EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (the Agreement), made and entered into this 30th day of March 2017 by and between Orgenesis Inc., a Nevada corporation (the Company), and Vered Caplan (Executive).
WHEREAS, the Executive and the Companys Israel based subsidiary, Orgenesis Ltd., are currently parties to an Personal Employment Agreement dated August 22, 2014 pursuant to which Executive serves as Chief Executive officer of the Company(the Prior Agreement); and
WHEREAS, Company and the Executive wish to enter into this Agreement pursuant to which the Executive will continue to serve as Chief Executive Officer of the Company at which time this Agreement will supersede and replace in its entirety the Prior Agreement, and the Prior Agreement shall be of no further force or effect;
NOW, THEREFORE, in consideration of the mutual promises, terms, provisions, and conditions contained herein, the parties agree as follows:
1. Roles and Duties.
(a) Chief Executive Officer. Subject to the terms and conditions of this Agreement, Company shall continue to employ Executive as its Chief Executive Officer reporting to Companys Board of Directors (Board). Executive accepts such employment upon the terms and conditions set forth herein, and agrees perform to the best of Executives ability the duties normally associated with such position and as determined by Company in its sole discretion. During Executives employment, Executive shall devote all of Executives business time and energies to the business and affairs of Company, provided that nothing contained in this Section 1 shall prevent or limit Executives right to manage Executives personal investments on Executives own personal time, including, without limitation the right to make passive investments in the securities of: (a) any entity which Executive which does not compete with Company, or (b) any publicly held entity so long Executives aggregate direct and indirect interest does not exceed two percent (10%) of the issued and outstanding securities of any class of securities of such publicly held entity. During Executives employment, Executive shall not engage in any additional other non-Company related business activities of any nature whatsoever (including board memberships) without the Companys prior written consent. In addition, and so long as such activities do not interfere materially with Executives performance of Executives duties hereunder, Executive also may participate in civic, charitable and professional activities, but shall not serve in any official capacity, including as a member of a board, without the prior written consent of the Companys Board (excluding existing board memberships).
(b) Board Membership. Executive currently serve as a member of the Board and shall continue to so during Executives employment hereunder, subject to any required approval. Executives service as a Board member shall be without further compensation upon the listing of the Companys common stock on national exchange. Executive shall receive standard compensation (as other non-executive board members the Company) for serving on the Board effective immediately upon the termination of Executives employment with Company for any reason.
2. Employment Term and Termination.
(a) Term. This Agreement shall be in effect commencing as of April 1, 2017 (the Commencement Date) and shall continue in full force and effect until terminated pursuant to the terms hereof..
(b) Termination. Executives employment may be terminated by either party, at any time,pursuant to the delivery of six months prior written notice (the "Notice Period").
(i) During the Notice Period and unless otherwise determined by the Company Executive shall continue to perform his duties until the conclusion of the Notice Period, and cooperate with the Company in assisting the integration of the person who will assume Executive's responsibilities. Notwithstanding the aforementioned, the Company shall have the right not to take advantage of the full Notice Period and may terminate Executive's employment at any time during the Notice Period. In the event of such termination, the Company shall pay Executive his Salary due to him hereunder as he would have been entitled to receive for the remaining period of the Notice Period.
(ii) It is hereby expressly stated that the Company reserves the right to terminate Executives employment at any time during the Notice Period, regardless of whether notice of termination of employment was delivered by the Company or whether such notice was delivered by Executive. In the latter case such termination shall not constitute a dismissal of Executive by the Company.
( c) Company may terminate Executives employment immediately for the following:
(i) Death. Immediately upon Executives death;
(ii) For Cause (as defined below in Section 2(d)), upon written notice by Company to Executive that Executives employment is being terminated for Cause which termination shall be effective on the date of such notice or such later date as specified in writing by Company; or
(iii) For reasons other than under Sections 2(d), upon written notice by Company to Executive that Executives employment is being terminated, which termination shall be effective thirty (30) days after the date of such notice or such later date as specified in writing by Company.
Notwithstanding anything in this Section 2, Company may at any point terminate Executives employment for Cause prior to the effective date of any other termination contemplated hereunder.
(e )Definition of Cause. Cause shall include: (i) Executives willful engagement in dishonesty, illegal conduct or gross misconduct, which is, in each case, is materially injurious to Company or any affiliate; (ii) Executives deliberate insubordination; (iii) Executives substantial malfeasance or nonfeasance of duty; (iv) Executives unauthorized disclosure of confidential information; (v) Executives embezzlement, misappropriation or fraud, whether or not related Executives employment with Company; or (vi) Executives breach of a material provision of any employment, non-disclosure, invention assignment, non-competition, or similar agreement between Executive and Company. In all cases, Company shall provide Executive with written notice of the specific conduct or events that Company believes constitutes Cause and, in case of (ii) and (iii) above, Executive shall have thirty (30) days to effect a cure of the claimed conduct or events.
(a) Base Salary. Company shall pay Executive a base salary (the Base Salary) at the annual rate of $160,000. The Base Salary shall be payable in substantially equal monthly installments in accordance with Companys payroll practices as in effect from time to time. Company shall deduct from each such installment all amounts required to be deducted or withheld under applicable law or under any employee benefit plan in which Executive participates. The Board or an appropriate committee thereof shall review the Base Salary on an annual basis. Notwithstanding the foregoing, upon the listing of the Companys common stock on a national exchange, the Base Salary shall be increased to $250,000.
