Exhibit 2.2
MANAGEMENT AGREEMENT
This Management Agreement (the "Agreement") is made as of the ___ day of
January, 2004, by and between Epsilor Electronic Industries Ltd., an Israeli
company having its principal executive offices in the Temed Industrial Zone,
Arava 86800, Israel ("Epsilor"), and Office Line Ltd., an Israeli company having
its principal executive offices at 24 Alexandroni Street, Ramat Gan, Israel
52225 ("Office Line"), and Hezy Aspis, an individual residing at 24 Alexandroni
Street, Ramat Gan, Israel 52225 ("Aspis").
W I T N E S S E T H :
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WHEREAS, Office Line, by and through its employee Hezy Aspis an individual
residing at 24 Alexandroni Street, Ramat Gan, Israel 52225 ("Aspis"), has
expertise in the areas of management of entities engaged in the manufacture,
marketing and sale of electronic products for industrial battery applications
and other matters relating to the business of Epsilor; and
WHEREAS, Epsilor desires to avail itself of the expertise of Office Line
in the aforesaid areas and Office Line agrees to avail such expertise to Epsilor
all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions herein set forth, the parties hereto agree as follows:
1. Preamble. The preamble to this Agreement constitutes an integral part
hereof.
2. Appointment and Services.
(a) Epsilor hereby appoints Office Line to render the management
services described in Section 2 hereof for the term of this Agreement.
(b) Office Line hereby agrees that during the term of this Agreement
it shall provide Epsilor with the services of Aspis, who shall serve as
Chief Executive Officer of Epsilor (the "Services"). It is agreed that the
Services shall include a maximum of four trips abroad per year throughout
the term of this Agreement, two of which shall be in the United States of
America and two in Europe; each trip shall be for a maximum period of 7
days. Aspis shall be entitled to six weeks of vacation per year. Nothing
in this Agreement or in the relationship between Aspis and Epsilor shall
be deemed to create any employer-employee relationship between Aspis and
Epsilor; Aspis is and shall be deemed to be an employee of Office Line,
providing services to Epsilor as an employee of Office Line pursuant to
the terms of this Agreement and of his employment relationship with Office
Line.
(c) It is hereby acknowledged that pursuant to the Share Purchase
Agreement executed between Electric Fuel (E.F.L.) Ltd., Epsilor, Aspis and
Leora Aspis (the "SPA"), Aspis has agreed to avail his services to Epsilor
for up to an average of 100 hours per month for a period of 12 months from
the date thereof. It is agreed that the hours availed by Aspis to Epsilor
pursuant to the SPA shall constitute part of the Services. By virtue of
the fact that Aspis's job will require a special degree of personal trust,
and because the conditions of employment and the circumstances thereof
will not allow Epsilor or Office Line to have any control over Aspis's
hours of work, the provisions of the Hours of Work and Rest Law,
5711-1951, will not apply to Aspis and to the relationship between Aspis
and Epsilor and Office Line. Neither Aspis nor Office Line may represent
themselves as agents, employees, partners or joint ventures of Epsilor, or
any of its subsidiaries or affiliates.
Nothing in this Agreement shall be interpreted or construed as
creating or establishing any partnership, joint venture, employment
relationship, franchise or agency or any other similar relationship
between Epsilor and Office Line or Epsilor and and any of Epsilor's
employees, and neither party shall be held liable for the debts or
obligations of the other party. Should it be held by any competent
judicial authority, that the relationship between Epsilor and Office Line
or between Epsilor and Aspis in respect of the Services provided pursuant
to this Agreement is one of employer and employee, then retroactively from
the commencement of this Agreement, and in lieu of any Fee paid or payable
hereunder prior to the date of such holding, (i) Office Line shall not be
entitled to any payment hereunder of any kind, (ii) Aspis shall be
entitled only to a gross monthly salary (including overtime hours) in an
amount equal to 65% of the Fee payable under sections 3(a) and 3(b), and
(iii) any amounts paid to Office Line hereunder shall be deemed to have
been paid to Aspis as such gross monthly salary. Any excess that may have
been paid hereunder by Epsilor to Office Line over such amount as shall be
owing under this Section shall be repaid by Office Line and Aspis to
Epsilor together with interest at the applicable rate under the Law for
Determination of Interest and Linkage Differentials, 5721-1961.
