Dror Ortho-Design, Inc. 8-K

Exhibit 10.1

Employment Agreement

This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of December 6, 2021, by and between Dror Ortho-Design Ltd. registration No. 513542274 (the “Company”), and Lee Haddad ID No.: 328971973(“Executive”).

WHEREAS, the Executive is expected to make major contributions to the stability, growth and financial strength of the Company;

WHEREAS, in consideration of the Executive’s employment with the Company, the Company desires to provide the Executive with certain compensation and benefits as set forth in this Agreement; and

WHEREAS, the Executive desires to be employed by the Company on the terms contained in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1.            Position and Duties.

(a)           Beginning as of December 6, 2021 (the “Effective Date") The Executive shall serve as the Chief Executive Officer (“CEO”) of the Company reporting to the Company’s Board of Directors (the “Board”). The Executive shall also be appointed a director of the Company.

(b)           In addition, without further compensation, the Executive shall serve as a director or officer of one or more of the Company’s subsidiaries or affiliates if so elected or appointed from time to time.

(c)           The Executive shall have such duties, authority and responsibilities as are consistent with the role of CEO and as may be set forth in the governing documents of the Company, and in any event subject to the direction and supervision of the Board. For purposes of the applicability of the Company compensation plans to the Executive, Executive shall be considered an “employee.” Executive shall be a full-time employee provided he shall have discretion to devote whatever amount of his time to the performance of his duties hereunder as he deems necessary. Executive shall not be prohibited from (i) serving as a member of the board of directors of unaffiliated companies, (ii) serving on civic, charitable, educational, religious, public interest or public service boards, (iii) managing the Executive’s personal and family investments, (iv) engaging in or having an ownership interest in other businesses, (v) working on any consulting relationships he has now, and (vi) take on anew consultant position that does not materially interfere with his duties to the Company. In addition, the Executive has disclosed to the Company his involvement in entities and investments other than the Company (collectively, the “Outside Activities”). The Company shall permit the Executive to continue to engage in the Outside Activities provided that the Executive agrees to disclose to the Board any actual or potential conflict of interest arising out of any such Outside Activity and no such Outside Activity materially interferes with Executive’s ability to perform his responsibilities hereunder.

(d)           All employees and consultants of the Company shall report to the Executive.

(e)           In the event that Executive discovers that he has, or might have at some point in the future, any direct or indirect personal interest in any of the Company’s business, or a conflict of interest with his employment duties and functions, Executive shall promptly inform the Board upon such discovery.

(f)           It is agreed between the parties that the position the Executive holds within the Company is (i) a high senior position, (ii) requires a special measure of personal trust and loyalty or (iii) is of conditions and circumstances of which it is impossible for the Company to control Executive's working hours. Accordingly, the Law of Working Hours and Rest, 5711-1951, and any other law amending or replacing such law, shall not apply to the employment of the Executive. Executive undertakes not to claim that the Law of Working Hours and Rest applies to Executive’s employment with the Company. Executive acknowledges the legitimacy of the Company’s requirement to work “overtime” or during “weekly rest- hours” without being entitled to “overtime compensation” or “weekly rest-hour compensation” (as these terms are defined in the Working Hours and Rest Law), and Executive undertakes to reasonably comply with such requirements of the Company. Executive acknowledges that the consideration set for him hereunder nevertheless includes within it any consideration that would otherwise have been due to Executive pursuant to such law and Executive shall not be granted any other compensation or payment.

2.            Term. This Agreement and Executive’s employment hereunder shall be for an initial term commencing on the date hereof (the “Effective Date”) and ending on December 31, 2025 (the “Expiration Date”), unless terminated earlier by the Company or the Executive pursuant to Section 4 of this Agreement (the “Term”). Thereafter, this Agreement be subject to renewal pursuant to the mutual agreement of the parties (such extensions the “Renewal Term”). In the event of renewal, the last day of each Renewal Term shall be deemed the new Expiration Date.

3.            Compensation and Related Matters.

(a)           Base Salary. The Executive’s annual base salary shall be a net payment of $144,000 (the “Base Salary”). The Base Salary shall be paid in arrears on the first business day of each calendar month.

(b)          Annual Bonus. For each calendar year, the Executive may be entitled to a discretionary annual bonus, subject to meeting certain goals and objectives as shall be determined by the Board and communicated to the Executive prior to each year, in an amount to be determined by the Board based on the Company’s performance. The annual bonus shall not be considered in any case whatsoever as part of the Base Salary and the Executive will not be entitled to receive any social benefits and severance payments with respect to the annual bonus. It is hereby clarified that in any event of termination prior to the end of the calendar year, the Executive shall not be entitled to the annual bonus.

