Exhibit 10.7
Employment Agreement, dated as of July 1, 1999,
by and between Xxxxxx Xxxxxx and the Registrant.
PERSONAL EMPLOYMENT AGREEMENT
Signed and executed in Rosh Xxxx as of the 1 day of July 1999
Between: On Track Innovations Ltd.(Reg. No. 52-004286-2)
a private company registered in Israel
of Z.H.R. I.Z., Rosh Xxxx 12000
(the "Company",)
of the one part
And: Xxxxxx Xxxxxx (ID No. 000000000)
of Moshav Beit Hilel
(the "Employee")
on the other part
Whereas the Employee has been employed by the Company as a Vice President
Research and Development (the "Position") and the Company wishes to
continue employing him in the said Position, subject to the terms and
conditions set forth below in this Agreement; 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, contractaul or otherwise - for the execution by
him of this Agreement.
NOW, THEREFORE, THE PARTIES HAVE AGREED AS FOLLOWS:
1. Nature of the Agreement - General and Applicability
1.1. This Agreement exhaustively prescribes the terms and
conditions applicable to the Employee's employment with the
Company and accordingly no collective or special agreements
shall apply to the employment relations between the Employee
and the Company.
1.2. It is hereby warranted and agreed that the Employee has been
employed by the Company since its establishment; however, the
provisions of this Agreement shall only apply to the Employee
from July 1, l999 (the "Effective date") and thereafter. Until
the Effective date, the terms, conditions and provisions
relating to the Employee's employment at such time, and from
time to time, shall apply to the Employee and his rights. The
Employee's signature at the margin of this agreement also
constitutes his confirmation that, save for the amounts (if
any) specified in the Appendix annexed to this Agreement as
Annex A and constituting an integral part hereof and that are
payable to him in respect of his employment prior to the
Effective Date (in respect of convalescence pay or leave pay),
he has been paid all the amounts of whatsoever nature due to
him from the Company in connection with his employment with
the Company until the Effective Date, whether in respect of
salary, social benefits or otherwise, and his signature at the
margin of this contract also constitutes his full and absolute
waiver of any amounts due to him (if any) as stated.
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2. The Employee's Duties
2.1. The Employee shall be employed by the Company in the position
of Vice President Research and Development. By virtue of the
Position the Employee shal1 be responsible for the day to day
and routine management of the Company's research and
development and operations involved therein. In the
performance of the Position, the Employee shall be subject to
the Company's President and Chief Executive Officer (the
"Officer in Charge") and subject to the 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 a 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 posi1ion, the Employee shall be
considered solely, as the Company's employee.
3. The Employee's Undertakings
The Employee hereby undertakes:
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 subject to the provisions and
instructions given to him from time to time by the Officer In
Charge, 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 the Agreement (as defined
in Section 10.l below), in any engagement not within the scope
of his employment with the Company pursuant to this
Agreement, other than with the Officer in Charge'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 holds more than 1%. It is acknowledged
that the Employee is a member of a moshav and in addition owns
an agricultural settlement.
4. Monthly Salary
4.1. In consideration for the Employee's employment and the
performance of his other undertakings to the Company pursuant
to this Agreement, the Company shall pay the Employee, by no
later than the 9th of each month in respect of the preceding
month, a monthly salary (gross) of NIS in an amount equal to
US$ 8,000 (the "Monthly Salary").
4.2 By no later than December 1st of each year, the Company's
board of directors shall determine the Employee's salary for
the following year, which shall not be less than in the
preceding year.
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5. Bonus
5.1 The Company pursuant to a resolution of its compensation
committee, in its absolute discretion, is entitled or give the
Employee, in accordance with targets to be determined by no
later than December 31 of each calendar year ("Year") in
respect of the next Year by the compensation committee of the
Board (but in its first meeting following July 1, 1999 in
respect of 1999), a monetary annual bonus (the "Bonus"). In
determining such Bonus, the compensation committee shall
relate to the Company's revenues, and/or the Company's
profits, as applicable to the Employee.
5.2 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.
5.3. When feasible in light of the Company's cash flow and
provided it is justifiable in light of the Company's results
as manifested 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
During the term of the Agreement, the Company shall place at the Employee's
exclusive disposal a car for his use 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 Adjustment Period (as
defined in Section 10.2.1.4 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 in respect of the said benefits.
7. Annual Leave, Sick Leave, Convalescence Pay, Military Reserve Service
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 and redeemable - but 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 able to accrue more than 100
days for the purposes of redemption and 3O days for the
purposes of taking actual leave.
The exact periods of such annual leave shall be coordinated
with the Company's officer In Charge and the Company's
administrative officer.
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.