(b) Annual Performance Bonus. Executive shall be eligible to receive an annual cash bonus (the Annual Performance Bonus), with the target amount of such Annual Performance Bonus equal to twenty-five (25%) of Executives Base Salary in the year to which the Annual Performance Bonus relates, provided that the actual amount of the Annual Performance Bonus may be greater or less than such target amount. The amount of the Annual Performance Bonus shall be determined by the Board or an appropriate committee thereof in its sole discretion, and shall be paid to Executive no later than January 31st of the calendar year immediately following the calendar year in which it was earned. Except as otherwise provided for in this Agreement, Executive must be employed by Company on the date on which the Annual Performance Bonus is paid in order to be eligible for, and to be deemed as having earned, such Annual Performance Bonus. Company shall deduct from the Annual Performance Bonus all amounts required to be deducted or withheld under applicable law or under any employee benefit plan in which Executive participates. For the avoidance of any doubt it is hereby clarified that the Annual Performance Bonus shall not constitute a part of the Salary for any purpose whatsoever, including for the purpose of the calculation of the severance pay, to the extent such payment is applicable.
(c) Signing Bonus. Upon execution, Executive will be entitled to a signing bonus of $150,000.
(d) Equity. Subject to approval of the Board or an appropriate committee thereof and subject to shareholder approval of the Orgenesis Inc. 2017 Equity Incentive Plan (the Plan), Executive is entitled to options or other grants under the terms of the Plan. Subject to approval by the compensation committee, as soon as practically possible following stockholder approval of the Plan, the Company shall grant Executive pursuant to the terms of the Plan, a stock option (the Option) to purchase 4,000,000 shares of common stock of the Company, at a per share exercise price equal to the Fair Market Value (as defined in the Plan) of the Companys common stock on the date of grant, which Option shall be, to the maximum extent permissible, treated as an incentive stock option within the meaning of Section 422 of the Code. The Option shall vest ratably on a semi-annual basis over four years on each anniversary of the Commencement Date, provided that Executive remains employed by Company on the vesting date; provided, further, however, that the Option shall vest fully immediately prior to a Change of Control (as defined below) or upon the non-renewal of this Agreement. The Option shall be evidenced in writing by, and subject to the terms and conditions of, the Plan and the Companys standard form of stock option agreement, which agreement shall include cashless exercise provisions, expire ten (10) years from the date of grant except as otherwise provided in the stock option agreement or the Plan.
( e) Fringe Benefits. Executive shall be entitled to participate in all benefit/welfare plans and fringe benefits provided to Company senior executives. Executive understands that, except when prohibited by applicable law, Companys benefit plans and fringe benefits may be amended by Company from time to time in its sole discretion.
(f) Reimbursement of Expenses. Company shall reimburse Executive for all ordinary and reasonable out-of-pocket business expenses incurred by Executive in furtherance of Companys business in accordance with Companys policies with respect thereto as in effect from time to time. Executive must submit any request for reimbursement no later than ninety (90) days following the date that such business expense is incurred. All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during Executives lifetime (or during a shorter period of time specified in this Agreement); (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year; (iii) the reimbursement of an eligible expense shall be made no later than the last day of the calendar year following the year in which the expense is incurred; and (iv) the right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit.
(g) Additional Benefits
(i) Vacation. Executive shall be entitled to 25 working days vacation in each calendar year. Executive is required to make every reasonable effort to exercise his annual vacation during the year it is accrued and shall be obliged to take at least five (5) paid vacation days during each year of Executives employment; provided however, that if Executive is unable to utilize all the vacation days, he will be entitled to accumulate the unused balance of the vacation days standing to her credit. Executive shall be entitled to redeem the unused vacation days upon termination of employment. Vacation shall be taken in accordance with the Company policy and prior approval. For avoidance of any doubt, it is hereby agreed that the Company shall be entitled to set uniform dates for vacation to all or part of its employees, as it shall deem fit.
(ii) Recreation Pay. The Executive shall be entitled to annual recreation pay (Dmey Havra-ah) for 10 days per year, in the amount determined in accordance with the applicable law.
(iii) Sick Leave. The Executive shall be entitled to sick leave (Yemei Mahala) as provided by the Sickness Pay Law, 5736-1976,. The Executive shall notify the Company, immediately, of any absence due to sickness and furnish the Company with an applicable medical certificate to approve it. Sick days are not redeemable and may not be converted into cash.
(iv) Company Car. Company shall provide Executive with a Mazda MPV or equivalent car (the Company Car) to be placed at Executives disposal, solely for Executives business and reasonable personal use and for the reasonable use of her spouse and any children over the age of 19 holding valid drivers licenses (the Authorized Drivers), provided that Companys procedures in respect of said use are followed. Executive shall take good care of such Company Car and ensure that the provisions of the insurance policy and Companys rules relating to the Companys cars, as shall exist from time to time, are strictly, lawfully and carefully observed.
Executive is aware that in order to provide her with the Company Car the Company shall lease the Company Car from a leasing company, and Executive undertakes to strictly comply with the provisions of the leasing agreement.
Executive shall bear all expenses relating to any violation of law committed in connection with the use of the Company Car, including without limitation, all fines and penalties and the cost of any deductible amount charged the Company for damage caused to the Company Car and/or any amount in compensation of any type charged the Company in connection with the use of the Company Car by Executive and/or any Authorized Driver.
Executive hereby irrevocably authorizes Company to set off and deduct all amounts that may be owed to Company under this Section 0 from and against the Salary and/or any other amounts due to Executive from Company under the Employment Agreement.
