EMPLOYMENT AGREEMENT
This Agreement, is entered into in Hnifa, Israel as of December 24, 1998
between
GENESIS DEVELOPMENT AND CONSTRUCTION LTD.
of 00 Xxxxxxxxx Xxxxxx, Xxxxx
(hereinafter referred to as "the Company")
and
XX. XXX XXXX
residing at 000 Xxxxx Xxxx,
Xxx Xxxx, Xxx Xxxx 00000
(hereinafter referred to as "the Employee")
WHEREAS the Company is engaged in the business of development and construction
of private and public properties; and
WHEREAS the Employee possesses knowledge and experience in the fields in which
the Company is engaged; and
WHEREAS the Employee has been engaged in the management and operation of the
Company as its Chairman of the Board; and
WHEREAS the Company wishes to enter into an agreement with the Employee
governing the terms and conditions of his employment; and
WHEREAS the Employee is willing to be employed on the conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and mutual agreements herein
contained and set forth, and for other good and valuable consideration, made
over by each party to the other, the receipt of which is hereby acknowledged, it
is covenanted and agreed as follows:
1. Employment
----------
The Company hereby employs the Employee as Chairman of the Board of
the Company, and the Employee shall have such other commensurate
responsibilities, duties and authority as may from time to time be
assigned to him by the Company's Board of Directors, and the Employee
hereby accepts such employment with the Company in accordance with the
terms and conditions set forth in this Argreement.
2 Terms of Agreement
------------------
The term of this Agreement shall commence January 1, 1999 and end on
December 31, 2003, subject to the provisions for termination as set
forth in Section 12 hereinbelow (hereinafter referred to as "the
Employment Term").
3. Obligations of the Employee
---------------------------
3.1 During the Employment Term, the Employee shall perform his duties and
exercise his authority as Chairman of the Board of the Company, and
the Employee shall have such other commensurate responsibilities,
duties and authority as may from time to time be assigned to him by
the Company's Board of Directors, including responsibility for the
operation of the Company and its daily management, in accordance with
the policies, procedures and directors of the Board of Directors of
the Company, and subject to any applicable law and the Company's
Articles of Association.
3.2 During the Employment Term, the Employee will devote substantially all
of his productive time, efforts, ability and attention toward
devotedly and fulfilling his obligations and duties to the Company in
accordance with the objectives of the Company, as they are defined by
the Company's Board of Directors, from time to time.
4. Place of Employment
--------------------
4.1 The Employee's regular place of employment shall be in the area of New
City. New York, United States of America, and will include travel and
periods of stay abroad according to the requirements of the Company as
determined by the Company' s Board of Directors, and other
requirements resulting from the Company being headquartered in Haifa,
Israel.
5. Compensation
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5.1 Annual Salary
-------------
During the Employment Term, the Employee will be compensated at
an annual gross base salary of U.S, $350,000 (three hundred fifty
thousand U .S. dollars) (hereinafter: "Base Salary"), payable in
U.S. dollars. The Employee's salary is subject to such increases
during the Employment Term as may be approved at any time or from
time to time by the Company, according to Companies Ordinance and
the Company's Articles of Association.
Until otherwise resolved by the Company's Board of Directors, the
Employment annual salary for each year of the Employment Term
shall be paid in 12 consecutive and equal monthly payments (each
payment for the proceeding month).
5.2 Bonus
-----
The Employee shall receive upon the publication of the Company's
annual financial statements for the preceding year, commencing
with the fiscal year ending December 31, 1999 and terminating
after the publication of the Company's annual financial
statements for the fiscal year ending December 31, 2003, bonus
compensation equal to U.S. $50,000 (fifty thousand U.S. dollars),
payable in U.S. dollars, for each U.S. $1,000.000 of net income
for such fiscal year (determined according to U.S. GAAP in the
Company's audited financial statements).
The exclusive decision as to the amount of net income in the
Company's audited financial statements shall be made by the
Company's independent accountants, as they may be from time to
time, and their decision shall be final and binding on the
Company and the Employee.
