EMPLOYMENT AGREEMENT
Exhibit
10.7
THIS
EMPLOYMENT AGREEMENT
(this
“Agreement”)
is
made and entered into as of the 14th
day of
December, 2005 (the “Effective
Date”),
by
and between MODIGENE INC.,
a
Delaware corporation (“Employer”),
and
Xxxx Xxxxx (“Executive”).
RECITALS
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A.
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Executive
currently serves in the position of President of
Employer.
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B.
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Employer
desires to have Executive continue in the position of President and
Executive desires to continue to serve in such
position.
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C.
|
Employer
and Executive have made commitments to each other on a variety of
important issues concerning Executive’s employment, including the
performance that will be expected of Executive, the compensation
that
Executive will be paid, how long and under what circumstances Executive
will remain employed and the financial details relating to any decision
that either Executive or Employer might ever make to terminate this
Agreement.
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D.
|
Employer
and Executive believe that the commitments they have made to each
other
should be memorialized in writing, and that is the purpose of this
Agreement.
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NOW,
THEREFORE,
in
consideration of the premises and of the covenants and agreements hereinafter
contained, it is covenanted and agreed by and between the parties hereto as
follows:
AGREEMENTS
Section
1. Term
and Automatic Extension.
Executive’s employment hereunder shall be for a term of two years (the
“Term”)
commencing on the Effective Date. The Term shall automatically extend for
additional one-year periods (the “Automatic
Extension”),
unless either party provides written notice to the other not less than 60 days
prior to the applicable one-year anniversary of the Effective Date of its desire
not to extend the Term. If such a written notice is effectively given and the
Automatic Extension is not effected, then Executive’s employment hereunder shall
terminate as of the last day of the then current Term.
For the
avoidance of doubt, the initial Term commences on December 14, 2005, therefore
the expiration date shall be December 14, 2007 unless the Automatic Extension
is
triggered as a result of no notice being given on or before October 15, 2006
(60
days prior to the one-year anniversary of the commencement date) and thereby
the
Term will be automatically extended to December 14, 2008. Similarly, if no
notice is given on or before October 15, 2007 (60 days prior to the next
one-year anniversary of the commencement date), the Term will automatically
be
extended to December 14, 2009.
Section
2. Position
and Duties.
Employer
hereby employs Executive as the President. Executive will devote Executive’s
full business time and best efforts to the performance of Executive’s duties
hereunder and will not engage in any other business, profession or occupation
for compensation or otherwise which would conflict or interfere with the
rendition of such services, without the prior written consent of the Board;
provided,
that
nothing herein shall preclude Executive from engaging in other business
professions or occupations for compensation or otherwise or from accepting
appointment to or continuing to serve on any board of directors or trustees
of
any business corporation or any charitable organization; provided
further,
that, in
each case, and in the aggregate, such activities do not conflict or interfere
with the performance of Executive’s duties hereunder or conflict with
Section
6.
Executive’s duties and authority shall consist of and include all duties and
authority customarily performed and held by persons holding equivalent positions
with business organizations similar in nature and size to Employer, as such
duties and authority are reasonably defined, modified and delegated from time
to
time by the Board. Executive shall have the powers necessary to perform the
duties assigned to him.
1
Section
3. Compensation.
As
compensation for the services to be provided by Executive hereunder, Executive
shall receive the following compensation, expense reimbursement and other
benefits (as shall be set forth also in the Notice to Employee attached hereto
as Exhibit
A,
as may
be amended from time to time):
(a) Base
Salary.
Executive shall receive an aggregate annual minimum base salary at the rate
of
One Hundred and Ninety-Five Thousand Dollars ($195,000) payable in equal monthly
installments of $16,250 or otherwise in accordance with the regular payroll
schedule of Employer (“Base
Salary”).
At
the mutual agreement of Employer and Employee, payments of Base Salary shall
be
made in NIS, calculated in accordance with the applicable exchange rate
published by Bank Israel at the day of payment. The Base Salary shall be subject
to review annually commencing on July 1, 2006, and shall be maintained or
increased during the term hereof as the Board may determine from time to
time.
(b) Performance
Bonus.
Executive shall be eligible to receive an annual cash bonus up 50% of Base
Salary, as determined by the Board, payable within 30 days after the end of
the
fiscal year of Employer, which shall be based upon performance criteria
established by the Board (“Performance
Bonus”).
(c) Signing
Bonus.
Executive shall receive a signing bonus of One Hundred Thousand Dollars
($100,000) (the “Signing
Bonus”),
payable as follows: (i) $50,000 within three business days of the Effective
Date, and (ii) $50,000 upon the earliest to occur of (1) the receipt of $100,000
by Employer or any of its subsidiaries from any business or research and
development collaboration, including, without limitation, any down payment,
milestone payment or royalty payment, (2) the closing of the next equity or
debt
funding round of Employer, (3) 12 months after the Effective Date, or (4) the
termination of this Agreement for any reason. At the mutual agreement of
Employer and Employee, payments of the Signing Bonus shall be made in NIS,
calculated in accordance with the applicable exchange rate published by Bank
Israel at the day of payment.
