EXHIBIT 10.5
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement is entered into as of
January 30, 1996 between Xxxxxxxxx Industries, Inc. (formerly Israel Tech
Acquisition Corp.), a Delaware corporation, having its principal place of
business at Sawgrass International Corporate Park, 00000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000 (the "Company"), and Xxxxxxx Xxxxxx, residing at
0000 XX 00xx Xxxxxx, Xxxxxxxxxx, Xxxxxxx, 00000 (the "Executive") amends and
restates the employment agreement dated June 22, 1995 by and between the Company
and the Executive (the "Original Employment Agreement").
W I T N E S S E T H:
WHEREAS, the Executive has assumed duties of a responsible nature to
the benefit of the Company and its Board of Directors; and
WHEREAS, the Board of Directors of the Company believes it to be in the
best interests of the Company to enter into this Agreement to assure the
Executive's continuing services to the Company and to diminish any distraction
on the part of the Executive resulting from personal uncertainties and risks
associated with assuming this position; and
WHEREAS, the Company and the Executive entered into the Original
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the Company and the Executive hereby agree that the Original
Employment Agreement shall be amended and restated in its entirety to read as
follows:
1. DEFINITIONS.
(a) The "Agreement" shall mean this Employment Agreement between the
Company and the Executive.
(b) The "Board" shall mean the Board of Directors of the Company.
(c) A "Change of Control" shall mean (i) any transaction that has the
result that stockholders of the Company immediately before such transaction
cease to own at least 51% of (x) the voting stock of the Company or (y) of any
entity that results from the participation of the Company in reorganization,
liquidation or any other form of corporate transaction; (ii) a merger,
consolidation, reorganization, liquidation or dissolution in which the Company
does not survive; or (iii) a sale, lease, exchange or other disposition of all
or substantially all the property and assets of the Company.
(d) The "Company" shall mean Xxxxxxxxx Industries, Inc. (formerly
Israel Tech Acquisition Corp.), a Delaware corporation.
(e) "Dependents" shall mean the Executive's spouse and children, if
any.
(f) The "Effective Date" shall mean the date of the closing of the
Asset Purchase Agreement dated February 15, 1995 among Israel Tech Acquisition
Corp., a Delaware corporation, Rada Electronic Industries Ltd., Tasco
Electronics Inc., a Delaware corporation, and the Company.
(g) The "Employment Period" shall mean the period commencing on the
Effective Date and ending on the fifth anniversary of the Effective Date.
(h) The "Executive" shall mean Xxxxxxx Xxxxxx.
(i) The "Health Insurance" shall mean such health insurance as is
available to other contract employees of the Company.
(j) The "Pension Plan" shall have the meaning set forth is Section
3(c)(i) of this Agreement.
(k) The "Salary" shall mean the amount set forth in Section 3(b) of
this Agreement.
2. EMPLOYMENT PERIOD. The Company hereby agrees to continue the Executive in his
employ, and the Executive hereby agrees to remain in the employ of the Company,
for the duration of the Employment Period under the terms and conditions
provided herein. This Agreement shall terminate at the end of the Employment
Period, unless it is terminated prior to the end of the Employment Period by
virtue of one of the provisions of Section 5 of this Agreement.
3. TERMS OF EMPLOYMENT.
(a) Position and Duties. During the Employment Period the Executive's
position shall be the Vice President - Operations. The Executive's services
shall be performed at the Company's headquarters or a location where a
substantial activity for which the Executive has responsibility is located.
(b) Compensation.
(i) Base Salary. As of the Effective Date of the Agreement,
the Executive's annual salary (the "Salary") shall be $75,000. During the
Employment Period, the Executive's Salary may be reviewed and changed; however,
the Company shall not pay the Executive a Salary less than $75,000 during the
Employment Period. Any increase in the Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement.