The value of the monthly use of the Company Car shall be added to the Salary, in accordance with income tax regulations applicable thereto and Executive shall bear all taxes in connection with the Company Car and/or the use thereof.
Executive shall return the Company Car (together with its keys and any other equipment supplied and/or installed therein by Company) to Companys principal office upon termination of her employment under this Agreement.
4. Manager's Insurance/Pension
As of the Commencement Date, the Company shall, on a monthly basis, pay for, and deduct and transfer from payments due to Executive for, a managers insurance policy or a pension fund, or a combination thereof, for Executive, as selected by Executive as follows:
In the event that Executive selects managers insurance:
The Company shall pay into the managers insurance policy an amount equal to 6.5% of Executives monthly Base Salary on account of pension fund payment (Tagmulim) under the managers insurance policy. Such contribution includes contribution to a disability insurance policy on Executives behalf which would insure 75% of the Executives monthly Base Salary. To the extent necessary, such amount shall be increased to a total maximum of 7.5% of Executives monthly Base Salary if such increase is required for purchasing a disability insurance policy insuring 75% of Executives monthly Base Salary, provided that Companys payment to Tagmulim shall not be less than 5% of Executives monthly Base Salary;
The Company shall deduct 6.5% from Executives monthly Base Salary on behalf of Executive and shall transfer such amount to the managers insurance policy on account of pension fund payment (Tagmulim) under the managers insurance policy;
The Company shall pay into the managers insurance policy 8.33% of Executives monthly Base Salary for severance pay (Pituzei Piturim).
In the event that the Executive selects a pension fund:
The Company shall pay a sum equal to 6.5% of Executives monthly Base Salary on account of pension fund payment (Tagmulim).
The Company shall deduct 6% of Executives monthly Base Salary on behalf of Executive and shall transfer such amount to the pension fund as Executives share of the pension fund payment (Tagmulim);
The Company shall pay 8.33% of Executives monthly Base Salary for severance pay (Pituzei Piturim) into the pension fund.
(h) Executive shall be entitled to elect to have the Company make the payments and deductions set forth above to a managers insurance policy for part of Executives monthly Base Salary and to a pension fund for the remainder of Executives monthly Base Salary, and under such circumstances the provisions of Section 6.1 shall apply pro rata to such parts of Executives monthly Base Salary as if they were the whole salary.
(i) All the payments and deductions set forth in this Section shall be based upon the monthly Base Salary, as defined above, in accordance with its amount from time to time, and under no circumstances, shall the payments and deduction set forth in this Section be made with respect to an amount in excess of the Executives total monthly payments of the Base Salary.
(j) The Parties hereby declare and agree that the pension arrangement in accordance with this clause constitutes a beneficial arrangement for the purpose of the Extension Order (Combined Version) for Mandatory Pension under the Collective Agreements Law, 5717-1957 (the Pension Extension Order), and the Company shall not be under any obligation to provide any pension arrangement as provided in the Pension Extension Order other than as provided under this Section 6.
(k) Without derogating from the generality of the aforesaid, as of the Commencement Date, all payments made by the Company to the pension fund and/or the managers insurance shall be in lieu of severance pay due to Executive or his heirs from the Company with respect to and from which the said payments were made, and for the period made, and the Company shall not have any additional or other obligations to pay the Executive severance payments, and the Executive hereby consents to this arrangement in accordance with Section 14 of the Severance Pay Law 5723-1963 and the General Approval regarding the Payments of Executive to the Pension Fund and Insurance Fund instead of the payment of Severance Pay (the General Approval), a copy of which is attached to this Agreement as Appendix A and the provisions of the General Approval shall apply to the Executive and this Agreement. In any event of a contradiction between the provisions of this Agreement and the provisions of the General Approval, the provisions of the General Approval shall prevail.
(k) For avoidance of doubt, as of the date indicated herein, the General Approval has not yet been updated to reflect the percentages of contributions/deductions indicated above. In the event of discrepancy between an updated General Approval and the percentages stated herein, the updated General Approval shall prevail.
(l) The Company hereby waives any entitlement and/or right for reimbursement with respect to the severance compensation and acknowledges, that upon termination of Executive's employment in the Company, including inter alia, in the event of Executive's resignation, the Company shall release the severance compensation and shall transfer the severance compensation to the Executive, except in the event that: (i) the Company has terminated Executive's employment due to circumstances under which his entitlement for severance payment is denied pursuant to Articles 16 or 17 of the Severance Law; or (ii) the Employee has already withdrawn funds from the pension fund or the managers insurance not as a result of an Entitling Event according to Section 2(b) of the General Approval
(m) Indemnification. Executive shall be entitled to indemnification with respect to Executives services provided hereunder pursuant to Delaware law, the terms and conditions of Companys certificate of incorporation and/or by-laws, Companys directors and officers (D&O) liability insurance policy and Companys standard indemnification agreement for directors and officers as executed by Company and Executive.
5. Advanced Study Fund
(a) The Company shall continue to make monthly contributions on the Executive 's behalf to a recognized advanced study fund (Keren Hishtalmut) (hereinafter the Study Fund), in an amount equal to 7.5% of monthly Base Salary of the Executive. In addition, the Company shall deduct 2.5% from the monthly Base Salary. It is hereby clarified that the sums contributed by the Company to the Study Fund will not exceed the exempted limit recognized by the Income Tax Authority from time to time.
