DIGITAL POWER CORPORATION
EMPLOYMENT AGREEMENT
for
XXXXXXXX WAX
DIGITAL POWER CORPORATION ("Employer"), and XXXXXXXX WAX ("Employee"),
agree as follows:
1. Employment. Employer employs Employee and Employee accepts employment with
Employer on the terms and conditions set forth in this Employment Agreement
("Agreement").
2. Term. This Agreement shall be for an initial term from January 5, 2004 until
January 4, 2005, and thereafter for an automatically renewable term of one year,
unless terminated earlier as provided for herein. If this Agreement is not
renewed by the Employer for the subsequent year pursuant to a written notice
from the Employer to Employee delivered prior to December 1st of the applicable
year, such non-renewal will be deemed to be a "Termination without Cause" and
Employee shall be entitled to the amounts set forth in Section 6.2 hereof.
3. Position; Scope of Employment. Employee shall have the position of Chief
Executive Officer and President for Employer, and shall have the duties and
authority set forth below, and as detailed on the position description attached
as Exhibit "A", which duties and authority may be modified from time to time by
Employer. As Chief Executive Officer and President, Employee shall report
directly to Employer's Board of Directors.
3.1. Entire Time and Effort. Employee shall devote Employee's full working
time, attention, abilities, skill, labor and efforts to the performance of his
employment. Employee shall not, directly or indirectly, alone or as a member of
a partnership or other organizational entity, or as an officer of any
corporation (other than any which are owned by or affiliated with Employer) (i)
be substantially engaged in or concerned with any other commercial duties or
pursuits, (ii) engage in any other business activity that will interfere with
the performance of Employee's duties under this Agreement, except with the prior
written consent of Employer, or (iii) join the board of directors of any other
corporation; provided, however, that Employee may join the board of directors of
no more than two unaffiliated corporations so long as such corporations are not
competitive, at the sole determination of Employer, to the current or future
operations of Employer and those corporations offer some synergistic prospects
or other support for Employer's goals.
3.2. Rules and Regulations. Employee agrees to observe and comply with
Employer's rules and regulations as provided by Employer and as may be amended
from time to time by Employer and will carry out and perform faithfully such
orders, directions and policies of Employer. To the extent any provision of this
Agreement is contrary to an Employer rule or regulation, as such may be amended
from time to time, the terms of this Agreement shall control.
4. Compensation. Employer shall pay to or provide compensation to Employee as
set forth in this section 4. All compensation of every description shall be
subject to the customary withholding tax and other employment taxes as required
with respect to compensation paid to an employee.
4.1 Base Salary. Employer shall pay Employee a base salary of One Hundred
Sixty-Five Thousand Dollars ($165,000) per year commencing on January 5, 2004
("Base Salary"). Employee's Base Salary shall be payable in accordance with
Employer's regular pay schedule, but not less frequently than twice per month.
4.2. Annual Review. On the date of Employer's annual meeting of
stockholders and on each subsequent annual meeting of stockholders during the
term of this Agreement, or at such other time as the Employer may establish in
its discretion, Employer shall review the previous year's performance of
Employee for the purpose of making reasonable increases to Employee's Base
Salary; provided that Employer shall not be required to increase Employee's Base
Salary, but may do so at its discretion.
4.3. Bonuses. In addition to the Base Salary provided for in sections 4.1
and 4.2, Employee is eligible to receive bonuses, paid through issuance of stock
or grant of options, based on Employer performance and Employee's attainment of
objectives periodically established by the Compensation Committee of the Board
of Directors. Employee will receive an incentive bonus of Twenty Thousand
Dollars ($20,000), if Employer earns over Five Million Five Hundred Thousand
Dollars ($5,500,000) in revenue for the twelve-month period ended December 31,
2004, excluding revenue earned from military contracts or Digital Power Limited.
This one time bonus shall be payable immediately after it is earned. Annual
bonuses to be provided to Employee shall not exceed thirty-five percent (35%) of
Employee's Base Salary then in effect in any given year.
