AGREEMENT
Exhibit 4.7
AGREEMENT
THIS AGREEMENT is entered into as of the 30th day of June, 2004 between XXXX COMMUNICATIONS & SOFTWARE LTD., an Israeli corporation (“Xxxx”) and XXXXXX X. XXXXXX (“Xx. Xxxxxx”), under the following circumstances:
A. Xx. Xxxxxx has been previously employed for many years by The Iams Company as Senior Vice President and Chief Financial Officer. Xx. Xxxxxx currently serves as a Board Member of Xxxx and Chairman of its Investment Committee. The Board of Directors of Xxxx has elected Xx. Xxxxxx as the Chairman of the Board of Xxxx.
NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth herein, it is hereby agreed as follows:
Section 1. Term. Unless sooner terminated as provided in Section 9, the term of this Agreement (the “Term”) shall commence as of July 1, 2004 and shall expire on June 30, 2007; provided, however, that the Term shall be automatically extended on June 30, 2007 and on each June 30 thereafter (each a “Renewal Date”) for an additional one year period unless, at least six (6) months prior to any Renewal Date, either Xx. Xxxxxx or Xxxx gives written notice (a “Nonrenewal Notice”) to the other that the Term will not be so extended on such Renewal Date and, in such event, the Term shall expire on such Renewal Date. Xxxx agrees to use its best efforts to obtain any requisite shareholder approval of this Agreement as soon as possible.
Section 2. Chairman of the Board.
(a) Election. During the Term, Xx. Xxxxxx shall serve as the Chairman of the Board of Xxxx, provided Xx. Xxxxxx is elected by Xxxx’x shareholders to serve as a Director. Xx. Xxxxxx hereby agrees to serve in such capacity and, if requested and in Xx. Xxxxxx’x sole discretion, to also serve as a member of other committees of the Board of Directors of Xxxx or as a director of other subsidiaries of Xxxx. Xxxx agrees to use its best efforts to nominate Xx. Xxxxxx as a Director of Xxxx to its shareholders so that he serves as a Director of Xxxx at all times during the Term.
(b) Duties. In his capacity as Chairman of the Board of Xxxx, Xx. Xxxxxx shall perform such duties as may be required by law or Xxxx’x Articles of Association or as may be reasonably assigned to him from time to time by the Board of Directors of Xxxx. While Xx. Xxxxxx shall devote such time and attention as shall be necessary to perform his duties hereunder, the parties acknowledge that Xx. Xxxxxx’x engagement hereunder is not fulltime and that he has other active business interests and engagements.
(c) Compensation. For his services under this Section 2, Xx. Xxxxxx shall receive a retainer fee at the quarterly rate of Twenty-One Thousand Two Hundred and Fifty U.S. Dollars (US$21,250), payable in advance on the first business day of July, October, January and April during the Term (the first of such payments to be made in arrears upon the effectiveness of this Agreement). During each quarter of the Term, the quarterly fee shall be adjusted upward to equal twice the fee paid in cash to any other director of Xxxx but shall not be adjusted to exceed the annual rate of One Hundred Thousand U.S. Dollars (US$100,000).
(d) Stock Options. Within seven (7) days after the effectiveness of this Agreement, Xxxx shall grant Xx. Xxxxxx options to purchase 150,000 ordinary shares of Xxxx at a purchase price equal to the closing price of Xxxx shares on the date of grant. Such options shall vest in three installments of 50,000 shares each on June 30, 2005, 2006 and 2007 and shall be subject to the terms and conditions of an option agreement to be entered into between Xxxx and Xx. Xxxxxx and, as to be agreed to between the parties, subject to one of Xxxx’x existing stock option plans or an option plan to be adopted by Xxxx.
Section 3. Place of Performance. In performing his duties under this Agreement, Xx. Xxxxxx shall not be required to be physically located within Israel and Xx. Xxxxxx may perform such duties from such locations as Xx. Xxxxxx may determine from time to time.
