PERSONAL EMPLOYMENT AGREEMENT
THIS PERSONAL EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into this 19 day of October, 2010 by and between A.D. Integrity Applications Ltd. (No. of Company 51-315187-8), of 102 Ha’Avoda St., P.O. Box 432, Ashkelon, 78100, Israel (the “Company”) and David Malka (the “Manager”).
WHEREAS, | the Company employs the Manager and the Manager is employed by the Company commencing on March 1, 2003 (the "Commencement Date"); and |
WHEREAS, | the parties desire to state the terms and conditions of the Manager's employment by the Company, as set forth below. |
NOW, THEREFORE, in consideration of the mutual premises, covenants and other agreements contained herein, the parties hereby agree as follows:
General
1. Position. The Manager shall serve in the position described in Exhibit A attached hereto. In such position the Manager shall report regularly and shall be subject to the direction and control of the Company's Chief Executive Officer. The Manager shall have all of the powers, authorities, duties and responsibilities usually incident to the position of a Vice President of Operations of a corporation, including responsibility of the entire daily operations and infrastructures of the Company, maintenance, subcontractors and manufacturing of the Company. The Manager shall perform his duties diligently, conscientiously and in furtherance of the Company's best interests.
2. Scope of Employment. The Manager agrees to devote the working time and attention to the business and affairs of the Company, as shall be required to discharge the responsibilities assigned to the Manager hereunder. The Manager shall devote the required time and attention to the business of the Company. The Manager hereby acknowledges that the performance of his employment with the Company may require working overtime. However, Manager acknowledges that he holds a senior position in the Company requiring a special degree of trust and therefore is not entitled to receive, pursuant to the Hours of Work and Rest Law 5711-1951, separate and/or additional payments in respect of additional hours or for working on weekends or on holidays.
3. Location. The Manager shall perform his duties hereunder at the Company's office in Ashkelon, Israel or from his home, as shall be decided by the Manager, and he understands and agrees that his position may involve international travels. It is clarified that any international travel of the Manager shall be coordinated between the Manager and the Company.
4. Manager's Representations and Warranties. The Manager represents and warrants that the execution and delivery of this Agreement and the fulfillment of its terms: (i) will not constitute a default under or conflict with any agreement or other instrument to which he is a party or by which he is bound; and (ii) do not require the consent of any person or entity.
Term of Employment
5. Term. The Manager's employment with the Company had commenced on the date set forth in Exhibit A (the "Commencement Date"), and shall continue until it is terminated pursuant to the terms set forth herein.
6. Termination at Will. Either party may terminate the employment relationship hereunder at any time, by giving the other party a prior written notice as set forth in Exhibit A (the "Notice Period"). Notwithstanding the foregoing, the Company is entitled to terminate this Agreement with immediate effect upon a written notice to Manager and to pay the Manager an amount equal to the Salary (as defined below) the Manager is entitled to receive under this Agreement and the financial value of the other benefits the Manager is entitled to receive under the Agreement (including partial part of the bonus payable) that would have been paid to the Manager during the Notice Period, in lieu of such prior notice.
The Company and Manager agree and acknowledge that the Company’s Severance Contribution to the Insurance Scheme in accordance with Section 11 below, shall, provided contribution is made in full, be instead of severance payment to which the Manager (or his beneficiaries) shall be entitled with respect to the Salary upon which such contributions were made and for the period in which they were made (the “Exempt Salary”), pursuant to Section 14 of the Severance Pay Law 5723 – 1963 (the “Severance Law”). The parties hereby adopt the General Approval of the Minister of Labor and Welfare, which is attached hereto as Exhibit C. The Company hereby forfeits any right it may have in the reimbursement of sums paid by Company into the Insurance Scheme, except: (i) in the event that Manager withdraws such sums from the Insurance Scheme, other than in the event of death, disability or retirement at the age of 60 or more; or (ii) upon the occurrence of any of the events provided for in Sections 16 and 17 of the Severance Law. Nothing in this Agreement shall derogate from the Manager’s rights to severance payment in accordance with the Severance Law or agreement or applicable ministerial order in connection with remuneration other than the Exempt Salary, to the extent such remuneration exists.
7. Termination for Cause. The Company may immediately terminate the employment relationship for Cause, and such termination shall be effective as of the time of notice of the same. "Cause" means (a) conviction of a felony involving moral turpitude; or (b) any cause justifying termination or dismissal in circumstances in which the Company can deny the Manager's severance payment under applicable law.