(d) Grant
of Options.
Executive is hereby granted two (2) option grants. The 1st
option
grant includes 100,000 options to purchase common shares of Employer, with
a
strike price of $1.5, vested equally over a twelve months period starting on
the
Effective Date. The 2nd
option
grant includes 85,000 options to purchase common shares of Employer, with a
strike price of $1.5, vested annually over a three-year period starting on
the
Effective Date. The exercise of the 1st
and
2nd
option
grants can be done via cash or cashless method. The 1st
and
2nd
option
grants are granted to Employee under the Employer’s ESOP. The 1st
option
grant shall be effective through the expiration date of the options, and shall
survive any voluntary termination by Employee or termination by Employer. All
the other terms of the 1st
and
2nd
option
grants shall be detailed in a separate Option Grant Agreement delivered to
the
Employee no later than 90 days from the Effective Date.
2
(e) Discretion
of the Board.
Additional incentive compensation shall be at the discretion of the
Board.
(f) Vacations
and Sick Leave. During
the Term, Executive shall be entitled to an aggregate of 30 days of paid
vacation and sick leave per calendar year (which include paid sick leave (“Dmei
Xxxxxxx”) as prescribed under Israeli law). Such
paid
vacation /sick leave shall accrue quarterly. Executive may accumulate
or carry over up
to 21
days of unused,
accrued vacation/sick leave to
the
next calendar year.
For any
partial year of employment, the number of vacation /sick leave days shall be
prorated.
(g) Employer
Plans.
Executive shall have the right to participate in such employee benefit and
welfare plans and programs as Employer may from time to time offer or provide
generally to its executive officers, including participation in any life
insurance, disability coverage, health and accident, medical plans and programs
and profit sharing and retirement plans, all in accordance with the terms and
conditions of such plans and programs.
(h) Other
Benefits.
Executive
shall be entitled to all benefits specifically established for him by the Board
and, when and to the extent he is eligible therefor, to receive commensurate
benefits as from time to time generally accorded to senior executives of
Employer.
(i) Reimbursement
of Expenses.
Executive
shall be reimbursed, upon submission of appropriate vouchers and supporting
documentation, for all travel, entertainment and other out-of-pocket expenses
reasonably and necessarily incurred by Executive in the performance of his
duties hereunder.
(j) Withholding.
Employer
shall be entitled to withhold from amounts payable to Executive hereunder,
any
applicable withholding or other taxes or charges which it is from time to time
required to withhold under applicable law. Employer shall be entitled to rely
upon the opinion of its legal counsel with regard to any question concerning
the
amount or requirement of any such withholding.
Section
4. Confidentiality
and Loyalty.
(a) Confidentiality.
(i) Executive
will not at any time (whether during or after Executive’s employment with
Employer) (x) retain or use for the benefit, purposes or account of
Executive or any other Person; or (y) disclose, divulge, reveal,
communicate, share, transfer or provide access to any Person outside Employer
(other than its professional advisers who are bound by confidentiality
obligations), any non-public, proprietary or confidential
information - including, without limitation trade secrets, know-how,
research and development, software, databases, inventions, processes, formulae,
technology, designs and other intellectual property, information concerning
finances, investments, profits, pricing, costs, products, services, vendors,
customers, clients, partners, investors, personnel, compensation, recruiting,
training, advertising, sales, marketing, promotions, government and regulatory
activities and approvals - concerning the past, current or future
business, activities and operations of Employer, its subsidiaries or affiliates
and/or any third party that has disclosed or provided any of same to Employer
on
a confidential basis (“Confidential
Information”)
without the prior written authorization of the Board.
3
(ii) “Confidential
Information”
shall
not include any information that is (a) generally known to the industry or
the public other than as a result of Executive’s breach of this covenant or any
breach of any other confidentiality obligations by third parties; (b) made
legitimately available to Executive by a third party without breach of any
confidentiality obligation; or (c) required by law to be disclosed;
provided,
that
Executive shall give prompt written notice to Employer of such requirement,
disclose no more information than is so required, and cooperate with any
attempts by Employer to obtain a protective order or similar
treatment.
(iii) Except
as
required by law, Executive will not disclose to anyone, other than Executive’s
immediate family and legal or financial advisors, the existence or contents
of
this Agreement; provided,
that
Executive may disclose to any prospective future employer the provisions of
Section
4
and
Section
6
of this
Agreement provided they agree to maintain the confidentiality of such terms.
