--------------------------------------------------------------------------------

Exhibit 10.1

 
April 7th, 2017
To
Mr. Avner Gal

Agreement
 
Reference is hereby made to that certain Employment Agreement executed between
you (the "Employee" or "you") and A.D. Integrity Applications Ltd. (the
"Company") in October 2010, (together with all exhibits and amendments thereto,
the “Employment Agreement”). All of the terms used in this Agreement have the
same meanings as set out in the Employment Agreement, unless specifically stated
otherwise.
 
The Company and you have reached a mutual agreement that you voluntarily
separate from your employment with the Company and from your directorship in the
Company and in Integrity Applications Inc. ("Parent") (the Company and the
Parent shall be referred herein collectively as "Integrity") and transition to a
consulting arrangement with the Company pursuant to this Agreement without
having an employer-employee relationship.
 
In accordance with your Employment Agreement you are entitled to a notice of 180
days prior to the effective separation of the Employment Agreement (the “Notice
Period”). Notwithstanding the aforesaid, your effective separation will be April
7, 2017 (the "Separation Date") and the Company will pay you an amount equal to
your Salary and the financial value of the other benefits you are entitled to
receive under the Employment Agreement, that would have been paid to you during
the Notice Period, in lieu of such prior notice.
 
You shall continue to be entitled to any and all rights and benefits owing and
payable to you in connection with your Employment Agreement until the Separation
Date.
 
In addition, in consideration for your execution of this Agreement, the Company
and the Parent agree to provide you the following payments and benefits:
 

(i)
The Adjustment Period pursuant to section 19 of your Employment Agreement, shall
be extended to 24 Salaries, including all the benefits mentioned in your
Employment Agreement, paid to you in monthly installments subsequent to the
Separation Date (the "Adjustment Period"), provided you will not work and/or
provide services to any entity directly competing with the Company. In
consideration for the aforesaid increased Adjustment Period, you shall provide
the Company with consulting services during the Notice Period and the Adjustment
Period as you and the CEO of the Parent agree provided that you shall not be
required to provide more than 150 hours during the Adjustment Period, without
such additional compensation as agreed to by you and the CEO of the Parent.

 

(ii)
Effective as of the date of this Agreement (the "Effective Date"), the Parent,
shall accelerate the vesting of 88,259 outstanding unvested options to purchase
common stock of the Parent at an exercise price per share equal to US$6.25 held
by you as of the Effective Date. Additionally, the term of all your outstanding
options (vested and unvested) shall be extended and be exercisable for five
years from the Effective Date.

 

--------------------------------------------------------------------------------

 

(iii)
On the Effective Date, the Parent shall grant you an option to purchase up to
300,000 shares of common stock of the Parent having an exercise price per share
equal to US$4.50 and an option to purchase up to additional 50,000 shares of
common stock of the Parent having an exercise price per share equal to US$7.75
(collectively the "Options"). The Options shall be exercisable for no more than
seven years from the Effective Date, vest monthly over a 24 months period
following the grant date and shall be subject to the terms and conditions set
forth in the stock option agreement to be provided to you and pursuant to
Parent's 2010 Incentive Compensation Plan, including the right to a cashless
exercise. The Options shall be granted pursuant to Section 3(i) of the Israeli
Income Tax Ordinance [new version]-1961.

 
Your undertakings pursuant to this Agreement are in addition to, and without
derogation from, your undertakings towards the Company pursuant to the
Employment Agreement or under any applicable law.
 
As part of the separation of your employment with the Company, the following
actions will take place:
 

(i)
In the framework of the final account, the Company shall make the final payments
due to you in connection with your employment and separation of employment with
the Company as described under Annex A attached hereto;

 

(ii)
Upon the Separation Date, you will be provided with: (i) letters confirming the
transfer to your name of the funds managed on your behalf, including your
manager's insurance plan and pension funds (the "Funds Transfer Letters"); (ii)
a letter confirming your period of employment with the Company; (iii) a letter
of recommendation (the “Additional Letters”);

 

(iii)
On the Effective Date, you shall resign from the board of directors of both the
Company and Parent, effective as of the Effective Date;

 

(iv)
You will serve as Chairman Emeritus of the Parent and member of its scientific
advisory board.

 
Within 5 days of the Effective Date, you have offered to deliver and will
deliver to the Company all documents and materials of any nature pertaining to
your work with the Company and Integrity, and you will not take with you any
documents or materials or copies thereof containing any information with respect
to the Company and Integrity, including without limitation any such information
contained on a laptop computer or mobile phone, except as necessary or requested
by the CEO of the Parent in connection with your consulting duties. You may keep
to yourself your laptop computer, mobile phone and your mobile phone number
provided that any and all of Integrity’s documents, information and materials
that are stored on the laptop and mobile phone, will be returned to the Company
or destroyed (at Company’s option) and all copies thereof.
 