(c)          Long Term Incentive Plan. The Executive shall be entitled to participate in all bonus or other compensation programs adopted by the Company and applicable generally to senior executives of the Company.

(d)          Signing Options. Subject to approval of the Board, the Company’s share option plan to be adopted, and an option agreement to be signed between the Company and the Executive, the Executive shall be awarded options to purchase five percent (5%) of the fully diluted shares of the Ordinary Shares of the Company issued and issuable on the date of this Agreement (the “Signing Options”). The Signing Options shall be non-dilutable and the Executive shall be granted additional option every time the Company issued any shares of common stock or common stock equivalents. The Signing Options shall be exercisable for ten (10) years from the date of this Agreement at an exercise price equal to the fair market value thereof. The Signing Options shall vest in three tranches: one third (1/3) on the first anniversary of this Agreement, one third (1/3) on the second anniversary of this Agreement, and one third (1/3) on the third anniversary of this Agreement. In the event the Company has a Deemed Liquidation (as defined in the Company’s Articles of Association), all the Signing Options shall immediately vest. Upon the Company producing a working prototype of Version 2 of the Dror device half (½) the Signing Options shall immediately vest. Upon the Company having 500 patients using Version 2 of the Dror device, all the Signing Options shall immediately vest. The Signing Options shall be exercisable cashlessly. The Company and Executive may enter into a separate agreement to further memorialize the Signing Options.

(e)          Business Expenses. The Company shall promptly reimburse the Executive for all reasonable and necessary business-related expenses incurred in connection with the performance of the Executive’s duties hereunder in accordance with the policies and procedures then in effect and established by the Company for its senior executive officers, provided that the Executive furnishes the Company with all supporting information and documentation relevant to such expenses as the Company may reasonably request.

(f)           Other Benefits. The Executive shall be entitled to participate in all pension, savings and retirement plans, welfare and insurance plans, practices, policies, programs and perquisites of employment applicable generally to other senior executives of the Company.

(g)           Pension Insurance.

(i)           As of the Employment Starting Date, the Company shall insure the Executive under a pension fund and/or managers’ insurance and/or provident fund and/or a combination of several types of such arrangements (the "Pension Arrangement"), according to the Executive's selection regarding the pension product as well as the pension provider. For avoidance of any doubt, it is hereby clarified that in any event the Company's overall contributions will not be made from an amount exceeding the Executives' Base Salary.

(ii)          The percentage of the contributions to the pension fund and/or managers’ insurance and/or provident fund shall be in the rate as detailed in Annex A.

(iii)         The Company and the Executive agree and acknowledge that the Company's contribution towards managers insurance and/or pension plan and/or provident fund as set forth in this Section (g), are in lieu of severance payments to which the Executive (or his beneficiaries) is otherwise entitled to with respect to the Base Salary upon which such contributions were made and for the period in which they were made, pursuant to Section 14 of the Severance Law. The parties hereby adopt the General Approval of the Minister of Labor and Welfare, in the form attached hereto as Annex B.

(iv)         The Company hereby forfeits any right it may have for reimbursement of sums paid by the Company into the managers insurance and/or pension plan and/or provident fund, except (a) if the Executive withdraws such sums from the pension fund and/or managers insurance and/or provident fund, other than in the event of death, disability or retirement at the age of 60 or more; or (b) upon the occurrence of any of the events provided for in Sections 16 and 17 of the Severance Law.

(v)          If the Executive does not notify the Company in writing within 30 days of the Employment Starting Date regarding his elected Pension Arrangement, the Company shall insure the Executive under the default pension fund elected and published by the Commissioner of the Capital Market, Insurance and Savings Division at the Ministry of Finance.

(vi)         The Executive's contributions shall be deducted by the Company from the Executive's Base Salary and shall be transferred by the Company to the Executive's pension fund and/or managers insurance and/or provident fund. By signing this Agreement, the Executive hereby irrevocably authorizes the Company to deduct the appropriate amounts from the Executive's Base Salary.

(h)           Annual Vacation.

(i)            Executive shall be entitled to 20 paid vacation days during each year of employment with the Company as detailed in Annex A. 

(ii)           The dates of the Executive’s vacation shall be coordinated in advance with the Company.

(iii)          To the extent the Executive requires additional vacation days, he may request additional days from the Supervisor and coordinate such vacation with the Company at Company’s discretion and according to the Company’s policy as amended from time to time.

