference between said funds to the severance payments to which the Employee is entitled under the Severance Pay Law, 1963.
|
9.
|
The Company shall attend to making a vocational studies fund in the Employee’s name and shall make a provision each month to the said vocational studies fund of an amount equal to 7.5% (seven and a half percent) of the Monthly Salary. Furthermore, an amount equal to 2.5% (two and a half percent) of the Monthly Salary shall be deducted from the Monthly Salary, such being in respect of the Employee’s part of the provision to the vocational studies fund.
|
10.
|
Term and Termination
|
|
10.1.
|
This Agreement is for a specified term of three (3) years commencing on the Effective Date and terminating on March 6
th
2016 (the “
Initial Term
”). This Initial Term shall be automatically extended for successive two periods of three (3) years each (the “
Extended Term
”) (the Initial Term and the Extended Term hereinafter individually or collectively shall be referred to as: the “
Term of Employment
”.) Notwithstanding the aforesaid, it is herein clarified that the Term of Employment may be at any time terminated by the Company, whether for cause or without cause, or by the Employee, by a party serving the other with at least six (6) months’ prior written notice (the “
Prior Notice Period
”) and upon such termination of employment the provisions of article 10.2 hereunder shall apply. Following such notice, the Employee shall continue in his Position and perform his undertakings pursuant to this Agreement during the Prior Notice Period, and, at the Company’s request he shall use his best endeavors to transfer his Position in an efficient and orderly manner to his successor within the Prior Notice Period. Notwithstanding the above, it is hereby warranted and agreed that the Company shall be entitled at any time, in its discretion to demand that the Employee terminate his Position forthwith (or within a period shorter than the Prior Notice Period) and in such event the employer-employee relations between the Company and the Employee shall terminate on the date designated in the said demand, all without derogating from the Employee’s rights pursuant to this Agreement and at law to payment in lieu of prior notice in respect of the Prior Notice Period, to severance pay and to all other amounts due to him (if any) in connection with his employment and the termination of his employment with the Company (and the period in respect of which employer-employee relations actually existed between the Company and the Employee pursuant to the above provisions is hereinafter referred to as “The Term of Employment”).
|
|
10.2.
|
In the event of termination of this Agreement, the following provisions shall apply:
|
|
10.2.1.
|
Should the termination of the employment be as a result of dismissal (other than dismissal in circumstances depriving the Employee of the right to severance pay as provided in Section 10.2.2 below), the Employee’s resignation or, heaven forbid, as a result of circumstances preventing the continuation of his employment with the Company (including his death), the Employee shall be entitled (or, as the case may be, his heirs shall be entitled):
|
|
10.2.1.1.
|
to receive the Monthly Salary from the Company only for and in respect to the Prior Notice Period (not until the end of the Term of Employment), such being whether the Employee was requested to continue working during the Prior Notice Period or otherwise; and
|
|
10.2.1.2.
|
to receive, following publication of the financial statements relating to the year during which such termination has occurred, pursuant to Section 5.3 above, the amounts of the Bonus and Stock Options payable to him (if at all) pursuant to Section 5 above calculated on a linear basis in respect of such part of the year in which the Employee has been actually employed with the Company, including the entire Prior Notice Period, as shall be pro rata calculated from the yearly Bonus and Stock Options, computed pursuant to Section 5.1 and 5.2 above.
|
|
10.2.1.3.
|
to assign to the Employee the rights accrued in the executives’ insurance fund and the vocational studies fund all the amounts, which have accrued to his benefit in such funds, whether from his own provisions or from provisions of the Company and/or the Related Companies, including all linkage differentials, interest and profits that have accrued in the said fund in respect of the said provisions.
|
|
10.2.1.4.
|
to continue to use the Company car with all its related costs per Section 6 above, until the end of the Prior Notice Period.
|
|
10.2.1.5.
|
to receive a onetime compensation against the Employee’s commitment in Section 11 below. Such onetime compensation shall be equal to Twelve (12) Monthly Salaries as defined in Section 4 above. The Company will pay the Employee upon the termination of Employment 50% of this amount and the remainder 50% will be deposited upon the termination of employment with the Company’s External Counsel under escrow, to be released after 12 months from the termination of Employment, subject to the fulfillment of the Employees commitment in Section 11 below.
|
|
10.2.2.
