EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is signed on the 15th day of May, 2005,
effective as of the 1st day of January, 2005, and is entered into by and among
Electric Fuel (E.F.L.) Ltd., an Israeli corporation (the "Company"), and Xx.
Xxxxxx Xxxxx (the "Executive").
WHEREAS, the Company wishes to employ the Executive, and the Executive
wishes to be employed by the Company, on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, the parties agree as follows:
1. Term.
The term of the Executive's employment under this Agreement shall be for the
period commencing on January 1, 2005, and ending on December 31, 2006 (the
"Initial Term"), provided, however, that the term of this Agreement shall be
automatically extended for additional terms of two (2) years each (each, an
"Additional Term") upon the end of the Initial Term and each Additional Term,
unless either the Executive or the Company shall have given written notice to
the other at least ninety days (90) days prior thereto that the term of this
Agreement shall not be so extended (a "Non-Renewal"). The provisions of this
Agreement shall apply to the relationship between the parties hereto
retroactively as if this Agreement were signed on the commencement of the
Initial Term.
2. Employment.
(a) The Executive shall be employed as Executive Vice President and Chief
Operating Officer of the Company. The Executive shall perform the duties,
undertake the responsibilities and exercise the authority customarily
performed, undertaken and exercised by persons situated in a similar
executive capacity in Israeli subsidiaries of publicly-held corporations.
The Executive shall exercise his authority in a reasonable manner and
shall report to the Chief Executive Officer of the Company (the "CEO").
(b) Excluding periods of vacation and sick leave to which the Executive shall
be entitled, the Executive agrees to devote the attention and time to the
businesses and affairs of the Company required to discharge the
responsibilities assigned to the Executive hereunder. The Company
acknowledges that the Executive is a director of multiple non-profit
organizations. In addition, the Company acknowledges that the Executive is
involved in certain investment activities which, together with the above
mentioned positions, will consume a portion of his time. The Company
consents to these other positions and activities so long as these do not
interfere in any material manner with the Executive's performance of his
duties hereunder and do not constitute a violation of Section 8 hereof.
(c) While the Executive is employed by the Company hereunder, the Company
shall use its best efforts to cause the Executive to be elected to the
Board of Directors of the Company (the "Board") and on the board of
directors of such of the Company's Israeli subsidiaries as the CEO shall
determine, as a member of such Board(s).
(d) The Company will use its reasonable best efforts to obtain, and to keep in
place at all times that the Executive is a director or officer of the
Company, a directors and officers liability policy covering the Executive
in an amount and otherwise containing terms and conditions consistent with
past practices.
(e) The Executive agrees to serve on the Board and on the board of directors
of such Israeli subsidiaries of the Company as the CEO may request.
(f) The Executive shall be required to travel on a periodic basis. Air travel
shall be business class.
3. Base Salary, Bonus and Financial Planning Allowance.
(a) Base Salary. The Company agrees to pay or cause to be paid to the
Executive, for his services to the Company, during the first year of this
Agreement a base salary at the rate of US $5,000 per month, or such larger
amount as the Compensation Committee of the Board (the "Compensation
Committee) may in its sole discretion determine following a review which
shall be conducted by the CEO and the Compensation Committee by not later
than March 31 of each year, such larger amount to take effect
retroactively to the January 1 immediately preceding such review
(hereinafter referred to as the "Base Salary"). Such Base Salary shall be
payable in equal monthly installments.
(b) Bonus. The Company will pay or cause to be paid to the Executive a signing
bonus of up to $100,000, payable at the end of each fiscal quarter in
eight equal quarterly installments of $12,500 each during the term of this
Agreement, with each such payment being contingent on the Executive being
employed by the Company on the scheduled payment date. Additionally, the
Company agrees to pay or cause to be paid to the Executive on each
anniversary of this Agreement or as soon thereafter as may be possible in
order to determine the relevant results of the Company, an annual bonus,
as follows:
(i) If, as of such anniversary, the Company shall have attained 90%
of the Company's Budgeted Number (as defined below) for the year preceding
such anniversary, then Executive's bonus shall be equal to 25% of
Executive's gross annual Base Salary as then in effect for the year
preceding such anniversary;
(ii) If, as of such anniversary, the Company shall have attained
120% of the Company's Budgeted Number (as defined below) for the year
preceding such anniversary, then Executive's bonus shall be equal to 75%
of Executive's gross annual Base Salary as then in effect for the year
preceding such anniversary;
(iii) If, as of such anniversary, the Company shall have attained
more than 90% but less than 120% of the Company's Budgeted Number (as
defined below), then Executive's bonus shall be calculated as follows:
B = (S x 25%) + (N-90)/30 x (S x 50%)
Where:
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B = The amount of Executive's annual bonus, as a percentage of
Executive's gross annual Base Salary; and
N = The percentage of the Budgeted Number (as defined below)
that was attained by the Company in the immediately preceding
fiscal year; provided, however, that N is more than 90 and
less than 120;
S = Executive's gross annual Base Salary;
provided, however, that the Executive shall be entitled in each year to a
minimum bonus of 20% of his salary.