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(ii) Annual Bonus. For each calendar year commencing with the
year ending December 31, 1996, at the end of which the Executive is employed by
the Company as its Vice-President:
(A) if the Company has Net Income (as defined below) for such
year of an amount equal to the target net income before taxes (such net
income to be determined by eliminating the effect of any intercompany
transactions prior to the closing date of the Acquisition and any
deductions from net income in respect of transaction expenses related
to the Acquisition), determined in accordance with generally accepted
accounting principles in the U.S. as in effect from time to time (the
"Net Income") as approved by the board of directors of the Company (or
the Executive Committee of the Board, if one exists) for such year (the
"Target"), the Executive shall be entitled to a bonus in an amount
equal to $40,000.
(B) if the Company has Net Income for such year of more than
the Target and less than 150% of the Target, the Executive shall be
entitled to a bonus as calculated below:
B = 40,000 + $40,000 x (NI - T)
------------
T
where:
B = the bonus earned in such year.
T = the Target for such year.
NI = the actual Net Income for such year.
(C) if the Company has Net Income for such year of 150% of the
Target or more, the Executive shall be entitled to a bonus of $60,000.
(D) if the Company has Net Income for such year of less than
50% of the Target, the Executive shall not be entitled to a bonus.
(E) if the Company has Net Income for such year of at least
50% of the Target but less than the Target, the Executive shall be
entitled to a bonus as calculated below:
B = $40,000 - ($40,000 x 2 x (T - NI))
-------------
T
where:
B = the bonus earned in such year.
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T = the Target for such year.
NI = the actual Net Income for such year.
(c) Benefits. In addition to the compensation payable to the
Executive as set forth in Section 3(b) above, during the Employment
Period the Executive shall be eligible to participate in the following:
(i) Pension Plan. The Company shall establish for the
Executive an accumulating life insurance plan/pension plan to
which the Company shall contribute $4,000 annually (the
"Pension Plan").
(ii) Health Insurance. The Company shall provide the
Health Insurance for the Executive and his Dependents that it
provides to other contract employees of the Company. The
provision of the Health Insurance shall be subject to
acceptance by the insurance company of the Executive and his
Dependents to the Company's current program or whatever other
program the Company's Board of Directors may decide to elect.
The Executive shall be solely responsible for all deductible
and copayment amounts due according to the Health Insurance.
Upon termination of this Agreement, all payments under this
Section 3(c)(ii) shall cease, provided, however, that the
Executive shall be entitled to payments for periods prior to
the date of the termination and for which the Executive has
not yet been paid.
(iii) Other Benefits. The Executive shall be eligible
to all other incentive, savings, welfare (including without
limitation medical and dental, disability and salary
continuance insurance) plans, practices, policies and programs
applicable on or after the Effective Date to other contract
employees of the Company.
(d) Other Business Expenses. During the Employment Period the
Executive shall be entitled to receive prompt reimbursement from the
Company for all reasonable business expenses incurred by the Executive,
itemized in accordance with the Company's existing policies, practices
and procedures.
(e) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to all fringe benefits applicable on or
after the Effective Date to other contract employees of the Company.
(f) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the policies and
practices applicable on or after the Effective Date to other executives
of the Company, provided that the Executive shall be entitled to a
minimum of three weeks of paid vacation per calendar year. If during
the Employment Period the Executive serves for less than a full
calendar year, the minimum three weeks shall be prorated for the
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period of the year in which the Executive served. Vacation accrued but
unused at the end of a calendar year may be carried over into the
following calendar year or years, provided that unused vacation days
shall be accrued up to a maximum of six weeks.
(g) Holidays and Sick Leave. The Executive shall be entitled
to all holidays that are prescribed by the Company's policies and
practices. The Executive shall be entitled to 5 days paid sick leave
per year. Unused sick leave days may not be carried over to the
following calendar year or years.
(h) Automobile. During the Employment Period, the Company
shall make available to the Executive an automobile commensurate with
his position and shall pay for all expenses related thereto including,
without limitation, gas and insurance.
4. EXECUTIVE'S OBLIGATIONS. During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially all of his attention and time during
normal business hours to the business and affairs of the Company and to perform
faithfully and efficiently the responsibilities assigned to the Executive.
