EMPLOYMENT AGREEMENT

 

1.1

The Employee shall be employed by the Company in the Position commencing as of January 1, 2011 (the: “Commencement Date”).

 

1.2

From April 15, 2008 until the Commencement Date, the Employee served as a consultant to the Company under a services agreement (“Services Agreement”). Employee and Company agree that Employee shall now serve as an employee of the Company as of the Commencement Date. The Services Agreement is hereby terminated and the Employee hereby declares that he has received any and all amounts due to him under the Services Agreement and that neither him, nor anyone on his behalf, shall have any claim whatsoever against the Company (or Parent or any subsidiary of Company or Parent or their respective affiliates) in connection with the period in which he served as a consultant to the Company. It is also clarified and agreed for the avoidance of any doubt, that Employee's seniority with the Company will be calculated as of the Commencement Date only.

 

1.3

The Employee shall report to the Chief Executive Officer of the Parent, and the Chief Executive Officer of the Company (the: “Supervisor”). The Employee shall perform the duties, undertake the responsibilities and exercise the authority as determined from time to time by the Supervisor and as customarily performed, undertaken and exercised by persons situated in a similar capacity.

 

1.4

During the course of the Employee’s employment with the Company, the Employee shall honestly, diligently, skillfully and faithfully serve the Group. The Employee undertakes to devote best efforts and utilize all available qualifications and skills to promote the business and affairs of the Group, and further undertakes loyally and fully to comply with the directives, policies and orders of the Group. The Employee shall act at all times in a manner befitting the Employee’s position and status in the Group.

 

1.5

The Employee undertakes promptly to notify the Company regarding any matter or subject in respect of which the Employee has a personal interest and/or which might create a conflict of interest with the Employee’s position in the Group.

 

1.6

The Employee shall be employed on a full time basis, and will devote full time and attention to the business and affairs of the Group as may be required to discharge the responsibilities assigned to the Employee hereunder. During the term of this Agreement the Employee shall not engage in any other employment nor directly or indirectly engage in any other business activities in any capacity for any other person, firm or company whether or not for consideration, without the express prior written consent of the Company.

 

1.7

The Employee hereby makes the following representations and undertakings for the benefit of the Group:

 

1.7.1

There are no undertakings or agreements preventing the Employee from making the commitments described herein and performing Employee’s obligations pursuant to this Agreement.

 

1.7.2

To the best of the Employee’s knowledge, the Employee is not currently, nor will the Employee be deemed to be by virtue of entering into this Agreement, in breach of any of the Employee’s obligations towards any former employer, including, without limitation, any non-competition or confidentiality undertakings.

 

1.7.3

In carrying out the Employee’s duties under this Agreement, the Employee shall not make any representations or make any commitments on behalf of the Company or Parent, except as authorized to do so expressly and in advance.

 

1.7.4

The Employee acknowledges and agrees that the Company is entitled to conduct inspections within the offices of any member of the Group and on the  computers of any member of the Group and other devices, including inspections of electronic mail transmissions, internet usage and inspections of their content. For the avoidance of any doubt, it is hereby clarified that findings of any such examinations shall be the Group’s sole property.  The Employee acknowledges and agrees that any messages and data sent from, received by, or stored in or on the computers of any member of the Group and communications systems are the sole property of the Group, regardless of the form and/or content of these messages and data.  The Employee should not consider messages and data sent from, received by, or stored in or upon a computer of a member of the Group and communications systems to be private and should not send, receive, or store sensitive personal or private information using these systems.  The Employee is deemed to have consented to any reasonable use, transfer and disclosure of all messages and data contained or sent via the computer and communications systems of any member of the Group, including electronic mail.