Notwithstanding anything herein to the contrary, any party to this Agreement
(and any employee, representative, or other agent of any party to this
Agreement) may disclose to any and all persons, without limitation of any kind,
the tax treatment and tax structure of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure. However, any such information relating to the tax treatment or tax
structure is required to be kept confidential to the extent necessary to comply
with any applicable federal or state securities laws.
(iv) Upon
termination of Executive’s employment with Employer for any reason, Executive
shall (x) cease and not thereafter commence use of any Confidential
Information or intellectual property (including, without limitation, any patent,
invention, copyright, trade secret, trademark, trade name, logo, domain name
or
other source indicator) owned or used by Employer, its subsidiaries or
affiliates; (y) immediately destroy, delete or return to Employer, at
Employer’s option, all originals and copies in any form or medium (including
memoranda, books, papers, plans, computer files, letters and other data) in
Executive’s possession or control (including any of the foregoing stored or
located in Executive’s office, home, laptop or other computer, whether or not
Employer property) that contain Confidential Information or otherwise relate
to
the business of Employer, its affiliates and subsidiaries, except that Executive
may retain only those portions of any personal notes, notebooks and diaries
that
do not contain any Confidential Information; and (z) notify and fully
cooperate with Employer regarding the delivery or destruction of any other
Confidential Information of which Executive is or becomes aware.
4
(b) Intellectual
Property.
(i) If
Executive creates, invents, designs, develops, contributes to or improves any
works that relate to Employer’s business of developing therapeutic proteins,
either alone or with third parties, at any time during Executive’s employment by
Employer and within the scope of such employment and/or with the use of any
of
Employer resources (“Employer
Works”),
Executive shall promptly and fully disclose same to Employer and hereby
irrevocably assigns, transfers and conveys, to the maximum extent permitted
by
applicable law, all rights and intellectual property rights therein (including
rights under patent, industrial property, copyright, trademark, trade secret,
unfair competition and related laws) of the Employer Works to Employer to the
extent ownership of any such rights does not vest originally in
Employer.
(ii) Executive
agrees to keep and maintain adequate and current written records (in the form
of
notes, sketches, drawings, and any other form or media requested by Employer)
of
all Employer Works. The records will be available to and remain the sole
property and intellectual property of Employer at all times.
(iii) Executive
shall take all requested actions and execute all requested documents (including
any licenses or assignments required by a government contract) at Employer’s
expense (but without further remuneration) to assist Employer in validating,
maintaining, protecting, enforcing, perfecting, recording, patenting or
registering any of Employer’s rights in the Employer Works. If Employer is
unable for any other reason to secure Executive’s signature on any document for
this purpose, then Executive hereby irrevocably designates and appoints Employer
and its duly authorized officers and agents as Executive’s agent and attorney in
fact, to act for and in Executive’s behalf and stead to execute any documents
and to do all other lawfully permitted acts in connection with the
foregoing.
(iv) Executive
shall not improperly use for the benefit of, bring to any premises of, divulge,
disclose, communicate, reveal, transfer or provide access to, or share with
Employer any confidential, proprietary or non-public information or intellectual
property relating to a former employer or third party without the prior written
permission of such third party. Executive hereby indemnifies, holds harmless
and
agrees to defend Employer and its officers, directors, partners, employees,
agents and representatives from any breach of the foregoing covenant. Executive
shall comply with all relevant policies and guidelines of Employer, including
regarding the protection of confidential information and intellectual property
and potential conflicts of interest. Executive acknowledges that Employer may
amend any such policies and guidelines from time to time, and that Executive
remains at all times bound by their most current version.
(v) The
provisions of this Section
4
shall
survive the termination of Executive’s employment for any reason.
Section
5. Termination.
(a) Voluntary
Termination by Executive or Expiration of Term.
If
Executive voluntarily terminates his employment under this Agreement, other
than
pursuant to Section
5(f)
(Change
of Control), or upon the natural expiration of the Term (after any Automatic
Extensions), then Employer shall only be required to pay Executive such Base
Salary, accrued vacation and unpaid expenses as shall have accrued through
the
effective date of such termination and the Signing Bonus (to the extent not
previously paid), and Employer shall not be obligated to pay any Performance
Bonus for the then current fiscal year of Employer, or have any further
obligations to Executive. Executive shall provide Employer a 30-day notice
prior
to such voluntary termination. If the Term expires, then Employer shall only
be
required to pay Executive such Base Salary, accrued vacation/sick leave and
unpaid expenses as shall have accrued through the effective date of such
termination, plus Employer shall be obligated to pay any Performance Bonus
(as
determined be Section 3 above) for the then current fiscal year of Employer.
