Exhibit 10.6
ATOMICA ISRAEL TECHNOLOGIES LTD.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Agreement (the "Agreement") is entered into
by and between Atomica Israel Technologies Ltd. (the "Company") and Xxxxxx X.
Xxxxxxxxxxx (the "Employee") as of the 1st day of January, 2002 (the "Effective
Date"), and amended and restated as of January 8, 2004.
WHEREAS, Employee has previously been employed by the Company as
President; and
WHEREAS, the Company desires to employ Employee as its Chief Executive
Officer ("CEO"), and Employee desires to accept such employment; and
WHEREAS the parties desire and agree to enter into an employment
relationship by means of this Agreement;
NOW THEREFORE in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and among the parties as follows:
1. POSITION AND DUTIES.
(a) POSITION AND DUTIES. Employee shall be employed, as of the
Effective Date, as CEO of the Company, reporting to the Board of Directors (the
"Board") of Atomica Corporation ("Parent") and assuming and discharging such
responsibilities as are commensurate with Employee's position. Employee shall
perform his duties faithfully and to the best of his ability and shall devote
his full business time and effort to the performance of his duties hereunder.
Notwithstanding the foregoing, Employee may serve on the boards of directors of
other entities and engage in charitable, religious or other activities outside
of his employment with the Company, so long as such activities do not materially
interfere with his duties to the Company. In addition, at the request of the
Company, the Employee shall serve as the executive or other officer of companies
which are parent or subsidiary companies of, or otherwise affiliated with, the
Company.
(b) NATURE OF DUTIES. The Employee's duties shall be in the
nature of management duties that demand a special level of loyalty and,
accordingly, the Israeli Law of Work Hours and Rest 5711-1951 shall not apply to
this Agreement. The parties hereto confirm that this is a personal services
contract and that the relationship between the parties hereto shall not be
subject to any general or special collective employment agreement or any custom
or practice of the Company in respect of any of its other employees or
contractors.
2. TERM. The term of this Agreement shall be five (5) years
measured from the Effective Date. Thereafter, the term of this Agreement shall
automatically be extended for one or more additional two year periods unless
either party gives the other no less than ninety (90) days prior written notice.
3. COMPENSATION.
(a) BASE SALARY. For all services to be rendered by Employee
pursuant to this Agreement, Employee shall receive an annual base salary from
the Company of $180,000, payable monthly in accordance with the Company's normal
payroll practices. At Employee's option, Employee shall receive payment of the
aforesaid base salary in the New Israeli Shekel ("NIS") equivalent as determined
by the Representative Rate of Exchange of the MS as published by the Bank of
Israel on the date of payment. Employee shall receive a ten percent (10%) annual
base salary increase at the end of each full year of employment during the term
of this Agreement.
(b) ACCRUAL. Pursuant to the terms of this Agreement as in
effect prior to its amendment and restatement, the Company has accrued deferred
base salary of the Employee payable from and after May 1, 2001 (the "Accrued
Amount"). The Accrued Amount shall be paid in full only if and when Parent's
cash reserves exceed $8,000,000.
(c) BONUS. Beginning with the Company's current fiscal year,
and for each fiscal year thereafter during the term of this Agreement, Employee
shall be eligible to receive an annual bonus based on Employee's performance, to
the extent such bonus, if any, is approved by the Board in its sole discretion.
(d) NO COST OF LIVING INCREASES. The linkage of the salary set
forth in subparagraph (a), above, to the United States dollar is in lieu of any
generally-applicable increases, whether the statutory cost of living increase in
Israel ("TOSEFET YOKER") or any other industry-wide increase applicable as the
result of collective bargaining agreements or other order of the Israeli
Ministry of Labor and Welfare (such as TZAVEI HARHAVA). By signing this
Agreement and accepting employment pursuant to its terms, the Employee
represents that he will not claim any such increase.
(e) VACATION. Employee shall initially be entitled to 18
working days paid vacation annually, adding 1 day for each year of employment up
to the legal maximum in Israel, and sick leave in accordance with applicable
legal requirements as reflected in the Employment Policy (attached).
(f) TELEPHONE. The Company shall pay or reimburse the Employee
for the costs of .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 personal calls.
4. OTHER BENEFITS.
(a) MANAGER'S INSURANCE. The Company shall effect a Manager's
Insurance Policy (the "Policy") in the name of the Employee, and shall pay a sum
equal to 15.83% of the Employee's base salary towards such Policy, of which
8.33% will be on account of severance pay, 5% on account of pension fund
payments, and up to 2.5% on account of disability pension payments. The Company
shall deduct 5% from the Employee's base salary to be paid on behalf of the
Employee towards such Policy. Payments by the Company towards the Policy under
this Section 4(a) shall be in lieu of any statutory obligations to pay severance
pay, subject to the approval of the Minister of Labor under Section 14 of the
Israeli Severance Pay Law 5723-1963.
