EXHIBIT 10.3
EMPLOYMENT AGREEMENT
--------------------
This employment agreement (the "Agreement") is effective as of May 1, 2000 (the
"Effective Date"), by and between Keryx Biopharmaceuticals (Israel) Ltd., an
Israeli company with it principal place of business at Sha'arei Ha'ir, 216 Jaffa
Road, Jerusalem (the "Company") and Xxxxxx Xxxxxx, I.D. No. 069455137, of 00
Xxxxx Xxxxxx, Xxxxxxxxx (the "Employee").
Whereas the Company desires to continue to employ the Employee in the position
of Chief Executive Officer (the "Position");
Whereas the Employee desires have his employment continued by the Company and
fulfill the responsibilities of the Position; and
Whereas the parties desire to set forth the conditions of employment pursuant to
which the Employee will be continued to be employed by the Company;
It is hereby agreed by and between the parties as follows:
1. Preamble
The preamble to this Agreement and any attachments thereto are an integral part
of this Agreement.
2. Job Description
The Employee shall have the title of Chief Executive Officer and shall be
responsible for the overall management, direction and leadership of the Company.
He shall report directly to the Board of Directors. The description of
responsibilities set forth herein shall serve as a general statement of the
duties, responsibilities and authority of the Employee. Additional duties,
responsibilities and authority may be assigned to the Employee by the Board of
Directors from time to time in its reasonable discretion.
3. Working Hours
The Employee shall be employed by the Company on a full-time basis, namely for
not less than forty-four (44) hours per week (inclusive of meal time). The
Employee agrees that his position is considered to be a management position as
defined in the Hours of Work and Rest Law - 1951, which requires a special
measure of personal trust. Accordingly, the provisions of the Hours of Work and
Rest Law - 1951 shall not apply and the Employee shall not be entitled to
receive any additional payment for his work other than those that are set forth
in this Agreement.
4.Term of Agreement
Unless terminated earlier as hereinafter provided, this Agreement shall take
effect from the Effective Date and shall remain in effect through the third
anniversary of such date, at which time it shall be automatically renewed for an
additional three year term unless either party has provided written notice of
its intent not to renew prior to the second anniversary of the Effective Date.
5. Annual Salary
5.1. The Employee's annual salary shall be as follows:
5.1.1. The Employee shall receive an annual gross salary of two
hundred and twenty five thousand dollars ($225,000), payable in New
Israeli Shekels according the representative rate of exchange in
effect each month at the time Company salaries are calculated. The
Employees salary shall be paid in twelve equal installments, monthly
in arrears.
5.1.2. On each anniversary date of this Agreement, the Employee's
annual gross salary shall be increased by an amount to be determined
by the Board of Directors, but in no event shall such increase be less
than the increase in the Israeli Cost of Living Index for the year
each anniversary date.
5.1.3 The salary set forth in paragraph 5.1.1, above, shall be
referred to as the "Global Salary". The linkage of the Global Salary
to the United States dollar is in lieu of any generally-applicable
increases, whether the statutory cost of living increase ("Tosefet
Yoker") or any other industry-wide increase applicable as the result
of collective bargaining agreements or other order of the Ministry of
Labor and Welfare (such as Tzavei Harhava). By signing this Agreement
and accepting employment pursuant to its terms, the Employee
represents that s/he will not claim any such increase.
5.1.4. The Employee shall not be entitled to receive from the Company
any salary or payment of any kind other than the Global Salary and
other payments specifically set forth in this Agreement or properly
authorized by the Board of Directors and, should the Employee be a
director of the Company at the time such other payments not
specifically included in this Agreement are made, also by the
shareholders of the Company.
5.2. Other Terms of Employment
5.2.1. Bonuses: The Employee shall be entitled to receive one or more
bonuses during any calendar year in accordance with the terms set
forth in Schedule 5.2.1, attached hereto.