Notwithstanding the foregoing, if Executive voluntarily terminates his
employment due to Employer’s material breach of its obligation to pay Executive
pursuant to this Agreement and Executive has given Employer notice and a 30-day
period to cure such breach, then Employer shall continue to pay Executive his
Base Salary for the 12-month period following the effective date of termination
(payable in monthly installments), plus Employer shall pay to Executive, within
ten (10) days after the effective date of termination, an amount equal to the
value of accrued vacation/sick leave, unpaid expenses and any other benefits
accrued at the effective date of termination (including a pro rata portion
of
the current fiscal year’s Performance Bonus, if any). In such case, Employer
shall not be obligated to pay any remaining Performance Bonus for the then
current fiscal year of Employer, or have any further obligations to
Executive.
5
(b) Premature
Termination by Employer.
In the
event of the termination of this Agreement by Employer prior to the last day
of
the Term (as the same may be extended pursuant to Section 1) for any reason
other than a termination in accordance with the provisions of Section
5(c)
(Termination for Cause), then Employer shall continue to pay Executive his
Base
Salary for the nine-month period following the effective date of termination
(payable in monthly installments), plus Employer shall pay to Executive, within
ten (10) days after the effective date of termination, an amount equal to the
value of accrued vacation/sick leave, unpaid expenses and any other benefits
accrued at the effective date of termination (including a pro rata portion
of
the current fiscal year’s Performance Bonus, if any, through the effective date
of termination). In such case, Employer shall not be obligated to pay any
remaining Performance Bonus for the then current fiscal year of Employer, or
have any further obligations to Executive; provided, however, that the Base
Salary amount that Employer is obligated to pay hereunder shall be reduced
by
any salary or consulting fees that Executive receives from another employer
during such nine-month period. Employer shall provide Executive with 90 days
prior written notice of such premature termination.
(c) Termination
for Cause.
This
Agreement may be terminated for cause as hereinafter defined. “Cause”
shall
mean: (i) Executive’s
death; (ii) Executive’s
“Permanent
Disability”,
which
shall mean Executive’s inability, as a result of physical or mental incapacity,
substantially to perform his duties hereunder for a period of three consecutive
months; (iii) a
material violation by Executive of any applicable material law or regulation
respecting the business of Employer; (iv) Executive
being found guilty of a felony or an act of dishonesty in connection with the
performance of his duties as an officer of Employer, or which disqualifies
Executive from serving as an officer or director of Employer; (v) the
willful or negligent failure of Executive to perform his duties hereunder in
any
material respect after receipt of written notice from the Board and a reasonable
opportunity to cure; (vi) the
willful or negligent failure of Executive to obey the reasonable lawful
directives of the Board after receipt of written notice from the Board and
a
reasonable opportunity to cure; and (vii) to
the extent permitted by applicable law, the development by Executive of any
drug, alcohol or other substance abuse problems, or the commission of a crime
involving moral turpitude. Upon a termination of Executive’s employment with
Employer for Cause, Executive shall be entitled to receive from Employer only
such payments as are due and owing to Executive as of the effective date of
such
termination.
Employer
shall provide Executive with five days prior written notice of termination
with
Cause. For the avoidance of doubt, no Performance Bonus shall be payable for
the
fiscal year in which Employee is terminated for Cause.
6
(d) Payments
Upon Death.
At the
death of Executive, payment of all accrued but unpaid Base Salary and the value
of any accrued but unused vacation/sick leave, as of the date of such death,
shall be made to such beneficiary as Executive may designate in writing, or
failing such designation, to the executor of his estate, in full settlement
and
satisfaction of all claims and demands on behalf of Executive. Such payments
shall be in full settlement and satisfaction of all claims and demands on behalf
of Executive under this Agreement.
(e) Payments
Upon Permanent Disability.
Executive shall be entitled to the compensation and benefits provided for under
this Agreement for any period during the Term and prior to the establishment
of
Executive’s Permanent Disability during which Executive is unable to work due to
a physical or mental infirmity. Notwithstanding anything contained in this
Agreement to the contrary, until the date specified in a notice of termination
relating to Executive’s Permanent Disability, Executive shall be entitled to
return to his position with Employer as set forth in this Agreement in which
event no Permanent Disability of Executive will be deemed to have occurred.
Upon
the establishment of Executive’s Permanent Disability, payment of all accrued
but unpaid Base Salary, and the value of any accrued but unused vacation /sick
leave shall be made to Executive or his representative. Such payments shall
be
in full settlement and satisfaction of all claims and demands on behalf of
Executive under this Agreement.