Section 4. Expenses. Xxxx shall reimburse Xx. Xxxxxx for all reasonable out-of-pocket expenses (including travel expenses) incurred by him in connection with the performance of his duties hereunder, including, but not limited to, expenses relating to the purchase, set up and maintenance of new office equipment as Xx. Xxxxxx may reasonably request from time to time.
Section 5. Relationship of Parties. In the performance of his duties hereunder, Xx. Xxxxxx’x relationship to Xxxx shall be that of an independent contractor and not that of an employee. Xx. Xxxxxx shall be solely responsible for and shall pay all applicable federal, state, local or other self-employment and income taxes applicable to the compensation payable to him hereunder. Xxxx may withhold such taxes as shall be required to be withheld pursuant to applicable law or regulation with respect to any amounts payable or benefits granted to Xx. Xxxxxx under this Agreement.
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Section 6. Confidentiality. During the Term and indefinitely thereafter, Xx. Xxxxxx shall keep and hold all confidential, nonpublic and proprietary information (including, without limitation, any information which may constitute a “trade secret”) of, or relating to, Xxxx or any of its subsidiaries or affiliates in strict confidence.
Section 7. Indemnification. Xxxx undertakes to amend its Articles of Association to provide for the exemption (ptor) and indemnification (Shipui) of Xx. Xxxxxx in connection with the performance of his duties hereunder to the full extent that Xxxx is permitted to exempt and indemnify a director and officer under Israeli law. Xxxx shall at all times cause Xx. Xxxxxx to be included, in his capacities as a director or officer of Xxxx, as a named insured under all directors’ and officers’ liability insurance coverage (or similar insurance coverage) maintained by Xxxx from time to time.
Section 8. Other Activities. Nothing contained herein shall prevent Xx. Xxxxxx from engaging in other business, civic, charitable or industry activities so long as such other activities do not unreasonably interfere with the performance of his duties hereunder.
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Section 9. Termination.
(a) Death. This Agreement shall terminate automatically upon Xx. Xxxxxx’x death during the Term.
(b) By Xxxx. Xxxx may terminate this Agreement during the Term on account of Xx. Xxxxxx’x Disability or for Cause.
(c) By Xx. Xxxxxx. Xx. Xxxxxx may terminate this Agreement during the Term for Good Reason.
(d) Change of Control. This Agreement shall terminate automatically upon the consummation of a Change of Control during the Term.
(e) Notice of Termination. Any termination of this Agreement pursuant to Section 9(b), (c) or (g) shall be communicated by a Notice of Termination. For this purpose, a “Notice of Termination” means a written notice given by Xxxx to Xx. Xxxxxx or by Xx. Xxxxxx to Xxxx which (i) indicates the specific termination provision(s) relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination and (iii) specifies the Date of Termination.
(f) Failure to Obtain Approvals. This Agreement shall terminate unless any requisite shareholder approval has been obtained by Xxxx by December 31, 2004; subject to extension by Xx. Xxxxxx in his sole discretion.
(g) Removal as Director and Chairman. In the event that during the Term, Xx. Xxxxxx is not elected as a Director and Chairman of the Board (or is removed as a Director or Chairman of the Board), then unless Xx. Xxxxxx and Xxxx thereupon mutually agree otherwise, Xx. Xxxxxx may terminate this Agreement.
Section 10. Obligations of Xxxx Upon Termination.
(a) Generally. Upon termination of this Agreement for any reason (including, without limitation, by reason of the expiration of the Term), Xxxx shall pay to Xx. Xxxxxx in cash or cashier’s check not later than the fifteenth day after the Date of Termination the amount of any compensation payable to Xx. Xxxxxx pursuant to Section 2 through the Date of Termination to the extent not theretofore paid.
