EXHIBIT
10.1
EMPLOYMENT
AGREEMENT
This Employment Agreement (the “
Agreement ”) by and between Medis Technologies Ltd., a
Delaware corporation (the “Company”) with executive
offices at 805 Third Avenue, New York, New York 10022, and Jose
Mejia (“ Executive ”) is hereby entered into and
effective as of September 19, 2008.
RECITALS
WHEREAS, the Company wishes to employ Executive
as its President and Chief Executive Officer and Executive wishes
to be employed by the Company in such capacities, pursuant to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual
promises, terms, covenants and conditions set forth herein and the
performance of each, it is hereby agreed as follows:
AGREEMENTS
1.
Employment and Duties .
(a) The Company hereby
employs Executive in the positions of President and Chief Executive
Officer of the Company (and such other positions consistent with
his status as the President and Chief Executive Officer of the
Company as shall be reasonably assigned to Executive by the
Company’s Board of Directors (the “ Board
”)). Executive shall have all of the normal and customary
responsibilities, duties and authorities customarily accorded to,
and expected of, such positions, including those as may be
established by the Board; provided that the nature of such
responsibilities, duties and authorities shall not be materially
inconsistent with Executive’s positions and duties hereunder
or with those customarily accorded to, and expected of, a chief
executive officer of a company similar to the Company. The
Executive shall be included as a director nominee for the
Company’s 2009 Annual Meeting of Stockholders and the
Company’s annual meetings of stockholders thereafter through
the end of the Term (as defined in Section 4 hereof), and the
Executive agrees to so serve, if elected by the Stockholders of the
Company, through the end of the Term but not thereafter.
(b) Executive hereby
accepts this employment upon the terms and conditions contained
herein and agrees to devote his full business time, attention and
efforts to promote and further the business of the
Company. Executive shall not, during the Term of his
employment hereunder, be engaged in any other business activity
pursued for gain, profit or other pecuniary advantage without the
prior consent of the Board. Notwithstanding the
foregoing limitations, provided that such activities neither
interfere with the discharge of the duties and responsibilities of
Executive hereunder nor violate the terms of Section 3 hereof,
Executive shall be able to: (i) devote occasional business time to
charitable, industry trade group and community activities and
making personal passive investments in publicly traded securities
in general and in competitors of the Company and its subsidiaries
and affiliates; provided that Executive shall not in any event own
more than 2% of the issued and outstanding securities of any such
publicly traded company; and (ii) continue to serve as a member of
the Board of Directors of Pella Windows and Doors and Liberty
Property Trust, and serve on any committee thereof.
(c) The Company shall
provide to Executive offices in the City of New York, County of New
York for the performance of Executive’s services. The Company
may, from time to time, require Executive to travel in carrying out
Executive’s duties pursuant to this Agreement, including but
not limited to the Company’s other offices and
facilities.
(d) Executive
faithfully shall adhere to, execute and fulfill all policies
lawfully established by the Board acting in good faith.
2.
Compensation . For all services rendered by
Executive in any capacity required hereunder, the Company shall
compensate Executive as follows:
(a)
Base Salary
. During the Initial Term
(as defined in Section 4 hereof), Executive shall be paid a base
salary at a rate of $350,000 per year (or pro-rated amount for any
partial year during the Initial Term) (the “ Base
Salary ”), payable on a regular basis in accordance with
the Company’s standard payroll procedures, but not less
frequently than monthly. For each successive Renewal Term (as
defined in Section 4 hereof), the Base Salary shall be reviewed by
the Board or the compensation committee thereof (the “
Compensation Committee ”) after consultation with
Executive and may be increased, as determined in good faith relying
in part on such consultation, by the Board or the Compensation
Committee.
(b)
Equity Incentive
Compensation.