(iv)          Executive shall be obligated to take at least one vacation each year of at least 7 consecutive days (5 working days which shall be counted as vacation days and the weekend), as prescribed by law.

(v)           The Company shall be entitled to set uniform dates for vacation for all or part of its employees, with respect to all or any part of the vacation days, as it shall deem fit.

(vi)          Any unused vacation days shall be treated in accordance with the Company’s policy, as in effect from time to time.

(i)            Sick Leave & Recreation Pay. Executive shall be entitled to sick leave (commencing the first day of sickness), and to recreation pay (“dmei havra’ah”) according to applicable law.

4.            Termination.

(a)           Death. The Executive’s employment hereunder shall terminate upon his death.

(b)          Disability. The Company may terminate the Executive’s employment if the Executive becomes subject to a Disability. For purposes of this Agreement, “Disability” means the Executive is unable to perform the essential functions of his position as CEO, with or without a reasonable accommodation, for a period of 120 consecutive days or 180 days during any rolling consecutive 12-month period.

(c)          Termination by Company for Cause. Notwithstanding the above, the Company shall have the right to immediately terminate this Agreement for a Cause, as determined by the Company. For purposes of this Agreement, “Cause” means the Executive’s: (i) willful misconduct, gross negligence, fraud, embezzlement or other material dishonesty with respect to the affairs of the Company or any of its affiliates; (ii) material failure to meet minimum performance expectations of the Board; (iii) conviction, plea of nolo contendere, guilty plea, or confession to either a felony or any lesser crime relating to the affairs of the Company or any of its affiliates or of which fraud, embezzlement, or moral turpitude is a material element; or (iv) a material breach of this Agreement or a breach of a fiduciary duty owed to the Company, provided that any such breach, if curable, shall not constitute Cause unless the Company has provided the Executive with (x) written notice of the acts or omissions giving rise to a termination of his employment for Cause; (y) the opportunity to correct the act or omission within 30 days after receiving the Company’s notice (the “Cure Period”); and (z) an opportunity to be heard before the Board with the Executive’s counsel present prior to the expiration of the Cure Period. In the event of termination for Cause, Executive’s entitlement to severance pay will be subject to Sections 16 and 17 of the Severance Pay Law 5723-1963 (the “Severance Law”) and/or any other applicable law.

(d)          Termination by the Company without Cause. The Company may not terminate the Executive’s employment during any Term or Renewal Term without Cause.

(e)          Termination by the Executive. The Executive may terminate his employment at any time for any reason other than a Good Reason, upon 30 days prior written notice.

(f)           Termination by the Executive for Good Reason. The Executive may terminate his employment for Good Reason by providing written notice. For purposes of this Agreement, “Good Reason” means: (i) a material reduction in the Executive’s Base Salary; or (ii) the Company’s material breach of this Agreement; provided that Good Reason based on a material breach shall exist only if within 90 days of the Company’s act or omission resulting in a material breach, the Executive notifies the Company in a writing of the act or omission, the Company fails to correct the act or omission within 30 days after receiving the Executive’s written notice and the Executive actually terminates his employment within the 30 days following the end of such 30-day cure period.

(g)           Expiration. Executive’s employment shall terminate on the Expiration Date.

(h)          Termination Date. The “Termination Date” means: (i) if the Executive’s employment is terminated by his death under Section 4(a), the date of his death; (ii) if the Executive’s employment is terminated on account of his Disability under Section 4(b), the date on which the Company provides the Executive a written termination notice; (iii) if the Company terminates the Executive’s employment for Cause under Section 4(c), the date on which the Company provides the Executive a written termination notice, unless the circumstances giving rise to the termination are subject to the Cure Period, in which case the date on which the Company provides the Executive a written termination notice following the end of the Cure Period; (iv) if, despite the restriction against doing so under Section 4(d), the Company terminates the Executive’s employment without Cause under Section 4(d), 90 days after the date on which the Company provides the Executive a written termination notice; (v) if the Executive resigns his employment without Good Reason under Section 4(e), 30 days after the date on which the Executive provides the Company a written termination notice; (vii) if the Executive resigns his employment with Good Reason under Section 4(f), the date on which the Executive provides the Company a timely written termination notice, except the Termination Date shall be the last day of the relevant 30-day cure period, if applicable; and (viii) the Expiration Date if the Executive’s employment terminates under Section 4(g).

