exv10w38



 





Exhibit 10.38




	 	 	 
	Pinchas Reich

	 	January 1, 2003
	
	 	 
	Dear Mr. Reich,
	 	 





Re:     Your Employment at VERAZ Networks Ltd.



We are pleased to confirm by this Agreement and its Appendices the terms of your employment at
VERAZ Networks Ltd. (private co. no. 513044537, hereinafter: “Veraz” / the “Company”) and wish you
every success in your position.





	A.	 	The Position






	 	1.	 	You have been accepted to the position of Vice President of Sales, VERAZ LTD.
(hereinafter: the “Position”) in a sales unit subordinate to the CEO of Veraz Networks
Inc., or as a result of any change of control in the Company, as defined in section J of
Appendix A (Change of Control), to another position with similar powers and
responsibilities as the Company may decide and shall instruct, provided that the
provisions of section J of Appendix A – Terms and Conditions of Employment, remain intact.
	 
	 	2.	 	Your employment with the Company is for an indefinite term commencing on January 1,
2003.
	 
	 	2.	 	Position of Personal Trust
	 
	 	3.	 	You acknowledge and agree without reservation that:
	 
	 	3.1	 	As there is no supervision over your hours of work and rest and your position is one
of those positions requiring a special measure of personal trust, as defined in the Hours
of Work and Rest Law, 5718 – 1951, the provisions of this Law shall not apply to you, and
you shall not receive any remuneration for working overtime or extra hours.
	 
	 	3.2	 	The Position and work requirements require work according to flexible work hours,
work beyond regular work hours or even on irregular work days.






	C.	 	The Salary






	 	4.	 	Your salary shall be at the rate of NIS 51,359 gross monthly (hereinafter: the
“Salary”) and shall be updated according to the cost of living increment as shall be paid
from time to time to employees in the marketplace. The above Salary includes the cost of
living increment which was paid prior to the signing of this Agreement.
	 
	 	5.	 	Your Salary shall include a monthly payment, at the rate of 10% (ten percent) of the
Salary owing to you for that month – as special consideration




 









 






	 	 	 	for your undertaking to limit competition against the Company as specified in Appendix A,
attached hereto (hereinafter: the “Special Consideration”), provided that you are not in
breach of your above mentioned undertaking.
	 
	 	6.	 	Your Salary will be paid to you on the first day of each month, and in any event by
no later than by the ninth day of each month.
	 
	 	7.	 	Furthermore, you shall be entitled to be included within the scope of a senior
executive benefits plan as agreed upon between you and the Company with the approval of
the Company’s Board. The terms and goals of the plan shall be agreed upon by no later than
the end of January.






	D.	 	Annual Vacation, Sick Leave, Holiday Payments and Military Reserve Duty






	 	8.	 	You are entitled to annual vacation eave of 21 working days for your first year’s
work with the Company (hereinafter: the “Initial Vacation Quota”).
	 
	 	9.	 	After your first year’s work, for any additional year’s work with the Company one
work day shall be added to the Initial Vacation Quota up to a maximum annual vacation
ceiling of 21 (twenty one) working days annually.
	 
	 	10.	 	You shall be entitled to accumulate to your credit the unutilized balance of
contractual vacation days – up to a ceiling of 600 work hours. The accumulated vacation
hours above and beyond this ceiling shall be redeemed by the Company in your regular
Salary. The redemption of your Salary shall be done without the payment of social or other
benefits. You must actually utilize at least five consecutive working days as annual
vacation leave.
	 
	 	11.	 	You shall be entitled to be absent from work with payment due to illness 1.5 days
every month which may be accumulated up to a maximum ceiling of 90 days. Payment of sick
leave shall be made subject to the providing of a duly issued sick note, except for two
non consecutive sick days annually which you may utilize without said sick note. There is
no redemption of sick days which have not been utilized.
	 
	 	12.	 	At the end of the work year, you shall be paid holiday pay according to 12 days a
year. The tariff per day of holiday pay shall be according to law, in an amount acceptable
at the Company and as shall be updated from time to time.
	 
	 	13.	 	You shall be entitled to receive a full salary from the Company for absence due to
military reserve duty against provision of a certificate from the Israel Defense Force
authorities regarding the duration of service. The National Insurance Institute payments
which shall be received on account of your military reserve duty shall belong to the
Company.