5. TERMINATION.
(a) Notice. During the Employment Period, the Executive's employment
hereunder may be terminated upon sixty (60) days prior notice by either
Executive or the Company. Any such termination shall be evidenced by a written
document signed by the party providing notice. If the Executive's employment is
terminated by reason of the Executive's death, the Company shall have no further
obligations to the Executive's legal representatives under this Agreement, other
than those obligations accrued, earned or vested by the Executive as of the date
of his death. In addition, the Executive's family shall be entitled to receive
benefits at least equal to the most favorable benefits provided by the Company
to surviving families of other contract employees of the Company based on the
terms of the benefit plans referenced in Section 3(c) of this Agreement as in
effect on the date of the Executive's death.
(b) Death. This Agreement shall terminate automatically upon the
Executive's death. If the Executive's employment is terminated by reason of the
Executive's death, the Company shall have no further obligations to the
Executive's legal representatives under this Agreement, other than those
obligations accrued, earned or vested by the Executive as of the date of his
death. In addition, the Executive's family shall be entitled to receive benefits
at least equal to the most favorable benefits provided by the Company to
surviving families of other contract employees of the Company based on the terms
of the benefit plans referenced in Section 3(c) of this Agreement as in effect
on the date of the Executive's death.
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(c) Disability. If the Company determines in good faith that the
Executive has a "disability" (as defined below), it may give the Executive
written notice of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate effective on
the 60th day after receipt by the Executive of such notice. No such notice of
termination by reason of disability shall be given until the Executive has
experienced a period of three consecutive months of disability and the
disability is continuing. The notice of termination shall not be effective if
the Executive returns to full-time performance of his duties prior to the
expiration of the 60-day notice period. For purposes of this Agreement,
"disability" shall mean a physical or mental condition which, three months after
its commencement, is determined to be total and permanent by a physician
selected by the Company. The Executive shall be entitled to all compensation and
benefits provided for under this Agreement during the three-month waiting period
for the disability determination and during the 60-day notice of termination
period. In the event that the Company provides long-term disability benefits for
the Executive, such benefits shall not commence until after the employment of
the Executive has been terminated and the Company has ceased paying the
Executive compensation pursuant to the foregoing sentence. If the Executive's
employment is terminated by reason of the Executive's disability, this Agreement
shall terminate without further obligations to the Executive or the Executive's
legal representatives under this Agreement, other than those obligations
accrued, earned or vested by the Executive as of the date of the termination. In
addition, the Executive and the Executive's family shall be entitled to receive
benefits, including without limitation disability benefits, at least equal to
the most favorable benefits provided by the Company to other contract employees
of the Company based on the terms of the benefit plans referenced in Section
3(c) of this Agreement as in effect on the date the Executive's disability
commenced.
(d) Voluntary Termination or Retirement. If the Executive shall elect
to voluntarily terminate his employment (other than for "good reason" as defined
in Section 5(g) below) or to retire during the Employment Period, this Agreement
shall terminate automatically and the Company shall have no further obligations
to the Executive under this Agreement, other than those obligations accrued,
earned or vested by the Executive as of the date of the termination or
retirement.
(e) Cause. During the Employment Period, the Company may terminate the
Executive's employment for "cause," as defined below. For purposes of this
Agreement, "cause," shall mean:
(i) an act or acts of personal dishonesty taken by the
Executive at the expense of or against the interests of the Company;
(ii) repeated violations by the Executive of his obligations
under Section 4 of this Agreement which are not remedied within a
reasonable period of time after receipt of written notice from the
Company of such violations;
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(iii) any direct or indirect disclosure of any confidential
information or other special knowledge of the finances, business or
other affairs of the Company;
(iv) the conviction of the Executive of a felony; or
(v) the conviction of the Executive of a serious misdemeanor
involving illegal use, possession or sale of drugs, larceny, crimes of
violence or sex offenses.
If the Executive's employment is terminated for cause, this Agreement shall
terminate without further obligations to the Executive under this Agreement,
other than those obligations accrued, earned or vested by the Executive as of
the date of the termination. The Executive shall not be entitled to any Bonus in
respect of the year of termination in the event the Executive's employment is
terminated for cause pursuant to this Section 5(e).