|
It is hereby agreed and warranted that in the event that the Employee’s dismissal is as a result of a breach of fidelity or material breach of his confidentiality or non competition undertakings to the Company pursuant to Section 11 below and
Annex B
hereto or dismissal in other circumstances depriving, according to any law, the Employee of the right to severance pay, then, notwithstanding anything to the contrary provided in this Agreement, the Employee shall not be entitled to receive prior notice of his dismissal or payment in lieu of prior notice and he shall not be entitled to severance pay or any other payment which the Company is not legally bound to pay, including any payment due to the Employee as a Bonus payment. In such event, the Employee shall be obligated to reimburse Allowances, which were granted, to Employee pursuant to Section 5.4 above in the last Year of the Employee’s employment with the Company, and subject to applicable law, the Company shall be entitled to set off the amounts of such allowances from any payments due to the Employee from the Company.
|
11.
|
Confidentiality and Non-Competition
|
|
11.1.
|
The Employee shall sign a confidentiality undertaking towards the Company, which is attached as
Annex B
hereto, and forms an integral part of this Agreement.
|
|
11.2.
|
The Employee undertakes that during the term of his employment with the Company and for a period of twelve (12) months following the termination of the Employee’s employment with the Company, he shall not:
|
|
11.2.1.
|
engage, directly or indirectly, with any customer of the Company or the Related Companies (whether as employee, consultant, self-employed or otherwise) in any matter relating to the Company’s or the Related Companies’ business unless in the framework of his employment with the Company.
|
|
11.2.2.
|
engage, directly or indirectly, for whatsoever reason, in Israel or anywhere else, in any business, position employment or other engagement whatsoever in the sphere of contactless smart cards which competes with the Company’s business.
|
|
11.2.3.
|
solicit any of the Company’s employees or contractors.
|
12.
|
Further Provisions
|
|
12.1.
|
In the scope of his Position with the Company pursuant to this Agreement, he is not an employee to whom the Hours of Work and Rest Law, 5711-1951 applies, and he shall not be entitled to claim or receive any payments or increments whatsoever for working overtime or on Sabbaths and festivals, and the monthly salary payable to him as aforesaid also includes full compensation for working overtime and on Sabbaths and festivals.
|
|
12.2.
|
The amount of the Monthly Salary payable to him as specified in Section 4 above, and it alone, shall be the basis for the provisions and deductions in respect of the social benefits specified in this agreement; and all the bonuses, contributions to expenses and other benefits granted to him or which shall be given to him (if at all) pursuant to this Agreement or in connection with his employment by the Company do not constitute a component of his Monthly Salary and shall not be taken into account in respect of the provisions or other benefits whatsoever granted to the Employee pursuant to this Agreement which are computed on the basis of his Monthly Salary; and the expression the “Monthly Salary” wherever it appears in this agreement refers to the Monthly Salary as defined in Section 4 above, without any increments whatsoever.
|
|
12.3.
|
The payments and benefits of whatsoever description granted to the Employee pursuant to this Agreement are subject to the deduction of income tax and other compulsory deductions which the Company has to deduct according to any law, and nothing stated in this Agreement shall be interpreted as imposing upon the Company the burden of paying tax or any other compulsory payment for which the Employee is liable, other than the value of the benefit of placing the car at the Employee’s disposal and providing the Employee with meals, which shall be grossed up by the Company as provided in Section 6 above.
|
|
12.4.
|
Except in relation to the grant of options to the Employee by the Company, the terms and conditions of the Employee’s employment by the Company are regulated solely pursuant to this personal employment agreement between him and the Company and save as expressly provided in this Agreement the Employee shall not be entitled to any payments or other benefits in respect of his employment and the termination of his employment with the Company.
|
13.
|
Amendments to the Agreement
|
14.
|
Addresses
|
15.
|
Law and Jurisdiction
|
/s/ On Track Innovations Ltd.
|
/s/ Offer Tziperman
|
||
ON TRACK INNOVATIONS
|
OFER TZIPERMAN
|
1.
|
Salary
|
|
1.1.
|
Monthly Gross Salary: Ninety Thousands (90,000) New Israeli Shekels.
|
|
1.2.
|
Company Car: Level 6. Tax value will be grossed up.
|
|
1.3.
|
Mobile phone: Tax value will be grossed up. Full mobile phone expenses including for the mobile phone device according to the Company’s Policy for executives. Mobile phone number
shall remain the property of Employee and shall be transferred to Employee’s possession following termination of this Employment Agreement for any reason whatsoever.
|
|
1.4.
|
Bonus payable per Section E.2 of the Agreement and in the amounts detailed below.
|
2.
|
Annual Bonus Plan
|
|
2.1.