(f) Other
Termination Payments
(i) In
the
event of a termination of Executive’s employment under either (A) or (B) below,
Executive shall be entitled to receive, in lieu of any other payments provided
for in this Agreement, a lump sum payment equal to the sum of (x) the lesser
of
(i) Executive’s Base Salary for nine months and (ii) Executive’s Base Salary for
the remainder of the Term (as the same may have been extended pursuant to
Section 1), (y) the value of accrued vacation/sick leave, unpaid expenses and
any other benefits accrued at the effective date of termination (including
a pro
rata portion of the current fiscal year’s Performance Bonus, if any), and (z)
the Signing Bonus (to the extent not previously paid). In addition, all
non-vested stock options held by Executive shall immediately vest and shall
be
exercisable:
A. Executive
terminates his employment under this Agreement for Good Reason (as defined
below) by a written notice to that effect delivered to the Board within 12
months after the occurrence of the Good Reason event.
B. Executive’s
employment is terminated by Employer or its successor within 12 months of a
Change of Control.
7
(ii) For
purposes of this Section, the term “Change
of Control”
shall
mean the following:
A. The
consummation of the acquisition by any person (as such term is defined in
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the
“1934
Act”))
of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the 0000 Xxx) of fifty percent (50%) or more of the combined voting power of
the
then outstanding voting securities of Employer;
B. The
individuals who, as of the date hereof, are members of the Board cease for
any
reason to constitute a majority of the Board, unless the election, or nomination
for election by the stockholders, of any new director was approved by a vote
of
a majority of the Board, and such new director shall, for purposes of this
Agreement, be considered as a member of the Board; or
C. The
consummation of: (1) a merger or consolidation to which Employer is a party
if
the stockholders immediately before such merger or consolidation do not, as
a
result of such merger or consolidation, own, directly or indirectly, more than
fifty percent (50%) of the combined voting power of the then outstanding voting
securities of the entity resulting from such merger or consolidation in
substantially the same proportion as their ownership of the combined voting
power of Employer’s voting securities outstanding immediately before such merger
or consolidation; or (2) a complete liquidation or dissolution or an agreement
for the sale or other disposition of all or substantially all of the assets
of
Employer.
Notwithstanding
the foregoing, a Change of Control shall not be deemed to occur solely because
fifty percent (50%) or more of the combined voting power of Employer’s then
outstanding securities is acquired by: (1) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained for employees
of
the entity; or (2) any corporation which, immediately after such acquisition,
is
owned directly or indirectly by the stockholders in substantially the same
proportion as their ownership of stock immediately prior to such
acquisition.
(iii) If
(A)
Executive provides written notice to Employer of the occurrence of Good Reason
(as defined below) within a reasonable time after Executive has knowledge of
the
circumstances constituting Good Reason, which notice specifically identifies
the
circumstances which Executive believes constitute Good Reason; (B) Employer
fails to notify Executive of Employer's intended method of correction within
30
days after receipt of the notice, or fails to commence appropriate action to
correct the circumstances within 30 days after receipt of such notice; and
(C)
Executive resigns within ten business days after receiving Employer's response,
if such response does not indicate an intention to correct such circumstances,
or within ten business days following the end of Employer's 30-day cure period
if Employer had failed to commence appropriate action to correct the
circumstances; then Executive shall be considered to have terminated for Good
Reason. For purposes of this Agreement, "Good
Reason"
shall
mean, without Executive's express written consent (and except in consequence
of
a prior termination of Executive's employment), the occurrence of any of the
following circumstances, including, but not limited to, after the occurrence
of
a Change of Control:
8
A. the
assignment to Executive, without Executive’s written consent, of any duties
materially inconsistent with his positions, duties, responsibilities and status
with Employer, or a change in Executive’s reporting responsibilities, titles or
offices or any plan, act, scheme or design to constructively terminate
Executive, except in connection with the termination by Employer for Cause
or
Permanent Disability or as a result of Executive’s death or voluntary
resignation;;
provided, however, the change which is the result of Employer becoming an entity
which is a subsidiary to one or more entities, public or private, will not,
by
itself, constitute Good Reason;
B. a
reduction in Executive’s Base Salary or bonus opportunity; or
C. a
change,
without Executive’s written agreement, in the location of Executive’s principal
place of employment with Employer by more than 50 miles from the location where
Executive was principally employed as of the signing of this Agreement and
which
is not closer to Executive’s principal residence at that time.