(b) The sums contributed by the Executive shall be deducted by the Company directly from the monthly Base Salary of the Employee. The Employee hereby instructs the Company to transfer to the Study Fund from each monthly Salary of the Executive due to him the amount of the Employee's and the Company's contribution, as set forth above.
(c ) Should any tax or other compulsory payment be imposed and payable in respect of the Companys contributions to the Study Fund, such tax shall be paid by the Executive and deduct according to law.
(d) The Study Fund shall be transferred to the Executive, subject to any applicable law, upon the termination of the Executive 's employment.
6. Payments Upon Termination.
(a) Definition of Accrued Obligations. For purposes of this Agreement, Accrued Obligations means: (i) the portion of Executives Base Salary that has accrued, including vacation time, prior to any termination of Executives employment with Company and has not yet been paid; and (ii) the amount of any expenses properly incurred by Executive on behalf of Company prior to any such termination and not yet reimbursed. Executives entitlement to any other compensation or benefit under any plan of Company shall be governed by and determined in accordance with the terms of such plans, except as otherwise specified in this Agreement.
(b) Termination by Company for Cause or as a Result of Executives Death. If Executives employment hereunder is terminated by Company for Cause or as a result of Executives death, then Company shall pay the Accrued Obligations to Executive promptly following the effective date of such termination and shall have no further obligations to Executive.
(c ) Termination by Company Without Cause or Upon Expiration of the Term. In the event that Executives employment is terminated by action of Company other than for Cause or Executive terminates employment for any reason whatsoever, then, in addition to the Accrued Obligations, Executive shall receive the following, subject to the terms and conditions described in Section 4(e) (including Executives execution of a release of claims):
(i) Severance Payments. An amount equal to the sum of (x) Executives annual Base Salary at the rate in effect as of the termination date, and (y) the greater of actual or target Annual Performance Bonus to which Executive may have been entitled for the year in which Executives employment terminates, in each case less all customary and required taxes and employment-related deductions. The severance payment provided for in this Section 4(c)(i) shall be paid in one lump sum payment within 10 days of termination.
(ii) Benefits Payments. The Company shall pay to Executive an amount equal to the Companys share of the premium paid for Executive while Executive was an active employee for medical insurance coverage under the Companys health care plan (the Healthcare Subsidy) for a period of twelve (12) months following Executives termination date. The Healthcare Subsidy shall be paid, less required withholdings, in the same manner and the same time as the payments under Section 4(c)(i) are paid.
(iii) Vesting of Options. All options heretofore granted and not vested shall immediately vest.
Payment of the above described severance payments and benefits are expressly conditioned on Executives execution without revocation of the release of claims under Section 4(e) and return of Company property under Section 6 and continued compliance with the Executives obligations in the Restrictive Covenant Agreement (as defined below). In the event that Executive is eligible for the severance payments and benefits under this Section 4(c), Executive shall not be eligible for and shall not receive any of the severance payments and benefits as provided in Section 4(d).
(d) Termination by Company Without Cause or by Executive Following a Change of Control. In the event that a Change of Control (as defined below) occurs and within a period of one (1) year following the Change of Control, either Executives employment is terminated other than for Cause, or Executive terminates Executives employment for any reason whatsoever, then, in addition to the Accrued Obligations, Executive shall receive the following, subject to the terms and conditions described in Section 6(e) (including Executives execution of a release of claims):
(iii) Severance Payment. An amount equal to one and a half times the sum of (x) Executives annual Base Salary at the rate in effect as of the termination date, and (y) the target Annual Performance Bonus to which Executive may have been entitled for the year in which Executives employment terminates, in each case less all customary and required taxes and employment-related deductions. The severance payment provided for in this Section 4(d)(i) shall be paid over a 18-month period in accordance with Companys normal payroll practices (provided such payments shall be made at least monthly), commencing on the first payroll date following the date on which the release of claims required by Section 4(e) becomes effective and non-revocable, but not after sixty (60) days following the effective date of termination from employment; provided, that if the 60th day falls in the calendar year following the year during which the termination or separation from service occurred, then the payments will commence in such subsequent calendar year; provided further that if such payments commence in such subsequent year, the first such installment shall include an amount equal to the payments that would have been paid if the payments had commenced in the first month following the termination of employment.
(iv) Benefit Payments. The Company shall pay to Executive the Healthcare Subsidy for a period of eighteen (18) months following Executives termination date. The Healthcare Subsidy shall be paid, less required withholdings, in the same manner and the same time as the payments under Section 4(d)(i) are paid.
(v) Vesting of Options. All options heretofore granted and not vested shall immediately vest.
Payment of the above described severance payments and benefits are expressly conditioned on Executives execution without revocation of the release of claims under Section 4(e) and return of Company property under Section 6 and continued compliance with Executives obligations in the Restrictive Covenant Agreement. In the event that Executive is eligible for the severance payments and benefits under this Section 6(d), Executive shall not be eligible for and shall not receive any of the severance payments and benefits as provided in Section 6(c).
As used herein, a Change of Control shall mean the occurrence of any of the following events: (A) The approval by shareholders of the Company of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (B) The approval by the shareholders of the Company of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Companys assets.