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Upon the
execution of this Agreement (the “ Date of Grant
”), the Company will issue to the Executive options to
purchase 250,000 shares of the Company’s common stock (the
“ Incentive Options ”) under the Company’s
2007 Equity Incentive Plan (the “Incentive Plan”). The
Incentive Options will (1) bear an exercise price per share equal
to 100% of the closing price of the underlying shares on the Date
of Grant, (2) be exercisable for a period of 7 years from the Date
of Grant, (3) provide for vesting of 100,000 shares on the one year
anniversary of the Date of Grant, 100,000 shares on the two year
anniversary of the Date of Grant and 50,000 shares on the three
year anniversary of the Date of Grant, (4) immediately vest in
full, to the extent unvested, and be fully exercisable, upon any
termination of Executive by the Company without cause or by
Executive for Good Reason (as defined in Section 4(d) hereof), (5)
be issued as incentive stock options (as such term is defined under
Section 422 of the Internal Revenue Code of 1986, as amended (the
“ Code ”)) to the extent permissible under
applicable law and the Incentive Plan (for example, generally, the
favorable tax treatment of incentive options are limited to
$100,000 in any one year, computed by multiplying the exercise
price of an option by the number of shares vesting in that year),
(6) be subject to termination and other provisions as set forth in
the Stock Option Agreement setting forth the terms of the Incentive
Options, attached hereto as Exhibit A, and (7) otherwise have such
other terms and conditions that are no less favorable to Executive
than the terms and conditions applicable to stock options granted
at or about the same time to other senior executives or directors
of the Company.
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Upon the
execution of this Agreement, the Company will issue to the
Executive warrants to purchase 125,000 shares of the
Company’s common stock (the “ Warrants ”).
The Warrants will (1) bear an exercise price per share equal to
100% of the closing price of the underlying shares on the Date of
Grant, (2) be exercisable for a period of 7 years from the Date of
Grant, (3) provide for vesting of 50,000 shares on the one year
anniversary of the Date of Grant, 25,000 shares on the two year
anniversary of the Date of Grant and 50,000 shares on the three
year anniversary of the Date of Grant, (4) immediately vest in
full, to the extent unvested, and be fully exercisable, upon any
termination of Executive by the Company without cause or by
Executive for Good Reason and (5) be subject to termination and
other provisions as set forth in the Warrant Agreement setting
forth the terms of the Warrants, attached hereto as Exhibit
B.
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The Company may
at any time and from time to time in its sole discretion consider
Executive for future annual or other grants of stock options,
restricted shares or other forms of equity incentive
compensation.
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(c)
Vacation.
Executive shall be entitled to four
(4) weeks (i.e., twenty (20) days) paid vacation per year,
pro-rated for partial years (the “ Annual Vacation
Days ”); provided, however, that Executive shall not be
compensated for any unused Annual Vacation Days or Carryforward
Vacation Days (as defined below) upon termination of this Agreement
or Executive’s employment by the Company. Executive shall be
entitled to carry forward his unused Annual Vacation Days from each
year, but only up to the lesser of (i) thirty percent (30%) of the
Annual Vacation Days or (ii) the number of unused Annual Vacation
Days from that year (by way of illustration, if no
vacation is taken in a particular year, then 6 days will be carried
forward to the next year (30% of 20 days), but if 15 days of
vacation are taken in a particular year, then 5 days will be
carried forward to the next year) (the “Carryforward Vacation
Days”).
(d)
Incentive Bonus Plan
. Commencing on and for
the fiscal year ending December 31, 2009 and annually thereafter
until termination of this Agreement, Executive shall be eligible to
receive a fiscal year end performance bonus (the “
Bonus ”), which shall constitute a wage, based upon
the Company’s level of achievement of pre-established
performance goals that shall be determined by the Board and the
Compensation Committee (acting in good faith), but only after
consultation with the Executive, based on the Board approved budget
for such year (excluding extraordinary gains). Such pre-established
performance goals shall be reduced to writing and delivered to the
Executive upon adoption prior to the commencement of the fiscal
year to which such pre-established performance goals relate. The
Bonus, if any, will be paid to Executive in accordance with
policies established by the Board or the Compensation Committee,
from time to time, with respect to the method and timing for
payment of bonuses to executives of the Company generally, and
shall be paid pro rata for partial fiscal years.