(iv) It
is the
intention of Employer and Executive that no portion of any payment under this
Agreement, or payments to or for the benefit of Executive under any other
agreement or plan, be deemed to be an “Excess Parachute Payment” as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),
or
its successors. It is agreed that the present value of and payments to or for
the benefit of Executive in the nature of compensation, receipt of which is
contingent on the Change of Control of Employer, and to which Section 280G
of
the Code applies (in the aggregate “Total
Payments”)
shall
not exceed an amount equal to one dollar ($1.00) less than the maximum amount
which Employer may pay without loss of deduction under Section 280G(a) of the
Code. Present value for purposes of this Agreement shall be calculated in
accordance with Section 280G(d)(4) of the Code. Within 90 days following the
earlier of (A) the giving of the notice of termination or (B) the giving of
notice by Employer to Executive of its belief that there is a payment or benefit
due Executive which will result in an excess parachute payment as defined in
Section 280G of the Code, Executive and Employer, at Employer’s expense, shall
obtain the opinion of such legal counsel and certified public accountants as
Executive may choose (notwithstanding the fact that such persons have acted
or
may also be acting as the legal counsel or certified public accountants for
Employer), which opinions need not be unqualified, which sets forth (I) the
amount of the “Base
Period Income”
of
Executive, (II) the present value of Total Payments and (III) the amount and
present value of any excess parachute payments. In the event that such opinions
determine that there would be an excess parachute payment, the payment hereunder
or any other payment determined by such counsel to be includable in Total
Payments shall be modified, reduced or eliminated as specified by Executive
in
writing delivered to Employer within 60 days of Executive’s receipt of such
opinions or, if Executive fails to so notify Employer, then as Employer shall
reasonably determine, so that under the method of calculation set forth in
such
opinions there will be no excess parachute payment. The provisions of this
subparagraph, including the calculations, notices and opinions provided for
herein shall be based upon the conclusive presumption that (y) the compensation
and benefits provided for in Section
3
hereof
and (z) any other compensation earned by Executive pursuant to Employer’s
compensation programs which would have been paid in any event, are reasonable
compensation for services rendered, even though the timing of such payment
is
triggered by the Change of Control; provided,
however,
that in
the event such legal counsel so requests in connection with the opinion required
by this subparagraph, Executive and Employer shall obtain, at Employer’s
expense, and the legal counsel may rely on in providing the opinion, the advice
of a firm of recognized executive compensation consultants as to the
reasonableness of any item of compensation to be received by Executive. In
the
event that the provisions of Sections 280G and 4999 of the Code are repealed
without succession, this subparagraph shall be of no further force or
effect.
9
Section
6. Restrictive
Covenant.
(a) Restrictive
Covenant.
Executive acknowledges and recognizes the highly competitive nature of the
businesses of Employer and its affiliates and accordingly agrees as
follows:
(i) During
the term of Executive’s employment and, for a period of one year following the
date Executive ceases to be employed by Employer for any reason (the
“Restricted
Period”),
Executive will not, whether on Executive’s own behalf or on behalf of or in
conjunction with any person, firm, partnership, joint venture, association,
corporation or other business organization, entity or enterprise whatsoever
(“Person”),
directly or indirectly solicit or assist in soliciting in competition with
Employer; the business of any client or prospective client:
A. with
whom
Executive had personal contact or dealings on behalf of Employer during the
one
year period preceding Executive’s termination of employment;
B. with
whom
employees reporting to Executive had had personal contact or dealings on behalf
of Employer during the one year immediately preceding Executive’s termination of
employment; or
C. for
whom
Executive had direct or indirect responsibility during the one year immediately
preceding Executive’s termination of employment.
(ii) During
the Restricted Period, Executive will not directly or indirectly:
A. engage
in
any business that competes with the business of Employer or its affiliates
(including, without limitation, businesses which Employer or its affiliates
have
specific plans to conduct in the future and as to which Executive is aware
of
such planning) in any county of any state of the United States or a comparable
jurisdiction of Israel where Employer or its affiliates researches, develops,
manufactures, produces, sells, leases, rents, licenses or otherwise provides
its
products or services (“Competitive
Business”);
B. enter
the
employ of, or render any services to, any Person (or any division or controlled
or controlling affiliate of any Person) who or which engages in a Competitive
Business;
C. acquire
a
financial interest in, or otherwise become actively involved with, any
Competitive Business, directly or indirectly, as an individual, partner,
shareholder, officer, director, principal, agent, trustee or consultant;
or
10
D. interfere
with, or attempt to interfere with, business relationships (whether formed
before, on or after the date of this Agreement) between Employer or any of
its
affiliates and customers, clients, suppliers or investors of Employer or its
affiliates.
(iii) Notwithstanding
anything to the contrary in this Agreement, Executive may, directly or
indirectly own, solely as an investment, securities of any Person engaged in
the
business of Employer or its affiliates which are publicly traded on a national
or regional stock exchange or on the over-the-counter market if Executive
(A) is not a controlling person of, or a member of a group which controls,
such Person and (B) does not, directly or indirectly, own five percent (5%)
or more of any class of securities of such Person.
(iv) During
the Restricted Period, Executive will not, whether on Executive’s own behalf or
on behalf of or in conjunction with any Person, directly or
indirectly:
A. solicit
or encourage any employee of Employer or its affiliates to leave the employment
of Employer or its affiliates; or
B. hire
any
such employee who was employed by Employer or its affiliates as of the date
of
Executive’s termination of employment with Employer, or who left the employment
of Employer or its affiliates coincident with, or within one year prior to
or
after, the termination of Executive’s employment with Employer, unless such
employee has not been employed by Employer for a period of six
months.