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7.4. During the period of military reserve the Employee shall be
entitled to receive his full Monthly Salary and the other
benefits payable to him pursuant to this Agreement. The
Employee shall remit to the Company every month that shall be
paid to him for his service as aforesaid from the National
Insurance ("hebrew phrase")
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 the Agreement 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 to 2.5% (two and a half percent) of
the Monthly Salary on account of loss of working
capacity insurance.
Furthermore, the Company shall deduct from the Monthly Salary
an amount equal to 5% (five percent) which shall be remitted
to the said executive insurance fund, such being on account of
the provident fund and in respect of the Employee's part of
the provision to the said fund.
8.2 In addition to the aforesaid provisions to the executive
insurance policy, the Company shall make a provision each
month of an amount equal to 8-1/3 (eight and one third
percent) of the Monthly Salary on account or supplementing the
severance pay prescribed in Section 8.1.1 above to an amount
equal to two monthly salaries for each year of actual
employment. This additional amount shall be paid by the
Company to the Employee at the time and in the event that the
Employee is entitled to payment of the severance pay
prescribed in Section 10.2.1 below.
8.3. It is hereby agreed that the above arrangement regarding the
executive insurance policy, is made in accordance with the
general permit relating to employer's payments to pension
funds and insurance funds, instead of severance payment under
Section 14 of the Severance Pay Law 5723-1963 (the "Severance
Pay Law") and thus, save in the event of termination pursuant
to Section 1O.2.2 below. and save if the Employee has drown
funds from the executive insurance policy not due to a
Qualifying Event (as defined in GN 4575 - 5758), the Company
waives any and all rights for return of the amounts paid by it
to the executive insurance policy and such payments shall be
deemed being in lieu of severance pay as specified in the
Severance Pay Law (GN 2787-5742, 993; GN 2847-5742, 2939;
GN 4575-5758).
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.
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10. Term and Termination
1O.1. This Agreement is for a term of five (5) years commencing on
the Effective Date and terminating on June 30, 2004. This term
shall be automatically extended (without limitation), or
terminated by the Company for reasonable and justifiable cause
or by the Employee by serving the other party with at least
six (6) months' prior written notice (the "Prior Notice
Period"). Following such notice, the Employee shall continue
in his Position and perform this 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 the Agreement").
Termination of this Agreement by the Company for unreasonable
and unjustifiable cause shall be deemed a material breach of
this Agreement.
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 for the
Prior Notice Period, such being whether the Employee was
requested to continue work 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 5.2 above, The amounts of the
Bonus payable to him (if at all) pursuant to Section 5 above,
in respect of such part of the year in which the Employee has
been actually employed with the Company, as shall be pro rata
calculated from the yearly Bonus, computed pursuant to section
5.1.2 above.
10.2.1.3 to receive from the executives' insurance fund and the
vocational studies and all the amounts which had accrued to
his benefit in
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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 receive the Monthly Salary and all benefits granted to the Employee
pursuant to this Agreement excluding Bonus payments pursuant to Section
5 above from the Company until June 30, 2002, notwithstanding any
prior termination.
10.2.1.5 In the event that termination notice is given after December 31, 2001,
the employee shall be entitled to receive the Monthly Salary from the
Company and all benefits granted to the Employee pursuant to this
Agreement excluding Bonus payments pursuant to Section 5 above, in
respect of an additional adjustment period of 6 (six) months, following
termination of the Prior Notice Period (the "Adjustment Period"). For
avoidance of doubt, the Employee shall not be entitled to receive
payments pursuant to both Sections 10.2.1.4 and 10.2.1.5 in respect of
the same month.
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 or any payment in
respect of the Adjustment Period. In such event, the Employee shall be
obliged to reimburse Allowances which were granted to the Employee
pursuant to Section 5.3 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.
It is agreed that termination of this Agreement by the Employee for
personal reasons, and where a Prior Notice was given by him to the
Company, shall not be considered a fundamental breach for the purpose
of this Section 10.2.2.
11. Confidentiality and Non-Competition
11.1. The Employee has signed 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 24 (twenty four) 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
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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.
12. Further Provisions
The Employee hereby warrants that he is aware and agrees that:
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
An amendment to this agreement shall not be valid unless made in a written
document duly signed by the parties hereto.
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14. Addresses
The parties' addresses for the purposes of this agreement shall be as
specified in the heading hereto and any notice, document or court process
sent by one party to the other according to the above addresses shall be
deemed to have reached its destination: if delivered by hand - at the time
of delivery, and if dispatched by registered post - after 72 hours have
elapsed from the time of dispatch as aforesaid.
IN WITNESS WHEREOF THE PARTIES HAVE SET THEIR HANDS:
/s/ ON TRACK INNOVATIONS LTD. /s/ XXXXXX XXXXXX
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ON TRACK INNOVATIONS LTD. EMPLOYEE
