Exhibit 10.68
SETTLEMENT AGREEMENT AND RELEASE
AGREEMENT ("Agreement") entered into this 31 day of December, 2002, by and
between ELECTRIC FUEL CORPORATION, a Delaware corporation ("EFC") and ELECTRIC
FUEL (E.F.L.) LTD., an Israeli corporation ("EFL" and, together with EFC, the
"Company"), and XXXXXX XXXXXX, an individual residing at 00 XxXxxxxxxx Xxxxxx,
Xxxxxxxxx 00000, Xxxxxx (the "Employee").
W I T N E S S E T H :
WHEREAS, the Company and Employee are parties to an amended and restated
employment agreement dated as of January 1, 2000 (the "Employment Agreement");
and
WHEREAS, the Company and the Employee, through their respective
representatives, have held certain discussions concerning the facts and
circumstances surrounding the termination of the Employee's employment with the
Company; and
WHEREAS, both parties realize the uncertainty of litigation and the
time-consuming and costly nature thereof; and
WHEREAS, the Company and the Employee desire to settle and resolve fully
and finally any and all claims, potential claims, controversies or differences
between them; and as more specifically set forth below and solely under the
terms and conditions of this Settlement Agreement and Release; and
WHEREAS, the Company and the Employee desire to dismiss all the claims
connected to or derived from Motion No. 2977/02 filed by the Employee in the
labor court of Jerusalem and from the lawsuit filed by the Company against the
Employee at the New-York State Supreme Court;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter contained, the parties hereby agree as follows:
1. Employment Termination.
(a) The Company and Employee agree that the employment of the Employee
shall be deemed to have ceased as of December 31, 2002.
(b) Subject to fulfillment of all the terms of this Agreement, the Employee
represents and warrants that he has received full salary and any other
compensation or benefit to which he is entitled from the Company.
(c) For the avoidance of doubt, it is agreed that the Employee will not be
entitled to any other compensation or benefit for his employment with the
Company.
(d) Until January 15, 2003, the Employee will return to the Company (and
will not keep in his possession, recreate or deliver to anyone else) any and all
devices, Company property including without limitations, , palm pilot, cellular
telephone sets, records, data, notes, correspondence developed or received by
the Employee pursuant to Employee's employment with the Company or otherwise
belonging to the Company.
2. Payments.
(a) In place of whatever amounts to which the Employee may be entitled by
law or by contract, and as full settlement of all mutual claims of the parties,
the Employee agrees to accept a payment of US $640,000 (which payments and
benefits are in substitution for those required by any and all applicable laws
of any and all jurisdictions and/or the terms of the Employment Agreement).
(b) US $178,579 of the amount of US $640,000 above is a return of a loan
given by the Employee to the Company.
(c) US $50,000 of the amount of US $640,000 above is statutory severance
payment. under the Israeli Severance Pay Law-1963 for the Employee's employment
during a period of over 22 years (since July 15th, 1980).
(d) US $411,421 of the amount of US $640,000 above is special severance
payment..
(e) Subject to fulfillment of all the terms of this Agreement, the above
payment of US $640,000 shall be paid according to the following schedule:
(i) Beginning in January 2nd 2003 and continuing through and including
December 2005, the Company will pay the Employee, by direct deposit to the
Employee's bank account at Bank Igud, Main Branch Jerusalem 013 Account No.
013433/65 (or as will be instructed by the employee from time to time, in
writing), on a monthly basis, a total of 36 monthly payments of US
$7,777.77.
(ii) Prior to January 15, 2003, the Company shall transfer to the
Employee the amount of US $35,000, by direct deposit to the Employee's bank
account provided above (or as will be instructed by the employee from time
to time, in writing).