5.2.2. Expenses: The Employee shall be entitled, in accordance with
the Company's standard policy in effect from time to time, to be
reimbursed for expenses (Hotza'ot Eshel) incurred in Israel and abroad
in connection with Company business against receipt by the Company of
appropriate vouchers, receipts or other proof of the Employee's
expenditures.
5.2.3. Continuing Education Fund: The Employee shall be entitled to
participate in the Company's continuing education fund (Keren
Hishtalmut). The Company shall contribute an amount equal to five
percent (5%) of the Employee's Global Salary and shall deduct two and
a half percent (2.5%) of the Employee's Global Salary and transfer it
as the Employee's contribution. The Employee consents to the deduction
of this amount as his contribution to the continuing education fund.
These contributions will be calculated up to the permissible tax-
exempt salary ceiling according to the income tax regulations in
effect from time to time. If the amount of the Company's contribution
is greater than permitted by those regulations, the Employee shall not
have the right to receive the excess amount.
5.2.4. Medical License Expense: The Company shall reimburse the
Employee for expenses incurred by him in connection with the
maintenance of his medical license in the United States, including,
but not limited to, the costs of any continuing medical education
("CME") required as a condition of such license.
5.2.5. Automobile Maintenance: The Employee shall be entitled to
receive reimbursement on a before-tax basis for the upkeep and
maintenance entailed in the use of his personal automobile for
business purposes up to an annual maximum of $12,000 per year.
5.2.6. Telephone: The Company shall pay or reimburse the Employee for
the costs of a cellular telephone, a car phone and a telephone line
installed at his home and for the telephone charges billed thereto
during the term of his employment after deducting the cost of the
Employee's itemized personal calls. The Company shall reimburse the
Employee for the itemized costs of telephone calls made for the
Company's business purposes billed to any of Employee's personal
telephones. If the Employee incurs any income tax liability under
Israeli law for such payment or reimbursement, the Company will also
pay the Employee an amount equal to such tax liability (including any
tax incurred because of the payment described in this sentence.)
5.2.7. Reserve Duty: The Employee shall be entitled to receive his
full Global Salary and other payments while performing reserve duty,
provided that any amount received by the Employee from the I.D.F. or
any other source (excluding Damei Calcala) is transferred to the
Company or, in the alternative,
an amount equal to that received from the I.D.F. or any other source
is deducted from the Global Salary payable to the Employee.
5.2.8. Annual Leave and Recreation Pay (Damei Havra'a): The Employee
shall be entitled to thirty (30) working days of paid annual leave
each year. It is the intention of the Company that the Employee
utilize at least ten (10) working days of paid annual leave each year.
To the extent that such ten (10) working days of paid annual leave are
not utilized by the Employee, they shall be forfeited at the end of
each calendar year. In addition, the Employee shall not be allowed to
accrue more than thirty (30) working days of annual leave except in
unusual circumstances and with the permission of the Board of
Directors of the Company. Subject to the requirement that at least ten
(10) working days of paid annual leave be utilized by the Employee in
each calendar year or be forfeited, should the Employee's annual leave
balance exceed thirty (30) working days at the end of any calendar
year, the excess number of days shall be paid out in accordance with
the provisions of the Annual Leave Law - 1951. The Company shall also
pay the Employee for five (5) days of recreation (damei havra'a) each
year in accordance with the law and the normal practice of the Company
in effect from time to time.
5.2.9. Sickness and Disability Insurance: The Employee shall be
entitled to the number of days for sick leave permitted by law.
Compensation for sick days utilized shall be paid according to his
Global Salary only upon the presentation of medical documentation as
required by the Company. The Employee shall be covered by disability
insurance that provides monthly compensation. The cost of such
insurance shall be borne by the Company. Notwithstanding the
foregoing, the Employee shall not be entitled to receive compensation
for sick leave if such compensation is covered by the Employee's
disability insurance referred to above. However, should the amounts
received by the Employee pursuant to such disability insurance be less
than the amount that is properly payable as compensation for the
Employee's available sick leave, according to the Global Salary, the
Company shall pay the difference. It is understood and agreed that
unused sick leave cannot be redeemed by the Employee. For the
avoidance of doubt, it is understood and agreed that the payments made
by the Company in consideration of sick leave covers all obligations
of the Company pursuant to the Sick Leave Law - 1976.