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6. Automobile
----------
The Company shall provide the Employee with two automobiles of a make and
model similar to that which he is using at the time of the execution of
this Agreement for his exclusive use for business and personal travel. The
Company will pay all expenses of maintenance and use of the automobiles
excluding traffic violation fines. The Employee's Base Salary shall be
grossed up so as to include any tax applicable to the Employee because of
the use of the automobiles, resulting in no adverse affect on the employees
net income.
At the termination of the employment, the Employee shall be entitled to
purchase such automobiles for a consideration equal to its depreciated
value at the Company's books.
7. Employee's Insurance
--------------------
7.1 The Company will pay on the Employee's behalf at the Company's sole
cost and expense a sum equal to thirteen and one-third percent ( 13
1/3%) of the Employee's current monthly Base Salary each month for
executives' insurance which will be allocated as follow:
8 1/3% for a severance pay fund. 5% for a provident fund.
7.2 The Employee will contribute a sum equal to five percent (5%) of his
current monthly Base Salary for the insurance for the provident fund
in accordance with custom and practice.
7.3 The Company will pay at its sole cost and expense a reasonable sum
equal to the percent of the Employee's current monthly Base Salary as
determined by the insurance company for disability insurance.
7.4 All payments provided for in this Section 7 will be made in such
amounts and in such timely fashion as to guarantee the Employee the
full rights and benefits of such insurance at all times during the
Employment Term and thereafter in accordance with law and practice.
7.5 During the Employment Term, ownership of all accounts and insurance
policies provided in this Section 7 shall be in the name of the
Company.
7.6 Anything contained herein to the contrary notwithstanding, if the
employee-employer relationship is terminated by either party,
including termination resulting from death or severe disability of the
Employee as stated in Section 12.2 herein, the accounts and/or
policies provided for in this Section 7, including the provident and
severance pay funds, will be released to the Employee and transferred
to his name, effective as of the date of such termination, provided
that in cases where under Israeli applicable law or court rulings the
Employee is not entitled to severance pay the Company may choose not
to transfer to the Employee such severance pay funds. The amount of
severance pay to which the Employee shall be entitled shall be the
greater of (a) the amount accumulated in the policy account for
severance pay and (b) the amount resulting from multiplying (i) the
Employee's years of service to the Company, by (ii) the Employee's
last monthly salary (including all benefits and incentive
compensation). The transfer to the Employee of the amount accumulated
in the policy account for severance pay shall be in lieu of severance
pay which the Employee is entitled to receive from the Company under
the Severance Pay law, 1963, provided that the Company shall
supplement and pay the Employee any difference between the amount
accumulated in the severance pay policy and the amount he is actually
owed as set forth in this subsection 7.6.
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7.7 The Employee's Base Salary shall be grossed up so as to include any
tax applicable to the Employee because of the benefits included in
this Section 7, resulting in no adverse affect on the Employee's net
income.
8. Vacation and Sick Leave
-----------------------
8.1 The Employee shall be entitled to an annual vacation of one (1) month
per year with full salary. Annual vacations may be accumulated to the
extent permitted by law.
8.2 The Employee shall be entitled to one (1 ) month per year of sick
leave. Sick leave may be accumulated to the extent permitted by law.
9. Expense Account and Telephone
-----------------------------
9.1 The Employee shall be entitled to receive payment and/or reimbursement
of his reasonable ordinary and necessary business expenses which are
incurred by him on behalf of the Company or in the promotion of its
interests in Israel or abroad based upon receipts for such expenses
delivered to the Company by the Employee.
9.2 The Company shall pay the Employee's reasonable telephone bills,
including fax and mobile phones.
9.3 The Employee's Base Salary shall be grossed up so as to include any
tax applicable to the Employee because of the above benefits,
resulting in no adverse affect on the Employee's net income.
10. Medical Insurance
-----------------
The Company will pay in full at the Company's sole cost and expense all
medical insurance expenses of the Employee in accordance with a customary
medical insurance plan of the Employee's choice. The Employee's Base Salary
will be Crossed up so as to include any tax incurred by the Employee with
regard to such payment, if any.