|
Maximum annual bonus that can be achieved is the equivalent of 100% of the amount of the Annual Base Salary (for 2013, NIS 1,080,000 or approximately $300,000 USD) for the next three years (2013, 2014, 2015), subject to base salary increases (the “Max Bonus”).
|
|
2.2.
|
For 2013, up to 80% of the Max Bonus will be paid in cash. The Max Bonus components set out in clauses 2.3, 2.4, and 2.5, if payable, shall be paid in cash.
|
|
2.3.
|
2013 Financial Performance Targets (50% of Max Bonus)
:
|
|
2.3.1.
|
15% of Max Bonus –Total Annual Revenue Target of
[***]
% growth on continuing operations;
|
|
2.3.2.
|
15% of Max Bonus –EBITDA Target of $
[***]
USD or higher;
|
|
2.3.3.
|
20% of Max Bonus - Free Cash Flow Target of $
[***]
USD or higher;
|
|
2.4.
|
2013 Discretionary based on Short-Term Operational Objectives (20% of Max Bonus)
|
|
2.4.1.
|
20% - A Discretionary Score as determined by the Compensation Committee based on the CEO’s actions during the year to meet a basket of short-term (less than one year) operational objectives to bring the company closer to profitability.
|
|
2.5.
|
2013 Discretionary based on Long-Term Objectives (10% of Max Bonus)
|
|
2.5.1.
|
10% - A Discretionary Score as reported to the Compensation Committee by the Board of Directors, based on the CEO’s actions during the year to enhance shareholder value over the long-term.
|
|
2.6.
|
See Table 1 below for example calculations.
|
|
2.7.
|
CEO shall be entitled to receive the full bonus achievable for each component of bonus where actual meets target (i.e. score is 1), or a proportional fraction of each component of bonus achievable for each score that is less than 1.
|
|
2.8.
|
Total Annual Revenue Growth, EBITDA, and Free Cash Flow will be defined at the discretion of the Compensation Committee and based on the Company’s financial statements. The financial performance targets are intended to incentivize profitability on continuing operations.
|
|
2.9.
|
Bonus terms for each new fiscal year shall be negotiated and approved by the BOD no later than December 31
st
of the previous year.
|
|
2.10.
|
2014 and 2015 Financial Performance Targets will be determined at the discretion of the Compensation Committee and Board of Directors, in line the Company’s Executive Compensation Policy, representing a range of 50-90% Max Bonus.
|
Criteria
|
% of Total Bonus
|
Score
|
Annual Revenue Target
|
15% Annual Revenue Score
|
0 at negative or 0% growth
|
1 if actual meets target
|
||
Annual EBITDA Target
|
15% Annual EBITDA Score
|
0 at 0 or negative EBITDA
|
1 if actual meets target
|
||
Annual Free Cash Flow Target
|
20% Free Cash Flow Score
|
0 at 0 or negative FCF
|
1 if actual meets target
|
||
Discretionary Short-Term
|
20% discretionary score
|
Scores are 0 to 1
|
Discretionary Long-Term
|
10% discretionary score
|
Scores are 0 to 1
|
3.
|
Annual Stock Option Awards
|
4.
|
Stock Options plan per Section E.3 of the Agreement:
|
|
a)
|
1/3 vesting on March 7
th
2014
|
|
b)
|
1/3 vesting on March 7
th
2015
|
|
c)
|
1/3 vesting on March 7
th
2016.
|
1.
|
In this Undertaking:
|
|
1.1.
|
the term “
Confidential Information
” means any and all information relating to the Company’s proprietary technology or business including, without limitation, information, data, know-how, formulas, concepts, tests, drawings, specifications, applications, designs and trade secrets, patents, know-how, technology data and all other information, design methodology, engineering and manufacturing processes and data and information related to Company’s products or their development, equipment, suppliers, sales, customers, potential customers, business operations and plans, financial situation, members, employees and investors.
|
|
1.2.
|
the term “
Confidential Documents
” means any documents containing Confidential Information, including without limitation: (i) any documents, notes, memoranda, summaries, analyses, paper works, sketches, designs, charts, specifications, prints, compilations, or any other writings relating to the Confidential Information, and any other materials embodied in drawings, floppy discs, tapes, CD ROM, software or in any other possible way containing or relating to the Confidential Information or any part thereof, whether or not prepared by the Company or on it’s behalf, (ii) all documents received, used, or that shall be received or used, by me in relation with my employment in the Company, and/or (iii) the contents of such Confidential Documents as stored in my memory.