(e) Aspis has title and possession to the premises currently being
used by Epsilor, at 24 Alexandroni Street, Ramat Gan, Israel 52225, (the
"Premises"), Aspis agrees to grant Epsilor use of the Premises throughout
the Term (as defined in Section 5 below). Epsilor agrees to use the
Premises solely for conducting its core business and to maintain the
Premises in good condition at all times. It is hereby agreed that
immediately upon the expiration or termination of this Agreement, Epsilor
shall promptly vacate the Premises including removing any and all
equipment and property.
(f) Epsilor shall not operate on Saturdays or Jewish holidays, and
Office Line shall not perform the Services on Saturdays or Jewish
holidays.
3. Remuneration.
(a) In consideration of the performance of the Services contemplated
by Section 2 hereof, Epsilor agrees to pay to Office Line an aggregate per
annum gross fee (the "Fee") equal to Two Hundred and Seventy Thousand
Dollars ($270,000) plus VAT. Such Fee shall commence on the date hereof
and continue throughout all times that Office Line, by and through Aspis,
shall continue to serve as CEO of Epsilor. One-twelfth of the Fee shall be
payable to Office Line on a monthly basis which in no event shall be paid
later than the 9th day of the following month. Office Line and Aspis waive
any right to have the Fee adjusted for changes in the Cost of Living Index
during the term of this Agreement. Office Line shall provide Epsilor with
a tax receipt for sums paid hereunder.
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(b) Office Line shall also be entitled, for the first 36 months of
this Agreement, to an annual bonus. Such bonus shall be paid within 30
days from the conclusion of each calendar year that Office Line, by and
through Aspis, shall have served as CEO of Epsilor (or any company
controlled by Electric Fuel (E.F.L.) Ltd. to which the stock or assets of
Epsilor shall have been transferred in accordance with the provisions of
Section 2(e) above - the "Transferee"). The bonus shall be equal to
fifteen percent (15%) of Epsilor's annual pre-tax profits (including those
profits from sales of zinc-air products sold by Epsilor to current
customers of Epsilor as of the date of this Agreement) in excess of (i)
$2,200,000 in 2004, (ii) $2,420,000 in 2005 and (iii) $2,662,000 in 2006.
Office Line may receive such annual bonus in whole or in part in shares of
Arotech's Common Stock $0.01 par value per share ("ARTX"), at Aspis's
election, based upon the last reported closing price of ARTX shares on the
last day of the month in the month prior to completion of Epsilor's annual
financial statements for such year (the "Election Date"), such election to
be delivered to Epsilor in writing by the Election Date.
(c) On execution of this Agreement and in contemplation of the
Services to be rendered by Office Line, Offive Line is hereby granted an
option to acquire 200,000 shares of ARTX for $1.41 per share, which option
shall vest in equal amounts over a period of three (3) years on the
anniversary of this Agreement commencing with the first anniversary
thereof. Notwithstanding anything to the contrary, in the event that this
Agreement is terminated by Epsilor other than in circumstances permitted
to it pursuant to Sections 5(b) or 5 (c) below, Office Line shall be
entitled to exercise all of the options hereunder, at its sole discretion
and notwithstanding any provision to the contrary in the applicable option
plan.
(d) Epsilor shall provide Office Line with the automobile which
until the date of this Agreement was made available to Aspis. Epislor
shall bear all costs involved in insuring and repairing the automobile as
well as paying for the fuel, oil, licenses and other expenses involved in
the running and upkeep of the automobile for the duration of this
Agreement.
(f) The remuneration set forth in this Section 3 constitutes
Epsilor's entire obligation towards Office Line and Aspis for the
Services, and neither Aspis nor Office Line shall be entitled to any other
remuneration or payment whatsoever in respect of the Services. Without
limiting the generality of the foregoing, Aspis shall not have any
entitlement to any benefits from Epsilor, including without limitation
pension, managers' insurance, recuperation pay, payments to a severance
pay fund, etc., all of which benefits shall be the sole and exclusive
responsibility of Office Line.
(e) To the extent permitted by applicable law and on presentation of
a written confirmation from the Israeli tax authorities that payments to
Office Line are exempt from the requirement of source withholding, Epsilor
shall pay all amounts due under this Agreement gross to Office Line. In
the absence of such written confirmation, the parties agree that Epsilor
shall withhold such amounts in respect of Israeli taxes as required by
applicable Israeli law.