8. Notice Period; End of Relations. During the Notice Period and unless otherwise determined by the Company in a written notice to the Manager, the employment relationship hereunder shall remain in full force and effect, the Manager shall be obligated to continue to discharge and perform all of his duties and obligations with Company, and the Manager shall cooperate with the Company and assist the Company with the integration into the Company of the person who will assume the Manager's responsibilities.
Covenants
9. Proprietary Information; Assignment of Inventions and Non-Competition. Upon the execution of this Agreement, the Manager will execute the Company's Proprietary Information, Assignment of Inventions and Non-Competition Agreement attached as Exhibit B hereto.
Salary and Additional Compensation; Pension/Insurance Scheme
10. Salary. The Company shall pay to the Manager as compensation for the employment services an aggregate salary in the amount set forth in Exhibit A (the "Salary"). Except as specifically set forth herein, the Salary includes any and all payments to which the Manager is entitled from the Company hereunder and under any applicable law, regulation or agreement. The Manager's Salary and other terms of employment may be reviewed and upgraded by the Company's Board of Directors, from time to time, at the CEO discretion. The Salary is to be paid to the Manager no later than by the 9th day of each calendar month after the month for which the Salary is paid, after deduction of applicable taxes and like payments.
11. Insurance and Social Benefits. The Company will insure the Manager under one of the following Pension or Insurance schemes as will be selected by the Manager:
Pension Fund (the "Pension Scheme") - (i) the Company will pay an amount equal to 6% of the Salary towards a fund for Tagmulim; and (ii) the Company will pay an amount equal to 8 1/3% of the Salary towards a fund for severance compensation (the “Company’s Severance Contribution”). Similarly, the Company shall deduct an amount equal to 5.5% of the Salary and shall pay such amount in respect of the Tagmulim component of the Pension Scheme; or
"Manager's Insurance Scheme" (the "Insurance Scheme") - (i) the Company will pay an amount equal to 5% of the Salary towards a fund for Tagmulim; and (ii) the Company will pay an amount equal to 8 1/3% of the Salary towards a fund for severance compensation (the “Company’s Severance Contribution”). Similarly the Company shall deduct an amount equal to 5% of the Salary, and shall pay such amount in respect of the Tagmulim component of the Insurance Scheme. Additionally, the Company shall pay an amount equals to 2.5% of the Salary for a fund for the event of loss of working ability ("Ovdan Kosher Avoda").
The above contributions and deductions are subject to applicable law and therefore may be adjusted accordingly.
Additionally, the Company, together with the Manager will maintain an advanced study fund ("Keren Hishtalmut") and the Manager and the Company shall contribute to such fund an amount equal to 2.5% of the Salary (payable by the Manager) and 7.5% of the Salary (payable by the Company), respectively.
All of the Manager's aforementioned contributions shall be transferred to the plans and funds by the Company by deducting such amounts from each monthly salary payment. The contributions set out above shall be made with respect to the total amount of the Salary notwithstanding the maximum amounts exempt from tax payment under applicable laws, provided that the Manager shall bear all tax liability associated therewith.
Additional Benefits
12. Bonus. The Manager will be eligible to receive an annual bonus which will be determined by the Company's Board of Directors, at its sole discretion.
13. Vacation. The Manager shall be entitled to the number of vacation days per year as set forth in Exhibit A, to be taken at times subject to the reasonable approval of the Company. In the event that the demands of the Manager's activities shall preclude or limit the Manager's ability to actually use such vacation days in any specific year, the Manager shall be entitled to the balance of the unused vacation days in the next succeeding three years (and any unused days of vacation above the days mandatory pursuant to applicable law during such period shall be redeemed to the Manager by the Company).
14. Sick Leave; Convalescence Pay. The Manager shall be entitled to that number of paid sick leave per year as set forth in Exhibit A (with unused days to be accumulated without limitation), and also to Convalescence Pay ("Dmei Havra'a") as set forth in Exhibit A.
15. Company Car. During the term of this Agreement the Company will provide the Manager with a car of make and model equal to group 3 (as defined by the tax authorities for "Shovi Shimush Berechev") pursuant to Company's discretion (the "Car"). The Car shall belong to or be leased by the Company for use by the Manager during the period of his employment with the Company, including the Notice Period. The Car will be returned to the Company by the Manager immediately after termination of the Manager's employment by the Company (i.e. at the end of the Notice Period). The Company shall bear all the fixed and variable costs of the Car, including licenses, insurance, gasoline, regular maintenance and repairs and toll road fees. The Company shall not, at any time, bear the costs of any tickets, traffic offense or fines of any kind. The Company shall bear all the personal tax consequences of the allocation of a company car to the benefit ("Gilum Male"). Any expenses, payments or other benefits that are made in connection with the Car shall not be regarded as part of the Salary, for any purpose or matter, and no social benefits or other payments shall be paid on its account.