	E.	 	Comprehensive Insurance and Provident Fund and/or Executive Insurance Plan




 









 












	 	14.	 	Upon commencement of your employment you are given the option of choosing between
insurance under a comprehensive insurance policy and a provident fund or insurance under
an executive insurance plan and/or a combination of both of the above. The rates of
provisions made by the Company and you from your Salary are as detailed below:
	 
	 	15.	 	Pension Fund: the Company shall make payments and deductions for you to the
                                        pension fund (the “Fund”) as specified
below:
	 
	 	15.1	 	6% of your Salary on account of severance pay.
	 
	 	15.2	 	6% of your salary on account of pension.
	 
	 	15.3	 	Similarly, the Company shall pay 2.33% of your Salary and shall transfer such to “
                    ” Provident Fund on account of severance pay.
	 
	 	15.4	 	The Company shall deduct 5.5% from your Salary and shall transfer such to the Fund.
	 
	 	16.	 	Payments made by the Company as specified above shall be in lieu of full severance
pay, if owed to you, pursuant to Section 14 of the Severance Pay Law, 5723 – 1963, and
pursuant to the general certificate from the Minister of Labour and Welfare regarding
employers’ payments to pension funds and insurance funds in lieu of severance pay,
attached to this document as Appendix B.




And/Or





	 	17.	 	Executive Insurance Plan: the Company shall make provisions and deductions
for you to the executive insurance plan at Clal Bit Insurance Company (the “Policy”). The
Policy shall be owned by the Company and shall be managed in your name, pursuant to the
following provisions:
	 
	 	17.1	 	8.33% of your Salary on account of severance pay.
	 
	 	17.2	 	5% of your Salary on account of pension.
	 
	 	17.3	 	The Company shall deduct 5% of your Salary on account of a pension and shall forward
such amounts to the Policy.
	 
	 	18.	 	The Company shall also make payments to secure monthly income in the event of loss of
working capacity, at the rate required to guarantee 75% of your Salary, or payments at the
rate of up to 2.5% of your Salary, according to the lower of the two.
	 
	 	19.	 	The provisions made by the Company on account of the Policy shall be in lieu of full
severance pay, if you are owed any, pursuant to section 14 of the Severance Pay Law, 5723
– 1963 and pursuant to the general certificate from the Minister of Labour and Welfare
regarding employer’s payments to




 









 






	 	 	 	pension funds and insurance funds in lieu of severance pay, attached to this document as
Appendix B.
	 
	 	20.	 	For the removal of any doubt it is hereby clarified that the Company waives its right
to a reimbursement of monies paid to the pension fund and/or provident fund and/or the
Policy, unless your right to severance pay has been denied following a court judgement,
where it has been denied, or if you withdraw funds from the Policy due to an occurrence
which is not an “entitling event”. For this purpose, “entitling event” shall mean death,
disability or retirement at the age of 60 years old or more.
	 
	 	21.	 	For the removal of any doubt it is emphasized that in any event the base salary for
provisions and deductions to the Pension Fund and/or the Provident Fund and/or the
Executive Insurance Plan shall each, separately and/or jointly, in any form and manner
whatsoever, not exceed the amount of the Salary as defined above.






	F.	 	Advanced Study Fund






	 	22.	 	Upon commencement of your employment and subject to your presenting an appropriate
certificate from the human resources office, you will become a member of the Kinneret
Advanced Study Fund (hereinafter: the “Advanced Study Fund”). The Company shall make
monthly provisions at the rate of 7.5% of your Salary and shall deduct 2.5% from your
Salary and transfer these amounts to the Advanced Study Fund.
	 
	 	23.	 	The amounts to be accumulated in the Advanced Study Fund will be made available to
you according to the regulations of the Advanced Study Fund and the tax regulations in
force from time to time.
	 
	 	7.	 	Further Benefits
	 
	 	24.	 	Company Car: during the period of your employment at the Company a car shall
be provided for your use of the model and manufacture year at the discretion of the
Company and in accordance with its procedures (hereinafter: the “Car”). The Company shall
bear reasonable fuel costs for the Car. The value of the use of the Car, according to the
income tax regulations as shall be in force from time to time, shall be debited against
you and taxes shall be deducted from your Salary as required by law. The provision of the
Car for your use, as stated, covers and is in lieu of payment of travel expenses under the
general expansion order valid in the Israeli economy.
	 
	 	25.	 	Mobile Phone: the Company shall provide you with a mobile phone of the model
and network at the discretion of the Company (hereinafter: the “Mobile Phone”), and shall
cover all Mobile Phone expenses. The Company shall deduct any tax and/or levy and/or other
payment from your Salary which it is under a duty to deduct for the Mobile Phone under the
provisions of any law.