(b) Severance Benefits Upon Termination in Certain Events. In addition to the payments and benefits provided for in Section 10(a), if this Agreement is terminated prior to the expiration of the Term (i) by Xx. Xxxxxx pursuant to Section 9 (c); (ii) by Xxxx other than pursuant to Section 9 (b); or (iii) because of the consummation of a Change of Control pursuant to Section 9 (d), then:
(i) Xxxx shall pay to Xx. Xxxxxx as severance compensation in a lump sum in cash or cashier’s check not later than the fifteenth day after the Date of Termination an amount equal to the aggregate amount of the annual fees which would have been payable to Xx. Xxxxxx pursuant to Section 2 during the remainder of the Term had this Agreement not been terminated; and |
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(ii) all of Xx. Xxxxxx’x options to purchase ordinary shares of Xxxx shall be deemed to be vested and exercisable in full as of the Date of Termination. |
(c) No Mitigation. The benefits provided under Section 10 shall not be treated as damages, but rather shall be treated as severance compensation to which Xx. Xxxxxx is entitled under the terms and conditions set forth herein. Xx. Xxxxxx shall not be required to mitigate the amount of any benefit provided for in Section 10 by seeking employment or otherwise.
(d) Survival. Sections 4, 5, 6, 7, 9, 10, 13 and 14 shall survive termination of this Agreement.
Section 11. Certain Definitions. For purposes of this Agreement, the following terms have the following meanings:
“Cause” means only (i) the commission of a felony, (ii) embezzlement, (iii) the illegal use of drugs, or (iv) breach of obligations of confidentiality or fiduciary duties. Notwithstanding the foregoing, “Cause” shall not be deemed to exist unless and until there shall have been delivered to Xx. Xxxxxx a copy of a resolution duly adopted by the Board of Directors, which is confirmed in writing as agreed to by not less than three-fourths of the number of directors of Xxxx then in office (after reasonable notice to Xx. Xxxxxx and an opportunity for Xx. Xxxxxx, together with his counsel, to be heard at a meeting of the Board of Directors of Xxxx called and held for that purpose), finding that in the good faith opinion of such directors Xx. Xxxxxx was guilty of conduct set forth in any of clauses (i)-(iv)and specifying the particulars thereof in detail.
“Change of Control” means any change in control of Xxxx of a nature that would be required to be reported in response to Item 6 (e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the ‘Exchange Act’), or any similar law of the State of Israel that is applicable to Xxxx; provided that, without limitation, such a Change of Control shall be deemed to have occurred if (i) any ‘person’ (as such term is defined in Sections 13 (d) and 14 (d) (2) of the Exchange Act; hereafter, a ‘Person’) other than existing shareholders of Xxxx that directly or indirectly hold more than 20% of the voting rights in Xxxx as of the date hereof, after the date hereof becomes or consummates a tender offer to become the beneficial owner, directly or indirectly, of securities of Xxxx representing 34% or more of the combined voting power of the then outstanding securities of Xxxx; (ii) Xxxx enters into an agreement to merge or consolidate itself, or an agreement to consummate a ‘combination’ or ‘majority share acquisition’ in which it is the ‘acquiring corporation’ and in which shareholders of Xxxx as the case may be, immediately prior to entering into such agreement, will beneficially own, immediately after the effective time of the merger, consolidation, combination or majority share acquisition, securities of Xxxx or any surviving or new corporation, as the case may be, having less than 50% of the ‘voting power’ of Xxxx or any surviving or new corporation, as the case may be, including ‘voting power’ exercisable on a contingent or deferred basis as well as immediately exercisable ‘voting power’; (iii) Xxxx enters into an agreement to sell, lease, exchange or otherwise transfer or dispose of all or substantially all of its assets to any Person other than to a wholly owned subsidiary; but not including a mortgage or pledge of assets granted in connection with a financing or (iv) any transaction referred to in (ii) or (iii) above is consummated.