For the purposes of this Section 3(b), the Budgeted Number shall be the budgeted
results of the Company as agreed by the Board prior to the end of each fiscal
year for the fiscal year designated in such budget, and may include targets for
any or all of the following factors: (i) revenues; (ii) cash flow, and (iii)
EBITDA. In the event that some but not all targets are reached, the Compensation
Committee shall made a determination as to what percentage of the Budgeted
Number was attained.
(c) Stock Options. The Executive will receive annual stock option bonus grants
for options to purchase the common stock of the Company's parent
corporation, Arotech Corporation ("Arotech"), in amounts to be determined
based on the recommendation of the CEO and the decision of the
Compensation Committee of Arotech. Notwithstanding anything in any stock
option grant to the contrary, all stock options granted to the Executive
shall be exercisable after termination of the Executive's employment for
any reason other than for Cause (as hereinafter defined) for a period of
time equal to the term by which Arotech director options are generally
extended upon a director of Arotech leaving Arotech's Board of Directors.
(d) Tax Planning Reimbursement. The Company shall pay Executive an amount of
up to $10,000 on the first anniversary of this Agreement and up to $7,500
on each subsequent anniversary of this Agreement to cover Executive's
legal, tax and financial planning expenses, against invoices or receipts.
Any amounts not used in a given year shall roll over to future years, but
amounts unused at notice of termination of this Agreement shall expire.
Legal expenses may not be used to finance legal advice or litigation
against the interests of the Company.
4. Employee Benefits.
The Executive shall be entitled to the following benefits:
(a) Life and Disability Insurance. The Company will pay to an insurance
company of the Executive's choice, as premiums for life and disability
insurance for the Executive, an amount equal to 13.33% of each monthly
payment of the Base Salary together with 2.5% of the Base Salary for
disability, and will deduct from each monthly payment of the Base Salary
and pay to such insurance company an amount equal to 5% of each monthly
payment of the Base Salary, which shall constitute the Executive's
contribution to such premiums. Upon the termination of the Executive's
employment with the Company for whatever reason, including without
limitation termination for Cause or the resignation by the Executive, the
right to receive the life and disability insurance benefits shall be
automatically assigned to the Executive. At the Executive's option, in
lieu of providing life and disability insurance, the Company shall pay the
amount it would otherwise pay for such insurance to the trust referred to
in Section 7(b)(ii) hereof.
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(b) Education Fund. The Company will contribute to an education fund of the
Executive's choice an amount equal to 7.5% of each monthly payment of the
Base Salary, and will deduct from each monthly payment of the Base Salary
and contribute to such education fund an additional amount equal to 2.5%
of each such monthly payment of the Base Salary. Additionally, the Company
will pay a supplementary amount to the education fund in the amount of 20%
of the Base Salary. Upon the termination of the Executive's employment
with the Company for whatever reason, including without limitation
termination for Cause or the resignation by the Executive, the right to
receive any amounts in such fund shall be automatically assigned to the
Executive. All education fund contributions or imputed income made under
this Section in excess of the statutory exemption shall be tax-effected
such that the amount of contribution net of any taxes and withholding
(including such amounts in respect of payments pursuant to this sentence)
equals the percentages specified herein.