 









 






	 	26.	 	Annual Health Review – the employee shall be entitled to undergo an annual
health examination at an institution to be determined by the Company.
	 
	 	27.	 	The Options Plan: the Company (or the parent company) shall act to adopt an
options plan (or some other benefits plan), during the month of January 2003. The Company
shall grant you options according to the policy of the Company (or the parent company) as
shall be formulated from time to time vis-à-vis employees of your status. Every grant or
benefit as stated is subject to the exclusive discretion and approval of the board of
directors of the Company.






	G.	 	Term and Termination of Employment






	 	28.	 	As has been stated above, the Employment Agreement is for an undefined term. Each
party shall be entitled to terminate the Agreement upon ninety (90) days prior written
notice to the other party. Should the termination of the Agreement be in consequence of
any Change of Control, as set forth in section J of Appendix A, the provisions of section
J of Appendix A shall apply to the termination of the Agreement.
	 
	 	29.	 	During the notice period you must continue to carry out your work in a full and
proper manner and hand over your Position to your designated replacement, as necessary and
as required.
	 
	 	30.	 	The Company may waive all or part of your actual employment during the notice period,
continually or alternately.
	 
	 	31.	 	The Company may immediately terminate the employment relationship between the parties
prior to the end of the notice period, in whole or in part, provided that you are given
compensation in the amount of your Salary (as defined above) for the period for which you
have not been given prior notice under this Agreement and you may keep the Car and the
Mobile Phone throughout the notice period. Furthermore, there shall be an acceleration of
all the options which should have been vested in the course of the three months, had the
Employee remained at the Company.
	 
	 	32.	 	Notwithstanding the above, the Company may dismiss you without prior notice, under
those circumstances in which the Company is entitled to dismiss you without prior notice
under the provisions of any law, including in each of the following cases:
	 
	 	32.1	 	The Company has reasonable suspicion that a criminal offence has been committed in
connection with your employment at the Company and/or the commission of an offence
involving moral turpitude.
	 
	 	32.2	 	A breach of your duty of loyalty to the Company and/or the commission of any act
involving a conflict of interests.
	 
	 	32.3	 	A breach of your undertakings to keep confidentiality, non-competition, not to damage
reputation or infringe intellectual property, as set forth in the




 









 






	 	 	 	Appendix to this Agreement, which has not been remedied within 10 (ten) days of the date
on which you were given written warning.
	 
	 	32.4	 	Causing malicious damage to Company property or causing damage to Company property as
a result of a grossly negligent act. In such a case you also agree that the Company shall
duly deduct amounts from your Salary to cover all or part of the expenses and costs of the
damage.
	 
	 	33.	 	Upon termination of employment for any reason whatsoever, you must return to the
Company any property, equipment, document or information in your possession and which has
been given to you in the course of your employment at the Company and you shall have no
right of lien or other right on account of the above.






	I.	 	General






	 	34.	 	Under Company policy, the terms and conditions of your employment, including the
amount of your Salary and fringe benefits, are personal and confidential information and
you undertake not to disclose such information to other Company employees and/or to any
third party unless you are required to so under law. Nothing stated in this Agreement
shall derogate from any right vested in you in under the provisions of any law, extension
order, collective agreement or employment agreement.
	 
	 	35.	 	The Appendices: “Terms and Condition of Employment” and the “General Certificate
Under Section 14 of the Severance Pay Law” are an integral part of this Agreement. By your
signature on this Agreement you are certifying your agreement to all the provisions of the
Agreement and the Appendices and that you will act in accordance therewith.




The Management of the Company is pleased to have you join its workforce, wishes you every success
in your position and hopes to see you as a fully integrated member of its team.




Faithfully,




Veraz Networks Ltd.

Human Resources





	I hereby certify my consent to all the provisions of this Agreement and its Appendices.





	 	 	 	 	 
	January 1, 2003

	 	Pinchas Reich
	 	( — )
	 
	 	 	 	 
	 

	 	 
	 	 
	Date

	 	Name of Employee
	 	Signature of Employee






	 	 	 
	Enclosures:

	 	Appendix A – Terms and Conditions of Employment.
	 

	 	Appendix B – General Certificate Under Section 14 of the Severance Pay Law.






 









 






	 	 	 
	 

	 	Appendix A – Terms and Conditions of Employment







	A.	 	Preamble
	 
	1.	 	This Appendix constitutes an integral part of the Personal Employment Agreement dated January
1, 2003 (hereinafter: the “Agreement”).
	 
	2.	 	The Agreement is written in the masculine form for the sake of convenience only and applies
equally to men and women.
	 
	B.	 	Special Agreement
	 
	3.	 	This Agreement is a personal agreement and the Employee’s terms and conditions of employment
shall only be pursuant to the provisions of this Agreement and its Appendices. No provisions
of any collective agreement, collective arrangement or custom of any sort whatsoever, if and
when such should apply, shall apply to the relationship between the parties, save for
provisions applicable under law.
	 
	4.	 	This Agreement expresses and exhausts all understandings between the Employee and the Company
and any arrangements, representations, letters or understandings in the course of the
negotiations leading up to the Employee joining the Company which have not been explicitly
expressed in this Agreement shall be void and invalid.
	 
	B.	 	No Restriction on Employee’s Employment
	 
	5.	 	The Employee declares, confirms and undertakes that he is entitled to enter into this
Agreement and to assume all the undertakings hereunder, that there is no restriction,
contractual or otherwise, on his entering into this Agreement and his employment by the
Company and that his entering into this Agreement is not in breach of any other agreement or
undertaking to which he is party or to which he was party.
	 
	6.	 	The Employee hereby declares that he has no medical or other problems which are likely to
prevent him from fulfilling his undertakings to work for the Company. The Employee shall
notify the Company of any change occurring in his state of health which is relevant to his
position.
	 
	D.	 	The Employee’s Position and Duties
	 
	7.	 	Throughout his term of employment with the Company the Employee shall act toward the Company
with honesty, dedication, skill and loyalty. The Employee undertakes to devote all his work
capacity and best skills and expertise to promoting the business and affairs of the Company,
carrying out Company policy and working arrangements, complying loyally and fully with
decisions of the Company, the management and his superiors, both in Israel and abroad,
complying with Company procedures, as they may be from time to time, carrying out at all times
any tasks assigned to him and always acting loyally to




 









 






	 	 	the Company, any affiliated corporation or any corporation or individual having business
connections with the Company.
	 
	8.	 	The Employee shall act at all times in a proper manner as befits his position and status in
the Company. Without derogating from the aforesaid, the Employee undertakes not to use the
computer, internet or electronic mail for improper purposes, including receiving and
transmitting pornographic material, or any other material unrelated to his work and likely to
harm the Company, other employees or any other third party whatsoever, and not to use any
illegal software or any other external software.
	 
	9.	 	The Employee is aware of the provisions of the rules on prevention of sexual harassment
existing at the Company and undertakes to review these rules which may be found in the human
resources department.
	 
	10.	 	The Employee shall not hold any other job, either at another employer or independently, for
a fee or gratuitously, as a self employed or salaried worker or as a consultant, and shall
not assume any position in any other entity whatsoever, including a public entity, unless the
Company has provided its prior written consent to the aforesaid.
	 
	11.	 	The Employee undertakes to notify the Company immediately and without delay, of any matter or
subject in which he has a personal interest and/or which is likely to create a conflict of
interests with his functions at the Company.
	 
	12.	 	The Employee undertakes to assist the Company and any affiliated or associated corporation
and to be available to the Company, even after termination of the employment relationship with
the Company for any reason whatsoever, including for the purpose of furnishing any information
relating to his employment or the activities he undertook, including in the management of
disputes, including legal proceedings or quasi legal proceedings. Should the Company require
the services of the Employee after termination of the employment relationship with him, for
any reason whatsoever, the Employee shall be reimbursed with his expenses for carrying out the
provisions of this section.
	 
	13.	 	Immediately upon termination of his employment with the Company, for any reason whatsoever,
the Employee shall deliver and/or return to the Company any documents, charts, lists, formulae
and any other material, disks or any other magnetic media and shall carry out his departure
from the Company in coordination with his superiors, including the orderly handing over of his
position according to a timetable to be determined by his superiors and he shall hand over his
position, the documents and any matters being handled by him in an orderly manner in
accordance with Company procedures to any person as directed by the Company, all to the
satisfaction of the Company.
	 
	14.	 	After the termination of the employment relationship between the Employee and the Company,
the Employee shall deliver to his new employer a notice respecting his obligations and rights
under this Appendix. Moreover, the Employee hereby permits the Company to deliver such a
notice, provided that




 









 






	 	 	there is reasonable suspicion that the Employee is in breach of any of his undertakings under
this Appendix.
	 
	E.	 	Confidentiality
	 
	15.	 	The Employee declares that he is aware and agrees that in the course of his employment and
within the scope of a fiduciary relationship he is exposed and shall be exposed to highly
valuable professional – commercial information in all matters relating to the business and
commercial relationships of the Company, particularly in all matters relating to the business
of the Company in the areas of development, manufacture, marketing, sales and service of
communications products and solutions, including, inter alia, DCME products and VoIP products
separately, as well as in combination with SoftSwitch products. The products include
condensing and transfer of telephony signals (including, inter alia, speech, modem, fax and
video) and signal conversion and transfer over TDM networks or Packets networks (including,
inter alia, ATM, IP and Ethernet) (hereinafter: the “Company’s Field of Business”). This
information is the exclusive property of the Company and the disclosure thereof to any entity
or the use thereof by the Employee is likely to seriously damage and harm the Company.
	 
	16.	 	Therefore, the Employee declares and undertakes that as an employee of the Company and even
after the termination of his employment for any reason whatsoever, he shall keep confidential
and not disclose or deliver to any person or any entity whatsoever, apart from employees of
the Company within the scope of their work and as necessary, and he shall not publish in any
form whatsoever or make use himself or in favour of any third party, directly and/or
indirectly, whether or not the secrets, information or documents set forth below, reached him
directly or indirectly in consequence of his employment at the Company:






	 	16.1	 	trade and/or other secrets of the Company, information directly or indirectly
related to the property, business, interests, customers and suppliers of the Company and
of people and/or entities affiliated with the Company, including information on the
Company’s Field of Business, as defined above, and any information relating to and/or
connected with the above, including, but without derogating from the generality of the
above, any information which reached and/or shall reach the Employee and/or come to his
attention, directly and/or indirectly, within the course of his employment at the
Company, including information relating to customers and suppliers of the Company and/or
the manufacturing or marketing arrangements of the Company or confidential information
of third parties which the Company has received from such third parties, or information
relating to any potential or actual contacts of the Company and/or its associated,
controlling, controlled or affiliated companies with any third parties whatsoever,
including customers, suppliers, banking institutions, government bodies, private
entities, quasi public and public bodies of any kind whatsoever and any other business,
financial and commercial information, financial statements and balance sheets prior to
publication thereof, any inside information whatsoever able to affect the value of the




 









 






	 	 	 	Company shares, formulae, data, software, plans, patents, processes, inventions,
discoveries, innovations, improvements, research, any methods whatsoever, and
scientific, technical, economic, commercial or other advances and developments, and
any information on matters in which the Company is likely to engage, provided that
such information is not within the public domain or has not come into the public
domain following the breach of any of the undertakings of the Employee pursuant to
this document or under the provisions of any law, regardless of whether the aforesaid
secrets and information reached the Employee in consequence of his employment at the
Company or by any other means (hereinafter: the “Secrets / Information”),
respectively;
	 
	 	16.2	 	in addition to any document, memorandum, record, report, summary, plans, letters,
drafts, patent application documents, prototypes, models, pictures, descriptions,
sketches or other documents of the Company, including computer software and information
encrypted and/or stored in any media whatsoever with respect to all or part of the
Information and Secrets set forth above, whether drawn up by the Employee or by any
other person (hereinafter: the “Documents”).
	 
	 	16.3	 	The Employee undertakes not to make any use, including duplication, manufacture,
sale, transfer, copying and dissemination of the Information, Secrets and Documents as
defined above which is not for the purposes of the success of the Company and shall not
carry out any act which may damage the Company’s reputation.






	17.	 	The Employee certifies that all the aforesaid Secrets, Information or Documents are within
the scope of the essential business proprietary information of the Company which is not within
the public domain and cannot be easily discovered by others and whose confidentiality vests in
the Company a business advantage over its competitors and the Company is taking all reasonable
measures to keep the confidentiality thereof.
	 
	18.	 	The undertakings mentioned above shall not apply to the transfer of information with the
consent of the board of directors or with the consent of any person authorized by the board of
directors to approve the transfer of such information and passing on such information to
authorities where the disclosure of such information is required under the provisions of any
law.
	 
	F.	 	Non-Competition and Non-Solicitation
	 
	19.	 	Similarly, to the extent that the employment relationship prevails between the Company and
the Employee, the Employee undertakes not to compete with the Company and/or any company under
its control and/or with any ventures and/or activities whatsoever in which the Company is a
party, directly or indirectly, either by himself or by means of any person on his behalf,
whether as an employee, consultant, partner, contractor, distributor, shareholder and/or in
any other capacity whatsoever, either at his own initiative or at the initiative of any other
person, or by any other means whatsoever. As part of this undertaking the Employee undertakes
not to solicit, enter into an agreement with or employ,




 









 






	 	 	either directly or indirectly, at his initiative or at the initiative of any other person
whatsoever, employees of the Company, former employees, customers, former customers,
suppliers and former suppliers of the Company and/or agents with whom the Company has
conducted negotiations prior to the creation of an agreement on the date of or prior to
termination of his employment with the Company, in Israel or countries in which the Company
operates, in order to leave the Company and/or to compete with the Company, directly and/or
indirectly and/or not for the purpose of carrying out his position under this Agreement,
without obtaining the prior written consent of the Company.
	 
	20.	 	Further to the provisions of section 19 above, the Employee undertakes, that to the extent
that the employment relationship prevails between the Company and the Employee, he will not
solicit or attempt to solicit, either directly or indirectly, any other employee, consultant,
or service provider of the Company to terminate his relationship with the Company with the
object of providing his services or working for another entity.
	 
	21.	 	In light of the special status of the Employee in the Company and in light of his special
expertise, knowledge, contacts and experience in the Company’s areas of activity, the
restrictions in Sections 19 and 20 above shall also apply to the Employee for twelve (12)
months after the termination of the employment relationship between the Employee and the
Company, in any event, even if his employment has terminated at the Company’s initiative.
	 
	G.	 	Intellectual Property, Copyright and Patents
	 
	22.	 	The copyright on any invention and/or patent and/or trade secret and/or professional secret
and/or innovation whatsoever invented by the Employee and/or any of the Company employees
subordinate to him in the course of and/or following his employment at the Company is the
exclusive property right of the Company and the Employee hereby assigns any interest he may
have in such invention and/or patent and/or trade secret and/or professional secret and/or
innovation whatsoever, in favour of the Company and waives any right in the aforesaid
intellectual property, without any further remuneration, provided that he will not be required
to incur any expenses whatsoever incidental to the aforesaid assignment. The Company may
protect any invention and/or patent and/or trade secret and/or professional secret and/or
innovation whatsoever as stated above by means of registration and/or by any other means
whatsoever, whether in Israel or in any other place.
	 
	23.	 	The Employee undertakes that wherever necessary, including after the termination of his
employment for any reason whatsoever, he will sign on any document which at the discretion of
the Company is necessary in order to submit an application for patents or copyright under the
laws of Israel and/or any other foreign country in order to protect the interest of the
Company in the invention and/or patent and/or trade secret and/or professional secret and/or
any innovation whatsoever as stated above. Wherever the Company is unable, for any reason
whatsoever, after reasonable attempts, to obtain the Employee’s signature in connection with
such activities as stated in section 22 above and in this section, the Employee hereby
authorizes and appoints the Company and its




 









 






	 	 	senior officers as his lawful representatives to sign and act in his name on the documents
required to carry out the actions described in section 22 above and in this section.
	 
	24.	 	The Employee undertakes to make a record, pursuant to Company procedures, of any invention
and/or patent and/or trade secret developed by him and to notify the Company in writing of any
invention and/or patent and/or trade secret and/or any innovation whatsoever invented by him
and/or invented by Company employees subordinate to the Employee, immediately upon such
discovery.
	 
	25.	 	The Employee declares that apart from the provisions of Appendix A attached hereto, he owns
no interest in any patent and/or patent application whatsoever and/or in research activities
at the patent registration filing stage, or any material subject to copyright.
	 
	26.	 	The obligations of the Employee under this chapter shall remain in force also after the
termination of his employment at the Company and/or its successor, also with respect to
inventions invented by him during or following his term of employment at the Company.
	 
	27.	 	The provisions of this section shall also apply to any inventions discovered, developed or
invented by the Employee after termination of the employment relationship between the Employee
and the Company for any reason whatsoever, even if the Employee uses and is helped by any
Information or confidential material reaching him or coming to his attention within the scope
of his employment at the Company.
	 
	28.	 	For the removal of any doubt it is hereby clarified that the Employee may not use, and the
Employee undertakes not to use in his job any intellectual property or classified information
of any third party whatsoever (if any) unless such use is lawful.
	 
	29.	 	The provisions of this section shall also bind any person in lieu of the Employee, his
estate, heirs, successors and family members.
	 
	30.	 	Prohibition on Use of Company Name: the Employee undertakes not to make any use of
the Company name or any other name containing its name in connection with products and/or
services and/or sales promotion on his behalf and/or any other use thereof, either directly or
indirectly, apart from mention of his actual employment at the Company, either himself or by
means of others, both during the term of his employment at the Company and not for the
purposes of his job, and after the termination of his employment with the Company, unless he
has been expressly permitted in writing to do so by the Company.
	 
	H.	 	The Employee declares and certifies the following:
	 
	31.	 	His undertaking to keep confidentiality, non-competition, non-infringement of reputation and
intellectual property under this document:




 









 












	 	31.1	 	applies vis-à-vis the Company and vis-à-vis affiliated companies, subsidiaries,
associated companies and the parent company of the Company, as the case may be;
	 
	 	31.2	 	derives from the status of the Employee and taking into account his position and
all that this entails, the Employee’s terms and conditions of employment under this
Agreement have been determined, inter alia, in reliance on this undertaking;
	 
	 	31.3	 	it is fair, proportionate and reasonable, also in light of the Special
Consideration he received within the scope of his employment contract with the Company
and is designed, first and foremost, to protect the secrets and confidential information
of the Company, which are the essence of the Company’s business and commercial advantage
worthy of protection in which a huge amount of capital has been invested.
	 
	 	31.4	 	It is not contrary to any previous undertakings made by the Employee and the
Employee shall not enter into any future undertakings conflicting with his undertakings
under this Agreement.






	32.	 	The breach of any of the undertakings under this Appendix shall be contrary to the special
fiduciary relationship between the parties as employee and employer, proper trade practices
and the duty of good faith and fairness between the parties, shall harm the Company’s business
and shall constitute a fundamental breach of this contract and of the Company’s trade secrets,
confidential contacts, confidential information and protected interests.
	 
	33.	 	The Employee received special and separate consideration for his undertakings under this
Appendix which are proportionate and reasonable and do not prevent the Employee from
developing his general knowledge and professional skills in his field of occupation with
respect to any person who is not a customer or employee of the Company and without
misappropriating its trade secrets.
	 
	I.	 	Relief
	 
	34.	 	In the event of any breach of the above sections on confidentiality and/or non-competition
and/or intellectual property, the Company shall be entitled, in addition to any other remedy
or relief under the provisions of any law or under this Contract, to the following:






	 	34.1	 	to receive from the Employee the entire consideration and/or entire benefits he
obtained from the breach;
	 
	 	34.2	 	to receive from the Employee the entire Special Consideration on account of his
undertaking to refrain from competition as set forth in the Agreement, paid to him in
the course of his employment under this Agreement, plus interest and linkage
differentials under law;




 









 






	 	34.3	 	To receive damages from the Employee for any damage and/or expenses incurred by
the Company in consequence of the breach, including legal costs and attorneys fees plus
value added tax as required by law;
	 
	 	34.4	 	to set off these amounts from any amount owed by the Company to the Employee;
	 
	 	34.5	 	and also to receive any legal remedy in the form of a mandatory injunction,
prohibitory injunction, provisional, temporary or permanent relief for the prevention
and/or removal of the breach, and the Employee declares and agrees in advance to the
grant of such relief against him, since it is fair, just, reasonable and proportionate
in the particular circumstances.






	J.	 	The provisions that will apply upon termination of employment in the case of any change of
control –


	 
	[Pages to be added]	 	


	 
	K.	 	General
	 
	37.	 	If, for any reason whatsoever, any of the terms of this Agreement are held to be invalid or
unenforceable, the validity and enforceability of the other provisions of this Agreement shall
not be affected.
	 
	38.	 	The Employee shall bear any taxes originating in the rights and benefits he received under
this Agreement. It is hereby clarified that any amounts as stipulated in this Employment
Agreement are gross amounts and any legal tax and other obligatory payments, including health
insurance and national insurance payments, shall be deducted from these amounts and from any
other rights and benefits received by the Employee in the future under this Agreement.
	 
	39.	 	Any amendment to the provisions of this Agreement and the Appendices thereto shall be made in
writing only and signed by the parties.
	 
	40.	 	Any notice sent by registered mail by one party to the other party shall be deemed to have
been received by the other party three business days after having being sent, and if sent by
personal delivery or by email, it shall be deemed to have been received at the time of
delivery.
	 
	41.	 	The Employee may not transfer, assign, endorse or deliver to any other person, directly or
indirectly, his rights and obligations under this Employment Agreement, without obtaining the
prior written consent of the Company.
	 
	42.	 	The Company may transfer, assign or endorse all or part of the Employee’s rights and
obligations to any other person, at its discretion, provided that the rights of the Employee
are saved.




 









 






	 
	43.	 	The Employment Agreement and the employment relationship shall be governed solely by Israeli
law, including the provisions of section J and the venue shall be the competent court in
Israel.
	 	 	

	44.	 	The addresses of the parties are as set forth in the Preamble to the Personal Employment
Agreement.





Employee Confirmation



I hereby confirm that I was given an opportunity to consult with an attorney on my behalf, I have
thoroughly read this Agreement and its Appendices, I fully understand their content, significance
and meaning, I agree to everything stated therein and undertake to fully comply with all my
obligations thereunder.




	 	 	 	 	 
	January 1, 2003

	 	Pinchas Reich
	 	( — )
	 
	 	 	 	 
	 

	 	 
	 	 
	Date

	 	Name of Employee
	 	Signature of Employee






 









 





Appendix B



General Certificate on Employer Payments to Provident Funds and Insurance Funds in Lieu of
Severance Pay




Under the Severance Pay Law, 5723-1963





	 	 	By virtue of my authority under section 14 of the Severance Pay Law, 5723-19631
(hereinafter: the “Law”) I certify that payments paid by an employer commencing on the date of
publication of this certificate on account of its employees to a comprehensive pension benefit fund
which is not an insurance fund as defined in the Income Tax (Rules on Approval and Management of
Provident Funds) Regulations, 5724 – 19642 (hereinafter: “Pension Fund”) or into an
executive insurance plan including the option of an insurance pension fund or the combination of
payments into a pension fund and into a plan which is not for a pension in such an insurance fund
(hereinafter: “Insurance Fund”) including payments paid by a combination of payments to a Pension
Fund and an Insurance Fund, whether or not the Insurance Fund has a pension plan (hereinafter: the
“Employer’s Payments”), shall be in lieu of severance pay due to such employee in respect of the
salary from which such payments were made and for the period such payments were made (hereinafter:
the “Exempt Salary”), provided that all of the following conditions have been satisfied:






	 	(1)	Employer Payments






	 	(a)	 	to the Pension Fund are not less than 141/3% of the Exempt
Salary or 12% of the Exempt Salary if the employer pays for his employee in addition
thereto also payments to supplement severance pay to a provident fund for severance pay
or to an Insurance Fund in the employee’s name in the amount of
21/3% of the Exempt Salary. Where the employer has not paid the
aforesaid 21/3% in addition to the aforesaid 12%, his payments
shall only be in lieu of 72% of the employee’s severance pay;
	 
	 	(b)	 	to the Insurance Fund are not less than one of the following:






	 	(1)	 	131/3% of the Exempt Salary, if the employer
pays for his employee in addition thereto also payments to secure monthly income
in the event of disability, in a plan approved by the Commissioner of the Capital
Market, Insurance and Savings Department of the Ministry of Finance, in an amount
required to secure at least 75% of the Exempt Salary or in an amount of
21/2% of the Exempt Salary, according to the lower of the
two (hereinafter: “Disability Insurance”);
	 
	 	(2)	 	11% of the Exempt Salary, if the employer paid, in addition, a
payment to the Disability Insurance, and in such case the Employer’s Payments
shall only be in lieu of 72% of the Employee’s severance pay. Where the employer
has paid in







 




			
	1	 	Sefer HaChukkim 5723, page 136
	 
	2	 	Kovetz Hatakanot, page 1302




 









 











	 	 	 	addition to the aforesaid payments to supplement severance pay to a provident
fund for severance pay or to an Insurance Fund in the employee’s name in the
amount of 21/3% of the Exempt Salary, the Employer’s
Payments shall be in lieu of 100% of the employee’s severance pay.






	(2)	 	No later than three months after the commencement of the Employer’s Payments, a written
agreement was drawn up between the employer and the employee including –






	(1)	 	the employee’s consent to the arrangement pursuant to this certificate in a form
setting forth the Employer’s Payments, the Pension Fund and Insurance Fund, as the case
may be. The aforesaid agreement shall also include the form of this certificate;
	 
	(2)	 	the employer has made a prior waiver of any right which it may have to any
reimbursement of monies from its Payments, unless the employee’s right to severance pay
under judgment by virtue of sections 16 or 17 of the Law has been denied, and it has
been denied, or the employee has withdrawn monies from the Pension Fund or Insurance
Fund other than by reason of an entitling event. For this purpose, “entitling event”
means death, disability or retirement at or after the age of 60.






	(3)	 	This certificate shall not derogate from the employee’s right to severance pay under the Law,
a collective agreement, expansion order or employment contract, on account of any salary
beyond the Exempt Salary.





15 Sivan, 5758 (June 9, 1998)




Eliyahu Ishay





	 	 	Minister of Labor and Social Welfare