2
The figures specified in this Section 4(a) above shall be amended in accordance
with any amendment to the maximum allowances permitted or deductions required by
the provisions of any relevant law.
(b) FURTHER EDUCATION FUND CONTRIBUTIONS. The Employee shall
be entitled to join a continuing education fund (KEREN HISHTALMUT) to be
calculated on his/her base salary, whereby 2.5% of his/her base salary shall be
deducted and paid and the Employer shall contribute 7.5%, up to the maximum
non-taxable amount.
(c) RECUPERATION PAY. The Employee shall be entitled to
Recuperation Pay (DMEI HAVRA'A) in accordance with Israeli Law.
5. EXPENSES. The Company shall reimburse Employee for reasonable
travel, entertainment or other expenses incurred by Employee in the furtherance
of or in connection with the performance of Employee's duties hereunder, in
accordance with the Company's expense reimbursement policy as in effect from
time to time.
6. SEVERANCE.
(a) INVOLUNTARY TERMINATION. If Employee's employment with the
Company terminates by reason of an Involuntary Termination during the term of
this Agreement, Employee shall be entitled to receive a lump-sum payment equal
to $150;000, no matter how much time remains in the term of this Employment
Agreement, [less the amount of the severance pay portion of the Policy. In the
event that the severance amount payable to Employee under the Policy is greater
than $150,000; then Employee shall be entitled to the entire amount payable
under the Policy, but to no additional severance under this Section 6(a)]. If
Employee's employment terminates because of death or Disability, Employee (or
his heirs) will receive a lump-sum payment equal to six (6) months of his annual
base salary in effect at the time of termination. Notwithstanding any other
provision of this Agreement, Employee shall not be entitled to any other
severance pay or other benefits upon his termination from employment with the
Company, except for those benefits described in this Section 6.
(b) OTHER TERMINATION. If Employee's employment terminates for
Cause or if Employee voluntarily resigns other than in an Involuntary
Termination, then Employee shall not be entitled to receive severance benefits
under this Section 6 but shall only be entitled to severance pay in the amount
required by law (subject to the provisions of section 6(c) below).
(c) TRANSFER OF THE POLICY. The Company and Employee agree and
acknowledge that in the event the Company transfers ownership of the Policy to
the Employee, then the severance portion thereof shall constitute payment
towards any severance pay the Company may be required to pay to the Employee
pursuant to the Severance Pay Law 5727-1963. Upon the termination of the
Employee's employment with the Company, other than for Cause, the Policy and the
Further Education Fund shall be automatically assigned to the Employee.
7. COVENANT NOT TO COMPETE. Employee acknowledges that the nature
of the Company's business is such that if Employee were to become employed by,
or substantially involved in, the business of a competitor of the Company during
the term of this Agreement and
3
for the twenty-four (24) months following the termination of Employee's
employment with the Company, it would be very difficult for the Employee not to
rely on or use the Company's trade secrets and confidential information. Thus,
to avoid the inevitable disclosure of the Company's trade secrets and
confidential information, during the term of this Agreement and for the
twenty-four (24) months following the termination of Employee's employment with
the Company, Employee agrees not to directly or indirectly engage in (whether as
an employee, consultant, proprietor, partner, director or otherwise), nor have
any ownership interest in or participate in the financing, operation, management
or control of, any person, firm., corporation or business that competes with the
business the Company was pursuing or had documented concrete plans to pursue at
the time of the termination of the Employee's employment, or is a customer of
the Company at the time of the termination of the Employee's employment. The
foregoing restrictions shall not preclude Employee from purchasing, receiving or
holding (directly or indirectly) solely as a passive investment 5% or less of
the outstanding stock, other securities or other equity participation interests
of any entity.
8. COVENANT NOT TO SOLICIT. During the term of this Agreement,
and for a period of twenty-four (24) months thereafter, Employee will not
directly or indirectly:
(a) Solicit, encourage, recruit or take any other action which
is intended to induce any other employee, independent contractor, customer or
supplier of the Company or any affiliated corporation to terminate his, her or
its relationship with the Company or any affiliated corporation; or
(b) Interfere in any manner with the contractual or employment
relationship between the Company or any affiliated corporation and any employee,
independent contractor, customer or supplier of the Company or any affiliated
corporation.
9. DEFINITIONS.
(a) CAUSE. "Cause" shall mean the occurrence of any one or
more of the following: (i) Employee's misconduct which materially injures the
Company; (ii) Employee's conviction by, or entry of a plea of guilty or nolo
contendere in, a court of competent jurisdiction for any crime which constitutes
a felony in the jurisdiction involved; or (iii) gross negligence by Employee in
the scope of Employee's services to the Company.