(iii) The Company shall pay the Employee, by direct deposit to the
Employee's bank account provided above (or as will be instructed by the
employee from time to time, in writing), an aggregate amount of $325,000 in
ten equal installments of US $32,500. One such installment shall be due and
payable by the last day of each of the months of September and December
2003, March, June, September and December 2004, and March, June, September
and December 2005. The Employee shall be entitled to inform the Company by
December 31, 2002, that he elects, at his sole discretion, to receive on or
prior to December 31, 2002, the above amount of US $325,000 or any part
thereof by check paid in the United States that will be immediately
endorsed by the Employee over to the order of EFC as a loan ("Loan"). The
Loan shall be evidenced by a promissory note and shall be payable by the
Company to the Employee according to the ten equal installments provided
above. The Loan shall bear no interest.
(iv) Of the above specified amounts, the first US $ 50,000 paid to the
Employee will be considered as statutory severance payment under the
Israeli Severance Pay Law-1963 for the Employee's employment referred to in
sub section 2 (c). The next US $ 178,579 will be considered as a return of
the above loan given by the Employee to the Company referred to in Sub
Section 2(b).
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(e) The Employee shall provide the Company with a receipt for each of the
payments provided on Sub-Section (d) above.
(f) The Employee acknowledges that he is responsible for, and he does
hereby indemnify the Company and its shareholders, directors, officers and
employees from and against, the payment of any and all federal and state,
including without limitations in Israel, income and like taxes, social security
payments or any other withholding which may be or become payable with respect to
any and all payment or any other consideration provided in this Agreement. With
respect to any of the payments provided above, the Company shall deduct all
statutory withholdings under any applicable law, including without limitations
income tax and social security payments. If the company will deduct any sum of
the above payments it will submit to the Employee all documentation concerning
such deduction.
(g) In addition to the foregoing, the Company will also release the
Employee's manager's insurance fund and study fund. The Company will take all
steps reasonably necessary to release the above funds to the Employee, including
but not limited to the prompt execution of any necessary paperwork. The Company
declares that it does not have any rights whatsoever in the above funds and will
not have any demands in regard with those funds.
3. Tax Refund.
The Employee presently has a petition for a tax refund relating to the
execution of 131,655 options in February 9th, 2000 (the "Petition") pending
before the Israeli tax authorities (the "Israeli IRS"). With respect to such
Petition, the parties agree as follows:
(i) The Employee shall notify the Company within three business days
of receipt of any communication from the Israeli IRS with respect to the
Petition, including a copy of such communication, if in writing (including
e-mail), or a written summary of such communication, if not in writing.
(ii) In the event that the Employee shall actually receive any tax
refund, of any size, in connection with the Petition (an "Actual Refund"),
he shall immediately notify the Company both orally and in writing of the
amount of such Actual Refund., the parties agree that an amount of money
equal to 10% of the amount of an Actual Refund (the "Refund Credit") shall
be credited against the remaining amount that the Company shall owe the
Employee at such time under Section 2(d)(iii) above. In the event that the
Refund Credit shall be in excess of such remaining amount, the Employee
shall immediately pay the Company any and all such excess Refund Credit.
(iii) In the event that the Employee shall receive any communication
from the Israel IRS indicating that his petition for a tax refund has been
granted, in whole or in part, but shall not yet have received an Actual
Refund by the time any of the last two payments under Section 2(d)(iii)
above shall have become due, the Company shall make such payments (up to
the maximum amount of the Refund Credit) into an escrow account maintained
by the law firm of Xx. X. Xxxxx & Co. (the "Escrow") pending a final
determination of the status of the Actual Refund.
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To the extent that, prior to or contemporaneously with the Company having
received notice of an Actual Refund, the Company shall have paid amounts
into Escrow, an amount of money equal to the amount paid into Escrow or the
amount of the Refund Credit, whichever is the lesser, shall be released
from the Escrow and returned to the Company. Should the Israeli IRS reverse
its determination and irrevocably decide that it will not give the Employee
a refund, then these sums shall be released to the Employee.
(iv) The Company shall use its commercially reasonable best efforts to
assist the Employee with obtaining a refund under the Petition (including
but not limited to the prompt execution of any necessary paperwork),
provided that such assistance is approved in advance by the Company's
accountants.