(c) Vacation. The Executive shall be entitled to an annual vacation at full
pay equal to 24 work days. Vacation days may be accumulated and may, at
the Executive's option or automatically upon termination, be converted
into cash payments in an amount equal to the proportionate part of the
Base Salary for such days; provided, however, that if the Executive
accumulates more than two (2) times his then current annual entitlement of
vacation days, such excess shall be automatically converted into the right
to receive such a cash payment in respect of such excess. Payments to
which the Executive is entitled pursuant to this Section 4(c) shall be
made promptly after the Executive's request therefor.
(d) Sick Leave. The Executive shall be entitled to a maximum aggregate of 30
days of fully paid sick leave, accruing at the rate of 2.5 days per month;
provided, however, that the Executive shall not be entitled to sick leave
payment to the extent he is already covered by manager's insurance. Sick
leave may be accumulated and may, at the Executive's option, be converted
into cash payments in an amount equal to the proportionate part of the
Base Salary for such days. Payments to which the Executive is entitled
pursuant to this Section 4(d) shall be made promptly after the Executive's
request therefor.
(e) Automobile. Every three years, the Company shall make a new automobile
available to the Executive during the term of this Agreement. Such
automobile shall be of a high quality comparable to, but not less than,
that of a current (2003, with respect to the Initial Term) model Honda
Accord, Volkswagen Passat or Audi A4, and shall be subject to the approval
of the Executive, which shall not be unreasonably withheld. The Executive
shall be entitled to use the automobile for his personal and business
needs, so long as he does not allow anyone who would not be covered by the
Company's insurance to drive it. The Company shall pay all expenses of
maintaining and operating the automobile. All expense reimbursements or
imputed income made under this Section shall be tax-effected such that the
amount of reimbursement received by the Executive net of any taxes and
withholdings (including such amounts in respect of payments pursuant to
this sentence) equals the expense incurred.
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(f) Benefit Plans. The Executive shall be entitled to participate in all
incentive, bonus, benefit or other similar plans offered by the Company,
including without limitation the Company's 2004 Stock Option and
Restricted Stock Purchase Plan, in accordance with the terms thereof and
as determined by the Board from time to time.
5. Expenses.
The Executive shall be entitled to receive prompt reimbursement of all expenses
reasonably incurred by him in connection with the performance of his duties
hereunder. Without limiting the generality of the foregoing, the Company shall
pay all of the Executive's expenses in the use of Internet and telephones for
the Company's businesses. The Executive shall be entitled to receive room, board
and travel reimbursement in connection with the performance of his duties other
than at the principal executive office of the Company, as is customary for
senior executives of publicly-held companies. All expense reimbursements made
under this Section shall be tax-effected such that the amount of reimbursement
received by the Executive net of any taxes and withholdings (including such
amounts in respect of payments pursuant to this sentence) equals the expense
incurred.
6. Termination.
The Executive's employment hereunder shall and/or may be terminated under the
following circumstances:
(a) Death. This Agreement shall terminate upon the death of the Executive.
(b) Disability. The Company may terminate the Executive's employment after
having established the Executive's Disability. For purposes of this
Agreement, "Disability" means a physical or mental infirmity which impairs
the Executive's ability to substantially perform his duties under this
Agreement which continues for a period of at least one hundred and eighty
(180) consecutive days.
(c) Cause. The Company may terminate the Executive's employment for Cause. For
purposes of this Agreement, termination for "Cause" shall mean and
include: (i) conviction for fraud, crimes of moral turpitude or other
conduct which reflects on the Company in a material and adverse manner;
(ii) a willful failure to carry out a material directive of the CEO,
provided that such directive concerned matters within the scope of the
Executive's duties, was in conformity with Sections 2(a) and 2(b) hereof,
would not give the Executive Good Reason to terminate this Agreement and
was capable of being reasonably and lawfully performed; (iii) conviction
in a court of competent jurisdiction for embezzlement of funds of the
Company; and (iv) reckless or willful misconduct that is materially
harmful to the Company; provided, however, that the Company may not
terminate the Executive for Cause unless they have given the Executive
written notice of the basis for the proposed termination ("Company's
Notice of Termination").