(e) Execution of Release of Claims. Company shall not be obligated to pay Executive any of the severance payments or benefits described in this Section 4 unless and until Executive has executed (without revocation) a timely release of claims in a form that is acceptable to Company, and which includes standard and reasonable terms regarding items such as mutual non-disparagement, confidentiality, cooperation and the like, which must be provided to Executive within fifteen (15) days following separation from service, and must be effective and irrevocable prior to the 60th day following Executives separation from service (the Review Period), and which shall include a general release of claims against Company and its affiliated entities and each of their officers, directors, employees and others associated with Company and its affiliated entities. If Executive fails or refuses to return such agreement, or revokes the agreement, within the Review Period, Executives severance payments hereunder and benefits shall be forfeited.
(f) No Other Payments or Benefits Owing. The payments and benefits set forth in this Section 4 shall be the sole amounts owing to Executive upon termination of Executives employment for the reasons set forth above and Executive shall not be eligible for any other payments or other forms of compensation or benefits. The payments and benefits set forth in Section 4 shall be the sole remedy, if any, available to Executive in the event that Executive brings any claim against Company relating to the termination of Executives employment under this Agreement.
7. Prohibited Competition And Solicitation. Executive expressly acknowledges that: (a) there are competitive and proprietary aspects of the business of Company; (b) during the course of Executives employment, Company shall furnish, disclose or make available to Executive confidential and proprietary information and may provide Executive with unique and specialized training; (c) such Confidential Information and training have been developed and shall be developed by Company through the expenditure of substantial time, effort and money, and could be used by Executive to compete with Company; and (d) in the course of Executives employment, Executive shall be introduced to customers and others with important relationships to Company, and any and all goodwill created through such introductions belongs exclusively to Company, including, but not limited to, any goodwill created as a result of direct or indirect contacts or relationships between Executive and any customers of Company. In light of the foregoing acknowledgements and as a condition of employment hereunder, Executive agrees to execute and abide by Companys Confidentiality, Intellectual Property, Non-Competition and Non-Solicitation Agreement (the Restrictive Covenant Agreement).
8. Property and Records. Upon the termination of Executives employment hereunder for any reason or for no reason, or if Company otherwise requests, Executive shall: (a) return to Company all tangible business information and copies thereof (regardless how such Confidential Information or copies are maintained), and (b) deliver to Company any property of Company which may be in Executives possession, including, but not limited to, Blackberry-type devices, smart phones, laptops, cell phones, products, materials, memoranda, notes, records, reports or other documents or photocopies of the same.
9. Code Sections 409A and 280G.
(a) In the event that the payments or benefits set forth in Section 4 of this Agreement constitute non-qualified deferred compensation subject to Section 409A, then the following conditions apply to such payments or benefits:
(i) Any termination of Executives employment triggering payment of benefits under Section 4 must constitute a separation from service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A -1(h) before distribution of such benefits can commence. To the extent that the termination of Executives employment does not constitute a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A -1(h) (as the result of further services that are reasonably anticipated to be provided by Executive to Company at the time Executives employment terminates), any such payments under Section 4 that constitute deferred compensation under Section 409A shall be delayed until after the date of a subsequent event constituting a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A -1(h). For purposes of clarification, this Section 7(a) shall not cause any forfeiture of benefits on Executives part, but shall only act as a delay until such time as a separation from service occurs.
(ii) Notwithstanding any other provision with respect to the timing of payments under Section 4 if, at the time of Executives termination, Executive is deemed to be a specified employee of Company (within the meaning of Section 409A(a)(2)(B)(i) of the Code), then limited only to the extent necessary to comply with the requirements of Section 409A, any payments to which Executive may become entitled under Section 4 which are subject to Section 409A (and not otherwise exempt from its application) shall be withheld until the first (1st) business day of the seventh (7th) month following the termination of Executives employment, at which time Executive shall be paid an aggregate amount equal to the accumulated, but unpaid, payments otherwise due to Executive under the terms of Section 4.
(b) It is intended that each installment of the payments and benefits provided under Section 4 of this Agreement shall be treated as a separate payment for purposes of Section 409A. Neither Company nor Executive shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A.
(c) Notwithstanding any other provision of this Agreement to the contrary, this Agreement shall be interpreted and at all times administered in a manner that avoids the inclusion of compensation in income under Section 409A, or the payment of increased taxes, excise taxes or other penalties under Section 409A. The parties intend this Agreement to be in compliance with Section 409A. Executive acknowledges and agrees that Company does not guarantee the tax treatment or tax consequences associated with any payment or benefit arising under this Agreement, including but not limited to consequences related to Section 409A.
(d) If any payment or benefit Executive would receive under this Agreement, when combined with any other payment or benefit Executive receives pursuant to a Change of Control (for purposes of this section, a Payment) would: (i) constitute a parachute payment within the meaning of Section 280G the Code; and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the Excise Tax), then such Payment shall be either: (A) the full amount of such Payment; or (B) such lesser amount (with cash payments being reduced before stock option compensation) as would result in no portion of the Payment being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local employments taxes, income taxes, and the Excise Tax, results in Executives receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.
(a) Notices. Except as otherwise specifically provided herein, any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (i) by personal delivery when delivered personally; (ii) by overnight courier upon written verification of receipt; (iii) by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (iv) by certified or registered mail, return receipt requested, upon verification of receipt.
Notices to Executive shall be sent to the last known address in Companys records or such other address as Executive may specify in writing.
Notices to Company shall be sent to:
2027 Goldenrod Lane, Germantown MD
Attention: Chairman of the Board
or to such other Company representative as Company may specify in writing.
(b) Modifications and Amendments. The terms and provisions of this Agreement may be modified or amended only by written agreement executed by the parties hereto.
(c) Waivers and Consents. The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.