(b) INVOLUNTARY TERMINATION. "Involuntary Termination" shall
mean (i) without the Employee's express written consent, a material reduction in
Employee's duties, position or responsibilities with the Company and its parent
and subsidiary corporations relative to Employee's duties, position or
responsibilities in effect immediately prior to such reduction, provided,
however, that a reduction in duties, position or responsibilities solely by
virtue of the Company being acquired and made part of a larger entity (as, for
example, when the President of the Company remains as such following a Change of
Control but is not made the President of the acquiring corporation) shall not
constitute an "Involuntary Termination"; (ii) without Employee's express written
consent, a reduction of the facilities and perquisites (including office space
and location) available to Employee immediately prior to such reduction; (iii)
without Employee's express written consent, a reduction by the Company of
Employee's base salary (as set forth in Section 3) or kind or level of his
employee benefits in effect immediately prior to
4
such reduction; (iv) without the Employee's written consent, the relocation of
the Employee to a facility or location more than fifty (50) kilometers from
Jerusalem, Israel: (v) any purported termination of Employee by the Company
without Cause: or (vi) the failure of the Company to obtain the assumption of
this Agreement by any successors contemplated by Section 11 below.
(c) DISABILITY. "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.
10. RIGHT TO ADVICE OF COUNSEL. Employee acknowledges that he has
had the right to consult with his own separate legal counsel and is fully aware
of his rights and obligations under this Agreement.
11. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. Any successor to the Company
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets shall assume the obligations under this
Agreement and agree expressly to perform the obligations under this Agreement in
the same manner and to the same extent as the Company would be required to
perform such obligations in the absence of a succession. For all purposes under
this Agreement, the term "Company," as applicable, shall include any successor
to the Company's business and/or assets which executes and delivers the
assumption agreement described in this subsection (a) or which becomes bound by
the terms of this Agreement by operation of law.
(b) EMPLOYEE'S SUCCESSORS. Without the written consent of the
Company, Employee shall not assign or transfer this Agreement or any right or
obligation under this Agreement to any other person or entity. Notwithstanding
the foregoing, the terms of this Agreement and all rights of Employee hereunder
shall inure to the benefit of, and be enforceable by, Employee's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
12. NOTICE CLAUSE.
(a) MANNER. Any notice hereby required or permitted to be
given shall be sufficiently given if in writing and upon mailing by registered
or certified mail, postage prepaid, to either party at the address of such party
or such other address as shall have been designated by written notice by such
party to the other party.
(b) EFFECTIVENESS. Any notice or other communication required
or permitted to be given under this Agreement will be deemed given on the day
when delivered in person, or the eighth [US - Israel] business day after the day
on which such notice was mailed in accordance with Section 12(a).
13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal substantive laws, but not the choice
of law rules, of the State of Israel.
5
14. SEVERABILITY. The invalidity. or unenforceability of any
provision of this Agreement, or any terms hereof; shall not affect the validity
or enforceability of any other provision or term of this Agreement.
15. INTEGRATION. This Agreement represents the entire agreement
and understanding between the parties as to the subject matter herein and
supersedes all prior or contemporaneous agreements, whether written or oral. No
waiver, alteration, or modification of any of the provisions of this Agreement
shall be binding unless in writing and signed by duly authorized representatives
of the parties hereto.
16. TAXES. All payments made pursuant to this Agreement shall be
subject to withholding of applicable income and employment taxes.
17. INDEMNIFICATION. The Company shall take whatever steps are
necessary to indemnify its officers, including, but not limited to the Employee,
to the maximum extent permitted by law.
18. RESERVE DUTY. The Employee shall continue to receive the
salary provided for hereunder during periods of military reserve, duty. The
Employee hereby assigns and undertakes to pay to the Company any amounts
received from the National Insurance Institute of Israel as compensation for
such reserve duty service.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officers, as of the day and year
first above written.
ATOMICA ISRAEL TECHNOLOGIES, LTD.
By:/s/ Xxxxxx Xxxxxxxxx
Title: CFO, Atomica Corporation
EMPLOYEE
/s/ Xxxxxx X. Xxxxxxxxxxx
Xxxxxx X. Xxxxxxxxxxx
6
Exhibit 10.6
January 29, 2004
Vertical Ventures
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Gentlemen:
Atomica Corporation represents that as of December 31, 2003, the
Company's balance sheet includes $61,000 in deferred compensation to
Xxxxxx Xxxxxxxxxxx. This relates to the period beginning May 2001 and
ending November 2003. Beginning December 2003, we are no longer accruing
deferred compensation, as this is no longer a feature of his contract.
Regards,
/s/ Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx
CFO