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(d) Good Reason. The Executive may terminate his employment under this
Agreement for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean the occurrence of any of the events or conditions described in
subsections (i) through (vi) hereof:
(i) a change (1) in the Executive's status, title, position or
responsibilities which, in the Executive's reasonable judgment,
represents a reduction or demotion in the Executive's status, title,
position or responsibilities as in effect immediately prior thereto,
or (2) in the primary location from which the Executive shall have
conducted his business activities during the 60 days prior to such
change;
(ii) a reduction in the Executive's Base Salary;
(iii) the failure by the Company to continue the Executive as a
participant in any material compensation or benefit plan in which
the other vice presidents of the Company are participating unless
agreed to by the Executive;
(iv) the insolvency or the filing (by any party, including the Company)
of a petition for the winding-up of the Company;
(v) any material breach by the Company of any provision of this
Agreement;
(vi) any purported termination of the Executive's employment for Cause by
the Company which does not comply with the terms of Section 6(c) of
this Agreement;
provided, however, that the Executive may not terminate his employment
under this Agreement for Good Reason unless he has given the Company (i)
written notice of the basis for the proposed termination not more than
thirty (30) days after the Executive has obtained knowledge of such basis
("Executive's Notice of Termination") and (ii) a period of at least thirty
(30) days after the Company's receipt of such notice in which to cure such
basis.
(e) Change in Control. The Executive may terminate this Agreement if there is
a "Change in Control." For purposes of this Agreement, a "Change in
Control" shall mean any of the following events:
(i) the acquisition (other than from the Company in any public offering
or private placement of equity or equivalent securities) by any
person or entity of beneficial ownership of thirty percent (30%) or
more of the combined voting power of the Company's then outstanding
voting securities; or
(ii) individuals who, as of January 1, 2004, were members of the Board of
the Company (the "Original Board"), together with individuals
approved by a vote of at least two-thirds (2/3) of the individuals
who were members of the Original Board and are then still members of
the Board of the Company, cease for any reason to constitute at
least one-third (1/3) of the Board of the Company; or
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(iii) approval by the shareholders of the Company of a complete winding-up
of the Company or an agreement for the sale or other disposition of
all or substantially all of the assets of the Company.
The Executive shall give to the Company an Executive's Notice of
Termination if the Executive desires to terminate his employment because
there has been a Change in Control, such notice to specify the date of
such termination which shall be not less than thirty (30) days after such
notice is received by the Company. Any such notice, to be effective with
respect to any Change in Control, must be sent no later than six (6)
months after such Change in Control.
(f) Termination Date, Etc. "Termination Date" shall mean in the case of the
Executive's death, his date of death, or in all other cases, the date
specified in the Notice of Termination subject to the following:
(i) if the Executive's employment is terminated by the Company for Cause
or due to Disability, the date specified in the Company's Notice of
Termination shall be at least thirty (30) days from the date the
Notice of Termination is given to the Executive, provided that in
the case of Disability the Executive shall not have returned to the
full-time performance of his duties during such period of at least
thirty (30) days;
(ii) if the Executive's employment is terminated for Good Reason, or
because there has been a Change in Control, the Termination Date
specified in the Executive's Notice of Termination shall not be more
than sixty (60) days from the date the Notice of Termination is
given to the Company.
(g) Retirement. At any time during the period beginning (i) 150 days prior to
his 65th birthday ("Retirement") or (ii) from 150 days prior to his 55th
birthday until 150 days prior to his 65th birthday ("Early Retirement"),
the Executive may retire from his positions with the Companies by giving
to the Companies written Notice of Retirement specifying the Retirement
Date, which Retirement Date shall be at least one hundred and fifty (150)
days from the date of such Notice of Retirement.
7. Compensation upon Termination.
Upon termination of the Executive's employment hereunder, the Executive shall be
entitled to the following benefits:
(a) If the Executive's employment is terminated by the Company for Cause or if
the Executive's employment is terminated by the Executive other than with
either Good Reason, because there has been a Change in Control, due to
Non-Renewal, or due to Retirement or Early Retirement, then the Company
shall pay the Executive all amounts of Base Salary and the employee
benefits specified in clauses (a), (b) and (c) of Section 4 of this
Agreement earned or accrued hereunder through the Termination Date but not
paid as of the Termination Date (collectively, "Accrued Compensation").