All entitlements under this Agreement are gross and shall be made after
deduction of applicable taxes.
 
- 2 -

--------------------------------------------------------------------------------

 
At the end of the Adjustment Period, you will be entitled to purchase the Car at
its book value. If you decide not to purchase the Car, you shall return the Car
to the Company on the last day of the Adjustment Period. You agree and declare
that you will pay all parking/police tickets regarding the Car, in accordance
with the period it was and will be held by you, and that the Company is entitled
to set-off these amounts with other amounts you are entitled to receive from the
Company.
 
You hereby confirm, declare and agree that notwithstanding the Separation of
your employment with the Company, you will continue to comply with all your
obligations concerning proprietary information and disclosure, as detailed in
Exhibit B of the Employment Agreement.
 
You hereby agree not to make any direct or indirect derogatory statements
regarding, or disparage in any way, the business or reputation of the Company or
the Parent, or any of their directors, officers, shareholders, managers or
employees or any statements that would damage the Company or any of the
foregoing. The Company and the Parent agrees that its officers and directors
shall not intentionally make any direct or indirect derogatory statements
regarding, or disparage in any way your reputation.
 
Nothing in this Agreement is intended to be or shall be construed as an
admission by you, the Company or the Parent that you or they violated any law,
interfered with any right, breached any obligation or otherwise engaged in any
improper or illegal conduct with respect to the other or otherwise, the parties
hereto expressly deny any such improper or illegal conduct.
 
You acknowledge that Integrity may use the image, likeness, voice, or other
characteristics of you in the services, materials, computer programs, marketing
and advertising and other deliverables created or used or distributed by or on
behalf of Integrity in the course of its business.  You hereby consent to the
use of such characteristics by Integrity and release Integrity, its directors,
officers, employees, agents, contractors, licensees and assigns from any claims
which you has or may have for invasion of privacy, right of publicity,
defamation, copyright infringement, or any other causes of action arising out of
the use, adaptation, reproduction, distribution, broadcast, or exhibition of
such characteristics.
 
You hereby confirm, declare and agree, on your behalf and on behalf of all your
heirs, successors and assigns (the “Waiving Parties”), that upon the payment of
all the amounts and entitlements set forth hereinabove and under Annex A and the
receipt of the Letters, you will receive the complete and full compensation due
to you from Integrity, in connection with your employment and Separation of
employment with Integrity. Subject to the receipt of all the amounts and
entitlements set forth hereinabove and under Annex A and the receipt of the
Letters, you, on your behalf and on behalf of the Waiving Parties, forever and
irrevocably waive, release and discharge the Company, the Parent, and their
officers, directors, shareholders, agents, servants, employees, affiliated
entities and successors and assigns, past and present (the "Indemnitees"), from
any and all claims, demands, causes of actions, fees, liabilities and expenses
of any kind whatsoever, whether known or unknown, against any of the Indemnitees
by reason of any actual or alleged act, omission, practice, conduct, occurrence,
or other matter, with respect to your employment with the Company and/or
directorship in Integrity until the Separation Date and the termination thereof,
including, without limitation, salary, bonuses, payment for notice periods,
entitlement to stock options, contributions to  managers insurance (ביטוח
מנהלים), pension fund (קרן פנסיה), education funds ((קרן השתלמות, severance pay,
annual vacation and/or payment for accrual of unutilized vacation days, overtime
pay (if and to the extent payable), car allowance, recreation (Convalescence)
pay (דמי הבראה) sick pay, the conduct of a hearing process, and any other
payment, entitlement, benefit or right. By countersigning this agreement you
acknowledge that this agreement constitutes a waiver and release which applies
to severance pay according to Section 29 of the Israeli Severance Pay Act,
5723-1963. For the avoidance of doubt it is clarified that the waiver referred
to hereinabove does not derogate from the D&O insurance coverage.
 
- 3 -

--------------------------------------------------------------------------------

 
You acknowledge that the restrictions contained in the two previous paragraphs
are fair, reasonable, and necessary for the protection of the legitimate
business interests of Integrity and that Integrity will suffer irreparable harm
in the event of an actual or threatened breach of any such provision by you. 
 
Subject to your fulfillment of your undertakings pursuant to this Agreement and
your undertakings towards the Company pursuant to the Employment Agreement or
under applicable law, the Company, the Parent and anyone on their behalf hereby
forever and irrevocably waive, release, and discharge you from any and all
claims, demands, causes of actions, fees, liabilities and expenses of any kind
whatsoever, whether known or unknown, against you by reason of any actual or
alleged act, omission, practice, conduct, occurrence, or other matter with
respect to your employment with the Company until the Separation Date.