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“Date of Termination” means (a) if this Agreement is terminated pursuant to Section 9(b), 9 (c) or pursuant to Section 9(g), the date specified in the Notice of Termination (provided that such date shall not exceed 60 days from the date of the Notice of Termination) or (b) if this Agreement is terminated for any other reason (including, without limitation, by reason of the expiration of the Term or the consummation of a Change of Control), the date of such termination.
“Disability” means the inability of Xx. Xxxxxx to perform his duties hereunder for a period of three consecutive months because of physical or mental illness or other physical or mental disability or incapacity.
“Good Reason” means: (a) other than in connection with the termination of this Agreement pursuant to Section 9(a) or 9(b) or by reason of the expiration of the Term, the assignment to Xx. Xxxxxx, without his consent, of any duties inconsistent with the duties contemplated by Section 2; (b) if, during the pendency of a Change of Control, Xx. Xxxxxx determines in good faith that, due to such Change in Control, he is not able to effectively discharge his duties hereunder; (c) the termination of this Agreement by Xxxx without satisfying any of the applicable requirements therefore set forth herein; or (d) any material breach by Xxxx of this Agreement.
Section 12. Successors. This Agreement is personal and shall not be assignable by either Xxxx or by Xx. Xxxxxx (otherwise than by will or the laws of descent and distribution) without prior written consent of the other party.
Section 13. Legal Expenses. Xxxx shall reimburse Xx. Xxxxxx in full for all legal fees and expenses reasonably incurred by him in connection with this Agreement and in the performance of his responsibilities hereunder (including, without limitation, any such fees and expenses incurred in connection with the preparation and negotiation of this Agreement; or in contesting or disputing any termination of this Agreement or in seeking to obtain or enforce any right or benefit provided herein, provided a court finds for Xx. Xxxxxx.
Section 14. General Provisions.
(a) Notices. All notices required or permitted to be given under this Agreement shall be in writing and shall be mailed (postage prepaid by either registered or certified mail) or delivered, if to Xxxx, addressed to Xxxx Communications & Software, Ltd., 00 Xxxxxxxx Xx., Xxxx Xxxxxxx, Kiryat Weizmann, Nes Ziona, 74140, Israel, Attention: the Board of Directors and the Chief Executive Officer, with a copy to: Xxxxx X. Xxxxxxxx, Adv., Xxxxx Xxxxx & Co., One Azrieli Center, 46th Floor – Xxxxx Xxxxx, Xxx-Xxxx, Xxxxxx 00000; and if to Xx. Xxxxxx, addressed to: Xx. Xxxxxx X. Xxxxxx, 000 Xxxxxxx Xxxx, Xxxxxxx, XX 00000, with a copy to: Xxxxxxx X. Xxxxxxxxx, Esq., Xxxxxxxxx, Xxxxxx & Xxxxx P.L.L., 00 Xxxxxxxxxx Xxxxx, X.X., Xxxxx 0000, Xxxxxx, XX 00000. Any party may change the address to which notices to such party are to be directed by giving written notice of such change to the other parties in the manner specified in this Section 14.
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(b) Waiver. No failure or delay in exercising any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right.
(c) Amendment. Any amendment to this Agreement or any waiver of rights or any consent hereunder shall not be operative unless it is in writing and signed by the party sought to be charged.
(d) Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original for all purposes and all of which shall constitute a single instrument.
(e) Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Israel, without giving effect to the principles of conflict of laws thereof.
(f) Effectiveness. THE VALIDITY AND EFFECTIVENESS OF THIS AGREEMENT IS SUBJECT TO THE APPROVAL OF ITS TERMS BY XXXX’X AUDIT COMMITTEE, BOARD OF DIRECTORS AND SHAREHOLDERS TO THE EXTENT REQUIRED BY APPLICABLE LAW.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
| _______________________________ XXXXXX X. XXXXXX |
XXXX COMMUNICATIONS & SOFTWARE LTD. By:____________________________ Title:_________________________ |
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