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(b) If the Executive's employment by the Company shall be terminated (1) due
to Disability, (2) by the Executive for Good Reason, (3) by the Executive
because there has been a Change in Control, (4) by the Executive's death,
(5) due to Non-Renewal or (6) due to Retirement or Early Retirement, then
the Executive shall be entitled to the additional benefits provided below:
(i) the Company shall pay the Executive (a) all Accrued Compensation,
(b) a bonus at a rate of the higher of (i) 20%, or (ii) the rate
that would otherwise be payable pursuant to the provisions of
Section 3(b) above for the year in which the Termination Date
occurs, of Executive's annual Base Salary as of the Termination
Date, pro rated based on the number of days in such year which
occurred prior to the Termination Date, and (c) the amounts referred
to in Sections 4(d) and (e) above, to the extent earned or accrued
hereunder through the Termination Date but unpaid as of the
Termination Date;
(ii) the Company shall pay into a trust to be established pursuant to a
separate trust agreement (the "Trust") as termination pay (in lieu
of any amounts payable as severance under law) and in lieu of any
further salary for periods subsequent to the Termination Date
(except as provided in Section 7(b)(i) above), a total of $330,000;
provided, however, that if the Executive's employment is terminated
by reason of a Change of Control or a change in the primary location
from which the Executive shall have conducted his business
activities during the 60 days prior to such change, the termination
payment pursuant to this clause (y) shall be an amount equal to
twice the amount that would otherwise be payable. Termination pay
will vest and be funded into the Trust in three equal installments
as provided in Section 7(b)(iv) below.
(iii) for a period of time equal to (1) twelve months, in the case of
Termination due to Disability, Good Reason, a Change in Control, the
Executive's death, or Non-Renewal, or (2) twenty-four months, in the
case of Termination due to Early Retirement, or (3) thirty-six
months, in the case of Termination due to Retirement, the Company
shall at its expense continue on behalf of the Executive and his
dependents and beneficiaries all of the benefits, including without
limitation automobile (only in the case of Retirement or Early
Retirement), manager's insurance, life insurance, disability,
medical, dental and hospitalization benefits, which were being
provided to the Executive at the time Notice of Termination is given
(or, if the Executive terminates his employment for Good Reason or
because a Change in Control has occurred, the benefits provided to
the Executive at the time immediately preceding when such Good
Reason arose or such Change in Control occurred, if greater, or if
such benefits are being provided after the Executive's death, the
date of his death), provided that the Company's obligation hereunder
with respect to the foregoing benefits shall be limited to the
extent that the Executive obtains any such benefits pursuant to a
subsequent employer's benefit plans.
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(iv) The termination pay will be funded into the Trust in three equal
installments, each in an amount in cash equal to $110,000. The first
installment will be paid into the Trust on signing of this
Agreement, the second by December 31, 2005, and the third by
December 31, 2006.
(v) In the event of a termination due to Change of Control or a change
in the primary location from which the Executive shall have
conducted his business activities during the 60 days prior to such
change, all of the Executive's stock options, whether or not they
have yet vested, shall immediately vest and shall be extended for a
period of the later of (x) the expiration date thereof, and (y) the
second anniversary of such Change of Control or change in location.
In the event of termination due to any other reason except for
Termination for Cause, the Executive's then-vested stock options
shall be extended for a period of the earlier of (x) the expiration
date thereof, and (y) two years after such termination.
Such sums are intended to be in place of and not in addition to any
severance sums due to the Executive by operation of law, and any such sums
paid to the Executive as a result of statutory or other legal requirements
shall be deducted from the sums above. Such sums are not intended to be in
lieu of amounts payable pursuant to any separate agreements entered into
contemporaneously with or subsequent to the date of this Agreement.
As a condition to receiving the payments described in this Section 7, the
Executive shall execute and deliver to the Company a release in the form
attached hereto as Exhibit A.
8. Confidentiality; Proprietary Rights; Competitive Activity.
(a) Confidentiality. Executive recognizes and acknowledges that the
technology, developments, designs, inventions, improvements, data,
methods, trade secrets and works of authorship which the Company owns,
plans or develops, including without limitation the specifications,
documentation and other information relating to the Company's zinc-air
battery systems, and businesses and equipment related thereto (in each
case whether for their own use or for use by their clients) are
confidential and are the property of the Company. Executive also
recognizes that the Company's technology, customer lists, supplier lists,
proposals and procedures are confidential and are the property of the
Company. Executive further recognizes and acknowledges that in order to
enable the Company to perform services for its clients, those clients may
furnish to the Company confidential information concerning their business
affairs, property, methods of operation or other data. All of these
materials and information will be referred to below as "Proprietary
Information"; provided, however, that such information shall not include
any information known generally to the public (other than as a result of
unauthorized disclosure by the Executive).