4.4. Stock Option Grants. In addition to Base Salary provided for in
sections 4.1 and 4.2, Employee is eligible to receive, in addition to any cash
bonus provided for in section 4.3, an award of stock options as may be
determined from time to time by Employer's Compensation. At the inception of
this Agreement, and subject to plan requirements, Employee shall be granted,
subject to Board approval, an initial option to acquire 150,000 shares at the
fair market value on the date of grant, vesting twenty-five percent (25%) on
January 5, 2004, and twenty-five percent (25%) on each anniversary date
thereafter. This stock option shall terminate ninety (90) days after Employee
ceases to be an employee of the Employer, except for death or disability as
defined in the Plan. If the Employee ceases to be an employee due to termination
without cause or due to a change in control, this stock option shall terminate
after one hundred eighty (180) days.
If Employee's employment is terminated by the Employer, other than due to
cause as defined in section 6.1, all options granted under this section 4.4
shall fully vested on the date of termination. If there is a change of control
in the Employer, all outstanding options granted under this section 4.4 shall
fully vest immediately upon the Employer's public announcement of such a change.
A "change of control" shall mean an event involving one transaction or a related
series of transactions, excluding any transaction with Telkoor Telecom Ltd., in
which (i) the Employer issues securities equal to 50% or more of the Employer's
issued and outstanding voting securities, determined as a single class, to any
individual, firm, partnership, limited liability company, or other entity,
including a "group" within the meaning of SEC Exchange Act Rule 13d-3, (ii) the
Employer issues voting securities equal to 50% or more of the issued and
outstanding voting stock of the Employer in connection with a merger,
consolidation other business combination, (iii) the Employer is acquired in a
merger or other business combination transaction in which the Employer is not
the surviving company, or (iv) all or substantially all of the Employer's assets
are sold or transferred. A change in control of any shareholder of the Employer
is not a change in control of the Employer.
4.5. Vacation and Sick Leave. Employee shall be entitled to accrue up to
Three (3) weeks vacation annually; provided, however, that vacation time may not
accrue beyond Six (6) weeks of accrued and unused time. Employee shall be
entitled to sick leave in accordance with Employer's sick leave policy, as
amended from time to time. At the end of each anniversary of this Agreement,
subject to the limit on two weeks accrued and unused vacation, all such unused
and accrued vacation time shall be paid in cash.
4.6. Other Fringe Benefits. Employee shall participate in all of Employer's
fringe benefit programs in substantially the same manner and to substantially
the same extent as other similar employees of Employer, excluding only those
benefits expressly modified by the terms hereof.
4.7. Expenses. Employee shall be reimbursed for his reasonable business
expenses; subject to the presentation of evidence of such expenses in accordance
with established policies adopted by Employer from time to time.
4.8. Compensation From Other Sources. Any proceeds that Employee shall
receive by virtue of qualifying for disability insurance, disability benefits,
or health or accident insurance shall belong to Employee. Employee shall not be
paid Base Salary in any period in which he receives benefits as determined and
paid under Employer's long-term disability policy. Benefits paid to Employee
under Employer's short-term disability policy shall reduce, by the same amount,
Base Salary payable to Employee for such period.
5. Confidential Information of Customers of Employer. During the Employment Term
and at all times thereafter, the Employee agrees to keep secret and to retain in
the strictest confidence all confidential matters which relate to the Employer
or its "affiliate" (as that term is defined in the Exchange Act), which are of a
specific nature to the Employer's business and not generic skills or knowledge
of Employer, and which may include, but not necessarily be limited to, customer
lists, client lists, trade secrets, pricing lists, business plans, financial
projections and reports, business strategies, internal operating procedures, and
other confidential business information from which the Employer derives an
economic or competitive advantage, or from which the Employer might derive such
advantage in its business, whether or not labeled "secret" or "confidential."