4. Car.
The Employee shall be entitled to continue and hold the Company's car
(VOLVO S-80, registration plate # 74-526-35) currently in his possession ("Car")
as security for the Company payments under this agreement. The Employee shall
return the Car to the Company by December 31, 2005. It is hereby agreed that the
Employee may use the Car and he shall bear any and all expenses and taxes
related to the Car. The Employee shall maintain the Car in good condition
consistent with past practice and shall maintain an insurance policy on the Car
at all times. To avoid doubt, holding the Car as security will not constitute
any employment status or other relationship between the parties.
5. Standstill; Options.
(a) The Employee agrees that from the date hereof until September 30, 2003,
neither he nor any member of his family shall, directly or indirectly, (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend or otherwise transfer or dispose of, directly or indirectly, any
of the shares of common stock or other securities of EFC ("Shares") nor (ii)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of any of the Shares,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Shares, in cash or otherwise.
(b) In consideration for this standstill agreement, the Company shall
extend the term of the Employee's existing vested stock options to expire on
September 30, 2005. Options granted to the employee in lieu of salary shall
continue to have a ten-year limitation on their term.
(c) The parties acknowledge that any and all of Employee's stock options
that shall not have vested by December 31, 2002, shall expire on that date.
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(d) Any violation of the provisions of Section 5(a) above shall
automatically result in the immediate cancellation of all of the Employee's
vested and outstanding options.
(e) The parties agree that the all the outstanding options and shares for
which no share certificate has been issued in the name of the Employee on the
date hereof are listed on EXHIBIT A attached hereto.
(f) Prior to September 30, 2003, the Company will. comply with the terms of
Section 16 of the Employment Agreement, provided that the Employee shall fulfill
in a timely fashion all of his obligations under the terms of Section 16 of the
Employment Agreement
6. Release of Claims.
(a) The Employee, subject to the release provided on Sub Section (b) below,
for himself, his heirs, executors, administrators, successors and assigns,
hereby fully and unconditionally waives, releases, and forever discharges, the
Company, its subsidiary companies, related and affiliated companies,
predecessors, successors, assigns and its present and former directors,
officers, agents and employees, from any and all suits, causes of action, and
claims of any nature whatsoever, known or unknown, which the Employee may have
against the Company and the other parties released hereby, which he and his
heirs, executors, administrators, successors and assigns ever had, now have or
hereafter can, shall or may have, for, upon, or by reason of any matter, cause
or thing whatsoever from the beginning of the world to the day of the date of
this release, including without limitation any and all claims in any way
resulting from, arising out of or connected with his employment or its
termination or pursuant to any Israeli common law, statute, regulation or other
requirement, including without limitation (i) the Severance Payment Law of 1963,
Annual Vacation Law of 1951, Protection of Wages Law of 1958, Sick Payment Law
of 1976, Prior Notice for Dismisal and Resignation Law of 2001, recreation
payment (Dmei Havra'a payment) and any and all claims under any collective
bargaining agreement or extension thereof; (ii) any other compensation or
consideration as a result of employment relations or end of employment relations
including without limitation, Bituach Menahalim, Keren Hishtalmut, pension
compensation, and/or any compensation and consideration resulting from such
relations, or arising out of or connected with his position as a director of the
Company and/or as a principal in the Company and/or connected with any act or
vote of the Company's board of directors, whether by virtue of his position as a
director, officer, employee or shareholder, all pursuant to any Israeli common
law, statute, order, regulation or other requirement (including without
limitation the Companies Ordinance [New Version] of 1983, the Companies Law of
1999, the Securities Law of 1968, the Torts Ordinance [New Version], each as
amended from time to time, infliction of any tort, or breach of contract,
whether actual or implied, or whether oral or written) including without
limitation any United States federal, state or local common law, statute,
regulation or other requirement (including without limitation the General
Corporation Law of the State of Delaware, the United States Securities Act of
1933, and the United States Securities Exchange Act of 1934, Title VII of the
Civil Rights Act of 1964, the Age Discrimination in Employment Act, the
Americans with Disabilities Act, the fair employment practices laws of the state
or states in which the Employee have been employed by the Company, each as
amended from time to time, infliction of any tort, or breach of contract,
whether actual or implied, or whether oral or written).