(e)
Benefits and Other
Compensation . Executive shall be entitled to
receive additional benefits and compensation from the Company in
such form and to such extent as specified below:
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The Company
shall include Executive as a covered insured under its Directors
and Officers insurance policy and any other liability or similar
insurance policies, if provided to other senior executives of the
Company.
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The Company
shall make payments aggregating $35,000 to Executive for relocation
expenses, which payments shall be payable by the Company in three
installments, as follows: (1) on December 31, 2008; $11,667.00; (2)
on March 31, 2009, $11,667.00; and (3) on June 30, 2009,
$11,666.00.
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Reimbursement
for all business travel and other out-of-pocket expenses actually,
reasonably and properly incurred by Executive in the performance of
his services pursuant to this Agreement. All
reimbursable expenses shall be appropriately documented in
reasonable detail by Executive upon submission of any request for
reimbursement, and in a format and manner consistent with the
Company’s expense reporting policy, and shall be reimbursed
no less than on a monthly basis.
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An automobile
allowance of $600.00 per month during the Term.
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(f)
Payment. Except as otherwise provided herein,
payment of all compensation and benefits to Executive hereunder
shall be made in accordance with the relevant Company policies in
effect from time to time, including normal payroll practices, and
shall be subject to all applicable employment and withholding taxes
and source deductions.
(g)
Cessation of
Employment . In the event Executive shall cease
to be employed by the Company for any reason, Executive’s
compensation and benefits shall cease on the date of such event,
except as otherwise provided herein.
3.
Non-Competition Agreement .
(a) Executive shall
not, without the prior consent of the Board, during any
Term and for the Applicable Period, for himself or on
behalf of, or in conjunction with, any other person, company,
partnership, corporation, entity or business of whatever nature,
either directly or indirectly:
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engage, as an
officer, director, shareholder, member, manager, owner, partner,
joint venturer, trustee, or in a managerial capacity, whether as an
executive, independent contractor, agent, consultant or advisor, or
as a sales representative, in any business selling any products or
services that compete with the products or services offered by the
Company at the time of termination of Executive’s employment
hereunder, anywhere in the United States and in any other country
in which the Company does business;
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solicit any
person who is at that time, or at any time within the preceding
ninety (90) days of the time of the proposed call was, an employee
of the Company, for the purpose, or with the intent, of enticing
such employee away from, or out of, the employ of the Company or
for the purpose of hiring such employee for Executive or any other
Person; provided, however, that this Section 3(a)(ii) shall not
apply to any person who independently contacts Executive during the
Applicable Period in response to a general solicitation by a person
or entity with which Executive is affiliated published in a
newspaper or other publication of general circulation that is not
specifically targeted at the Company’s employees;
or
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solicit any
person or entity that is at that time, or that was, at any time
within the twelve (12) months prior to that time, a customer of the
Company, for the purpose of soliciting or selling products or
services in competition with the Company.
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For the
purposes of this Agreement the term “ Applicable
Period ” shall mean twelve (12) months from the date
Executive ceases to be an employee of the Company, regardless of
the reason for separation.
(b) Because of the
difficulty of measuring economic losses to the Company as a result
of a breach of the foregoing covenant, and because of the immediate
and irreparable damage that could be caused to the Company for
which it would have no other adequate remedy, Executive agrees that
the foregoing covenant may be enforced by the Company in the event
of breach by him, by injunctions and restraining orders, without
the necessity of posting a bond or other security.
(c) It is agreed by
the parties that the foregoing covenants in this Section 3 impose a
reasonable restraint on Executive in light of the activities,
business and plans of the Company on the date of the execution of
this Agreement, and Executive’s compensation hereunder, in
part, constitutes consideration for this covenant; but it is also
the intent of the Company and Executive that such covenants be
construed and enforced in accordance with any change in the
activities, business or plans of the Company throughout the term of
this Agreement.
(d) The covenants in
this Section 3 are severable and separate, and the unenforceability
of any specific covenant or part thereof shall not affect the
remainder of such covenant or provisions of any other
covenant.