 

1.7.5

The Employee grants consent to the Group and its affiliates and employees, wherever they may be located, to utilize and process the Employee’s personal information, including data collected by the Group for purposes related to the Employee’s employment. This may include transfer of the Employee’s personnel records outside of Israel and further transfers thereafter. All personnel records are considered confidential and access will be limited and restricted to individuals with a need to know or process that information solely for purposes relating to the Employee’s employment, such as management teams and human resource personnel. Any member of the Group and its respective affiliates and employees may share personnel records as needed solely for such purposes with third parties assisting human resources administration.

 

1.8

The duties of the Employee in accordance with this Agreement involve duties which require of him special personal care and loyalty, and therefore the directives of the Work Hours and Rest Law, 1951, or any law to be enacted in its place, will not be applicable to the Employee or to his activities which he will perform for the Group and as such, the Employee will not be entitled to remuneration according to the Work Hours and Rest Law, 1951.

 

2.1

The Company agrees to pay to the Employee during the term of this Agreement a gross monthly salary of $8,334 (eight thousand three hundred and thirty four U.S. dollars) (the: “Salary”). The Salary constitutes the complete and full compensation for the Employee's services and duties to the Group. All amounts shall be paid in NIS in accordance with the representative rate of exchange of the U.S. dollar last published by the Bank of Israel prior to the date of payment, but in no event at an exchange rate of less than NIS 3.60: $1.00.

 

2.2

The Employee acknowledges that the nature of his employment is such that the Company cannot monitor his work hours. Therefore, the laws and regulations of Work and Rest Act – 1951 shall not apply to this Agreement and to the Employee’s relationship with the Company. The Employee acknowledges that he shall not be entitled to any further remuneration or payment whatsoever other than the Salary and/or benefits set out herein, unless expressly specified in this Agreement or otherwise agreed upon by the Company and the Employee in writing.

 

2.3

In the event of an initial public offering of the Parent securities, no later than October 31, 2011 (the: “IPO”) the Salary shall be increased to $11,111 (eleven thousand one hundred and eleven U.S. dollars). All amounts shall be paid in NIS in accordance with the representative rate of exchange of the U.S. dollar last published by the Bank of Israel prior to the date of payment, but in no event at an exchange rate of less than NIS 3.60: $1.00.

 

2.4

The Salary will be paid monthly, no later than the ninth day each month, one month in arrears, after deduction of any and all taxes and charges applicable to the Employee, as may be currently in effect or which may hereafter be enacted or required by law. The Employee shall notify the Company of any changes which may affect the Employee’s tax liability.

 

2.5

An amount equal to $1,000 of the Salary is a special compensation for the Employee's obligation to confidentiality and not to compete with the Company, as set forth in Appendix B attached hereto (the "Special Compensation"). In the event of a breach by Employee of any of any of the provisions in Appendix B, Employee shall promptly return to the Company, the Special Consideration, together with interest and linkage differentials.

 

5.1

The Employee shall be entitled to the following benefits:

 

5.1.1

Pension Insurance.  The Company will pay on behalf of the Employee, either to an insurance company or to a pension fund (at the Employee’s discretion), an amount equal to:

 

(a)

8.33% of the Salary, which amount shall be allocated to a fund for severance pay; and

 

(b)

5% of the Salary, in case of an insurance policy, or 6%, in case of a pension fund, which amount shall be allocated to a provident fund or pension plan.

 

In the event that the Employee chooses that payments be made to an insurance policy (and not to a pension fund), the Company will also contribute up to 2.5% of the Salary on account of disability insurance, provided that such insurance is available for the Employee.

 

The Employee hereby agrees and acknowledges that all of the payments that the Company shall make to the abovementioned manager’s insurance policy or pension fund shall be in lieu of any severance pay to which the Employee or the Employee’s successors shall be entitled to receive from the Company with respect to the Salary from which these payments were made for the period during which they were made, in accordance with Section 14 of the Severance Pay Law Order of the Minister of Labor and Welfare, published in the Official Publications Gazette No. 4659 on June 30, 1998, and modified later on, attached hereto as Exhibit B. The Company hereby waives in advance any claim it has or may have to be refunded any of the payments made to the manager’s insurance policy or pension fund, unless (1) the Employee’s right to severance pay is invalidated by a court ruling on the basis of Sections 16 or 17 of the Law (and in such case only to the extent it is invalidated), or (2) the Employee withdrew funds from the manager’s insurance policy for any reason other than death, disability or retirement at the age of 60 or more.