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(b) The Company, subject to the release provided on Sub Section (a) below,
for itself, its subsidiary companies, related and affiliated companies,
predecessors, successors, assigns and its present and former directors,
officers, agents and employees, hereby fully and unconditionally waives,
releases, and forever discharges, the Employee, his heirs, executors,
administrators, successors and assigns, from any and all suits, causes of
action, and claims of any nature whatsoever, known or unknown, which the Company
may have against the Employee and the other parties released hereby, which it
and its subsidiary companies, related and affiliated companies, predecessors,
successors, assigns and its present and former directors, officers, agents and
employees, ever had, now have or hereafter can, shall or may have, for, upon, or
by reason of any matter, cause or thing whatsoever from the beginning of the
world to the day of the date of this release, including without limitation any
and all claims in any way resulting from, arising out of or connected with his
employment or its termination or arising out of or connected with his position
as a director of the Company and/or as a principal in the Company and/or
connected with any act or vote of the Employee in the board of directors, and/or
connected with any act of the Employee as a shareholder, all pursuant to any
Israeli common law, statute, order, regulation or other requirement (including
without limitation the Companies Ordinance [New Version] of 1983, the Companies
Law of 1999, the Securities Law of 1968, the Torts Ordinance [New Version], each
as amended from time to time, infliction of any tort, or breach of contract,
whether actual or implied, or whether oral or written) including without
limitation any United States federal, state or local common law, statute,
regulation or other requirement (including without limitation all Securities
acts, laws and regulations, the General Corporation Law of the State of
Delaware, the United States Securities Act of 1933, and the United States
Securities Exchange Act of 1934, Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act, the Americans with Disabilities Act, the
fair employment practices laws of the states in which the Employee have been
employed by the Company, each as amended from time to time, infliction of any
tort, or breach of contract, whether actual or implied, or whether oral or
written).
(c) The Employee has carefully read this Agreement, knows its contents, and
freely and voluntarily agrees to all of its terms and conditions. The Employee
acknowledges that he has had reasonable time to consider and discuss this
Agreement with his attorney. By signing this Agreement, the Employee
specifically acknowledges that he has read it; he understands it and knows he is
giving up important rights; he agrees with everything in it; he is aware of his
right to consult an attorney of his own choice before signing it; and he has
signed it knowingly and voluntarily.
(d) This Agreement also constitutes a compromise agreement and notice of
final clearance in according with Article 29 of the Severance Payment Law of
1963.
(e) Subject to the registration of the lien according to section 10 below,
the parties shall submit to the labor court of Jerusalem a petition in the form
attached hereto as EXHIBIT B1, to strike out Motion No. 2977/02 filed by the
Employee.
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(f) Immediately upon execution of this Agreement, the parties shall submit
to the labor court of Jerusalem the executed petition attached hereto as EXHIBIT
B2, requesting the release of the Company's holdings in M.D.T. Protective
Industries Ltd. from any limitation or ant other obligation undertaken in
connection with Motion No. 2977/02 filed by the Employee.
(g) The Company will withdraw the lawsuit filed by it in the New York State
Supreme Court, County of New York, and/or any other lawsuit and/or petition
filed by it against the Employee, within 5 working days and will submit to the
Employee a copy of such petition to dismiss the lawsuit immediately upon its
submission.
7. Surviving Terms of Employment Agreement. The Employee acknowledges and
agrees that he shall continue to be bound by and comply with the provisions of
Section 8 of the Employment Agreement (entitled "Confidentiality; Proprietary
Rights; Competitive Activity").
8. Approval. The Company hereby declares that the Company's Board of
Directors has approved this Agreement, and empowered Xx. Xxxxxx X. Xxxxxxx to
sign this Agreement in the name of EFL & EFC. The resolution adopted by the
board and all its details and provisions and authorizing Xx. Xxxxxxx to sign
this Agreement is attached hereto as EXHIBIT C.