5.3. Pension Benefits and Severance Payments
5.3.1. The Company will pay into a Provident Fund (Kupat Gemel) (in
the meaning of paragraph 47 of the Income Tax Ordinance) in the form
of Manager's Insurance or another form according to the Employee's
choice and the Company's agreement, an amount equal to thirteen and
one third percent (13 1/3 %) from the monthly Global Salary paid to
the Employee, and the Employee will pay, on his own account, an amount
equal to five percent (5%) from that Global Salary. The Employee
agrees that the Company shall be entitled to deduct the Employee's
contribution (5%) from the Global Salary. For the avoidance of doubt,
it is clarified that under no circumstance shall the
Company's contribution exceed thirteen and one third percent (13 1/3
%) of the Global Salary in any one month.
5.3.2. Five percent (5%) of the thirteen and one third percent (13 1/3
%) that the Company contributes as set forth above and the five
percent (5%) the Employee contributes, together with linkage and
interest on the contributions, will be treated as pension benefits for
the Employee or his survivors. The remaining eight and one third
percent (8 1/3 %) of the Company's contribution, together with linkage
and interest on that portion, will be utilized to pay severance
benefits to the Employee or his descendants in the event of the
termination of his employment with the Company, except in those
circumstances discussed below.
5.3.3. In the event that the Employee chooses Manager's Insurance, the
policy shall belong to the Company as long as it employs the Employee
and it makes the required payments on the policy. The payments made
into the Kupat Gemel pursuant to paragraph 5.3.1, above, shall fulfill
the Company's obligation for severance payment pursuant to the
Severance Compensation Law - 1963. Upon the termination of the
Employee's employment, for whatever reason, and upon his final
departure from the Company, the Employee or his successors shall be
entitled to receive the ownership of all rights which have accrued on
his behalf in the Kupat Gemel or the ownership of the Manager's
Insurance policy, as appropriate and subject to the provisions of
section 6, below.
5.3.4. In the event that there is a difference in the Employee's favor
between the amount to which he is entitled to receive pursuant to the
Severance Compensation Law - 1963 and the severance payment amount
(including linkage and interest) that is in the Kupat Gemel or
Manager's Insurance policy, the Company shall pay that difference. The
Company shall be obligated to pay such difference whether the
termination of the Employee's employment is at the Employee's
initiative or the Company's, except in the case of termination
pursuant to paragraphs 6.4 and 6.5, below. For the avoidance of doubt,
it is understood that in the event that the severance payment amount
(including linkage and interest) that is in the Employee's Kupat Gemel
or Manager's Insurance policy exceeds the amount to which he is
entitled to receive as severance compensation pursuant to the
Severance Compensation Law - 1963, the difference shall not be
transferred to the Employee, including to his pension account, but
shall be the property of the Company.
6. Termination of Employment
6.1. Either party may terminate the Employee's employment with the Company
without cause, or the Employee may terminate his employment for "just
cause", at any time upon three (3) month's notice. The Company shall have
the right, in its sole discretion, to require the Employee to continue
working for the Company during the notice period. For the purposes of this
Agreement, "just cause" shall mean (
6.2. The Employee's employment shall be terminated by his death or
disability. (For purposes of this section, "disability" shall be deemed to
have occurred if the Employee is unable, due to any physical or mental
disease or condition, to perform his normal duties of employment for 120
consecutive days or 180 days in any twelve month period.) Should the
Employee's employment be terminated as a result of his death, the benefits
granted in paragraph 6.3, below, shall be granted instead to his lawful
heir or heirs.