11. Change In Control
-----------------
11.1 For purposes hereof, a "change in control" shall be defined as:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13D-3 promulgated
under the Exchange Act) of 20% or more of either (A) the then
outstanding Class A Ordinary Shares of the Company (the "Outstanding
Company Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of Directors (the "Outstanding Company
Voting Securities"); provided. however. that for purposes of this
subsection (i), the following acquisitions shall not constitute a
Change of Control: (1) any acquisition directly from the Company, (2)
any acquisition by the Company, (3) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (4) any acquisition by
any corporation pursuant to a transaction which complies with clauses
(A), (B) and (C) of subsection (iii) below; or
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(ii) Individuals who, as of the date hereof, constitute the Board
of Directors of the Company (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Incumbent Board;
provided, however, that any individual becoming a director subsequent
to the date hereof whose election or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Incumbent Board;
or
(iii) Consummation of a reorganization, merger, consolidation or
sale or other disposition of all or substantially all of the assets of
the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (A) all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly more than 60% of
respectively, the then outstanding Ordinary Shares (or its equivalent)
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the
case may be, (B) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20%
or more of, respectively, the then outstanding shares of common stock
of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a majority of the
members of the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action of
the Incumbent Board, providing for such Business Combination; or (iv)
approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.
11.2 Upon the occurrence of a Change in Control and the Company ceases to
use Employee's services specified in Section 3 above, the Company
shall pay the Employee, or in the event of his subsequent death, his
beneficiary or beneficiaries, or his estate, as the case may be, a sum
equal to the greater of the payments due for the remaining term of the
Agreement or three (3) times the Employee's then current annual
compensation as an employee of the Company. Such annual compensation
shall include any bonuses, incentive compensation, pension and profit
sharing plan benefits, severance payments, retirement benefits.
director or committee fees and fringe benefits paid or to be paid to
the Employee for the current fiscal year. At the election of the
Employee, which election is to be made within thirty (30) days of the
Change in Control, such payment may be made in a lump sum or paid in
equal monthly installments during the thirty-six (36) months following
the Employee's termination. In the event that no election is made,
payment to the Employee will be made on a monthly basis during the
thirty-six (36) months following the Employee's termination.
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11.3 All restrictions on restricted stock of the Company then held by the
Employee will lapse immediately, incentive stock options and stock
appreciation rights then held by the Employee will become immediately
exercisable, and any performance shares or units then held by the
Employee will vest immediately, in full, in the event of a Change in
Control.
11.4 Upon the occurrence of a Change in Control, the Employee will be
entitled to receive benefits due him under or contributed by the
Company on his behalf pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Company on the Employee's behalf to the extent such
benefits are not otherwise paid to the Employee under a separate
provision of this Agreement.
11.5 Upon the occurrence of a Change in Control followed by the Employee's
termination of employment, the Company will cause to be continued
life, medical, dental and disability coverage substantially identical
to the coverage maintained by the Company for the Employee prior to
his severance, except to the extent that such coverage may be changed
in its application for all Company employees on a nondiscriminatory
basis. Such coverage and payments shall cease upon the expiration of
thirty-six (36) full calendar months following the Date of
Termination.
11.6 Any and all payments to be made to the Employee under this Agreement
or otherwise as a result of a Change in Control whether in the nature
of severance payments, liquidated damage payments, compensation or
other payments (all of the foregoing being hereinafter referred to as
"Change in Control Payments"), shall be made free and clear of, and
without deduction or withholding for or on account of, any tax which
may be payable under Section 4999 of the Internal Revenue (the "Code")
Code of 1996 or similar provision under Israeli law, now of hereafter
imposed. levied, withheld or assessed (such amounts being hereinafter
referred to as the "Excise Taxes"). If notwithstanding the foregoing
provision. any Excise Taxes are withheld from any Change in Control
payments made or to be made to the Employee the amounts so payable to
the Employee shall be increased to the extent necessary to yield to
the Employee (after payment of any tax which may be payable under
Section 4999 of the Code, or similar provision under Israeli law) the
full amount which he is entitled to receive pursuant to the terms of
this Agreement or other wise without regard to liability for any
Excise Taxes and any other Federal, State, FICA/Medicare and
unemployment taxes thereon, or similar Israeli measures. In the event
any Excise Taxes are now or hereafter imposed, levied, assessed, paid
or collected with respect to the Change of Contro1 payments made or to
be made to the Employee, Excise Taxes and any other Federal, State,
FICA/Medicare and unemployment taxes thereof shall be paid by the
Company or, if paid by the Employee, shall be reimbursed to the
Employee by the Company upon its receipt of satisfactory evidence of
such payment having been made.