(d) Assignment. Company may assign its rights and obligations hereunder to any person or entity that succeeds to all or substantially all of Companys business or that aspect of Companys business in which Executive is principally involved. Executive may not assign Executives rights and obligations under this Agreement without the prior written consent of Company.
(e) Governing Law/Dispute Resolution. This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the law of the State of Israel, without giving effect to the conflict of law principles thereof. Any legal action or proceeding with respect to this Agreement shall be brought in the appropriate courts in Israel. By execution and delivery of this Agreement, each of the parties hereto accepts for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts.
(f) Headings and Captions. The headings and captions of the various subdivisions of this Agreement are for convenience of reference only and shall in no way modify or affect the meaning or construction of any of the terms or provisions hereof.
(g) Entire Agreement. This Agreement, together with the other agreements specifically referenced herein, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement of any kind not expressly set forth in this Agreement shall affect, or be used to interpret, change or restrict, the express terms and provisions of this Agreement.
(h) Counterparts. This Agreement may be executed in two or more counterparts, and by different parties hereto on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. For all purposes a signature by fax shall be treated as an original.
[Signature Page to Follow]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
|VERED CAPLAN||ORGENESIS INC|
Confidentiality, Intellectual Property, Non-Competition and Non-Solicitation Agreement
This Confidentiality, Intellectual Property, Non-Competition and Non-Solicitation Agreement (the Agreement) is entered into as of March 29, 2017, by and between Orgenesis, Inc. (the Company), and Vered Caplan, an individual (the Executive).
WHEREAS, concurrently upon the execution of this Agreement, the Company and Executive are entering into that certain Executive Employment Agreement under which Executive shall continue to be employed by the Company; and
WHEREAS Executive acknowledges that: (i) there are competitive and proprietary aspects of the business of Company; (ii) during the course of Executives employment, Company has furnished, disclosed and/or made available and shall furnish, disclose and/or make available to Executive confidential and proprietary information and may have provided and may provide Executive with unique and specialized training; (iii) such Confidential Information and training have been developed and shall be developed by Company through the expenditure of substantial time, effort and money, and could be used by Executive to compete with Company; and (iv) in the course of Executives employment, Executive was introduced and shall be introduced to customers and others with important relationships to Company, and any and all goodwill created through such introductions belongs exclusively to Company, including, but not limited to, any goodwill created as a result of direct or indirect contacts or relationships between Executive and any customers of Company; and
WHEREAS, in light of the foregoing acknowledgements the Company requires that Executive make certain proprietary information, invention assignment, non-compete and non-solicitation commitments as a condition to the continuation of his employment;
THEREFORE, in consideration of Executives continued employment with the Company, and the compensation received by Executive from the Company, from time to time, Executive and Company hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms are defined as follows:
1.1. Affiliate of the Company means an entity that, directly or indirectly, controls, is controlled by, or is under common control with the Company.
1.2. " Company Intellectual Property" means Intellectual Property Rights created, conceived, conducted, developed, reduced to practice, compiled, written, authored, made and/or produced by Executive (whether jointly or alone), whether prior to or during the course of Executive employment with the Company, whether or not during working hours, and/or conceived, conducted, developed, reduced to practice, compiled, written, authored, made and/or produced by Executive, prior to, during the term of Executive's employment or thereafter using Company's premises, intellectual property (including without limitation Company Intellectual Property) materials, products, and/or resources, all whether or not recorded in material form.
1.3. Confidential Information any and all information, data, materials, Know-How and Documents in whatever form, including but not limited to technical and scientific information, data, information regarding research and development related to actual or anticipated products, laboratory records, analytical and quality control data, trial data, case report forms, data analyses, reports or summaries and information contained in submissions to, and information from regulatory authorities', inventions, whether patentable or non-patentable, discoveries, conceptions, intellectual property rights, data rights, records, results, formulations, methods, processes, techniques, compilation, program, devices, systems, compounds, innovations, designs, drawings, sketches, diagrams, formulas, computer files, product definitions, product research, manuals, selection processes, data, methods of manufacture, planning processes, trade secrets, business secrets, business plans, copyrights, proprietary information, customer lists, names of customers, list of suppliers, marketing plans, strategies, forecasts, business forecasts, processes, finances, costing, sales, prices, terms of payment, details of employees and officers and of the remuneration and other benefits paid to them, improvements and any other data related to the business or affairs of Company, its Affiliates and/or their respective customers, including customers with whom Company is negotiating, which is: (i) disclosed by or on behalf of Company, Affiliates and/or their respective customers to Executive; (ii) was or may be otherwise acquired by Executive during his employment with the Company; and/or (iii) was and/or may be generated and/or developed by Executive as a result of: (a) use by Executive of any Confidential Information of the Company, its Affiliates and/or their respective customers; and/or (b) Executive's employment by Company, all whether or not in the case of documents or other written materials or any materials in electronic format they are or were marked as confidential and whether or not, in the case of other information, such information is identified or treated by the Company or any of its Affiliates as being confidential.
1.4. "Documents" means documents, records, notebooks, results, agreements, calculations in each case whether electronic or in hard copy.
1.5. Inventions means all Know-How, Documents and business methods, inventions, discoveries, formulas, ideas, results, records, concepts, processes, techniques, developments, improvements, innovations, new uses, derivatives, processes, procedures formulae, models, assays prototypes, methods, designs, techniques, compounds, conceptions, results, data, data rights, know how, materials, records, documentation, technology, products, works of authorship, laboratory records, analytical and quality control data, trial data, case report forms, data analyses, reports or summaries, all whether or not patentable, copyrightable or capable of registration, and whether or not recorded in any medium.