6. Compensation in the Event of Termination.
6.1. Termination For Cause. The Employer reserves the right to terminate
this Agreement for cause upon: (a) Employee's willful and continued failure to
substantially perform his duties with the Employer (other than such failure
resulting from his incapacity due to physical or mental illness) after there is
delivered to Employee by the Board, acting reasonably and in good faith, a
written demand for substantial performance which sets forth in detail the
specific respects in which the Board believes Employee has not performed his
duties, and giving Employee not less than thirty (30) days to correct the
deficiencies specified in the written notice; (b) Employee's willful engagement
in gross misconduct as determined by the Board which is materially and
demonstrably injurious to the Employer; or (c) Employee's commission of a
felony, or an act of fraud against the Employer or its affiliates. Upon
termination for cause, Employee shall not be entitled to any severance benefits
6.2. Termination Without Cause; Severance. Notwithstanding anything to the
contrary in this Agreement, the Employer reserves the right to terminate this
Agreement at any time without cause. If Employee is terminated without cause,
then on such date, the Employee-Employer relationship will cease and Employee,
shall be paid, Employee's base salary, including any increases in base salary
previously approved by the Board of Directors, for the next twelve (12) months
following the date of termination of Employment payable in accordance with
Employer's regular pay schedule.
6.3. Change in Control; Severance. If there is a "change in control" of the
Employer, and Employee will no longer be employed by Employer or its successor
in the same capacity and pay, then this Agreement shall be terminated, effective
as of the date the change in control. The term "change in control" is defined in
Section 4.4. In the event of a change in control, Employee, upon the effective
date of the change in control, shall be paid, Employee's base salary, including
any increases in base salary previously approved by the Board of Directors, for
the next twelve (12) months following the announcement of the change in control
payable in accordance with Employer's regular pay schedule.
6.4. Voluntary Termination by Employee. Notwithstanding anything to the
contrary in this Agreement, Employee may terminate this Agreement at any time
with written notice to the Employer. If Employee voluntarily terminates
employment, Employee shall not be entitled to any severance benefits, but will
be entitled to receive all deferred compensation and any other benefits required
by law, but excluding any unvested options.
6.5. Termination Without Cause for Failure to Raise Required Capital. As an
inducement for Employee to enter into this contract, Employer covenants that it
will raise capital in the minimum amount of $500,000 from the sale of its equity
securities. In the event Employer fails to raise $500,000 from the sale of its
equity securities by June 30, 2004, such failure shall be deemed a Termination
Without Cause.
7. Trade Secrets. Employee shall not disclose to any others, or take or use for
Employee's own purposes or purposes of any others, during the term of this
Agreement or at any time thereafter, any of Employer's trade secrets, including
without limitation, confidential information, customer lists, computer programs
or computer software of Employer. Employee agrees that these restrictions shall
also apply to (i) trade secrets belonging to third parties in Employer's
possession and (ii) trade secrets conceived, originated, discovered or developed
by Employee during the term of this Agreement. Information of Employer shall not
be considered a trade secret if it is lawfully known outside of Employer by
anyone who does not have a duty to keep such information confidential.
7.1 Inventions; Ownership Rights. Employee agrees that all ideas,
techniques, inventions, systems, formulas, discoveries, technical information,
programs, prototypes and similar developments ("Developments") developed,
created, discovered, made, written or obtained by Employee in the course of or
as a result, directly or indirectly, of performance of his duties hereunder, and
all related industrial property, copyrights, patent rights, trade secrets and
other forms of protection thereof, shall be and remain the property of Employer.
Employee agrees to execute or cause to be executed such assignments and
applications, registrations and other documents and to take such other action as
may be requested by Employer to enable Employer to protect its rights to any
such Developments. If Employer requires Employee's assistance under this section
8.1 after termination of this Agreement, Employee shall be compensated for his
time actually spent in providing such assistance at an hourly rate equivalent to
the prevailing rate for such services and as agreed upon by the parties.