|
|
1.3.
|
the term “
Competing Goods
” means any goods sold in competition with the prescribed goods;
|
|
1.4.
|
the term “
Competing Services
” means any services rendered in competition with the prescribed services;
|
|
1.5.
|
the term “
Prescribed Areas
” means Israel or in any other part of the world in which the Company conducts its business;
|
|
1.6.
|
the term “
Prescribed Customers
” means any person who is or was a customer of the Company at the termination date; or
who is or was a customer of the Company at the termination date or who was a potential customer with which I had been engaged in negotiations with a view to doing business on behalf of the Company within the period of 6 (six) months preceding the termination date;
|
|
1.7.
|
the term “
Prescribed Goods
” means any products sold by the Company in the ordinary course of business as at the termination date or which is then included in any strategic plan of the Company;
|
|
1.8.
|
the term “
Prescribed Services
” means any services rendered by the Company in the ordinary course of business as at the termination date or which is then included in any strategic plan of the Company;
|
|
1.9.
|
the term “
Prescribed Suppliers
” means any person who is or was a supplier of prescribed goods and/or prescribed services to the company at the termination date; or is or was a supplier of prescribed goods and/or prescribed services to the company at the termination date with which I had been engaged in negotiations with a view to doing business on behalf of the company within the period of 6 (six) months preceding the termination date;
|
|
1.10.
|
the term “
Restraint Period
” means a period of 12 (twelve) months calculated from the termination date;
|
|
1.11.
|
the term “
Termination Date
” means the date upon which my employment by the company ceases or is terminated for any reason whatsoever;
|
2.
|
I am fully aware that the Confidential Information and Confidential Documents are the exclusive property of the Company, and that they were made or shall be made available to me and for my use solely for the purpose of my work as an employee of the Company.
|
3.
|
I undertake towards the Company as follows:
|
|
3.1.
|
to maintain as fully confidential all Confidential Information and Confidential Documents;
|
|
3.2.
|
not to disclose or divulge to any third party, or allow any third party access to any of the Confidential Information or Confidential Documents, or use any of thereof, whether directly or indirectly, save exclusively for the purposes of my work as an employee of the Company.
|
|
3.3.
|
not to misuse any of the Confidential Information or Confidential Documents, or any part thereof, in a manner other than the usual use of the Confidential Information and Confidential Documents and for a purpose other than the purpose for which the Confidential Information and Confidential Documents were divulged to me.
|
|
3.4.
|
not to make public or divulge in any way the Confidential Information and Confidential Documents or any part thereof.
|
|
3.5.
|
not to duplicate, copy, scan, or create in any other way copies of the Confidential Documents or any part thereof, except for the purpose for which the Confidential Information and Confidential Documents were divulged to me.
|
|
3.6.
|
Not not challenge the Company’s intellectual property rights in any way, including without limitation, by filing to any court, patent or other authority, a claim, opposition or request for cancellation against such rights. The provisions of this
Section 3.6
shall survive termination.
|
|
3.7.
|
upon demand from the Company, at any time whatsoever, to return to the Company the Confidential Information and Confidential Documents or any part thereof or copies thereof in any form whatsoever, and to, if so required, confirm in writing to the Company that all the Confidential Information and Confidential Documents or any copies thereof in any form whatsoever which had been in my possession have been returned to the Company, and that I did not retain any copies of it, including copies made by electronic forms.
|
|
3.8.
|
not to remove from the Company’s premises or take for my use any of the Confidential Information and Confidential Documents without the Company’s prior written approval, unless if such removal is made strictly for the purposes of performing my undertakings towards the Company.
|
4.
|
I agree and accept that:
|
|
4.1.
|
The Company reserves all rights in any inventions, patents, copyrights, designs, and any other intellectual property invented or devised by it in relation to the Confidential Information and Confidential Documents.
|
|
4.2.
|
Any invention including any patent or patent application and any copyrights or any other intellectual property (the “
IP
”) invented or created by me during my employment with the Company or as a result of my employment with the Company, shall be the exclusive property of the Company, and I do not have and shall not have any demand or claim against the Company relating to the IP. I undertake to sign any document and to do any other act required in order to register the said rights in the name of the Company, or to prove the Company’s rights, if and to the extent that this is required in the opinion of the Company and/or the Company’s legal advisors.
|
|
4.3.
|
I shall not challenge the Company’s IP in any way, including without limitation, by filing to any court, patent or other authority, a claim, opposition or request for cancellation against such rights
|
5.