1.6. "Intellectual Property Rights" means patents, Inventions, copyright and related rights, trade marks, trade names, service marks and domain names, rights in get-up, goodwill, rights to sue for passing off, design rights, semi-conductor topography rights, database rights, confidential information, moral rights, proprietary rights, data rights, enforcement rights, royalty rights and any other intellectual property rights in each case whether registered or unregistered and including all applications or rights to apply for, and renewals or extensions of such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world.
1.7. "Know How" means a package of expertise, practical information or skills, resulting from experience and testing relating to any inventions, formulae, designs, drawings, procedures or methods.
2. Confidential Information. Executive hereby covenants and undertakes as follows:
2.1. Nondisclosure of Confidential Information. Executive shall not at any time during his employment nor at any time after its termination except for the benefit of the Company or its Affiliates, directly or indirectly use or assist a third party to use; divulge, disclose, publish, transfer or communicate; and/or permit or cause any unauthorized disclosure of any Confidential Information relating to the Company, its Affiliates, and/or their respective customers, prospective customers or suppliers. Notwithstanding any other provision of this agreement, Executive may communicate with the government about possible legal violations without violating the provisions of the Agreement.
2.2. The restrictions in clause Error! Reference source not found. do not apply to:
2.2.1. any disclosure required for the proper performance of the Executive's duties during his employment or as authorized by the Company's Board of Directors;
2.2.2. any disclosure made to any person authorized by the Company to possess the relevant information;
2.2.3. any information or knowledge that was known to the Executive prior to the commencement date of his employment; or
2.2.4. any information which becomes available to the public generally otherwise than through the default of the Executive.
2.3. Any and all Confidential Information, Documents and Company Intellectual Property including, without limitation, lists of customers and suppliers, employees correspondence, documents, computer and other discs and tapes, data listings, codes, designs and drawings and other documents and materials whatsoever in Executive's possession or under Executive's control and whether or not made or created by Executive, relating to the business and/or the financial affairs of the Company, its Affiliates, and/or their respective agents, customers, prospective customers and/or suppliers, are and shall remain the exclusive property of the Company or its relevant Affiliate; will be handed over by Executive to the Company on demand and, in any event, immediately on the termination of Executive's employment and Executive will certify that all such property has been so handed over; and will on demand and, in any event, immediately on the termination of Executive's employment, will be permanently deleted from any computer system in Executive's possession or under Executive's control.
3. Intellectual Property
3.1. The parties acknowledge that Executive may have created in the past and/or may create in the future Inventions (alone or jointly), prior to, during the course of Executive's employment with the Company and/or thereafter and that Executive has a special obligation to further the interests of the Company in relation to such Inventions. Executive shall, promptly following creation, disclose to the Company all such Inventions and works embodying Company Intellectual Property.
3.2. All rights, title and interests in and to the Company Intellectual Property shall be solely and exclusively owned by the Company. Executive acknowledges and agrees that any and all such Company Intellectual Property, including any marketing, advertising and promotional materials, and other works of authorship, are works made for hire for purposes of the Companys rights under copyrights laws.
Executive hereby assigns and undertakes to assign to the Company any and all rights, title and interests he may have or acquire in such Company Intellectual Property, without any further remuneration or compensation.
3.3. During the period in which the Executive is employed by the Company and/or otherwise provides services to the Company, and after termination of such period, the Executive will:
3.3.1. Upon the request of the Company, to execute all such documents, both during and after his employment, as the Company may require to vest in the Company all right, title and interest pursuant to this Agreement;
3.3.2. to provide all such information and assistance and do all such further things as the Company may require to enable it to protect, maintain and exploit the Company Intellectual Property to the best advantage, including (without limitation), at the Company's request, applying for the protection of Inventions throughout the world;
3.3.3. to assist the Company in applying for the registration of any registerable Company Intellectual Property, enable it to enforce the Company Intellectual Property against third parties and to defend claims for infringement of third party Intellectual Property Rights;
3.3.4. not to apply for the registration of any Company Intellectual Property in the United States or any other part of the world without the prior written consent of the Company; and
3.3.5. to treat all Company Intellectual Property as Company's Confidential Information unless the Company has consented in writing to its disclosure by Executive.
3.4. Executive hereby irrevocably appoint the Company as Executive's attorney in his name to sign, execute, do or deliver on Executive's behalf any deed, document or other instrument and to use Executive name for the purpose of giving full effect to this Section 3.
4. Additional Undertakings and Representations
4.1. The Executive has not and shall not disclose to the Company or induce the Company to use any Inventions and/or confidential information belonging to any third party.
4.2. The Executive hereby represents and warrants that he has no continuing obligations with respect to assignment or disclosure of Confidential Information and/or Company Intellectual Property to any previous employers or other person. The Executive further certifies that he does not claim any previous unpatented or non-published inventions or expressions, respectively, within the scope of this Agreement.
4.3. The Executive represents and warrants that the consummation by him of the transactions described herein will not result in or constitute any of the following: a breach of any term or condition of this Agreement; a default or an event that, with notice or lapse of time or both, would constitute a default, breach or violation of any agreement, instrument or arrangement to which the Executive is a party or an event that would permit any third party to terminate an agreement or to accelerate the maturity of one of the duties or obligations owed to it by the Executive.