4. Reimbursements.
In addition to the compensation payable to Office Line pursuant to Section
3 hereof, Epsilor shall pay directly, or reimburse Office Line for, its
out of pocket expenses in connection with the performance of the Services
in accordance with the current reimbursement practices of Epsilor
(including travel expenses, phone calls, lodging, food) as were in place
prior to the date hereof. All reimbursements for Out-of-Pocket Expenses
shall be made together with the payment of the Fee in the month following
presentation by Office Line to Epsilor of a statement in connection
therewith. Other than reimbursements under this Section, Epsilor shall not
be required to reimburse Aspis or Office Line for any expenses or costs
relating to the engagement of Office Line's employee providing the
Services on behalf of Office Line hereunder.
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5. Term.
(a) This Agreement shall be effective on the date hereof and shall
continue for a period of thirty six (36) months (the "Term"). The Term may
be extended upon the mutual agreement of the parties for additional twenty
four (24) month periods to be reached not later than ninety days prior to
the expiration of such period.
(b) Neither party may terminate this Agreement during the first
twelve months following the effective date hereof except in the
circumstances set forth out herein: (i) with regard to Epsilor, in the
event that Aspis ceases to render the services as CEO in circumstances
that would not entitle him to receive severance payment under Israel law
were he an employee of Epsilor and (ii) with regard to Office Line, under
circumstances that would entitle Aspis to receive severance payment under
Israel law were he an employee of Epsilor.
Office Line may resign and voluntarily terminate this Agreement by
providing twelve (12) months notice in writing to Epsilor ("Voluntary
Termination"). In the event of same, during such notice period Office Line
shall continue to receive its Fee provided that Office Line works
diligently to identify and train a successor to him as CEO.
(c) Following the completion of the first twelve months following
the effective date hereof, either party may terminate this Agreement for
Cause. For the purpose of this section, "Cause" is defined as (i) a
willful failure to carry out a material directive of the Board of
Directors of Epsilor; (ii) a conviction for fraud, crimes of moral
turpitude or other conduct which reflects on Epsilor in a material and
adverse manner; (iii) conviction in a court of competent jurisdiction for
embezzlement of Epsilor funds; or (iv) reckless or willful misconduct that
is found to be materially harmful to Epsilor.
6. Confidentiality.
Office Line and Aspis shall maintain the confidentiality of the details of
this Agreement and any Information obtained by Office Line pursuant to its
provision of the Services as set forth herein. For purposes of this
section, the term "Information" includes any know-how which may come into
the possession of Office Line and Aspis in the course of providing
Services to Epsilor or its affiliates and successors or during the period
prior to the date hereof during which Aspis was an employee of Epsilor,
including, inter alia, any knowledge in technological, technical
engineering, scientific, economic, commercial, accounting and/or legal
areas which relates to Epsilor and its business and resulting from any
confidentiality agreements between Epsilor and third parties. Office Line
and Aspis hereby declare that they are aware that the Information which
has been developed by Epsilor to date and which will be developed during
the course of the term of this Agreement is valuable Information whose
importance plays a substantial role in the success of Epsilor, and
further, that the passing on such information to a third party could cause
significant damage to Epsilor. Office Line and Aspis hereby undertake to
keep all information completely confidential and not to divulge
Information to any third party unless the same is within the parameters of
the Services being undertaken by Office Line and Aspis, personally. The
obligation to maintain confidentiality shall not apply to Information that
(a) is or becomes available to the public through no fault of the Office
Line and Aspis (b) was disclosed to the public by operation of law; or (c)
is rightfully received by the Office Line and/or Aspis from a third party
without a duty of confidentiality. The provisions of this Section shall
survive the termination of this Agreement without limitation as to time.
Office Line and Aspis acknowledge that the provisions set forth in this
Section of this Agreement are fair and reasonable.
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7. Non-Competition.
Office Line and Aspis shall not provide services to any entities competing
with Epsilor, including providing management services, advice, training or
information to any entity that is, or is likely to become a competitor of
Epsilor or who has a business similar in essence to the business in which
Epsilor currently engages in, or shall engage, during the term of this
Agreement. This obligation related to non-competition shall apply to
Office Line and Aspis, personally, during the term of this Agreement and
for an additional three years thereafter and with respect thereto, this
provision shall survive termination of the Agreement.
8. Intellectual Property.
Intellectual property created by Aspis or Office Line's other
representatives at Epsilor, either solely or with their participation,
shall be the sole property of Epsilor, and Epsilor shall be entitled to
make use thereof in its sole discretion. Office Line and its
representatives shall cooperate fully with Epsilor for the purposes of
protecting and utilizing its intellectual property including filing
applications for patent protection and obtaining rights of copyright or
other intellectual property rights, including the execution of
assignments, preparation of plans, formulae or any other actions and even
in the event Aspis's and Office Line's relationship with Epsilor has been
terminated for any reason prior to their being called upon to assist in
such activities. It is hereby clarified that Epsilor shall bear all costs
incurred pursuant to this Section 8.