 

5.2

Educational Fund (Keren Hishtalmut).  The Company will contribute to a recognized educational fund an amount equal to 7.5% of each monthly payment of the Salary and will deduct from each monthly payment and contribute to such educational fund an additional amount equal to 2.5% of the Salary.

 

5.3

Sick Leave.  The Employee shall be entitled to fully paid sick leave pursuant to the Sick Pay Law 5736 – 1976. Should the Employee receive any payments from the insurer under the Employee’s disability insurance policy, such payments will be in place of any payment that would otherwise be due to the Employee from the Company under law.

 

5.4

Annual Recuperation Allowance (Dme'i Havra'a). The Employee shall be entitled to annual recuperation allowance according to the applicable directive.

 

5.5

Vacation.  The Employee shall be entitled to an annual vacation of 22 (Twenty Two) working days at full pay.  A “working day” means any of the days Sunday to Thursday, inclusive. The dates of vacation will be coordinated between the Employee and the Supervisor in advance. Subject to the provision of due and reasonable prior notice, the Company may require the Employee to take vacation leave in accordance with applicable law.  The Employee must take at least 7 (Seven) consecutive vacation days per calendar year and may accumulate unused vacation days up to a maximum amount of 30 (Thirty) days.  Any unused vacation days beyond this limit will be forfeited, subject to applicable law. With the termination of this Agreement, the Employee will receive be reimbursed for the accumulated vacation days.

 

5.6

Motor Vehicle. The Company will make available to the Employee, for the purpose of fulfilling the Position, a vehicle (class 4) which will be leased by the Company on standard leasing terms. The Employee will make use of the vehicle in accordance with the Company’s procedures and policies as established and updated from time to time, and on the following terms:

 

5.6.1

The Employee shall be entitled to use the vehicle in a reasonable manner, also for purposes of recreation and pleasure in Israel only. The Company will bear the expenses entailed in the use and maintenance of the vehicle, save for: (A) fines in respect of traffic and parking offences, and (B) certain payments as set out by the Company. These payments shall be borne by the Employee and shall be paid by the Employee promptly as required in accordance with law.

 

5.6.2

The Employee will bear any tax liability arising from the use of the vehicle by the Employee.

 

5.6.3

The Employee shall return the vehicle to the Company’s possession, in sound condition (i) immediately upon termination of the employer-employee relationship between the Employee and the Company, regardless of the reason for the termination of the relationship, (ii) if the Employee is absent from work for a prolonged period of time, and (iii) at any other time as provided by the Company.  In any event, the Employee shall not be entitled to use the vehicle as a lien and shall relinquish it to the Company promptly upon its first request.

 

5.6.4

According to the above, the Employee undertakes to pay by himself all fines and/or tickets accrued while the motor vehicle is in his use, and all costs and damages including any insurance policy deductable or excess insurance, that will arise from the use or the holding of the vehicle. Failing to comply with his undertakings regarding the vehicle might cause termination of Employee's employment for Cause, as defined herein.

 

5.7

Cellular Phone. The Company shall provide the Employee with a cellular phone, and shall finance the use thereof up to the sum set by time to time by the Company. Any use beyond this sum shall be deducted directly from the Employee’s Salary, and the Employee hereby consents to this. The use of the cellular phone shall be for personal and work related matters. Tax in respect of this benefit shall be paid by the Employee. It is the Employee’s responsibility to preserve the cell phone. In any event, the Employee shall not be entitled to use the cell phone as a pledge and shall relinquish it to the Company promptly upon its first request.