(e) All of the
covenants in this Section 3 shall be construed as an agreement
independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Executive against the
Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement of such covenants;
provided that the Company is not in breach of any obligation with
respect to the payment of Severance (as defined in Section 4(e)
hereof) and the Company’s breach of such obligation is a
result of circumstances other than Executive’s breach of
Section 3 or Section 6 hereof.
(f) Notwithstanding
any of the foregoing, if any applicable law shall reduce the time
period or scope during which Executive shall be prohibited from
engaging in any competitive activity described in Section 3(a)
hereof, the period of time or scope for which Executive shall be
prohibited pursuant to Section 3(a) hereof shall be the maximum
time or scope permitted by law.
4.
Term; Termination; Rights on Termination . The
term of this Agreement shall begin on the date hereof and shall
continue until December 31, 2011 (the “ Initial Term
”) and, unless terminated as herein provided, shall be
automatically renewed at the end of the Initial Term for a period
of one (1) year and thereafter for successive one (1) year terms
(each such one (1) year term, a “ Renewal Term
”), on the same terms and conditions contained herein with
such changes, additions, deletions or modifications as may be
agreed to in writing by Executive and the Company (the
Initial Term and each Renewal Term, each a “ Term
”), until either party notifies the other party in writing at
least one hundred twenty (120) days prior to the expiration of the
then current Term that he or it does not want the Term to so renew.
It is acknowledged and understood that this Agreement shall remain
in full force and effect during any notice period until the actual
termination date hereof, subject to the terms hereof. This
Agreement and Executive’s employment may be terminated in any
one of the following ways:
(a)
Death . Executive’s employment
hereunder shall immediately terminate upon his death, and the
Company shall pay to Executive’s estate (i) all Base Salary
earned as of the date of his death but unpaid, (ii) Bonus amounts,
if any, earned as of the date of his death but unpaid and (iii) all
other unpaid benefits from the period prior to the date of his
death.
(b)
Disability
. If, as a result of the
Executive’s incapacity due to physical or mental illness, the
Executive shall not have performed his duties hereunder on a
full-time basis for three (3) consecutive months or for one hundred
twenty (120) days in any twelve (12) month period, the
Executive’s employment under this Agreement may be terminated
by the Company upon ten (10) days written notice if Executive is
unable to resume his full time duties at the conclusion of such
notice period. The Executive’s compensation during
any period of disability prior to the effective date of such
termination shall be the amounts normally payable to him in
accordance with his then current annual Base Salary, reduced by the
amounts of disability pay, if any, paid to the Executive under any
Company disability program. The Executive shall not be entitled to
any further salary or other compensation from the Company for any
period subsequent to the effective date of such termination, except
for (i) all Base Salary earned as of the date of such termination
but unpaid, (ii) Bonus amounts, if any, earned as of the date of
his termination but unpaid, (iii) all other unpaid benefits from
the period prior to the date of such termination, and (iv) any
other pay and benefits, if any, in accordance with then existing
severance policies of the Company and Company benefit
plans.
(c)
Termination by Company
.
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For
Cause . The
Company may terminate the Agreement immediately upon written notice
to Executive for cause, which shall mean: (1) Executive’s
willful misconduct or gross negligence in the performance or
nonperformance of any of Executive’s material duties and
responsibilities hereunder; (2) Executive’s continued and
willful refusal promptly to follow any lawful direction of the
Board, provided that if the Executive disagrees in good faith with
such lawful direction in writing within a reasonable period of time
after such lawful direction is given, then the Board and the
Executive shall in good faith discuss such disagreement and attempt
to resolve same within a reasonable period of time based on the
facts and circumstances of the disagreement, provided further that
if such disagreement is not so resolved, the Executive shall
promptly follow and comply with such lawful direction of the Board;
(3) Executive’s willful misconduct or gross negligence in the
performance or intentional nonperformance of his duties and
responsibilities (regardless of materiality) under this Agreement,
which in the aggregate, constitute a material nonperformance
hereunder; (4) Executive’s willful misrepresentation, fraud,
illegal drug abuse, or misconduct with respect to the business or
affairs of the Company, which materially and adversely affects, or
can reasonably be expected so to affect, the operations, prospects
or reputation of the Company; (5) Executive’s conviction of
or plea of nolo contendere to a felony or
other crime involving moral turpitude; (6) Executive’s
material breach of any fiduciary duty owed to the Company or breach
of the provisions of Section 3 or Section 6 hereof, which breach is
not cured within ten (10) days of written notice to Executive or is
incapable of cure; (7) any other willful and material breach by
Executive of this Agreement that is not cured within ten (10) days
of written notice to Executive or is incapable of cure; or (8) any
other errors, acts or omissions or any other reason which
constitutes termination for cause under applicable law. In the
event of a termination for cause, as contemplated in this
subsection 4(c)(i), the Company shall have no further obligation to
make any payments to Executive or to provide any other benefits to
him hereunder except for any Base Salary, reimbursement or other
benefits that have accrued or vested but not been paid as of the
effective date of such termination.
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Without
Cause . The Company may
at any time during any Term terminate this Agreement, if such
termination is approved by the Board. In the event of a
termination by the Company without cause, or upon the failure by
the Company to agree to renew the Term pursuant to Section 4 hereof
and the Executive in good faith wishes to renew such Term, the
Company’s obligations hereunder shall be as follows: (1)
paying Severance to Executive in accordance with subsection 4(e)
hereof; (2) paying a pro rata Bonus for the year of such
termination; and (3) providing to Executive any other benefits
hereunder that have accrued or vested but have not been paid as of
the effective date of such termination. The payments
hereunder shall be made as and when such payments would have been
made had Executive’s employment not have terminated
hereunder. The Company’s obligation to pay the amount
referred to in subsection 4(c)(ii)(1) shall be subject to
Executive’s duty to mitigate his damages following the date
on which this Agreement is terminated in accordance with this
subsection 4(c)(ii). Except as provided herein, all other
obligations of the Company under this Agreement shall cease as of
the date of termination. The payments and other benefits due to
Executive hereunder shall be inclusive of all statutory or other
legal severance entitlements of Executive.
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(d)
Termination by
Executive . Executive may at any time during
the Term terminate his employment hereunder (i) upon One Hundred
Twenty (120) days prior written notice to the Company for any
reason other than for Good Reason or (ii) for Good
Reason. For purposes of this Agreement, “Good
Reason” means the occurrence of any one or more of the
following events unless Executive specifically agrees in writing by
the Company and the Executive that such event shall not be Good
Reason: (A) any material breach of this Agreement by the Company;
provided, however, that no such material breach described in this
subsection shall constitute Good Reason unless Executive gives the
Company ten (10) days’ prior written notice of such act or
omission and the Company fails to cure such act or omission within
the ten (10) day period after delivery of such notice (except that
Executive shall not be required to provide such notice in case of
intentional acts or omissions by the Company or more than once in
cases of repeated acts or omissions); or (B) the failure of the
Company to assign this Agreement to a successor to the Company or
failure of a successor to the Company to explicitly assume and
agree to be bound by this Agreement.
(e)
Severance . If Executive’s employment is
terminated by the Company pursuant to Section 4(c)(ii) or by
Executive for Good Reason, the Company shall, subject to
Executive’s execution of a release, whereby the Executive
releases the Company from all statutory and other claims or rights
that Executive may have against the Company and its current and
former officers, directors, and employees, including, but not
limited to, all statutory claims
or rights
relating to Executive’s employment and/or termination (but
excluding any claims or rights relating to the Company's
obligations to pay Executive Severance due and owing to him
hereunder), in a form reasonably acceptable to the Company (a
“Release”), continue to pay Executive his then current
Base Salary (the “Severance”) for a period of twelve
(12) months (the “Severance Period”). The
Severance is expressly understood and agreed not to be salary or
payroll compensation to an Executive, but rather, severance to a
former Executive. Notwithstanding anything herein to the contrary,
if Executive has breached a provision of Section 6 of this
Agreement, or has breached a provision of Section 3 or Section 5 of
this Agreement and Executive has failed to cure such breach within
ten (10) days of notice from the Company describing such breach in
reasonable detail, then the Severance payments shall terminate
immediately. In the event Executive executes a Release in
accordance with this Section 4(e), the Company shall execute a
release, whereby the Company releases the Executive from all
statutory and other claims or rights that the Company may have
against the Executive; provided that such release shall immediately
and with no further action on the part of either party be of no
force and effect, and shall be null and void, if following the
Executive’s termination of employment circumstances arise or
are discovered with respect to the Executive that would have
constituted cause for termination of employment
hereunder.
(f)
Deferral of Payments Necessary to
Avoid Taxation Under Code Section 409A . The intent of the parties is that
payments and benefits under this Agreement comply with Section 409A
of the Internal Revenue Code of 1986, as amended, and the
regulations and guidance promulgated thereunder (collectively
“ Section 409A ”) and, accordingly, to the
maximum extent permitted, this Agreement will be interpreted to be
in compliance therewith. Notwithstanding any provision to the
contrary in this Agreement, to the extent that the Executive is a
“specified employee” within the meaning of that term
under Section 409A(a)(2)(B) of the Code, then with regard to any
payment or the provision of any benefit that is required to be
delayed in compliance with Section 409A(a)(2)(B) of the Code, such
payment or benefit will not be made or provided prior to the
earlier of (i) the expiration of the six-month period measured from
the date of the Executive’s “separation from
service” (as such term is defined under Section 409A) or (ii)
the date of the Executive’s death (the “ Delay
Period ”). Upon the expiration of the Delay Period, all
payments and benefits delayed pursuant to this Section 4(f)
(whether they would have otherwise been payable in a single sum or
in installments in the absence of such delay) will be paid or
reimbursed to the Executive in a lump sum, and any remaining
payments and benefits due under this Agreement will be paid or
provided in accordance with the normal payment dates specified for
them herein. Notwithstanding the foregoing, to the extent that the
foregoing applies to the provision of any ongoing welfare benefits
to the Executive that would not be required to be delayed if the
premiums therefore were paid by the Executive, the Executive will
pay the full cost of premiums for such welfare benefits during the
Delay Period and the Company will pay the Executive an amount equal
to the amount of such premiums paid by the Executive during the
Delay Period promptly after its conclusion.
5.
Inventions . Executive shall disclose promptly to
the Company any and all significant conceptions and ideas for
inventions, improvements and valuable discoveries, whether
patentable or not, that have been conceived or made prior to the
date hereof or that are conceived or made by Executive following
the date hereof, solely or jointly with another, during any Term
and that are directly related to the business or activities of the
Company whether or not conceived during or after regular business
hours or using any property or facilities of the
Company. Executive hereby assigns and
agrees to assign all of his right, title and interest in and to any
such intellectual property to the Company or its nominee and
Executive hereby expressly waives any and all moral rights he may
have in or in relation to such intellectual
property. Executive covenants and agrees to sign all
such documents, instruments or agreements and to perform all such
acts or otherwise assist the Company as are reasonably necessary in
order to perfect and give effect to the foregoing assignment of
intellectual property rights and, to the extent applicable, waiver
of moral rights therein. Executive agrees that all such
materials that he develops or conceives and/or documents related
thereto during such period shall be deemed works made-for-hire for
the Company within the meaning of the copyright laws of the United
States or any similar or analogous law or statute of any other
jurisdiction, and accordingly, the Company shall be the sole and
exclusive owner for all purposes for the distribution, exhibition,
advertising and exploitation of such materials or any part of them
in all media and by all means now known or that may hereafter be
devised, throughout the universe in
perpetuity. Executive agrees that in furtherance of the
foregoing, he shall disclose, deliver and assign to the Company all
such conceptions, ideas, improvements and discoveries and shall
execute all such documents, including patent, trademark and
copyright applications, as the Company reasonably shall deem
necessary to further document the Company’s ownership rights
therein and to provide the Company the full and complete benefit
thereof. Should any arbitrator or court of
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