9. General.
(a) No amendment or waiver of any provision of this Agreement, or
consent to any departure by either party from any such provision, shall be
effective unless the same shall be in writing and signed by the parties to
this Agreement, and, in any case, such amendment, waiver or consent shall
be effective only in the specific instance and for the specific purpose
for which given.
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(b) This Agreement and the rights of the parties hereunder may not
be assigned without the prior written consent of the parties hereto.
(c) Any and all notices hereunder shall, in the absence of receipted
hand or e-mail delivery, be deemed duly given when within seven (7)
business days after it is mailed, if the same shall be sent by registered,
certified or overnight mail, return receipt requested,. Notices shall be
addressed to the parties at the following addresses:
If to the Office Line
or Aspis: Office Line Ltd.
c/o Hezy Aspis
24 Alexandroni Street
Ramat Gan52225, Israel
Facsimile: +972-3-631-3336
E-mail: aspis@epsilor.com
With a copy to: Jacob Steinmetz, Adv.
Haim Samet, Steinmetz, Haring & Co.
23 Begin Road
Tel-Aviv 66184, Israel
Facsimile: +972-3-567-0101
E-mail: jacob@sametlaw.co.il
If to Epsilor: Epsilor Electronic Industries Ltd.
Temed Industrial Zone
Arava 86800, Israel
Facsimile: +972-8-655-6280
E-mail: naimer@arotech.com
With a copy to: Electric Fuel (E.F.L.) Ltd.
One HaSolela Street
Western Industrial Park
P.O. Box 641
Beit Shemesh 99000, Israel
Attention: Vice President and
General Counsel
Facsimile: +972-2-990-6688
E-mail: yaakovh@arotech.com
or such other address with respect to a party as such party shall notify
each other party in writing as above provided.
(d) This Agreement shall constitute the entire agreement between the
parties with respect to the subject matter hereof, and shall supersede all
previous oral and written (and all contemporaneous oral) negotiations,
commitments, agreements and understandings relating hereto including to
but not limited to the Term Sheet for the purpose of Epsilor Electronic
Industries Ltd executed on September 22, 2003.
(e) This Agreement shall be governed by, and enforced in accordance
with, the laws of the State of Israel (excluding the choice of law
principles thereof). The parties to this Agreement hereby agree to submit
to the exclusive jurisdiction of the Magistrates' Court or District Court
located in the city of Tel-Aviv in any action or proceeding arising out of
or relating to this Agreement; such jurisdiction is specifically intended
by the parties to be exclusive of any jurisdiction that may be claimed by
the Labor Courts of the State of Israel.
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(f) This Agreement shall inure to the benefit of, and be binding
upon, Office Line and Epsilor (including any present or future
subsidiaries of Epsilor that are not signatories hereto), and their
respective successors and permitted assigns.
(g) This Agreement may be executed in two or more counterparts and
by different parties on separate counterparts. Each set of counterparts
showing execution by all parties shall be deemed an original, and shall
constitute one and the same instrument.
(h) No party to this Agreement will be deemed to have made any
representation, warranty, covenant or agreement except for those expressly
set forth herein.
(i) The waiver by any party of any breach of this Agreement shall
not operate as or be construed to be a waiver by such party of any
subsequent breach.
(j) Aspis hereby guarantees the performance of all the undertakings
of Office Line hereunder. In the event of any breach of this Agreement by
Office Line, , Epsilor may seek and enforce any remedy against Aspis as if
Aspis were Office Line without the need to first seek any remedy against
Office Line.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers or agents as set forth below.
EPSILOR ELECTRONIC INDUSTRIES, LTD.
By:
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Name and title:
OFFICE LINE LTD.
By:
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HEZY ASPIS Name and title: Hezy Aspis, CEO
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We, Arotech Corporation, of 632 Broadway, Suite 1200, New York, New York 10012,
United States of America, hereby acknowledge and confirm that the Term Sheet
signed on September 22, 2003, by and between Arotech Corporation and Epsilor
Electronics Industries Ltd. is cancelled and shall be of no further effect and
we waive any rights we may otherwise have had pursuant to the Term Sheet or any
other document, agreement or understanding with respect the any services to be
rendered by Hezy Aspis thereunder.
AROTECH CORPORATION
By:
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Name and title: Robert S. Ehrlich, CEO
Date: ___ January 2004
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