12. Termination of Agreement
------------------------
12.1 In the event that the Board of Directors of the Company terminates
this Agreement prior to the end of the Employment Term, other than (i)
for ground entitling the Company under Israeli law or court rulings to
terminate this Agreement without paying the Employee severance pay,
(ii) for willful misconduct or acts in bad faith performed by the
Employee with respect to his employment to the Company, (iii) for
conviction of the Employee of committing a felony or fraud resulting
in adverse financial effect on the Company, (iv) for conviction of a
felony involving moral turpitude or (v) pursuant to Section 11 of this
Agreement; the Company shall pay to the Employee an amount equal to
three (3) times the Base Salary. At the election of the Employee,
which election is to be made within thirty (30) days of the date of
termination, such payment may be made in a lump sum or paid in equal
monthly installments during the thirty-six (36) months following the
Employee's termination. In the event no election is made, payment to
the Employee will be made on a monthly basis during the thirty-six
(36) months following the Employee's termination.
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12.2 In case of the death of the Employee or in case the Employee suffers
severe disability preventing him from performing his duties under this
Agreement, this Agreement will automatically be terminated.
12.3 At the end of the Employment Term, the Employee shall transfer his
position to his replacement in an orderly fashion and shall deliver to
the Company all documents, information and all other materials in his
possession or that were prepared by him relating to his work up to the
date that he ceases to be employed by the Company.
13. Confidentiality of Information
------------------------------
During the Employment Term and for all unlimited period of time subsequent
to the end of the Employment Term, the Employee shall preserve the
confidentiality of all information related to the business and activities
of the Company, and shall not reveal any such information to a third party
of any kind.
14. Non-Competition
---------------
14.1 The Employee agrees that so long as he is actively employed by the
Company, and for the twelve (12) month period following the date of
termination of employer-employee relationship between the Employee and
the Company (hereinafter: "the Non-Compete Period"), he will not
compete, in person or via any other entity, with the business of the
Company as it is constituted from time to time.
14.2 During the Non-Compete Period the Employee will not employ, whether
directly or indirectly, any individual employed at such time by the
Company, nor shall he employ or retain the services of any of the
Company's subcontractors, suppliers or advisors in a way competing
directly with the business of the Company.
14.3 Should any of the non-competition provisions contained in this Section
14 be determined as unreasonable by an Israeli court, such Section
shall not be completely cancelled, but its terms shall be narrowed in
a manner considered reasonable by such court.
15. Miscellaneous
-------------
15.1 The Employee shall not have the right to transfer his rights and
obligations under this Agreement to any third party whatsoever, except
to a corporation wholly owned by the Employee, or any other entity
controlled by him, so long as the corporation or other entity makes
the Employee' s services available to the Company on its behalf in
order to fulfill the Employee's commitments pursuant to this Agreement
and provided the Employee retains full autonomy in making resolutions
relating to his services to the Company.
15.2 All of the Employee's Base Salary and other payments owed to him in
accordance with this Agreement, as they exist at the time of his
death, will be paid, in the event of his death, to his heirs,
executors, administrators and/or assigns.
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15.3 The Employee shall cooperate with the Company in all matters relating
to the issuance of a key-man life insurance policy regarding the
Employee for the benefit of the Company.
15.4 This Agreement shall be governed by the laws of New York, United
States of America.
Dated effective this _____ of _____________, 1998.
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GENESIS DEVELOPMENT AND XX. XXX XXXX
CONSTRUCTION LTD.
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