 

6.1

Employment under this Agreement will begin as of the Commencement Date and will continue until either party gives the other a 60 days prior written notice of termination of this Agreement (the: "Notice Period").

 

6.2

Notwithstanding the above stated in section 6.1, subject to a completion of an IPO, the Notice Period shall be extended to 90 days.

 

6.3

In addition, the Company shall have the right to terminate this Agreement at any time by written notice in the event of Cause (as defined below). In such event, this Agreement and the employment relationship shall be deemed effectively terminated as of the time of delivery of such notice, the Employee will not be entitled to any payment in lieu of notice period and any office which the Employee held with or function performed for, the Parent, shall terminate immediately.

 

6.4

The term “Cause” shall mean (a) the Employee being convicted of a crime of moral turpitude, (b) a material breach of the Employee’s fiduciary duties towards the Company or Parent or any subsidiary of Company or Parent, including, without limitation, theft, embezzlement, or self-dealing, (c) failure to perform the duties prescribed hereunder or assigned by the Supervisor in accordance herewith, (d) engagement by the Employee in competing activities, or a material breach of the Employee’s confidentiality and non-disclosure obligations towards the Company and the Parent; or (e) any other circumstances under which severance pay (or part of it) may be denied the Employee upon termination of employment under the applicable Israeli law.

 

6.5

In any event of the termination of this Agreement, the Employee shall immediately return all Company or Parent property, equipment, materials and documents and the Employee shall cooperate with the Group and use the Employee’s best efforts to assist with the integration into the Group of the person or persons who will assume the Employee’s responsibilities.  At the option of the Company, the Employee shall during such period either continue to fulfill the Employee’s duties hereunder or remain absent from the premises of the Group.  Under no circumstances will the Employee have a lien over any property provided by or belonging to the Group.

 

6.6

Notwithstanding anything contained herein to the contrary, the Company at its sole discretion shall have the right to terminate the employment relationship (which shall include for this purpose, any office held with or function performed for, the Parent) with immediate effect or prior to the end of the notice period set forth above and make payment to the Employee in lieu of advance notice or the remainder of the term to which the Employee would otherwise be entitled in accordance with applicable law.

 

8.1

This Agreement shall be binding upon and shall inure to the benefit of the Company, the Parent and their successors and assigns.

 

8.2

Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Employee or the Employee’s beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Employee's legal personal representative.

 

10.1

No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Employee, the Company and the Parent.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party unless expressly set forth in this Agreement.

 

10.2

All of the provisions of this Agreement come to supplement the Employee’s undertakings and to complement one another and not to detract therefrom.

 

10.3

It is hereby acknowledged that the Company or the Parent may be required to disclose the terms of this Agreement, and/or other information relating to the Employee's employment by the Company, including, without limitations, details regarding the Employee's salary and benefits. The Employee hereby consents to such disclosure, and waives any rights or claims the Employee may have in connection with such disclosure.

 

14.1

This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof.

 

14.2

This Agreement is a personal and specific employment agreement, which formalizes the relations between the Company, the Parent and the Employee, and which sets forth, in an exclusive and exhaustive manner, the Employee’s terms of employment by the Company. The Employee affirms that this Agreement provides the Employee with preferential rights and terms above those offered to other employees of the Company, and the parties therefore affirm that no customs, conventions, norms, agreements or other arrangements shall apply to the Employee.

 

WhiteSmoke Israel Ltd.

Employee

Itay Meroz

024606485

WhiteSmoke Inc.

 

4.1

Proprietary Rights.  The term “Proprietary Rights” shall mean all trade secret, patent, copyright, mask work, design, and other intellectual property rights throughout the world.

 

4.2

Disclosure of Inventions.  I will promptly disclose in writing to the Company all Inventions, made or discovered or conceived or reduced to practice or developed by me, either alone or jointly with others, during the term of my employment. I will also disclose to the Company all Inventions made, discovered, conceived, reduced to practice, or developed by me within three (3) months after the termination of my employment with the Company which resulted, in whole or in part, from my prior employment by the Company. Such disclosures shall be received by the Company in confidence, to the extent such Inventions are not assigned to the Company pursuant to this Agreement.