9. Attorney Fees. The Company shall pay directly to the Employee's
attorney, Xx. X. Xxxxx & Co., of 4 Wissozki St., Tel Aviv, an amount of US
$89,500, as follows:
(a) An amount of US $34,500, on or prior to January 15, 2003.
(b) An amount of US $55,000 in ten equal installments of US $5,500. One
such installment shall be due and payable by the last day of each of the months
of September and December 2003, March, June, September and December 2004, and
March, June, September and December 2005.
(c) The Company will add VAT (at the rate determined by law at the time any
payment hereto) to all payments under this Section 9 and receive an invoice for
any such payment.
(d) The Company will pay Xx. X. Xxxxx & Co., all sums setforth in this
section by direct deposit to Xx. X. Xxxxx & Co.'s bank account at Bank Hapoalim,
Xxxxxx Xxxxxx Tel-Aviv (754) Account No. 187772 (or as will be instructed by the
employee from time to time, in writing).
(e) This Section 9 and Section 10 below shall constitute an agreement for
the benefit of third party.
10. Security. Debts.
(a) The payments provided in Sections 2 and 9 above shall be secured
by a lien in favor of the Employee and/or Xx. X. Xxxxx & Co.,
that will be registered on those of the assets of EFL that relate
exclusively to EFL's Water-Activated Battery line (the "WAB"),
the Instant Power consumer battery business, including patents
related exclusively thereto, and the Company's rights in the Car,
a breakdown of which is provided in EXHIBIT D attached
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hereto ("Lien"). For the avoidance of doubt, it is expressly
understood that the Lien shall include only such items provided
on EXHIBIT D and shall not include any shares owned by EFL,
including without limitations shares of M.D.T. Protective
Industries Ltd., and that the Lien shall not include any patents
owned by EFC which relate, in whole or in part, to the field of
batteries for military use or to electric vehicles. The Company
shall be empowered to sell assets subject to the Lien and take
off the Lien, and the Employee will make all necessary steps to
take off the Lien including but not limited to the prompt
execution of any necessary documents, provided that the proceeds
from such sale are applied to reduction of the remaining sums to
be due at such time under Section 2 and 9 above and that the
total consideration of such sale exceeds the remaining sums to be
due at such time under Section 2 and 9 above.
(b) The Company shall maintain the WAB in good condition consistent
with its current practice and shall maintain an insurance policy
on the WAB.
(c) During the year 2003 the Company shall maintain the Instant Power
consumer battery business in good condition consistent with its
current practice. However, the Company may elect at any time
during the year 2003 to stop maintaining the Instant Power
consumer battery business. In such event the company will notify
in writing its decision not to maintain the Instant Power
consumer battery business during or after 2003 and the Employee
shall have two months in which he may try to sell the Instant
Power consumer battery business. During these two months the
Company shall continue to maintain the Instant Power consumer
battery business in its current condition. In the event that the
Employee is successful in selling, the consideration out of the
selling will be taken off from the Company payments in section 2
and 9 above. Subject to full maintenance fee such as rent and
salaries which will be taken off from the Company Payments in
section 2 and 9 above the Employee may prolong in writing the two
months in which he will try to sell the Instant Power consumer
battery business.
(d) In the event the Company maintains the Instant Power consumer
battery business until October 30 2003 the Company, following the
Employee written request, shall notify in writing its decision re
the maintenance of the Instant Power consumer battery business
and in the event the Company decision is not to continue the
maintenance of the Instant Power consumer battery business the
Employee shall have two months in which he may try to sell it
according to subsection 10 c. To avoid any doubt in no event the
employee shall have more than two months to sell and the Company
may elect not to maintain the Instant Power consumer battery
business after December 31 2003 or during 2003 after the two
months given to the Employee for selling according to
subsection10c-10d.