(i)           Upon the earlier of the termination of employment, Executive shall return to the Company all Company equipment in good and working form (including without limitation, computer/laptop, mobile phone, etc.), including documents and information in Executive’s possession or control or that were provided to Executive and belong to the Company whether in the form of magnetic or digital media, formula, letter, certificate, copy, picture, movie etc., related in any manner, directly or indirectly, to the Company, even if same were created by Executive, and any copies thereof. Furthermore, Executive shall provide the Company with a list of all passwords, write-protect codes and similar access codes used in the context of Executive’s work.

5.            Compensation upon Termination.

(a)          Termination by the Company for Cause or by the Executive without Good Reason. If the Executive’s employment with the Company is terminated pursuant to Section 4(c) or 4(e), the Company shall pay or provide to the Executive the following amounts through the applicable Termination Date: any earned but unpaid Base Salary, unpaid expense reimbursements, and any earned but unpaid Annual Bonus (the “Accrued Obligations”) on or before the time required by law but in no event more than 30 days after the Executive’s Termination Date.

(b)          Death. If the Executive’s employment with the Company is terminated pursuant to Section 4(a), then the Executive (or his authorized representative or estate) shall be entitled to the following:

(i)            the Accrued Obligations earned through the applicable Termination Date (payable on or before the time required by law but in no event more than 30 days after the applicable Termination Date);

(ii)           a pro-rata portion of the Executive’s Annual Bonus, if any, for the fiscal year in which the Executive’s termination occurs (determined by multiplying the amount of such bonus which would be due for the full fiscal year by a fraction, the numerator of which is the number of days during the fiscal year of termination that the Executive is employed by the Company and the denominator of which is 365) payable at the same time bonuses for such year are paid to other senior executives of the Company;

(iii)          vest the Executive on the applicable Termination Date for any and all previously granted outstanding equity-incentive awards subject to time-based vesting criteria as if the Executive continued to provide services to the Company for 12 months following the applicable Termination Date; and

(iv)          in the case of a termination due to Disability, in addition to the aforementioned awards, continuation of the Base Salary in effect on the Termination Date until the earlier of (A) the first anniversary of the Termination Date, and (B) the date Executive is eligible to commence receiving payments under the Company’s long-term disability policy. If the net compensation from the Base Salary is greater than the net compensation from the long-term disability policy, the Company, through the first anniversary of the Termination Date will compensate the Executive’s estate the difference in net compensation.

(c)           Termination by Disability; by the Company without Cause, by the Executive with Good Reason, or Expiration. If the Executive’s employment is terminated by the Company in breach of Section 4(b), 4(d), 4(f), or 4(g) then the Executive shall be entitled to the following:

(i)            the Accrued Obligations earned through the Termination Date (payable on or before the time required by law but in no event more than 30 days after the applicable Termination);

(ii)           severance in a single lump sum installment in amount equal to the Base Salary at the rate in effect on the Termination Date (“Severance”). The Severance is payable in twelve installment on the first of the month for each month following the Termination Date;

(iii)          the Executive shall retain all the benefits in Sections 3(f), 3(g), 3(h), and 3(j), for one year after the Termination Date; and

(iv)          full vesting of the Executive in any and all outstanding previously granted equity-based incentive awards subject to time-based vesting criteria.

6.           Proprietary Information, Non-Disclosure and Non-Compete

(a)          Covenant Against Disclosure. The provisions of the Proprietary Information, Assignment of Inventions, Non-Disclosure and Non-Compete Agreement attached hereto as Annex C (the “PIIA”) are hereby incorporated by reference. Executive hereby acknowledges and agrees that this Agreement shall not come into force unless the PIIA is executed. The provisions of the PIIA shall survive the rescission or termination, for any reason, of this Agreement.

7.           No Disparagement. During the Term and through the second anniversary of the Termination Date, the Executive will not make public statements or communications that disparage the Company or any of its businesses, services, products, affiliates or current, former or future directors and executive officers in their capacity as such. During the Term and through the second anniversary of the Termination Date, the Company will instruct its directors and executives not to make public statements or communications that disparage the Executive. The foregoing obligations shall not be violated by truthful statements to any governmental agency or entity, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).