(b) Non-Disclosure. Executive agrees that, except as directed by the Company,
and in the ordinary course of the Company's business, Executive will not
during Executive's employment with the Company and thereafter, disclose to
any person or entity or use, directly or indirectly for Executive's own
benefit or the benefit of others, any Proprietary Information, or permit
any person to examine or make copies of any documents which may contain or
be derived from Proprietary Information; provided, however, that the
Executive's duties under this Section 8(b) shall not extend to (i) any
disclosure that may be required by law in connection with any judicial or
administrative proceeding or inquiry or (ii) any disclosure which may be
reasonably required in connection with any actions or proceedings to
enforce the Executive's rights under this Agreement. Executive agrees that
the provisions of this paragraph shall survive the termination of this
Agreement and Executive's employment by the Company.
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(c) Competitive Activity. The Executive undertakes not, directly or indirectly
(whether as owner, partner, consultant, employee or otherwise) at any
time, during and for twelve (12) months following termination of his
employment with the Company, to engage in or contribute his knowledge to
any work or activity that involves a product, process, service or
development which is then directly (in any material manner) competitive
with any business that the Company has conducted during the term of this
Agreement or any extension hereof on which the Executive worked or with
respect to which the Executive had access to Proprietary Information while
with the Company. Notwithstanding the foregoing, the Executive shall be
permitted to engage in the aforementioned proposed work or activity if the
Company furnishes him with written consent to that effect signed by an
authorized officer of the Company.
(d) No Solicitation. During the period specified in 8(c) hereof, Executive
will not solicit or encourage any customer or supplier of the Company or
of any group, division or subsidiary of the Company, to terminate its
relationship with the Company or any such group, division or subsidiary,
and Executive will not, directly or indirectly, recruit or otherwise seek
to induce any employee of the Company or any such group, division or
subsidiary to terminate his or her employment or violate any agreement
with or duty to the Company or any such group, division or subsidiary.
(e) Equitable Relief. The Executive agrees that violations of the material
covenants in this Section 8 will cause the Company irreparable injuries
and agrees that the Company may enforce said covenants by seeking
injunctive or other equitable relief (in addition to any other remedies
the Company may have at law for damages or otherwise) from a court of
competent jurisdiction. In the event such court declares these covenants
to be too broad to be specifically enforced, the covenants shall be
enforced to the largest extent as may be allowed by such court for the
Company's protection. Executive further agrees that no breach by the
Company of, or other failure by the Company under this Agreement shall
relieve the Executive of any obligations under Sections 8(a) and 8(b)
hereof.
9. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure to the benefit of the
Company, its successors and assigns and the Company shall require any
successor or assign to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession or assignment had taken
place. The term the "Company" as used herein shall include such successors
and assigns. The term "successors and assigns" as used herein shall mean a
corporation or other entity acquiring all or substantially all the assets
and business of the Company (including this Agreement) whether by
operations of law or otherwise.
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(b) Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
(c) Nothing to the contrary in the foregoing notwithstanding, the Executive
may assign this Agreement to any company of which he is a "control person"
within the meaning of the Securities Exchange Act of 1934, provided, that
the Executive shall continue to be obligated to fulfill the duties set
forth in Section 2 above, and provided, further, that the Executive shall
continue to be bound by the terms and provisions of Section 8 of this
Agreement notwithstanding any such assignment.
10. Notice.
For the purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or sent by registered mail, postage
prepaid, addressed to the respective addresses set forth below or last given by
each party to the other. All notices and communications shall be deemed to have
been received on the date of delivery thereof or on the eighth business day
after the mailing thereof, except that notice of change of address shall be
effective only upon receipt.
The initial addresses of the parties for purposes of this Agreement shall be as
follows:
The Company: Electric Fuel (E.F.L.) Ltd.
One XxXxxxxx Xxxxxx, Xxxxxxx Xxxxxxxxxx Xxxx
Xxxx Xxxxxxx 00000, Xxxxxx
The Executive: Xxxxxx Xxxxx
P.O. Box 1307
Efrat, Israel
11. Miscellaneous.
No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by the
Executive and the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreement or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.