|
The restrictions of use and disclosure set forth in this undertaking shall not apply to any Confidential Information and Confidential Documents which after they were disclosed became, available to the general public, through no breach of a confidentiality undertaking towards the Company.
|
6.
|
It is recorded that in the course of his my duties I (i) have acquired and/or will acquire considerable know-how in and will learn of the Company’s techniques relating to the business; (ii) will have access to names of customers with whom the Company does business whether embodied in written form or otherwise; (iii)will have the opportunity of forging personal links with customers of the company; and (iv) generally will have the opportunity of learning and acquiring the trade secrets, business connections and other confidential information appertaining to the Company’s business.
|
|
6.1.
|
carry on or be interested or engaged in or concerned with or employed by any company, close corporation, firm, undertaking or concern which carries on, in the Prescribed Areas any business which sells Prescribed Goods and/or Competing Goods or renders Prescribed Services or Competing Services or in the course of which Prescribed Goods or Competing Goods are sold and/ or Prescribed Services or Competing Services are rendered; provided that I shall not be deemed to have breached my undertaking by reason of my – (i) holding shares in the Company; or (ii) holding shares in any company the shares of which do not in aggregate constitute more than 5% (five per cent) of any class of the issued share capital of such company and which are listed on a recognised stock exchange if the shares owned by me or by my relatives (as defined in the Israeli Companies Act 1999) which do not in the aggregate constitute more than 5% (five per cent) of any class of the issued share capital of such company.
|
|
6.2.
|
|
6.2.1
|
not to solicit, on my own account or for any other person, the services of, or endeavor to entice away from the Company any director, employee, consultant or a subcontractor of, or any other person related to the Company, who during the period of 12 months prior to such termination occupied a
senior or managerial
position in relation to the Company, and/or who was likely (in the opinion of the Company) to be: (i) in possession of Confidential Information; or (ii) able to influence the customers’ connections of the Company (whether or not such person would commit any breach of his contract of employment or engagement with the Company).
|
|
6.2.2
|
furnish any information or advice (whether oral or written) to any prescribed customer that I intend to or will, directly or indirectly, be interested or engaged in or concerned with or employed by any company, close corporation, firm, undertaking or concern carried on in any of the Prescribed Areas which sells Prescribed Goods and/or Competing Goods or renders Prescribed Services and/or Competing Services or in the course of which Prescribed Goods and/or Competing Goods are sold and/or Prescribed Services or Competing Services are rendered during the Restraint Period; or
|
|
6.2.3
|
furnish any information or advice (whether oral or written) to any Prescribed Customer or use any other means or take any other action which is directly or indirectly designed, or in the ordinary course of events calculated, to result in any such Prescribed Customer terminating his association with the company and/or transferring his business to or purchasing any Prescribed Goods or Competing Goods or accepting the rendering of any Prescribed Services or Competing Services from any person other than the company, or attempt to do so.
|
|
6.3.
|
solicit orders from Prescribed Customers for the Prescribed Goods and/or any Competing Goods and/or the Prescribed Services and/or any Competing Services; or canvass business in respect of the Prescribed Goods and/or any Competing Goods and/or the Prescribed Services and/or Competing Services from Prescribed Customers; or sell or otherwise supply any Prescribed Goods and/or Competing Goods to any Prescribed Customer; or render any Prescribed Services and/or Competing Services to any Prescribed Customer; or purchase any Prescribed Goods and/or Competing Goods from any Prescribed Supplier or accept the rendering of any Prescribed Services and/or Competing Services from it; or solicit appointment as a distributor, licensee, agent or representative of any Prescribed Supplier in respect of Prescribed Goods and/or Prescribed Services, including on behalf of or for the benefit of a Prescribed Supplier.
|
|
6.4.
|
Each of the undertakings set out in this Section 6 (including those appearing in a single sub-section) is severable
inter alia
as to (i) the nature of interest, act or activity; (ii) the categories of persons falling within the definition of prescribed customers; (iii) the categories of goods falling within the definition of the Prescribed Goods and Competing Goods; (iv) the categories of services falling within the definition of the Prescribed Services and Competing Services; and (v) the categories of persons falling within the definition of Prescribed Supplier;
|
7.
|
It is agreed and recorded that, without prejudice to any right or remedy which is available to the Company under any law or agreement, the unauthorized disclosure or use of any Confidential Information and Confidential Documents or a breach of my undertakings pursuant to Section 6 above, will cause immediate or irreparable injury to the Company and that the Company can not be adequately compensated for such injury in monetary damages, then, in order to safeguard the Company from any possible breach of confidentiality, I consent in advance that the Company will be permitted to obtain, from any Court or Tribunal, any temporary or permanent injunctive relief necessary to prevent such unauthorized disclosure or use, or threat of unauthorized disclosure or use.