16. Mobile Phone. During the term of this Agreement the Company shall provide the Manager a mobile phone, for use in connection with Manager's duties hereunder. The Company shall bear all expenses relating to the Manager’s use and maintenance of the phone attributed to the Manager under this subsection. The Company shall bear all the personal tax consequences of the allocation of the mobile phone to his benefit.
17. Equity. As soon as possible after the execution of the Agreement, the Company will cause INTEGRITY APPLICATIONS, INC. ("Integrity"), a Delaware corporation and parent of the Company, to grant the Manager options to purchase common stock of Integrity at an exercise price per share equal to $6.25, on a fully diluted basis (the "Options"). The Options shall be subject to the terms and conditions set forth in the stock option agreement executed between Integrity and Manager and pursuant to Integrity's 2010 Incentive Compensation Plan. The number of Options will be calculated as follows: 1.5% (one point five percent) of all issued and outstanding common stock of Integrity after the contemplated offering for sale of a minimum 560,000 shares ($3,500,000) of Integrity's common stock and a maximum of 2,000,000 shares of Integrity's common stock ($12,500,000). The Options shall be deemed vested, in equal parts, in accordance with the achievement of the following milestones: (i) Submission of clinical trials’ results to the Notified Body; (ii) CE mark approval; (iii) FDA approval. In the event of a merger and/or acquisition in which one or more of the abovementioned milestones have not yet been met, the Options shall be deemed vested on the date of the merger and/or acquisition.
18. Adjustment Period. The Manager shall be entitled to 3 Salaries, including all the benefits mentioned above, paid to him in monthly installments subsequent to the termination of this Agreement, provided the Manager will not work and/or provide services to any entity directly competing with the Company.
19. Renegotiation of Terms. Following 12 months from the execution date of this Agreement, the Company and the Manager shall discuss the possibility to upgrade the Manger’s remuneration terms.
Miscellaneous
20. The laws of the State of Israel shall apply to this Agreement and the sole and exclusive place of jurisdiction in any matter arising out of or in connection with this Agreement shall be the Tel-Aviv-Yafo Regional Labor Court.
21. The provisions of this Agreement are in lieu of the provisions of any collective bargaining agreement, and therefore, no collective bargaining agreement shall apply with respect to the relationship between the parties hereto (subject to the applicable provisions of law).
22. No failure, delay or forbearance of either party in exercising any power or right hereunder shall in any way restrict or diminish such party's rights and powers under this Agreement, or operate as a waiver of any breach or nonperformance by either party of any terms or conditions hereof.
23. In the event it shall be determined under any applicable law that a certain provision set forth in this Agreement is invalid or unenforceable, such determination shall not affect the remaining provisions of this Agreement unless the business purpose of this Agreement is substantially frustrated thereby.
24. The preface and exhibits to this Agreement constitute an integral and indivisible part hereof.
25. This Agreement constitutes the entire understanding and agreement between the parties hereto, supersedes any and all prior discussions, agreements and correspondence with regard to the subject matter hereof, and may not be amended, modified or supplemented in any respect, except by a subsequent writing executed by both parties hereto.
26. The Manager acknowledges and confirms that all terms of the Manager's employment are personal and confidential, and undertake to keep such terms in confidence and refrain from disclosing such terms to any third party.
27. All references to applicable laws are deemed to include all applicable and relevant laws and ordinances and all regulations and orders promulgated there under, unless the context otherwise requires. The parties agree that this Agreement constitutes, among others, notification in accordance with the Notice to Employees (Employment Terms) Law, 2002. Nothing in this agreement shall derogate from the Manager’s rights according to applicable laws.
28. The Company will be bound by this Agreement subject to its authorization by all necessary corporate actions.
29. This Agreement may be assigned by the Company (whether by operation of law or otherwise) to Integrity, without the prior written consent of the Manager; provided, however, that the Company may assign its rights and delegate its duties hereunder without derogating from the Manager's rights or influencing them in any manner.
IN WITNESS WHEREOF the parties have signed this Agreement as of the date first hereinabove set forth.
| | /s/ Avner Gal | | /s/ David Malka |
| | A.D. Integrity Applications Ltd. | | David Malka |
15th Sivan 5758 (June 9th, 1998).