6.3. In the event the Employee's employment is terminated (a) by the
Company without cause, or because of his death or disability, or (b) by the
Employee for "just cause", he shall be entitled to continue to receive his
annual salary for fifteen (15) months following his last day of actual
employment by the Company. Such amount shall be in addition to any salary
he entitled to receive during or in consideration for the notice period set
forth in paragraph 6.1, above, and any severance payment he is entitled to
receive according the provisions of the Severance Compensation Law - 1963.
In addition, the Board of Directors shall take the necessary steps so that
(a) any outstanding, but unvested, options granted to the Employee shall
vest upon the effective date of his termination; and (b) the period during
which the Employee shall be permitted to exercise such options shall be
extended to two (2) years from the effective date of his termination as
defined in the Share Option Plan governing the options in question.
6.4. Notwithstanding the foregoing, the Company may terminate the Employee
immediately and without prior notice in the following circumstances: (a) a
material breach of the Employee's obligations pursuant to paragraphs 8.8,
8.9 and 8.9 (confidentiality and non-competition); (b) a material breach by
the Employee of any other provision of this Agreement, which is not cured
by the Employee within fifteen (15) days after receiving notice thereof
from the Company containing a description of the breach or breaches alleged
to have occurred; (c) the habitual neglect or gross failure by the Employee
to adequately perform the duties of his position; or (d) any criminal
action connected to his employment with the Company or his place of
employment.
6.5. In the event that Employee's employment has been terminated in
accordance with paragraph 6.4, above, the Employee shall not be entitled to
receive any of the severance payments set forth in paragraphs 5.3.4 and
6.3, above but shall be entitled to receive any salary or bonus accrued to
the date of termination.
6.6 In the event that Employee's employment is terminated by him for "just
cause"has been terminated in accordance with paragraph 6.4, above, the
Employee shall not be entitled to receive any of the severance payments set
forth in paragraphs 5.3.4 and 6.3, above but shall be entitled to receive
any salary or bonus accrued to the date of termination
7. Taxes and Other Payments
7.1. Unless otherwise specifically provided for in this Agreement, the
Company shall not be liable for the payment of taxes or other payments for
which the Employee is responsible as result of this Agreement or any other
legal provision, and the Employee shall be personally liable for such taxes
and other payments.
7.2. The Employee hereby agrees that the Company shall deduct from his
Global Salary the Employee's national insurance fees, income tax and other
amounts required by law or the terms of this Agreement. The Company shall
provide the Employee with documentation of such deductions.
8. The Obligations of the Employee
8.1. The Employee agrees to devote his entire business time, energy,
abilities and experience to the performance of his duties, effectively and
in good faith.
8.2. During the period of his employment, the Employee shall not be
employed, whether or not during regular business hours, for pay by any
other party other than the Company. The Employee must receive the prior
written consent of the Company before assuming an unpaid position outside
the Company. Notwithstanding the foregoing, the Employee may, with the
written permission of the Chairman of the Board of Directors, become a
member of the Board of Directors of another company and may accept any
compensation in connection with such position.
8.3. The Employee agrees to immediately inform the Company of any Company
issue or transaction in which the Employee has a direct or indirect
personal interest and/or where such issue or transaction could cause a
conflict of interest for the Employee in the fulfillment of his
responsibilities as an employee of the Company.
8.4. The Employee hereby gives irrevocable instructions and permission to
the Company to deduct from any amounts owed to the Employee by the Company,
including amounts payable as severance compensation, (a) any debt he has or
will have to the Company; and/or (b) any amount that was wrongfully or
mistakenly paid to him by the Company. Any such amounts to be deducted
shall be calculated in real terms as of the date of the deduction,
including linkage to cost of living index.
8.5. The Company may at its discretion and at any time apply for and
procure as owner and for its own benefit and at its own expense, insurance
on the life of the Employee ("Key Man Life Insurance") in such amounts and
in such form or forms as the Company may choose. The Employee shall
cooperate with the Company in procuring such insurance and shall, at the
Company's request, submit to such medical examinations, supply such
information and execute such documents as may be required by the insurance
company or companies to whom the Company has applied for such insurance.