|
8.
|
This Undertaking shall form an integral part of my employment agreement with the Company and a breach of any of my obligations hereunder, shall also constitute a material breach of such employment agreement.
|
9.
|
This Undertaking shall be governed by the laws of the State of Israel and the competent courts in Tel-Aviv shall have exclusive jurisdiction in all matters pertaining or relating thereto.
|
10.
|
If any condition, term or covenant of this Agreement shall at any time be held to be void, invalid or unenforceable, such condition, covenant or term shall be construed as severable and such holding shall attach only to such condition, covenant or term and shall not in any way affect or render void, invalid or unenforceable any other condition, covenant or term of this Agreement, and this Agreement shall be carried out as if such void, invalid or unenforceable term were not embodied herein.
|
11.
|
Unless specifically limited herein, my undertakings hereunder shall be valid: (i) during the term of my employment in the Company, and unless the Company waived such right in writing, following termination of my employment with the Company without time limitation; (ii) in Israel or outside Israel, and - (iii) whether such undertakings may or may not be registered under any register prescribed by law.
|
Date:
|
/s/ Ofer Tziperman
|
|||
(Signature)
|
||||
Name:
Ofer Tziperman
|
|
1.
|
Employee is a founder and shareholder of LocatioNet Systems Ltd., and is currently consulting the company on a monetization and assertion process of its patents.
|
|
2.
|
Employee is the sole owner of Radius Projects Tomas Ltd., through which he is conducting various business opportunities and consulting services.
|
1.
|
PREAMBLE
|
2.
|
PURPOSE
|
3.
|
OVERVIEW OF EXECUTIVES’ COMPENSATION COMPONENTS
|
a)
|
Directors
– Non-Employee Directors, including External Directors and Independent Directors (as defined in the Companies Law), shall receive from the Company an annual and participation based compensation in cash, reimbursement of expenses incurred by them in the performance of their duties, and may receive certain compensation in securities. Directors compensation (monetary or otherwise) shall be determined and approved by the Company’s Compensation Committee (the “
Compensation Committee
”), the Board of Directors (the “
Board
”) and by the General Meeting of Shareholders (the “
General Meeting
”) if required under applicable laws, and shall not exceed the maximum amounts set in accordance with the Companies Law and in the Companies Regulations (Rules on Compensation and Expenses of External Directors), 5760-2000 (the “
Compensation Regulations
”).
|
b)
|
Chief Executive Officer
– The compensation of the Company’s and Company's subsidiaries' Chief Executive Officers (each, a “
CEO
”) shall include a base salary, reimbursement of expenses incurred by them in the performance of their duties, performance bonus, compensation in equity and other social benefits usually granted to CEO’s in the high-tech industry, which shall be described further in this Policy. Such compensation, including performance targets and the maximum variable components of the CEO, shall be approved by the requisite organs in accordance with the Companies Law.
|
c)
|
Executives (other than Non-Employee Directors and the CEO)
– The compensation of Company's Executives (other than Non-Employee Directors and the CEO) shall include a base salary, reimbursement of expenses incurred by them in the performance of their duties, performance bonus, compensation in equity and other social benefits usually granted to Executives in the high-tech industry, which shall be further described in this Policy. Such compensation, including performance targets and the maximum variable components payable to each Executive, shall be presented and recommended by Company's management and approved by the requisite organs in accordance with the Companies Law.
|
4.
|
GENERAL CONSIDERATIONS
|
a)
|
The Executive's education, skills, expertise, professional experience and achievements;
|
b)
|
The Executive's position, responsibilities and his or her previous compensation arrangements;
|
c)
|
Executive's expected contributions to the future growth and profitability of the Company;
|
d)
|
The ratio between the Executive's employment terms and the salary of other Company employees and contractors, in particular the ratio between the average salary and the median salary of such employees and the effect of differences between such on work relations in the Company (for purposes of this section "contractors" and "salary"- as defined in the Companies Law);
|
e)
|
If the employment terms include variable components – the possibility of reducing such variable components at the discretion of the Board and the possibility of setting a limit to the realizable value of variable components of equity which are non-cash disposed;
|
f)
|
The Executive's compensation in view of comparable situated executives and based on comparable industry data (including data of peer companies )
8
;
|
g)
|
If the employment terms include a severance arrangement – the Executive's term of employment, the employment terms during the employment term, the Company's performance during such term, the Executive's contribution to achieve Company's goals and/or for maximizing profits, and the circumstances of the Executive retirement.