 

4.3

Assignment of Inventions.  I hereby assign and agree to assign in the future (when any such Inventions or Proprietary Rights are first reduced to practice or first fixed in a tangible medium, as applicable) to the Company all my right, title and interest in and to any and all Inventions whether or not patentable or registrable under copyright or other statutes, made or conceived or reduced to practice or learned by me, either alone or jointly with others, during the period of my employment with the Company or during any prior period during which I provided any consulting or other services to the Company.  Inventions assigned to the Company, or to a third party as directed by the Company pursuant to this Section 4, are hereinafter referred to as “Company Inventions”.

 

4.4

Government or Third Party.  I also agree to assign all my right, title and interest in and to any particular Company Invention to any third party, including without limitation government agency, as directed by the Company.

 

4.5

Works Made for Hire.  I acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope of my employment and which are protectable by copyright are the sole property of the Company pursuant to applicable copyright law.

 

4.6

Assignment or Waiver of Moral Rights.  Any assignment of copyright hereunder (and any ownership of a copyright as a work made for hire) includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights” (collectively “Moral Rights”).  To the extent such Moral Rights cannot be assigned under applicable law and to the extent the following is allowed by the laws in the various countries where Moral Rights exist, I hereby waive such Moral Rights and consent to any action of the Company that would violate such Moral Rights in the absence of such consent.

 

4.7

Enforcement of Proprietary Rights.  I will assist the Company in every proper way to obtain, and from time to time enforce, any Proprietary Rights relating to Company Inventions in any and all countries.  To that end, I will execute, verify and deliver such documents and perform such other acts (including appearances as a witness) as the Company may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary Rights and the assignment thereof.  In addition, I will execute, verify and deliver assignments of such Proprietary Rights to the Company or its designee.  My obligation to assist the Company with respect to Proprietary Rights relating to such Company Inventions in any and all countries shall continue beyond the termination of my employment, but the Company shall compensate me at a reasonable rate after my termination for the time actually spent by me at the Company's request on such assistance.

 

4.8

Service Inventions. For the removal of any doubt, I agree that the provisions contained in Sections 4.2, 4.3 and 4.4 above will apply also to any “Service Inventions” as defined in the Israeli Patent Law, 1967 (the: “Patent Law”).  However, in no event will such Service Invention become my property, and the provisions contained in Section 132(b) of the Patent Law shall not apply unless the Company provides in writing otherwise.  I acknowledge and agree that the compensation and consideration I receive from the Company includes all compensation and consideration to which I may be entitled under law for Service Inventions, including, but without limitation to, the provisions contained in Section 134 of the Patent Law, and that I will not be entitled to additional royalties, consideration or other payments with regard to any prior Inventions, Company Inventions, Service Inventions or any of the intellectual property rights set forth above, including any commercialization of such prior Inventions, Company Inventions, Service Inventions or other intellectual property rights.

 

4.9

Records.  I agree to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that may be required by the Company) of all of the Company's Proprietary Information developed by me and all of the Company's Inventions made by me during the period of my employment at the Company, which records shall be available to and remain the sole property of the Company at all times.

 

7.1

In any event of termination of my engagement with the Company, I agree that I will not, for a period of 24 months following such termination either alone or jointly with others or as an agent, consultant or employee of any person, firm or company, directly or indirectly, carry on or engage in any activity or business which shall be in competition with the business of the Company Entities ("Competing Entities").

 

7.2

Without derogating from the generality of the above, for the purpose of this Agreement, Competing Entities shall include any person or entity that is engaged in development, production, or commercial activities similar to those of any of the Company Entities, or any major clients of the Company.

/s/ Itay Meroz

7.8.2011

  

Date