(f) Involuntary Termination. If during the Employment Period the
Company terminates the Executive's employment other than for reasons set forth
in Sections 5(a) through 5(e) above, it shall be deemed to be an involuntary
termination and the Company shall pay to the Executive the following amounts:
(i) to the extent not theretofore paid, the Company shall pay
the Executive's Salary through the date of such involuntary
termination; and
(ii) the Company shall pay the Executive on the date of such
involuntary termination an amount equal to six months of the
Executive's Base Salary; provided that if such involuntary termination
occurs as a result of a Change of Control, such payment shall be in an
amount equal to eight months of the Executive's Base Salary;
(iii) the Company shall pay in one cash lump sum any vacation
days accrued but unused as of the date of termination to be paid within
30 days of such involuntary termination.
(g) Good Reason. During the Employment Period, the Executive
may terminate his employment for "good reason" as defined below. For
purposes of this Agreement, "good reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with Executive's position, duties
and responsibilities as set forth in Section 3(a) of this
Agreement or any action by the Company which results in a
diminution in such position, authority, duties or
responsibilities, excluding for this purpose any isolated,
insubstantial and inadvertent action by the Company which is
not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
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(ii) any failure by the Company to comply with any of
the provisions of Sections 3(b) through 3(g) of this Agreement
regarding the Executive's compensation, benefits, expenses,
fringe benefits, vacation and office staff, other than an
isolated, insubstantial and inadvertent action by the Company
which is not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be
based at any office or location other than that described in
Section 3(a) of this Agreement, except for travel reasonably
required in the performance of the Executive's
responsibilities; or
(iv) any failure by the Company to comply with and
satisfy Section 10 of this Agreement with respect to
successors.
In the event that the Executive terminates his employment for good reason as
defined in this Section 5(g), it shall be deemed to be an "involuntary
termination" as set forth in Section 5(f) above and the Executive shall be
entitled to all payments and obligations set forth in Sections 5(f)(i) through
5(f)(iv) of this Agreement as if the Executive's employment had been
involuntarily terminated.
6. NOTICE OF TERMINATION. Any termination by the Company for any reason or by
the Executive for any reason shall be communicated by a written notice which
indicates (i) the specific termination provision in this Agreement relied upon,
(ii) the facts and circumstances claimed to provide a basis for such
termination, and (iii) the date of termination.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any benefit, incentive or
other plans, programs, policies or practices provided by the Company and for
which the Executive may otherwise qualify. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of the Company at or subsequent to the termination of the
Executive's employment shall be payable in accordance with such plan, policy,
practice or program.
8. FULL SETTLEMENT. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment or other claim, right or
action which the Company may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement. The Company agrees to pay, to the full extent
permitted by law, all legal fees and expenses, as incurred by the Company, the
Executive and others, which the Executive may reasonably incur as a result of
any contest by the Company or others of the validity or enforceability of, or
liability under, any provision of this Agreement
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or any guarantee of performance thereof, plus in each case interest at the
applicable Federal rate provided for in Section 7872(f)(2) of the Internal
Revenue Code of 1986, as amended (the "Code").
9. CONFIDENTIALITY.
(a) The Executive shall hold in a fiduciary capacity for the benefit of
the Company all secret, proprietary or confidential information, knowledge or
data relating to the Company and its business, including without limitation
financial information and customer lists, which shall have been obtained by the
Executive during his employment with the Company and which shall not be or
become public knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). Notwithstanding the foregoing,
the Executive may disclose any such information if such information is compelled
by legal process, provided that if Executive is so compelled, he shall provide
the Company with prompt notice so that it may seek a protective order or other
remedy. In any event, the Executive shall furnish only that portion of the
confidential information that is legally required to be disclosed.
(b) In the event that the Executive breaches any provision of this
Section 9, any payments or other benefits promised under this Agreement shall be
forfeited. In addition, the Company shall be entitled to apply to any court of
competent jurisdiction for an injunction restraining the Executive from
committing or continuing any violation of this Agreement.