|
5.
|
FIXED COMPENSATION
|
5.1.
|
BASE SALARY
|
a)
|
Directors
– Non-Employee Directors, including External Directors and Independent Directors, shall receive in cash annual and participation based compensation and reimbursement of expenses incurred by them in performance of their duties (where the Company may issue them credit or debit cards to cover such expenses), as shall be determined and approved by the Compensation Committee and the Board, taking into account the considerations and restrictions set in the Companies Law and the rules and limitations set forth in the Companies Regulations.
|
b)
|
Chief Executive Officer
– The CEO shall receive a base salary and reimbursement of expenses incurred in performance of his/her duties (where the Company may issue them credit or debit cards to cover such expenses), as shall be determined and approved by the Board. The CEO’s base salary shall be designed to reward the CEO for the time and effort spent by him or her in the performance of his or her tasks and duties in the day-to-day management of the Company and shall be targeted to be competitive within the marketplace in which the Company competes. The base salary shall reflect the skills of the CEO such as education, expertise, professional experience and achievements, while taking into account his or her responsibilities and the requirements derived from the position. The CEO’s gross based annual salary shall not exceed NIS 2,160,000.
|
c)
|
Executives (other than Non-Employee Directors and the CEO)
– The Executives shall receive a base salary and reimbursement of expenses incurred in performance of their duties (where the Company may issue them credit or debit cards to cover such expenses), as shall be determined and approved by the Board. Executive's base salary shall be designed to reward the Executive for the time and effort spent by him or her in the performance of his or her tasks and his day-to-day duties and shall be targeted to be competitive within the marketplace in which the Company competes. The base salary shall reflect the skills of the Executive, such as education, expertise, professional experience and achievements, while taking into account his or her responsibilities and the requirements derived from his or her position. The Executive’s gross based annual salary shall not exceed NIS 2,160,000.
|
5.1.A
|
LUMP SUM SIGN UP BONUS
|
5.2.
|
ADDITIONAL BENEFITS
|
a)
|
Some social, incidental benefits (such as: pension and long term savings, life insurance, severance pay, vacation and sick leave) and prior termination notice are mandatory according to different local legislation, where some are provided according to market conventions and enable the Company to compete in the relevant labor market (such as education funds and company car in Israel) and others are meant to complement the base salary and compensate the Executives for expenses caused in connection with their job requirements (such as: travel expenses or allowances). To comply with the foregoing, the Company adopts the following compensation terms:
|
i.
|
The Company will provide all Executives with pension, long term disability and life insurance according to local practices and legislation and shall make such payments, contributions and deductions as required under applicable law and as customary for companies such as the Company. In Israel, the Company will provide all Executives educational fund as well.
|
ii.
|
The Company will subsidize Company cars for Executives (and gross up taxes in connection therewith).
|
iii.
|
The Company will provide all Executives with mobile phones for their use and will bear all taxes related to the use of the phone according to local legislation.
|
iv.
|
The Company will cover any reasonable, direct costs associated with an Executive's permanent move to a location decided by Company.
|
v.
|
Each Executive will be entitled to annual vacation according to prevailing Company procedures and policies, taking into consideration any relevant prior tenure and local legislation.
|
vi.
|
Each Executive will be entitled to sick leave according to Company procedures and any relevant local legislation.
|
vii.
|
Each Executive will be entitled to any additional benefits and perquisites according to Company procedures and any relevant local legislation.
|
viii.
|
Executives may be entitled to an unconditional advance notice period prior to Company termination of employer/employee relations (where Company may waive the actual work of Executives during the advance notice period) according to the following table:
|
Position
|
Months
|
CEO, CFO
|
Up to 6 months
|
VPs and other Executives
|
Up to 4 months
|
ix.
|
Without derogating from the advance notice period above and in addition thereto, the Company with the approval of the Compensation Committee will be authorized to approve a termination pay of, including special consideration for confidentiality and non-competition undertakings upon termination of employment, up to the maximum levels set in the following table.
|
The termination pay will be paid as soon as possible following the date of termination of employment and will be equivalent to the monthly base salary of the Executive multiplied by the number of months as specified in the chart above and as approved, without any additional components.