Neither the Employee nor any of his dependents shall have any interest
whatsoever in any such policy or policies or in the proceeds thereof.
8.6. The Employee declares that the terms and conditions of his employment
are personal and confidential and will not be disclosed by him.
8.7. The Employee declares that he is free to enter into this Agreement and
that he has no obligations of any kind to any third party that would impair
this Agreement, either as an employee or an independent contractor. The
Employee further declares that as long as he remains an employee of the
Company, he will not incur any such obligations.
8.8. The Employee agrees to keep confidential (a) all professional,
scientific, commercial, and business information; and (b) any other
information or document that comes to the Employee's knowledge in
connection with the affairs of the Company (collectively, the "Confidential
Information"), and agrees not to use or exploit the Confidential
Information or to disclose it to any third party where such use,
exploitation or disclosure in not directly related to the affairs of the
Company, unless the Company gives prior written authorization of such
disclosure.
8.9. The Employees agrees that during his employment by the Company and
thereafter he (a) will not disseminate or otherwise make use of the
Confidential Information or of other non-public information of which he
learned while working for the Company, except where such dissemination or
use is directly related to the affairs of the Company; (b) will maintain
the confidentiality of the Confidential Information; and (c) will not in
any way act to injure the reputation of the Company or any of its
affiliated companies.
8.10 The Employee understands and recognizes that his services to the
Company are special and unique. Therefore, he agrees that during the term
of this Agreement and for one (1) year after the termination for any reason
of his employment, he shall not be employed in or give any services to any
business or third party that directly competes with the business of the
Company or whose activities directly conflict with the activities of the
Company, unless the Board of Directors of the Company's parent has given
his explicit written consent prior the commencement of such employment or
the giving of such services. For the purposes of this Section 8.10, the
business of the Company means the discovery, development and
commercialization of drug candidates as described on the Company's
Registration Statement on Form S-1 filed with the Securities Exchange
Commission on May __, 2000, provided that the business of the Company shall
include any additional business activity undertaken by the Company after
the date of this Agreement.
8.11. Upon termination of his employment, the Employee agrees to assist the
Company with an orderly transition of his responsibilities and to return to
the Company any documents, information and/or materials that were given to
him or which were created by him in connection with his employment.
9. Intellectual Property Rights
9.1. The Employee declares that he is aware that anything that is done by
him in the Company or in connection with the Company, whether it be an
invention, a discovery, or the development of an idea or a thing, all
within the framework of the Company's business (the Development") shall
belong to and be controlled by the Company, unless the Board of Directors
shall, in writing, direct otherwise.
9.2. The Company shall have the right to fully utilize and exploit the
Development, as it sees fit, including changing it, registering part or all
of it as a patent, whether in Israel or abroad, selling it, transferring it
to a third party, all without being required to either receive the
Employee's consent or pay the Employee any additional payment for such
Development apart from any payment he receives pursuant to this Agreement.
9.3. The Development and any subsequent intellectual property arising
therefrom shall remain the sole property of the Employer even after the
Employee's employment terminates for any reason. The termination of this
Agreement, whether due to its breach or its own terms, shall not impair the
Company's exclusive rights in the Development. Notwithstanding the
termination of this Agreement, the Board of Directors shall have the
discretion to award the Employee a cash payment in accordance with the
terms of paragraph 5.2.1, above, as a result of any Development or
subsequent intellectual property arising therefrom developed primarily by
the Employee.
9.4. The Employee may not do anything with the Development or any related
materials without the knowledge and prior consent of the Company. The
Employee declares that he neither has nor will have any rights in the
Development or its fruits and that all rights to the Development and its
fruits shall fully reside in the Company.
9.5. Even in the event that at the time of the termination of the
Employee's employment for any reason the Development has not been
completed, the Employee shall be prohibited from any continued activity in
connection with the subject of the Development, alone or in concert with
others, that is not explicitly allowed in writing by the Company. The
Company alone will be the sole owner of the uncompleted Development and
shall have the sole right to complete the Development or to take any other
action in connection with the Development.