12. Governing Law; Arbitration; Venue.
This Agreement shall be governed by and construed and enforced in accordance
with the laws of Israel without application of any conflicts of laws principles
which would cause the application of the domestic substantive laws of any other
jurisdiction. All disputes under this Agreement that cannot be resolved by the
parties shall be submitted to arbitration under the rules and regulations of the
Israel Institute of Commercial Arbitration. Either party may invoke this
paragraph after providing 30 (thirty) days written notice to the other party.
All costs of arbitration shall be divided equally between the parties. The
arbitrator(s) shall award to the prevailing party, if any, as determined by the
arbitrator(s), all of its costs and fees. "Costs and Fees" means all reasonable
pre-award expenses of the arbitration, including arbitration fees,
administrative fees, travel expenses, out-of-pocket expenses such as copying and
telephone, court costs, witness fees and reasonable attorneys' fees. In the
event that notwithstanding the foregoing arbitration provision there is
nevertheless litigation in respect of this Agreement, each of the Executive and
the Company hereby irrevocably waives any objection it may now or hereafter have
to the laying of venue in the courts of the State of Israel, City of
Tel-Aviv-Yafo, for any legal suit or action instituted by any party to the
Agreement against any other with respect to the subject matter hereof.
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13. Severability.
The provisions of this Agreement shall be deemed severable, and the invalidity
or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
14. Entire Agreement.
This Agreement constitutes the entire agreement between the parties hereto and
supersedes all prior agreements, understandings and arrangements, oral or
written, between the parties hereto with respect to the subject matter hereof
including.
15. Registration Rights.
(a) If the Company at any time proposes to register any of its
securities under the Securities Act of 1933, as from time to time in
effect (together with the rules and regulations thereunder, all as
from time to time in effect, the "Securities Act"), for its own
account or for the account of any holder of its securities, on a
form which would permit registration of Common Stock of the Company
at the time held or obtainable upon the exercise of options,
warrants or rights, or the conversion of convertible securities, at
the time held by the Executive ("Registrable Securities"), for sale
to the public under the Securities Act, the Company will each such
time give notice to the Executive of its intention to do so. Such
notice shall describe such securities and specify the form, manner
and other relevant aspects of such proposed registration. The
Executive may, by written response delivered to the Company within
15 days after the giving of any such notice, request that all or a
specified part of the Registrable Securities be included in such
registration. the Company will thereupon use its best efforts as
part of its filing of such form to effect the registration under the
Securities Act of all Registrable Securities which the Company has
been so requested to register by the Executive, to the extent
required to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities to be so
registered.
(b) The Executive may, by notice to the Company specifying the intended
method or methods of disposition, given at any time and from time to
time after the Company has registered any shares of its Common Stock
under the Securities Act, request that the Company effect the
registration under the Securities Act of all or a specified part of
the Registrable Securities; provided, however, that the Company
shall not be required to effect a registration pursuant to this
Section 15(b) unless such registration may be effected on a Form S-3
(or any successor or similar Form); and provided, further, that each
registration pursuant to this Section 15(b) shall cover a number of
Registrable Shares equal to not less than 2% of the aggregate number
of shares of the Company Common Stock then outstanding. the Company
will then use its best efforts to effect the registration as
promptly as practicable under the Securities Act of the Registrable
Securities which the Company has been requested to register by the
Executive pursuant to the Section 15(b).
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(c) Notwithstanding the provisions of Section 15(b), in the event that
Executive has requested pursuant to Section 15(b) that the Company effect
a registration of securities, and (i) the CEO of the Company determines
that it would be seriously detrimental to the Company to effect a
registration pursuant to Section 15(b), or (ii) the CEO of the Company
determines in good faith that (A) the Company is in possession of
material, non-public information concerning an acquisition, merger,
recapitalization, consolidation, reorganization or other material
transaction by or of the Company or concerning pending or threatened
litigation and (B) disclosure of such information would jeopardize any
such transaction or litigation or otherwise materially harm the Company,
then the Company shall promptly notify Executive of the occurrence of any
of the events described in the foregoing clauses (i) or (ii). Upon the
occurrence of any of the events described in clauses (i) or (ii) hereof,
the Company shall be allowed to defer a registration of securities
pursuant to Section 15(b) above, and if a registration statement had
already been filed at such time, Executive shall not dispose of his
Registrable Securities under such registration statement until it is so
advised in writing by the Company that the registration of securities
under 15(b) may be effected or resumed. Notwithstanding the foregoing, any
such deferment or prohibition on disposition shall not be in effect for
more than 90 days in any 12 months period.