|
b)
|
All Executives, including Non-Employee Directors, shall be entitled to coverage by a D&O insurance policy and to receive from the Company an exemption and indemnification letter reflecting maximum indemnification and exemption in accordance with applicable law, as shall be approved from time to time in accordance with the Companies Law.
|
6.
|
VARIABLE
COMPENSATION
|
6.1.
|
GENERAL
|
6.2.
|
ANNUAL PERFORMANCE BONUS
|
6.2.1.
|
Payment of the annual performance bonus (the “
Bonus
”) to Executives, other than Non-Employee Directors, shall be tied to long-term corporate performance, rather than short-term stock market performance, with the goal of eliminating abuses resulting from a short-term focus.
|
6.2.2.
|
Such Bonus shall be made in accordance with each Executive's performance targets and based, among others, upon the following factors:
|
a)
|
The Company’s achievement of certain financial performance metrics, consisting of annual revenue targets, earnings before interest, taxes, depreciation and amortization target and free cash flow target, each based on the Company’s annual budget (to be approved by the Board);
|
b)
|
Achievement of the Executive defined Management by Objectives (“
MBOs
”) which will be determined by the CEO; and
|
c)
|
Discretionary and based upon achievement of the Executive performance goals, which shall be determined by the CEO, taking into account tangible and intangible performance factors as it deems appropriate, including the Executive’s relative contribution to the Company.
|
6.2.3.
|
In defining the Bonus the Company shall consider the weigh and percentage of each of the factors for the calculation of the Bonus as prescribed in the following table.
|
Position
|
Financial Factors
|
Defined MBOs
|
Discretionary
|
CEO, CFO
|
50- 90%
|
0 to 20%
|
10 to 30%
|
VP of Sales
|
50-75%
|
up to 50%
|
up to 10%
|
Other Executives
|
40-70%
|
up to 40%
|
up to 25%
|
6.2.4.
|
Payment of the annual Bonus (if any) will be made within 30 days after the publication of the financial statements for the year for which the Bonus is paid, unless the Executive's employment is terminated prior to such date, in which case the Compensation Committee and the Board of Director shall make appropriate adjustments. Any such bonus may be paid in cash in a single lump sum or by equity compensation, or a combination of both.
|
6.2.5.
|
The Executives annual Bonus shall not exceed the following amounts:
|
a)
|
CEO - the aggregate amount equivalent to 12 gross base salaries of the CEO.
|
b)
|
Other Executives - the aggregate amount equivalent to 9 gross base salaries of the Executive.
|
6.3.
|
EQUITY BASED INCENTIVES
|
7.
|
RATIO BETWEEN FIXED COMPENSTION AND VARIABLE COMPENSATION
|
8.
|
RECOUPMENT POLICY
|
9.
|
EXCHANGE RATES
|
10.
|
REVIEW, RECOMMENDATION AND APPROVAL OF THE POLICY
|
1.
|
Easy Park Ltd.
– incorporated under the laws of the State of Israel.
|
2.
|
PARX Ltd.
– incorporated under the laws of the State of Israel.
|
3.
|
OTI America Inc.
– incorporated under the laws of Delaware, U.S.A.
|
4.
|
OTI PetroSmart (Pty) Ltd.
– incorporated under the laws of the Republic of South Africa.
|
5.
|
ASEC S.A. (Spolka Akcyjna)
– incorporated under the laws of the Republic of Poland.
|
6.
|
Easy Park Israel Ltd.
– incorporated under the laws of the State of Israel.
|
7.
|
Softchip Israel Ltd.
(under voluntary liquidation) – incorporated under the laws of the State of Israel.
|
8.
|
Softchip Technologies (3000) Ltd.
(under voluntary liquidation) – incorporated under the laws of the State of Israel.
|
9.
|
CPI Communication Israel Ltd.
(under voluntary liquidation)– incorporated under the laws of the State of Israel.
|
10.
|
SmartCard Engineering S.A.S.
(under voluntary liquidation) – incorporated under the laws of the French Republic.
|
Date: March 30, 2015
|
|||
/s/ Ofer Tziperman
——————————————
Ofer Tziperman
Chief Executive Officer
(Principal Executive Officer)
|
Date: March 30, 2015
|
|||
/s/ Shay Tomer
——————————————
Shay Tomer
Chief Financial Officer
(Principal Financial Officer)
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: March 30, 2015
|
By: /s/ Ofer Tziperman
——————————————
Ofer Tziperman
Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: March 30, 2015
|
By: /s/ Shay Tomer
——————————————
Shay Tomer
Chief Financial Officer
|