10. NON-COMPETITION. The Executive agrees that during the Employment Period and
for two years thereafter, he will not, within the continental United States,
Israel or any other country in which the Company has operations, directly or
indirectly, engage or participate or make any financial investments in or become
employed by or render advisory or other services to or for any person, firm or
corporation, or in connection with any business activity, other than that of the
Company and its subsidiaries, directly or indirectly in competition with any of
the business operations or activities of the Company and its subsidiaries as at
the date of termination of his employment, whether such companies are presently
existing or hereafter acquired. Nothing herein contained, however, shall
restrict the Executive from making any investments in any company whose stock is
listed on a national securities exchange or actively traded in the over-the-
counter market, so long as such investment does not give him the right to
control or influence the policy decisions of any such business or enterprise
which is or might be directly or indirectly in competition with any of such
business operations or activities of the Company or any of its subsidiaries.
11. RESTRICTIONS ON SOLICITATION. The Executive agrees that during the
Employment Period and for two years thereafter, he will not:
(i) directly or indirectly solicit, raid, entice or
induce any employee of the Company or any of its subsidiaries
to become an employee of any person, firm or corporation which
is, directly or indirectly, in
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competition with the business or activities of the Company or
any of its subsidiaries;
(ii) directly or indirectly approach any such
employee for these purposes;
(iii) authorize or knowingly approve the taking of
such actions by other persons on behalf of any such person,
firm or corporation, or assist any such person, firm or
corporation in taking such action; or
(iv) directly or indirectly solicit, raid, entice or
induce any person, firm or corporation who or which on the
date hereof is, or at the time during the term of his
employment with the Company shall be, a customer of the
Company or of any of its subsidiaries to become a customer for
the same or similar products which it purchased from the
Company or any of its subsidiaries, of any other person, firm
or corporation, and the Executive shall not approach any such
customer for such purpose or authorize or knowingly approve
the taking of such actions by any other person.
12. SUCCESSORS. This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes this Agreement by operation of law, or
otherwise.
13. BINDING ARBITRATION. In the event that the Company and the Executive cannot
agree on an interpretation of any provision of this Agreement, or in the event
that the Company fails to make any payments or otherwise fulfill any obligations
required by the terms of this Agreement, the Company and the Executive agree to
resolve any such dispute through binding arbitration. Any request for such
arbitration shall be served on the other party by written notice. The parties
shall agree upon and select an arbitrator within 20 days after written demand is
made by either party for such arbitration. The arbitrator shall set a time for
hearing within 60 days of his/her selection. Each party shall have an
opportunity to present evidence on the issues in dispute before the arbitrator
and each party may be represented by legal counsel if either so desires. The
decision of the arbitrator shall be rendered in writing to both parties within
30 days of the close of the hearing. The decision of the arbitrator shall
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be final and binding upon both parties. Any legal fees, expenses or other costs
incurred by the Company and the Executive in connection with such arbitration
shall be borne by the Company.
14. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
(b) The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.
(c) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive: If to the Company:
------------------- -----------------
0000 XX 00xx Xxxxxx,
Xxxxxxxxxx, Xxxxxxx, 00000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(d) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(e) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(f) A party's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision thereof.
(g) This Agreement supersedes any prior employment agreement between
the Company and the Executive and contains the entire understanding of the
Company and the Executive with respect to the subject matter hereof.
(h) This Agreement may be executed in counterparts, each of which shall
be deemed an original and all of which, together, shall constitute one and the
same instrument.
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IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
XXXXXXXXX INDUSTRIES, INC. (FORMERLY
ISRAEL TECH ACQUISITION CORP.):
/s/ Zivi X. Xxxxxx
--------------------------------------
Zivi X. Xxxxxx
Date of Signature: 1/30/96
EXECUTIVE
/s/ Xxxxxxx Xxxxxx
--------------------------------------
Xxxxxxx Xxxxxx
Date of Signature: 1/30/96
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