8. Actions Contrary to Law. Nothing contained in this Agreement shall be
construed to require the commission of any act contrary to law, and whenever
there is any conflict between any provision of this Agreement and any statute,
law, ordinance, or regulation, contrary to which the parties have no legal right
to contract, then the latter shall prevail; but in such event, the provisions of
this Agreement so affected shall be curtailed and limited only to the extent
necessary to bring it within legal requirements.
9. Miscellaneous.
9.1. Notices. All notices and demands of every kind shall be personally
delivered or sent by first class mail to the parties at the addresses appearing
below or at such other addresses as either party may designate in writing,
delivered or mailed in accordance with the terms of this Agreement. Any such
notice or demand shall be effective immediately upon personal delivery or three
(3) days after deposit in the United States mail, as the case may be.
EMPLOYER: Digital Power Corporation
00000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
EMPLOYEE: Xxxxxxxx Wax
9.2. Attorneys' Fees; Prejudgment Interest. If the services of an attorney
are required by any party to secure the performance hereof or otherwise upon the
breach or default of another party to this Agreement, or if any judicial remedy
or arbitration is necessary to enforce or interpret any provision of this
Agreement or the rights and duties of any person in relation thereto, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
other expenses, in addition to any other relief to which such party may be
entitled. Any award of damages following judicial remedy or arbitration as a
result of the breach of this Agreement or any of its provisions shall include an
award of prejudgment interest from the date of the breach at the maximum amount
of interest allowed by law.
9.3. Choice of Law, Jurisdiction, Venue. This Agreement is drafted to be
effective in the State of California, and shall be construed in accordance with
California law. The exclusive jurisdiction and venue of any legal action by
either party under this Agreement shall be the County of Alameda, California.
9.4. Amendment, Waiver. No amendment or variation of the terms of this
Agreement shall be valid unless made in writing and signed by Employee and
Employer. A waiver of any term or condition of this Agreement shall not be
construed as a general waiver by Employer. Failure of either Employer or
Employee to enforce any provision or provisions of this Agreement shall not
waive any enforcement of any continuing breach of the same provision or
provisions or any breach of any provision or provisions of this Agreement.
9.5. Assignment; Succession. It is hereby agreed that Employee's rights and
obligations under this Agreement are personal and not assignable. This Agreement
contains the entire agreement and understanding between the parties to it and
shall be binding on and inure to the benefit of the heirs, personal
representatives, successors and assigns of the parties hereto.
9.6. Independent Covenants. All provisions herein concerning unfair
competition and confidentiality shall be deemed independent covenants and shall
be enforceable without regard to any breach by Employer unless such breach by
Employer is willful and egregious.
9.7. Entire Agreement. This document constitutes the entire agreement
between the parties, all oral agreements being merged herein, and supersedes all
prior representations. There are no representations, agreements, arrangements,
or understandings, oral or written, between or among the parties relating to the
subject matter of this Agreement that are not fully expressed herein.
9.8. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of the
Agreement which can be given effect without the invalid provision shall continue
in full force and effect and shall in no way be impaired or invalidated.
9.9. Captions. All captions of sections and paragraphs in this Agreement
are for reference only and shall not be considered in construing this Agreement.
9.10. Nomination as Director. Upon the execution of this Agreement,
Employee shall be up for consideration to be nominated and elected to Employer's
board of directors. Further, if Employee is nominated and elected to Employer's
board of directors, then, during the term of this Agreement, at each annual or
special meeting of the shareholders, Employee will be nominated by the board or
nominating committee to serve as director.
EMPLOYER:
DIGITAL POWER CORPORATION
By:____________________________________
Ben-Zion Diamant,
Chairman
By:____________________________________
Xxxxx Xxxxxx,
Director
By:____________________________________
Xxxx Xxxx,
Director
By:____________________________________
Youval Menipaz,
Director
By:____________________________________
Xxxxxxxx Xxxxx,
Director
By:____________________________________
Xxxx Xxxx,
Director
EMPLOYEE:
By:____________________________________
Xxxxxxxx Wax, an individual