All the terms of this agreement are highly confidential and cannot be disclosed
to any person or entity without Company's prior written consent, which shall not
be unreasonably withheld. This undertaking is in addition to and shall not
derogate from any confidentiality undertaking previously signed by you.
 
If any provision of this Agreement or the application of any such provision to
any party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement, or the application of such provision to such person or circumstances
other than those to which it is so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be enforced to
the fullest extent permitted by law.  If the final judgment of a court of
competent jurisdiction declares that any provision of this Agreement is invalid
or unenforceable, you agree that the court making the determination of
invalidity or unenforceability shall have the power, and is hereby directed, to
reduce the scope, duration or area of the provision, to delete specific words or
phrases and to replace any invalid or unenforceable provision with a provision
that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable provision, and this Agreement shall be enforced
as so modified.
 
The provisions of this Agreement which by their terms call for performance
subsequent to Separation Date or termination of this Agreement, shall so survive
such termination.

This Agreement shall take effect only upon the approval of the board of
directors of both the Company and Parent.

We thank you for your contribution to the Company and the Parent and wish you
success in your future.

              Sincerely yours,

                                 A.D. Integrity Applications Ltd.
   Integrity Applications Inc.
 
[Signature Page to Follow]

 
- 4 -

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, the undersigned has signed this Agreement on the date first
mentioned above
 
___________________________________
Signature

Name:  ____________
 
Address:______________
 
Email: _________________

- 5 -

--------------------------------------------------------------------------------

 
Annex A

The pay slip for the payment in lieu of the Notice Period (180 days), and the
Company's contribution to study fund up to the Effective Date ("Keren
Hishtalmut") to be paid as follows: 20% subsequent to the Separation Date and
remaining over 9 months in 5 equal payments (NIS 17,862 each), are attached.
 
Deduction File
951298223
No. of Company 513151878
Paycheck 03/2017
Company Name 
A.D. Integrity Applications Ltd.
19 Ha'Yahalomim st. Ashdod
Starting Date
01/01/04
Seniority
Rank
Sub Dept.
I.D. Number
 
Employee Name
Avner Gal
   
Department  1
Employee #
1
Monthly Compensations:                23,854.00
Compensation Exempt:                     2,667.00
Compensation:                                   0.00
Salary for compensation:                 286,372.00
Provident Fund:                                19,809.00
Salary for Provident Fund:              286,372.00
Monthly Employer Study Fund:    0.00
Salary for study fund:                      0.00
Payment Description
Quantity
Fee
%
Net To reflect
Total Payments
Base Pay
Convalescence pay
Car allowance
Accumulated Vacation
Early Notice base pay
Car Allowed gross up tax
Taxable Study Fund
Value of use of vehicle
Value of annuity
Disability insurance value
Mobile phone value
Value of severance pay
1.23
28.00
6.00
87.75
6.00
 
1.00
1.00
1.00
1.00
1.00
1.00
40,000.00
378.00
6,000.00
1,818.00
40,000.00
 
151,612.00
4,190.00
16,671.00
996.00
105.00
21,187.00
 
 
 
 
 
 
 
 
4,190.00
49,332.00
10,854.00
36,000.00
159,530.00
240,000.00
4,190.00
151,612.00
Credits
2.25
Space working
Yes
Family status
M
 
Personal Credit
483
% Fixed Tax
מס שולי
50.00
Shits Except
Provident Fund
Credit 211
Additional credit
Income tax for
coordination
Salary for Coordination
Tax Coordination
 

 

Compulsory Deductions
Sum
Optional Deductions
Balance
Qty
Total
Income Tax
336,589.00
Expenses Reimbursement
509.00
‐1
‐509.00
Social Security
2,403.00
Non Taxable Study Fund
98,078.00
‐1
‐98,078.00
Convalescence fee
1,716.00
   
Convalescence allowance
516.00
   
Pension Allowance
16,666.00
   
Total
357,890.00
Total
‐98,587.00

 
 
Taxable Income
 
542,785.00
 
Salary for National Security
 
43,240.00
 
Total Payments
 
651,248.00
 
Total Deductions
 
357,890.00
 
Net Salary
 
293,358.00
 
Payment amount
 
391,945.00
 

Vacation days

 
Current
balance
 
Use
 
New Balance
Vacation
Sick days
69.5
90.0
72.0
0.0
0.0
90.0
Days Per month
2.5

 

Cumulative Data
Payments
738,681.0
   
 
1,451
 
Total social security
 
129,720
Total Salary
56,087.0
Taxable Salary
643,156.0
 
Employer Provident Fund
27,015
Income tax
366,216.0
632
 
            ‐
Social Security
12,357.0
Employer Compensations
30,024
Study fund
21,626.0
151,612

 
 
 
 
- 6 -

--------------------------------------------------------------------------------