10. Indemnification
The Company shall take whatever steps are necessary to establish a policy of
indemnifying its officers, including, but not limited to the Employee, for all
actions taken in good faith in pursuit of their duties and obligations to the
Company. Such steps shall include, but shall not necessarily be limited to, the
obtaining of an appropriate level of Directors and Officers Liability coverage.
11. General
11.1. It is agreed that the provisions of this Agreement represent the full
scope of the agreement between the parties and that neither side shall be
bound by any promises, declarations, exhibits, agreements or obligations,
oral or written, that are not included in this Agreement prior to its
execution, provided that this Agreement and any binding employment
agreement between Employee and the Company's parent shall be interpreted as
a single agreement. Any changes or amendments to this Agreement must be in
writing and signed by both parties.
11.2. This Agreement shall be governed by, and construed and interpreted
under, the laws of the State of Israel. The parties agree that any legal
claim lodged by one party against the other arising from the terms of this
Agreement shall be adjudicated only by the appropriate court in Jerusalem,
Israel.
11.3. If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being
enforced in whole or in part, the remaining conditions and provisions or
portions thereof shall nevertheless remain in full force and effect and
enforceable, and no provision shall be deemed dependent upon any other
covenant or provision unless so expressed herein.
11.4. The rights, benefits, duties and obligations under this Agreement
shall inure to, and be binding upon, the Company, its successors and
assigns, and upon the Employee and his legal representatives. This
Agreement constitutes a personal service agreement, and the performance of
the Employee's obligations hereunder may not be transferred or assigned by
the Employee.
11.5 The failure of either party to insist upon the strict performance of
any of the terms, conditions and provisions of this Agreement shall not be
construed as a waiver or relinquishment of future compliance therewith or
with any other term, condition or provision hereof, and said terms,
conditions and provisions shall remain in full force and effect. No waiver
of any term or condition of this Agreement on the part of either party
shall be effective or any purpose whatsoever unless such waiver is in
writing and signed by such party.
11.6 The headings of Sections are inserted for convenience and shall not
affect any interpretation of this Agreement.
12. Notices
12.1. A notice that is sent by registered mail to a party at its address as
set forth in paragraph 12.2, below, shall be deemed received three (3) days
after its posting, and the receipt stamped by the post office shall
represent definitive evidence of the date of mailing.
12.2. The addresses of the parties for the purposes of this Agreement are:
Company:
000 Xxxxx Xxxx
Xxxxxxxxx 00000
Employee:
00 Xxxxx Xxxxxx
Xxxxxxxxx 00000
IN WITNESS WHEREOF the parties have hereunto set their hands at the place and on
the date first above written.
COMPANY EMPLOYEE
/s/ Xxx Xxxxxxxxxxxx /s/ Xxxxxx Xxxxxx
______________________________ ______________________
By: Xxx Xxxxxxxxxxxx Xxxxxx Xxxxxx
Secretary
SCHEDULE 5.2.1
--------------
Upon the completion of any the following milestones, the Company shall pay the
Employee a cash bonus in the amount of $75,000: upon (a) the approval of an IND
filed by the Company; and/or (b) a transaction with a strategic partner having a
value (as determined in good faith by the Board of Directors) in excess of
$10,000,000; and/or (c) the closing of an initial public offering of the shares
of the Company for net proceeds to the Company, aggregating not less than
$10,000,000. The bonuses paid to the Employee in any one calendar year shall not
exceed one hundred percent (100%) of his Global Salary in effect during the
beginning of such calendar year (the "Maximum Annual Bonus"). The Board of
Directors may, but is not required, to pay to the Employee such portion of the
Maximum Annual Bonus as it may decide if, in its opinion, the Company has made a
significant advances towards the completion of any milestone. For purposes of
this Schedule 5.2.1, the achievement by the Company's parent or one of its
subsidiaries of any of the aforementioned milestones shall constitute
achievement by the Company of such milestones.