(b) Remedies
for Breach of Restrictive Covenant.
Executive acknowledges that the restrictions contained in Section
4
(Confidentiality and Loyalty) and Section
6
(Restrictive Covenant) of this Agreement are reasonable and necessary for the
protection of the legitimate business interests of Employer, that any violation
of these restrictions would cause substantial injury to Employer and such
interests, that Employer would not have entered into this Agreement with
Executive without receiving the additional consideration offered by Executive
in
binding himself to these restrictions and that such restrictions were a material
inducement to Employer to enter into this Agreement.
(c) Enforceability.
It is
expressly understood and agreed that although Executive and Employer consider
the restrictions contained in this Section
6
to be
reasonable, if a final judicial determination is made by a court of competent
jurisdiction that the time or territory or any other restriction contained
in
this Agreement is an unenforceable restriction against Executive, the provisions
of this Agreement shall not be rendered void but shall be deemed amended to
apply as to such maximum time and territory and to such maximum extent as such
court may judicially determine or indicate to be enforceable. Alternatively,
if
any court of competent jurisdiction finds that any restriction contained in
this
Agreement is unenforceable, and such restriction cannot be amended so as to
make
it unenforceable, such finding shall not affect the enforceability of any of
the
other restrictions contained herein.
Section
7. General
Provisions.
(a) Successors;
Assignment. This
Agreement shall be binding upon and inure to the benefit of Executive, Employer
and his and its respective personal representatives, successors and assigns,
and
any successor or assign of Employer shall be deemed the “Employer” hereunder.
Employer shall require any successor to all or substantially all of the business
and/or assets of Employer, whether directly or indirectly, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement in form
and
substance satisfactory to Executive, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent as Employer would
be
required to perform if no such succession had taken place. At any time during
the Term, Executive shall be entitled to assign all or a part of his rights
and
obligations hereunder to a Controlled Entity (as defined below) provided that
(i) the Controlled Entity executes this Agreement upon such assignment and
agrees to be bound by the provisions hereof, (ii) the Controlled Entity shall
at
all times after such assignment employ or otherwise retain the services of
Executive, (iii) in addition to the Controlled Entity, Executive will remain
personally bound by and subject to the restrictions and other provisions of
Sections 4 and 6, (iv) the management services and other duties under Section
2
shall be rendered by the Controlled Entity only through Executive, and (v)
the
total cost to Employer shall be the same as if such services are rendered by
Executive as an employee in of Employer (for example, if Employer would have
incurred health insurance costs pursuant to Section 3(f) of $500 per month
if
Executive was an employee of Employer, then upon such assignment to a Controlled
Entity, Employer shall pay the Controlled Entity such $500 per month). For
purposes of this Section 7(a), a “Controlled
Entity”
is
an
entity wholly-owned by Executive and/or members of the Executive’s immediate
family. Upon such an assignment to a Controlled Entity, the term Base Salary
shall include any other payments made to the Controlled Entity by Employer
on a
monthly basis, and any severance payment due under this Agreement shall be
calculated to reflect such revised Base Salary.
11
(b) Entire
Agreement; Modifications.
This
Agreement constitutes the entire agreement between the parties respecting the
subject matter hereof, and supersedes all prior negotiations, undertakings,
agreements and arrangements with respect thereto, whether written or oral.
Except as otherwise explicitly provided herein, this Agreement may not be
amended or modified except by written agreement signed by Executive and
Employer.
(c) Enforcement
and Governing Law.
The
provisions of this Agreement shall be regarded as divisible and separate; if
any
of said provisions should be declared invalid or unenforceable by a court of
competent jurisdiction, the validity and enforceability of the remaining
provisions shall not be affected thereby. This Agreement shall be construed
and
the legal relations of the parties hereto shall be determined in accordance
with
the laws of the State of Israel without reference to the law regarding conflicts
of law.
(d) Arbitration.
(i) Subject
to Employer’s rights to seek specific performance pursuant to Section
6(b),
any
other dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration, conducted before a panel of three
arbitrators, selected by the parties in accordance with Section 7(d)(ii) below,
sitting in a location selected by Executive within 30 miles from the location
of
Employer’s main office, in accordance with the rules of the American Arbitration
Association (“AAA”)
then
in effect. Judgment may be entered on the arbitrator’s award in any court having
jurisdiction; provided,
however,
that
Executive shall be entitled to seek specific performance of his right to be
paid
through the date of termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
12
(ii) Within
ten days of the initiation of arbitration by either party, pursuant to this
Section 7(d), Executive and Employer shall each appoint one arbitrator. If
either party fails so to appoint an arbitrator within the time specified by
this
Section 7(d)(ii), the AAA shall make the appointment for such party. Within
ten
(10) days of the date on which both of the first two arbitrators have been
appointed, the first two arbitrators shall appoint the third arbitrator. If
within such ten (10) days the first two arbitrators shall not have agreed on
the
appointment of the third arbitrator, then the third arbitrator shall be
appointed by the AAA. By whomever appointed, the third arbitrator shall serve
as
chair of the tribunal.