4.4. Executive and the Company agree that it is important for any prospective employer to be aware of this Agreement, so that disputes concerning this Agreement can be avoided in the future. Therefore, the Executive agrees that, following termination of employment with the Company, the Company may forward a copy of this Agreement to any future prospective or actual employer, and the Executive releases the Company from any claimed liability or damage caused to the Executive by virtue of the Companys act in making that prospective or actual employer aware of this Agreement.
5. Covenant not to Compete; Non-Solicitation.
5.1. As the CEO of the Company, the Executive had and will continue to have access to the Companys most sensitive and commercially valuable Confidential Information. The Executive hereby covenants that the Executive shall not, for a period of six (6) months after the termination of the Executives employment (the "Restricted Period"), do any of the following directly or indirectly without the prior written consent of the Company in its sole discretion:
5.1.1. engage or participate, directly or indirectly, in any business activity defined as direct competition with the business of the Company as conducted during the term of the Executives Employment and/or as to Executive's knowledge is to be carried out by the Company and/or by any of its Affiliates at any time during the Restricted Period (collectively the "Business");
5.1.2. become an employee, agent, distributor, consultant or other service provider to any person or entity engaged in a business that is competitive with the Business of the Company;
5.1.3. influence or attempt to influence any customer or potential customer of the Company to terminate or modify any written or oral agreement or course of dealing with the Company and/or any of its Affiliates; or
5.1.4. influence or attempt to influence any person to terminate or modify its employment, consulting, agency, distributorship or other arrangement with the Company and/or any of its Affiliates.
5.2. The Executive acknowledges that the Executive has carefully read and considered the provisions of this Section 5. The Executive acknowledges that the foregoing restrictions may limit the Executives ability to earn a livelihood in a business similar to the Companys business, but the Executive nevertheless acknowledges that he has received, and will receive, sufficient consideration and other benefits in connection with the Executives employment with the Company to justify such restrictions, which restrictions the Executive does not believe would prevent the Executive from earning a living in businesses that are not competitive with the Companys business and without otherwise violating the restrictions set forth herein.
6. General Provisions.
6.1. The Executive acknowledges that the Company and any person, corporation, partnership or other entity affiliated with the Company will suffer immediate and irreparable harm as a result of any violation, breach or threatened breach of this Agreement by the Executive. The Company shall be entitled, and the Executive hereby consents to the issuance in any court of competent jurisdiction, with or without notice, and in addition to any other remedy, including damages, which may be available at law or in equity, to temporary, preliminary and permanent orders and injunctions, without bond or undertaking, restraining and enjoining such breach or violation by the Executive and any other person, corporation, partnership or other entity including their officers, directors, shareholders, employers, servants or agents who may be acting in concert with the Executive or to whom such Company Confidential Information may have been disclosed. If the Company is successful in any legal action seeking enforcement of this Agreement or damages relating thereto it shall be entitled to reimbursement of its out-of-pocket expenses, including reasonable legal fees and disbursements, in connection therewith.
6.2. Executive acknowledges that: (i) this Agreement has been specifically bargained between the parties and reviewed by Executive, (ii) Executive has had an opportunity to obtain legal counsel to review this Agreement, and (iii) the covenants made by and duties imposed upon Executive hereby are fair, reasonable and minimally necessary to protect the legitimate business interests of the Company, and such covenants and duties will not place an undue burden upon Executives livelihood in the event of termination of Executives employment by the Company and the strict enforcement of the covenants contained herein.
6.3. Except as otherwise specifically provided herein, any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (i) by personal delivery when delivered personally; (ii) by overnight courier upon written verification of receipt; (iii) by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (iv) by certified or registered mail, return receipt requested, upon verification of receipt.
Notices to Executive shall be sent to the last known address in Companys records or such other address as Executive may specify in writing.
Notices to Company shall be sent to:
or to such other Company representative as Company may specify in writing.
6.4. This Agreement may be altered, amended or modified only in writing, signed by both of the parties hereto.
6.5. Headings included in this Agreement are for convenience only and are not intended to limit or expand the rights of the parties hereto. References to Sections herein shall mean sections of the text of this Agreement, unless otherwise indicated.
6.6. This Agreement and the rights and duties set forth herein may not be assigned by Executive without the express written consent of the Company.
6.7. If any court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then such invalidity or unenforceability shall have no effect on the other provisions hereof, which shall remain valid, binding and enforceable and in full force and effect, and such invalid or unenforceable provision shall be construed in a manner so as to give the maximum valid and enforceable effect to the intent of the parties expressed therein.
6.8. The waiver by either party of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by either party.
6.9. The rights and obligations under this Agreement shall survive the termination of Executive's employment and/or the termination of this Agreement, for aby reason, and shall remain in full force and effect thereafter.
6.10. This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the law of Israel, without giving effect to the conflict of law principles thereof. Any legal action or proceeding with respect to this Agreement shall be brought in the courts of the Supreme Court of Israel. By execution and delivery of this Agreement, each of the parties hereto accepts for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts.
6.11. Jury Waiver. ANY, ACTION, DEMAND, CLAIM, OR COUNTERCLAIM ARISING UNDER OR RELATING TO THIS AGREEMENT SHALL BE RESOLVED BY A JUDGE ALONE AND EACH OF COMPANY AND EXECUTIVE WAIVES ANY RIGHT TO A JURY TRIAL THEREOF.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
|/s/ Vered Caplan||By:||/s/ David Sidransky|
|Signature||Name: David Sidransky|