8.           Indemnification. During the Term and thereafter, the Company shall indemnify and hold the Executive and the Executive’s heirs and representatives harmless, to the maximum extent permitted by law, against any and all damages, costs, liabilities, losses and expenses (including reasonable attorneys’ fees) as a result of any claim or proceeding (whether civil, criminal, administrative or investigative), or any threatened claim or proceeding (whether civil, criminal, administrative or investigative), against the Executive that arises out of or relates to the Executive’s service as an officer, director or employee, as the case may be, of the Company, or the Executive’s service in any such capacity or similar capacity with any affiliate of the Company or other entity at the Company’s request, both prior to and after the Effective Date, and to promptly advance to the Executive or the Executive’s heirs or representatives such expenses, including litigation costs and attorneys’ fees, upon written request with appropriate documentation of such expense upon receipt of an undertaking by the Executive or on the Executive’s behalf to repay such amount if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Company. During the Term and thereafter, the Company also shall provide the Executive with coverage under its then current directors’ and officers’ liability policy to the same extent that it provides such coverage to its other executive officers. If the Executive has any knowledge of any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative, as to which the Executive may request indemnity under this provision, the Executive will give the Company prompt written notice thereof. The Company shall be entitled to assume the defense of any such proceeding and the Executive will use reasonable efforts to cooperate with such defense. To the extent that the Executive in good faith determines that there is an actual or potential conflict of interest between the Company and the Executive in connection with the defense of a proceeding, the Executive shall so notify the Company and shall be entitled to separate representation at the Company’s expense by counsel selected by the Executive (provided that the Company may reasonably object to the selection of counsel within 10 business days after notification thereof) which counsel shall cooperate, and coordinate the defense, with the Company’s counsel and minimize the expense of such separate representation to the extent consistent with the Executive’s separate defense. This Section shall continue in effect after the termination of the Executive’s employment or the termination of this Agreement.

9.            Disputes.

(a)          Any dispute or controversy arising out of or relating to this Agreement or your employment shall be brought solely in the courts having jurisdiction over Tel Aviv, Israel.

(b)          BOTH THE COMPANY AND THE EXECUTIVE HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW.

(c)          In the event of any contest or dispute relating to this Agreement or the termination of Executive’s employment hereunder, the non-prevailing party in any such contest or dispute shall be liable for the attorneys’ fees and costs of the prevailing party.

10.          Integration. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements between the parties concerning such subject matter.

11.          Successors. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal representatives, executors, administrators, heirs, distributees, devisees and legatees. In the event of the Executive’s death after his termination of employment but prior to the completion by the Company of all payments due him under this Agreement, the Company shall continue such payments to the Executive’s beneficiary designated in writing to the Company prior to his death (or to his estate, if the Executive fails to make such designation). The Company shall require any successor to the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

12.          Enforceability. If any portion or provision of this Agreement (including, without limitation, any portion or provision of any section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

13.          Survival. The provisions of this Agreement shall survive the termination of this Agreement or the termination of the Executive’s employment to the extent necessary to effectuate the terms contained herein.

14.          Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

15.          Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight courier service or by registered or certified mail, postage prepaid, return receipt requested, to the Executive at the last address the Executive has filed in writing with the Company or, in the case of the Company, at its main offices,

16.          Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Company.

17.          Governing Law. This is an Israeli contract and shall be construed under and be governed in all respects by the laws of Israel for contracts to be performed in that State and without giving effect to the conflict of laws principles of Israel.

18.          Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

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IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year first above written.

	Dror Ortho-Design Ltd.
	By:
	Name: Shraga Braverman
	Title: Chief Executive Officer

	Lee Haddad

[Signature Page - Dror Ortho Design Ltd. - Employment Agreement - Lee Haddad - December 2021]

ANNEX A

* In the event of any conflict between the terms in this Annex A and the body of the Agreement the terms in the body of the Agreement shall control.

ANNEX B

GENERAL APPROVAL REGARDING PAYMENTS BY EMPLOYERS TO A PENSION FUND AND INSURANCE FUND IN LIEU OF SEVERANCE PAY UNDER THE SEVERANCE PAY LAW, 5723-1963

ANNEX C

PROPRIETARY INFORMATION, INVENTIONS ASSIGNMENT, NON-DISCLOSURE AND NON-COMPETE UNDERTAKING

The undersigned, employee of Dror Ortho-Design Ltd. (the “Employee” and the “Company”, respectively) hereby acknowledges that in the course of his employment with the Company (the “Employment”), he will have access to, and/or participate in the development or marketing of, the Company’s products and/or certain proprietary information, inventions, commercial secrets and other confidential information of the Company disclosed to the Employee, and/or accessed by, and/or developed by the Employee and/or with the assistance of the Employee. In relation to such confidential information, the Employee hereby undertakes as follows, in full knowledge that the force of this undertaking is in no way dependent upon the force of the Employee’s employment agreement entered with the Company and is entirely independent from the obligations under in the Employee’s employment agreement with the Company (the “Employment Agreement”):

IN WITNESS WHEREOF, the Employee has signed this Proprietary Information, Inventions Assignment, Non-Disclosure and Non-Compete Undertaking as of November 16 2021.

Lee Haddad