(d) The Company shall not be obligated to effect any registration of
Registrable Securities under Section 15(a) hereof incidental to the
registration of any of its securities in connection with mergers,
acquisitions, exchange offers, dividend reinvestment plans or stock option
or other employee benefit plans.
(e) The Company hereby agrees to pay, or cause to be paid, all legal,
accounting, printing and other expenses (other than the fees and expenses
of the Executive's own counsel and other than underwriting discounts and
commissions attributable to the Registrable Securities) in connection with
each registration of Registrable Securities pursuant to this Section 15.
(f) In connection with each registration of Registrable Securities pursuant to
this Section 15, the Company and the Executive will enter into such
agreements, containing such terms and conditions, as are customary in
connection with public offerings, such agreements to contain, without
limitation, customary indemnification provisions, representations and
warranties and opinions and other documents to be delivered in connection
therewith, and to be, if requested, with underwriters.
(g) The provisions of this Section 15 shall be subject to any agreement
entered into by the Company, in good faith, with any underwriter of the
Company's securities or any person or entity providing financing to the
Company, in each case containing reasonable limitations on the Executive's
rights and the Company's obligations hereunder.
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(h) The provisions of this Section 15 shall survive the termination of the
other provisions of this Agreement. The rights of the Executive under this
Section 16 are assignable, in whole or in part, by the Executive to any
person or other entity acquiring securities of the Company from the
Executive.
(i) Notwithstanding anything in the foregoing to the contrary, the Executive
shall not demand a registration during the 180 days following an
underwritten public offering of the Common Stock of the Company.
(j) Without the prior written consent of the underwriters managing any public
offering, for a period beginning ten days immediately preceding the
effective date of any registration statement filed by the Company under
the Securities Act of 1933, as amended, and ending on the earlier of (i)
180 days after the effective date of such registration statement and (ii)
the end of the shortest period generally applicable to any "affiliate" (as
defined in the Securities Act of 1933, as amended) of the Company who is a
selling shareholder pursuant to such registration statement or who is
otherwise subject to a lockup provision, the Executive (whether or not a
selling shareholder pursuant to such registration statement) shall not
sell or otherwise transfer any securities of the Company except pursuant
to such registration statement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and the Executive has executed this Agreement as
of the day and year first above written.
ELECTRIC FUEL (E.F.L.) LTD.
By:
------------------------------- -----------------------------------------
Name: XXXXXX XXXXX
Title:
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Exhibit A
FORM OF MUTUAL RELEASE
This mutual release is executed and delivered by and between the
undersigned employee of Arotech Corporation, a Delaware corporation (the
"Company") and the undersigned's successors, assigns, executors, estates and
personal representatives (collectively, the "Executive"), on the one hand, and
the Company and its affiliates, agents, successors and assigns (collectively,
the "Company"), on the other hand. For and in consideration of the Executive
receiving the compensation referred to in Section 7 of the Employment Agreement
effective as of January 1, 2005 and other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged by the Executive and the
Company, the Executive hereby remises, releases and forever discharges the
Company, and the Company hereby remises, releases and forever discharges the
Executive, of and from any and all manner of action and actions, cause and
causes of actions, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, covenants, contracts, controversies, executions, claims and
demands of any kind and nature whatsoever in law or in equity, known or unknown,
against the other party which ever existed prior to the date hereof, or may ever
have on and after the date hereof with respect to matters arising, and dealings
with the other party occurring, prior to the date hereof; provided, however,
that nothing contained herein shall be construed to release the Executive from
any obligations to the Company pursuant to the Employment Agreement nor to
release the Company from any of its obligations to the Executive pursuant to the
Employment Agreement.
IN WITNESS WHEREOF, the Executive and the Company have each caused this
Release to be executed as of ______________________.
ELECTRIC FUEL (E.F.L.) LTD.
By:
------------------------------- -----------------------------------------
Name: XXXXXX XXXXX
Title:
