CHIEF EXECUTIVE OFFICER’S AGREEMENT
CHIEF
EXECUTIVE OFFICER’S AGREEMENT
This
Agreement, is made and entered into this the 3rd day of January 2006, by and
between XTL Biopharmaceuticals, Ltd. ("XTL"
or the
"Company"),
an
Israeli-domiciled corporation having an address at Kiryat Weizman Science Park,
3 Hasapir Street, Building 3, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇
▇▇▇▇▇▇▇, an individual residing at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
U.S.A.("Bentsur").
WITNESSETH:
WHEREAS,
the
Board of Directors of the Company desires to appoint Bentsur as the Chief
Executive Officer of XTL (the “CEO”)
and
Bentsur is willing to accept such appointment as Chief Executive Officer of
XTL,
all pursuant to the terms and conditions hereinafter set forth;
NOW
THEREFORE,
in
consideration of the foregoing and the mutual promises and covenants herein
contained, it is agreed as follows:
1.
CEO's
Duties.
As
the
CEO of the Company, Bentsur shall be responsible for the overall management
of
the Company’s activities in addition to those roles and duties prescribed by the
Israeli Companies Law - 1999 (the “Companies
Law”).
Bentsur shall report directly to the Chairman of the Board of Directors. The
description of responsibilities set forth herein shall serve as a general
statement of the duties, responsibilities and authority of Bentsur. Additional
duties, responsibilities and authority consistent with that of a CEO may be
assigned to Bentsur by the Board of Directors of the Company from time to time
in its reasonable discretion.
2.
Term.
Bentsur's
appointment as the CEO of the Company shall commence from the date of the
resolution of the Board of Directors appointing him as a CEO of the Company
(the
"Effective
Date")
and
shall continue until terminated as hereinafter provided (the "Term").
3.
Compensation.
(a)
As
compensation for the performance of his duties on behalf of XTL, Bentsur shall
be compensated as follows:
(i) Annual
Base Salary.
Bentsur
shall receive a salary at the annualized rate of two hundred and fifty thousand
U.S. dollars ($225,000), less applicable state and federal withholdings, (as
may
be adjusted from time to time in accordance with this Agreement, the
"CEO’s
Salary"),
payable in accordance with corporate payroll practices (monthly or bi-weekly)
in
arrears. Commencing as of January 1, 2007, Bentsur shall be entitled to
automatic annual increase in the CEO's Salary in an amount representing a
percentage increase equal to or greater than the CPI increase during the
previous calendar year. Any increase greater than the CPI increase, is subject
to Compensation Committee approval. In addition, upon the capital raising by
the
Company of an amount >$10 million (U.S.), Bentsur shall be entitled to a
one-time bonus of $25,000.
(ii)
Contingent
Salary Increase.
Bentsur
shall be entitled to a 50% increase of his Annual Base Salary upon the Company
achieving a total market capitalization on a fully diluted basis of more than
(U.S.) $350 million (the “First
Increase”).
Bentsur shall be entitled to an additional 50% increase of his Annual Base
Salary upon the Company achieving a total market capitalization on a fully
diluted basis of more than (U.S.) $550 million (the “Second
Increase”).
An
evaluation of whether the First or Second Increase market capitalization
thresholds have been met shall be conducted on March 31, June 30, September
30
and December 31 of each calendar year (the “Evaluation Dates”). The First
Increase or Second Increase will be deemed to have been met if during the
quarter preceeding each Evaluation Date, the market capitalization of the
Company on a fully-diluted basis exceeded the required market capitalization
threshold for the First Increase or Second Increase, as applicable, for a period
of at least 5 consecutive trading days, as determined by the closing price
of
the Company’s ADS on NASDAQ, provided, however, that the market capitalization
of the Company on a fully-diluted basis as of the Evaluation Date is not below
the market capitalization of the Company on a fully-diluted basis as of the
Effective Date.
Following
the achievement of the First Increase and/or the Second Increase, if the
Company’s total market capitalization on a fully diluted basis on subsequent
Evaluation Dates reduces, for any reason, below the market capitalization of
the
Company on a fully-diluted basis as of the Effective Date, then the First
Increase and/or the Second Increase, as applicable, shall be suspended, and
the
First Increase and Second Increase market capitalization thresholds, as
described above, shall be then subject to evaluation on subsequent Evaluation
Dates.
(iii) Bonuses.
Bentsur
shall be eligible to receive an annual bonus at the end of each calendar year
of
up to 100% of his annual base salary, less applicable state and federal
withholdings, (the "Target
Bonus")
based
upon his achievement of corporate goals and objectives ("Corporate
G&Os"),
agreed to with the Board of Directors at the beginning of each calendar year,
to
the satisfaction of the Board of Directors.
-2-
(iv) Stock
Options.
The
Company will ▇▇▇▇▇ ▇▇▇▇▇▇▇ options (the "Options")
to
purchase a total of 7,000,000 shares of the ordinary shares of New Israeli
Shekels 0.02 each (the "Ordinary
Shares")
of the
Company (the "Initial Grant") at an exercise price equal to the closing price
of
an ADS as reported by the Nasdaq Stock Market (or such other exchange as
such
shares are then listed or in the good-faith determination of the Board of
Directors, if not then listed or quoted) on the Effective Date, divided by
the
number of Ordinary Shares then represented by each ADS (the "Exercise
Price"),
which
options shall be exercisable for a period of ten (10) years from the date
of
issuance (expected to be the Effective Date). Bentsur's Options will be granted
under the same terms and conditions as share options granted under the Company's
Share Option Plan 2001 (the "Plan")
and to
the terms of any share option agreement entered into by Bentsur and the Company;
provided, however, that if any provisions of this Agreement are inconsistent
with the terms and conditions of the Plans and any such stock option agreement,
the terms of this Agreement shall control. In accordance with the Plans,
should
any change be made to the Ordinary Shares by reason of any stock split, stock
dividend, extraordinary cash dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Ordinary Shares
as
a class without the Company's receipt of consideration, appropriate adjustments
shall be made to the total number and/or class of securities subject to such
options, and the Exercise Price in order to reflect such change and thereby
preclude a dilution or enlargement under such options.
The
Initial Grant shall vest as follows:
(A)
1/3
of the options shall vest and be exercisable over a three (3) year period so
that 777,782 options shall vest upon the first anniversary of the issuance
of
the options and 194,444 options shall vest at the end of each quarter thereafter
so that upon the end of the three (3) year period, 2,333,334 options shall
be
vested;
(B)
1/3
of the options (2,333,333) shall vest and be exercisable upon the Company
achieving (i) a total market capitalization on a fully diluted basis of more
than (U.S.) $350 million, as determined utilizing the Market Capitalization
Formula, or (ii) the Company possessing at least $75 million in Working Capital
(which shall mean as of any date, (1) the current assets plus investment
securities or similar asset which have maturities in excess of 12 months minus
(2) current liabilities) (the occurrence of either of the items in (B)(i) and
(ii) being referred to as the "First Milestone Event").; and
(C)
1/3
of the options (2,333,333) shall vest and be exercisable upon the Company
achieving (i) a total market capitalization on a fully diluted basis of more
than (U.S.) $550 million, as determined utilizing the Market Capitalization
Formula, or (ii) the Company possessing at least $125 million in Working Capital
(the occurrence of either of the items in (C)(i) and (ii) being referred to
as
the "Second Milestone Event");
-3-
Provided
that at each of such First Milestone Event or Second Milestone Event Bentsur
is
still the CEO of the Company, the “Market
Capitalization Formula”
shall
be calculated as follows:
(A)
the
amount obtained as the product of
(1)
the
fully diluted Ordinary Shares (including shares attributable to all options,
warrants, other purchase rights and convertible securities, which are in the
money and including shares held by affiliates (collectively "market
capitalization shares")),
multiplied by
(2)
the
quotient of:
(x)
the
three (3) consecutive trading day average of the closing price of the American
Depository Shares ("ADS"), as reported by the Nasdaq Stock Market (or such
other
exchange as such shares are then listed or in the good-faith determination
of
the Board of Directors, if not then listed or quoted), divided by
(y)
the
number of Ordinary Shares then represented by each ADS; plus
(B)
long-term debt (as of any date); minus
(C)
Working Capital (as defined below); and minus
(D)
the
aggregate exercise price of all options and warrants included in the market
capitalization shares.
The
term
“Working
Capital”
shall
mean as of any date, (1) the current assets plus investment securities or cash
equivalents thereof or similar assets that have maturities in excess of 12
months, minus (2) current liabilities.
(iii)
In
the event of a Change of Control or a Reorganization Event, as those terms
are
defined in the Plan, or in the event that Bentsur is terminated by the Company
without Cause (as defined below) or terminates his engagement for Good Reason
(as defined below) or dies or suffers a Disability (as defined below), the
exercisability of any of the options described in this Section 3 that are
unexercisable at the time of such event or termination shall accelerate (and,
in
the case of a Change of Control or a Reorganization Event, such acceleration
shall occur at a time and in a manner which allows Bentsur to participate in
such event in respect of the shares subject to such options in the same manner
as other shareholders). Additionally, the Board of Directors shall have the
discretion to accelerate all or a portion of these options at any time. In
addition, at the discretion of the Board of Directors, Bentsur shall be entitled
to special grants of subsequent stock options. Bentsur shall be entitled to
pay
the exercise price of any or all of the options described in this Section 3
by
each of the methods set forth in the Plans and shall be allowed to satisfy
any
withholding obligations incurred on the exercise of such options by electing
to
have option shares withheld upon such exercise. The Company shall use best
efforts to cause all of the shares underlying such options to be fully
registered and freely tradable, including for resale without any limitations
or
restrictions, provided, however, that while Bentsur is an employee or director
of the Company, Bentsur agrees to abide by the trading restrictions that may
be
imposed upon him from time to time pursuant to any laws, statutes, rules or
regulations to which the shares underlying the options may be subject from
time
to time.
-4-
(b)
Expenses.
XTL
shall reimburse Bentsur for all normal, usual and necessary expenses incurred
by
Bentsur in furtherance of the business and affairs of XTL, including travel
and
entertainment, provided Bentsur submits to XTL appropriate vouchers, receipts
or
other proof of Bentsur's expenditures and otherwise in accordance with such
expense reimbursement policy as may from time to time be adopted by the Board
of
Directors of XTL.
(c)
Annual
Leave and Holidays.
Bentsur
shall be entitled during the term of this Agreement to twenty (20) business
days
of paid annual leave per year as well as Company holidays as outlined in the
Company's employee handbook. Bentsur shall not be allowed to accrue more than
thirty (30) business days of annual leave except in unusual circumstances and
with the permission of the Company. Should Bentsur’s annual leave balance exceed
thirty (30) days at the end of any calendar year, the excess number of days
shall be paid out in accordance with the Company's regular payroll procedures.
(d)
Employee
Benefits.
During
the Term of his employment, Bentsur shall be entitled to participate in all
employee and fringe benefit plans and programs generally offered to other
members of the Company's senior management, including, without limitation,
any
pension, profit sharing, incentive, retirement, insurance, health and disability
benefits and plans, to the extent that Bentusr is eligible under and subject
to
the provisions of such plans. The Company reserves its right to modify or
terminate any of its employee and fringe benefit plans and programs at any
time.
4.
Representations
and Warranties By Bentsur and XTL.
(a)
Bentsur hereby represents and warrants to XTL as follows:
(i)
Neither the execution and delivery of this Agreement nor the performance by
Bentsur of his duties and other obligations hereunder violate any statute,
law,
determination or award, or conflict with or constitute a default under (whether
immediately, upon the giving of notice or lapse of time or both) any prior
employment agreement, contract, or other instrument to which Bentsur is a party
or by which he is bound.
(ii)
Bentsur has the full right, power and legal capacity to enter and deliver this
Agreement and to perform his duties and other obligations hereunder. This
Agreement constitutes the legal, valid and binding obligation of Bentsur
enforceable against him in accordance with its terms. No approvals or consents
of any persons or entities are required for Bentsur to execute and deliver
this
Agreement or perform his duties and other obligations hereunder.
-5-
(b)
XTL
hereby represents and warrants to Bentsur as follows:
(i)
XTL
is duly organized and validly existing under the laws of the State of Israel,
with all requisite corporate power and authority to own its properties and
conduct its business in the manner presently conducted.
(ii)
XTL
has the full power and authority to enter into this Agreement and to incur
and
perform its obligations hereunder, subject to shareholder approval.
(iii)
The
execution, delivery and performance by XTL of this Agreement does not conflict
with or result in a material breach or violation of or constitute a material
default under (whether immediately, or upon the giving of notice or lapse of
time or both) the Articles of Association of XTL, or any agreement or instrument
to which XTL is a party or by which XTL or any of its properties may be bound
or
affected.
(iv)
This
Agreement and the terms and conditions contained herein have been approved
by
the Audit Committee and the Board of Directors of the Company in accordance
with
the requirements of Section 270(1) of the Companies Act.
5.
Confidential
Information.
Bentsur
agrees to sign and comply with the Company's Proprietary Information and
Inventions Agreement.
6.
Termination.
(a)
Either party may terminate Bentsur's engagement and appointment with the Company
without Cause (in the case of the Company) or for Good Reason (in the case
of
Bentsur) (as such terms are defined herein) at any time upon thirty (30) days'
notice (the “Notice
Period”).
The
Board of Directors shall have the right, in its sole discretion, to require
Bentsur to continue as the CEO working for the Company during the Notice Period.
For purposes of this Agreement, Bentsur shall have "Good Reason" upon the
occurrence of: (i) Any material change by the Company of Bentsur' function,
duties or responsibilities such that Bentsur is no longer the highest member
of
the Company’s management team, or any other materially adverse change in such
functions, duties or responsibilities, without Bentsur' written consent; (ii)
a
reduction of Bentsur's CEO Salary (as set forth in paragraph 3(a)(i)) by more
than ten percent (10%), except where the Company has made similar reductions
in
the base salary of senior management throughout the Company; or (iii) the
Company's breach of any material term of this Agreement; or (iv) a Change in
Control or Reorganization Event. "Good Reason" shall not exist unless the
Company has not cured the basis for Bentsur' resignation within fifteen (15)
days following Bentsur' written notice to the Company specifying the basis
of
his resignation. For purposes of this Agreement, "Cause" shall mean: (i)
material breach by Bentsur of the confidentiality and ownership of inventions
agreement; (ii) the willful and continual failure or refusal by Bentsur to
perform his duties under this Agreement (other than by reason of death or
Disability (as defined below), Bentsur provided such failure or refusal
continues for a period of thirty (30) days after receipt of written notice
thereof from the Board of Directors in reasonable detail of such failure or
refusal; (iii) any action by Bentsur constituting willful misconduct in respect
of Bentsur' obligation to the Company that results in material, economic damage
to the Company; or (iv) conviction of a felony. Notwithstanding the foregoing,
the following shall not constitute Cause for the termination of Bentsur or
the
modification or diminution of any of his authority hereunder: any personal
or
policy disagreement between the Company and Bentsur, or Bentsur and any member
of the Board of Directors of the Company; or any action taken by Bentsur in
connection with his duties hereunder if Bentsur acted in good faith and in
a
manner he reasonably believed to be in, and not opposed to, the best interest
of
the Company.
-6-
(b)
If
the Company terminates Bentsur without Cause or Bentsur terminates his
engagement for Good Reason, the Board of Directors shall take the necessary
steps so that (i) any outstanding, but unvested, options granted to Bentsur
in
accordance with Section 3, above, shall vest upon the effective date of his
termination; and (ii) the period during which Bentsur shall be permitted to
exercise such options shall be extended to the earlier of two (2) years from
the
effective date of his termination, and ten (10) years from the Effective Date.
In addition, in the event of termination pursuant to this subsection and upon
Bentsur’s execution of a waiver and release of claims form, Bentsur shall be
entitled to (I) a lump sum severance payment equal to one year's annual gross
base salary and (II) a lump-sum payment equal to the product obtained by
multiplying (A) the bonus to which Bentsur would have been entitled for the
calendar year of termination (based on the achievement of Corporate G&Os) if
Bentsur had remained employed hereunder throughout such calendar year times
(B)
a fraction whose numerator equals the number of days Bentsur was employed
hereunder during such calendar year and whose denominator is 365, such payment
to be due to Bentsur at the time Bentsur’s bonus for such calendar year would
have been due if Bentsur had remained employed hereunder. Such payment shall
be
less applicable state and federal withholdings. Bentsur shall also receive
his
CEO Salary during the Notice Period.
(c)
In
the event of a Change of Control Event or a Reorganization Event, as those
terms
are defined in the Plans, Bentsur shall be entitled to (i) the immediate
acceleration of any outstanding, but unvested options granted to him in
accordance with Section 3, above, and (ii) the extension of the period during
which Bentsur shall be permitted to exercise such options to the earlier of
two
(2) years from the effective date of his termination (if applicable) and ten
(10) years from the Effective Date. In addition, in the event of a termination
of Bentsur’s employment in anticipation of a Change of Control or a
Reorganization Event or within 12 months thereafter, provided that Bentsur
executes a waiver and release of claims form, Bentsur shall be entitled to
receive a lump sum severance payment equal to the product of (x) one years'
annual gross Base Salary plus Bentsur’s target bonus for the year in which the
termination occurred and (y) less applicable state and federal withholdings.
This payment shall be in addition to his salary during the Notice Period if
Bentsur is terminated in connection with such Change of Control Event or
Reorganization Event.
-7-
(d)
Should Bentsur's engagement terminate by his death or disability, he or his
estate, if applicable, shall be entitled to continue to receive his CEO Salary
for six (6) months (less applicable state and federal withholdings) following
his last day of actual engagement by the Company. (For purposes of this
Agreement, "Disability" shall be deemed to have occurred if Bentsur is unable,
due to any physical or mental disease or condition, to perform his normal duties
of engagement for 120 consecutive days or 180 days in any twelve-month period.)
In addition, the Board of Directors shall take the necessary steps so that
(i)
any outstanding, but unvested, options granted to him in accordance with Section
3, above, shall vest upon the effective date of his termination; and (ii) the
period during which he shall be permitted to exercise such options shall be
extended to the earlier of two (2) years from the effective date of his
termination and ten (10) years from the Effective Date. Should Bentsur'
engagement terminate as a result of his death, the benefits granted herein,
shall be granted instead to his lawful heir or heirs.
(e)
Notwithstanding the foregoing, the Company and its shareholders may terminate
Bentsur immediately and without prior notice for Cause.
(f)
In
the event that Bentsur's engagement has been terminated in accordance with
Section 6(e), above, Bentsur shall not be entitled to receive any of the
severance benefits set forth in this Section 6, but he shall be entitled to
any
unpaid CEO Salaries, which have accrued through his date of termination.
7.
Indemnification.
Subject
to the Companies Act, the Company shall defend and indemnify Bentsur in his
capacity as CEO of the Company against any and all claims, judgments, damages,
liabilities, costs and expenses (including reasonable attorney's fees) arising
out of, based upon or related to Bentsur' performance of services hereunder,
except to the extent that such claims arise out of Bentsur' (a) willful
misconduct, (b) bad faith, (c) gross negligence, or (d) reckless disregard
of
the duties involved in the conduct of Bentsur' position.
In
addition, subject to the Companies Act, the Company shall take whatever steps
are necessary to establish a policy of indemnifying its officers and directors,
including, but not limited to Bentsur, for all actions taken in good faith
in
pursuit of their duties and obligations to the Company. Such steps shall
include, but shall not necessarily be limited to, the obtaining of an
appropriate level of Directors and Officers Liability coverage and including
such provisions in the Company’s' Articles of Association, as applicable and
customary. The rights to indemnification shall survive any termination of this
Agreement.
-8-
8.
Notices.
Any
notice or other communication under this Agreement shall be in writing and
shall
be deemed to have been given when delivered personally or via facsimile against
receipt thereof or confirmed in the case of facsimile; two (2) business days
after being sent by Federal Express or similar internationally recognized
courier service; or seven (7) business days after being mailed registered or
certified mail, postage prepaid, return receipt requested, to either party
at
the address set forth above, or to such other address as such party shall give
by notice hereunder to the other party.
9.
Severability
of Provisions.
If
any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole
or
in part, the remaining conditions and provisions or portions thereof shall
nevertheless remain in full force and effect and enforceable to the extent
they
are valid, legal and enforceable, and no provision shall be deemed dependent
upon any other covenant or provision unless so expressed herein.
10.
Entire
Agreement; Modification.
Other
than in respect of the share options, this Agreement contains the entire
agreement of the parties relating to the subject matter hereof, and the parties
hereto have made no agreements, representations or warranties relating to the
subject matter of this Agreement that are not set forth herein. No modification
of this Agreement shall be valid unless made in writing and signed by the
parties hereto.
11.
Binding
Effect.
The
rights, benefits, duties and obligations under this Agreement shall inure to,
and be binding upon, XTL, its successors and assigns, and upon Bentsur and
his
legal representatives. This Agreement constitutes a personal service agreement,
and the performance of Bentsur's obligations hereunder may not be transferred
or
assigned by Bentsur.
12.
Non-Waiver.
The
failure of either party to insist upon the strict performance of any of the
terms, conditions and provisions of this Agreement shall not be construed as
a
waiver or relinquishment of future compliance therewith, and said terms,
conditions and provisions shall remain in full force and effect. No waiver
of
any term or condition of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.
-9-
13.
Governing
Law.
This
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York without regard to principles of
conflicts of law.
14.
Remedies
For Breach.
Bentsur
understands and agrees that any breach of Sections 5 and/or 7 of this Agreement
by him could cause irreparable damage to XTL, and that monetary damages alone
would not be adequate and, in the event of such breach, XTL shall have, in
addition to any and all remedies of law, the right to an injunction, specific
performance or other equitable relief to prevent or redress the violation of
XTL’s rights under such Sections.
15.
Headings.
The
headings of paragraphs are inserted for convenience and shall not affect any
interpretation of this Agreement.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
|
CEO:
By:
/s/ ▇▇▇ ▇▇▇▇▇▇▇
Name:
▇▇▇ ▇▇▇▇▇▇▇
|
XTL
BIOPHARMACEUTICALS, LTD.
By:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
Chairman
|
-10-