(e) Waiver.
No
waiver by either party at any time of any breach by the other party of, or
compliance with, any condition or provision of this Agreement to be performed
by
the other party, shall be deemed a waiver of any similar or dissimilar
provisions or conditions at the same time or any prior or subsequent
time.
(f) Notices.
Notices
pursuant to this Agreement shall be in writing and shall be deemed given when
received; and, if mailed, shall be mailed by United States registered or
certified mail, return receipt requested, postage prepaid; and if to Employer,
addressed to the principal headquarters of Employer, attention: Chief Executive
Officer, with a copy to Barack Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx,
000 X. Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, attention: Xxxxxxxx
Xxxx Xxxxx, Esq., or,
if to
Executive, to his home address set forth below Executive’s signature on this
Agreement, or to such other address as the party to be notified shall have
given
to the other.
(g) Good
Faith.
The
parties will deal with each other in good faith with respect to this
Agreement.
[Remainder
of Page Intentionally Left Blank]
13
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the date first above
written.
|
EMPLOYER:
|
EXECUTIVE:
|
||
|
/s/
Xxxx Xxxxx
|
|||
|
Xxxx
Xxxxx
|
|||
|
By: /s/
Xxxx Xxxxxx
|
|||
|
Title: CEO
|
Notice
Address:
|
14
EXHIBIT
A
NOTIFICATION
TO EMPLOYEE OF EMPLOYMENT CONDITIONS
Date:
December 14, 2005
| 1. |
Name
of Employer: Modigene
Inc.
|
Legal
Entity: Company
Identification
Number: ____________
Address:
0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, XX 00000
Name
of
Employee: Xxxx Xxxxx
Identification
Number: 22280069
Address:
00 Xxxx-Xxxxxx Xxxxxx, Xxxxx-Xxxxxxxx, Xxxxxx
| 2. |
Date
of Commencement of Employment: December 14,
2005
|
Term
of
Employment: 2 years, automatic renewal mechanism
| 3. |
Main
Responsibilities of the Employee:
President
|
|
4.
|
Name
of employee’s direct supervisor or direct supervisor’s title:
Board
|
| 5. |
The
basis upon which employee’s salary is made:
monthly.
|
|
6.
|
The
aggregate fixed payments (gross) to be made to Employee in accordance
with
the base salary is US$16,250, to be paid either in US dollars, or
at
the equivalent in NIS to be calculated in accordance with the applicable
exchange rate published by Bank Israel at the day of payment (the
“Salary”). All payments to be made to Employee as compensation are as
follows:
|
|
Fixed
Payments
|
||
|
Payment
Type
|
Timing
of payment
|
|
|
Salary
(gross) US$16,250 (inclusive of all such payments that the Company
is
required to pay under any applicable law except for those payments
indicated herein)
|
In
accordance with the Company’s normal payroll
procedures.
|
|
|
Recreation
Pay (Dmei Havraa)
|
Once
a year in accordance with applicable law, if required
|
|
|
Signing
Bonus of $50,000 at signing, and $50,000 within 12 months
|
Within
12 months
|
|
|
Variable
Payments
|
||
|
Annual
bonus of 50% of annual Base Salary
|
Annual
|
|
|
7.
|
Your
working week shall consist of 43 hours. As your position in the Company
requires a special degree of personal trust, you may be required
to work
overtime and on days of rest.
|
15
| 8. |
The
rest day is Friday and Saturday.
|
|
9.
|
You
declare and agree that the Company’s rules and regulations, as shall be
adjusted from time to time by the Company in its sole discretion,
shall
apply to your employment with the Company and shall be part of the
terms
and conditions of your employment with the
Company.
|
|
10.
|
The
employer is not, nor is an association that the employer belongs
to, a
party to a collective agreement that address the employment terms
of the
employee.
|
This
notification is not an employment agreement, but rather an employer notification
regarding the main terms and conditions of employee’s employment with the
Company; this notification is without prejudice to employee’s rights pursuant to
applicable law, any extension order, any collective agreement and his/her
employment agreement.
| SIGNATURE OF EMPLOYER: | DATE: | ||
|
/s/ Xxxx
Xxxxxx
|
|||
|
|
|||
| SIGNATURE OF EMPLOYEE: | DATE: | ||
|
/s/
Xxxx Xxxxx
|
|||
|
|
16