(e) The Company hereby declares that other than its obligations to the
Office of the Chief Scientist, all assets to be pledged under section 10 (a) are
free from any lien,
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attachment or any other third party rights. The Company's obligations to the
Chief Scientist are attached hereto as EXHIBIT E
(f) Upon the execution of this agreement the Company will execute a deed of
pledge of the lien in favor of the Employee and/or Xx. X. Xxxxx & Xx.xx be
registared at the Registrar of Pledges and/or the Registrar of Companies. The
pledge shall comply with all the obligations of the Company toward the Office of
the Chief Scientist.
(g) The parties hereof acknowledge that the only debts which the Employee
has to the Company that will continue in existence after the date of this
Agreement are the debts in the principal total amount of US $957,966 ("Debts")
for which the Employee has executed non-recourse promissory notes on December
28, 1998 and February 9, 2000 ("Promissory Notes"). The Promissory Notes are
attached hereto as EXHIBIT F.
(h) The parties hereof acknowledge that the shares specified in each of the
non-recourse Promissory Notes, respectively, are the sole security for the debts
provided in sub-section (b) above; that the Debts will be governed only
according to the provisions and conditions set forth in each of the Promissory
Notes, respectively; that the recourse of the Debts under each of the
non-recourse Promissory Notes shall only be the pledged shares specified in each
of the Promissory Notes, respectively; and that the Debts will not be released
by this Agreement.
(i) Upon any event that the Company becomes adjudged insolvent or a
trustee, receiver or similar officer shall be appointed for the Company or any
substantial part of its property; or any bankruptcy, reorganization, debt
arrangement, recovery process or other proceeding under any bankruptcy or
insolvency law or any dissolution or liquidation proceedings shall be instituted
by or against the Company, all remaining payments set forth in sections 2 and 9
above will mature immediately and it will enable the Employee and/or Xx. X.
Xxxxx & Co. to realize the Lien immediately.
11. Binding Effect. This Agreement be binding upon or injure to the benefit
of the successors and assigns of the Company and the Employee and his personal
representative(s).
12. Binding Arbitration.
(a) This Agreement, the performance thereof and all matters arising from
and connected with the Agreement, shall be governed by and construed, solely and
exclusively, in accordance with the laws of Israel.
(b) Any dispute hereunder shall be finally settled by a binding arbitration
held in Tel Aviv, Israel, in the Hebrew language (except that witnesses shall be
permitted to speak in English), by one arbitrator, a retired judge with
commercial background to be chosen by the parties and if the parties do not
consent about the arbitrator, the arbitrator will be appointed by the president
of the Israeli Chamber of Certified Accountants. This section constitutes an
arbitration agreement.
(c) The decision or award of the arbitrators shall be published to each
party and will be final and binding upon all of the parties. Each of the parties
hereby irrevocably and expressly agrees to comply promptly and in good faith
with any and all such decisions or awards.
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(d) The arbitration hereunder shall be the exclusive and conclusive method
for resolving disputes under this Agreement and no court shall have the power to
adjudicate such disputes.
(e) The costs of the arbitration, including without limitations attorneys
fees, shall be borne by the non-prevailing party.
13. Severability. If one or more of the provisions of this Agreement or any
application thereof shall be invalid, illegal, or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions thereof
shall in no way be affected or impaired.
14. Entire Agreement. The foregoing contains the entire agreement of the
parties and may not be altered, amended, or terminated except by an instrument
in writing signed by the parties hereto.
15. Joint and Several Obligations. The obligations and liabilities of each
company hereunder (EFC and EFL) shall be joint and several with the obligations
and liabilities of the other company hereunder.
16. Execution in counterparts. This agreement may be executed in any number
of separate counterparts, each of which shall together be deemed an original,
but the several counterparts shall together constitute but one and the same
agreements of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ELECTRIC FUEL CORPORATION
By:
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Name: Xxxxxx X. Xxxxxxx
Title: Chairman, President and CEO
ELECTRIC FUEL (E.F.L.) Ltd.
By:
--------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman, President and CEO
--------------------------------------
Xxxxxx Xxxxxx
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