Document:

AVRA SURGICAL ROBOTICS,
INC.

 

August 2, 2012

 

VIA EMAIL TO:

 

Stephan Sagolla

ssagolla@AVRAsurgical.com

 

Re:          CEO Employment Agreement - AVRA
Surgical Robotics, Inc.

 

Dear Mr. Sagolla:

 

AVRA Surgical Robotics,
Inc. (“AVRA” or the “Company”) agrees to employ you as its Chief Executive Officer (“CEO”).
This letter, when counter-signed by you, will constitute the terms of our agreement governing your employment (the “Agreement”).

 

The specific terms
of your employment with the Company are as follows:

 

		1.	Term: This Agreement shall commence on or about August 2, 2012 and shall continue thereafter
for a period of 5 years, unless earlier terminated as herein provided.

 

		2.	Compensation: Beginning August 2, 2012, you will receive a base salary rate of €300,000
gross per year. This salary will be subject to annual review and increases as the Company’s board of directors deems appropriate
in its sole and absolute discretion. The salary will be paid monthly on the last day of each month. You are responsible to pay
all taxes required by law.

 

		3.	Benefits: During the term of your employment hereunder, the Company will pay for the following
expenses:

 

		(a)	Social Security, Health Insurance and Taxes: The Company will pay you a total of €15,000
per year, paid monthly at the end of each month, in full compensation to you for any Social Security assessments, health insurance
and any analogous charges assessed based on income. You agree to be responsible to pay the actual amounts due.

 

		(b)	Private Pension Fund: The Company will contribute at the end of each calendar year €48,000
gross into a private pension fund for your benefit.

 

		(c)	Company Car: The Company will reimburse you for leasing an Audi Q7 or equivalent, which
includes the right to use the car privately. All running costs (petrol, insurance, maintenance/repairs) will be paid by the Company.
Taxes shall be paid by you.

 

		(d)	Paid Vacation: The Company will pay you for four weeks’ vacation per year.

 

    	 

    	 

    

 

	Mr. Stephan Sagolla	2 August 2012	Page 2

 

		(e)	Other Expenses: In accordance with any rules and policies established from time to time
for its officers and employees, AVRA will reimburse you for business expenses reasonably incurred in the performance of your duties.
You are authorized to incur reasonable business expenses for promoting the business of AVRA, including reasonable expenditures
for travel, lodging, meals, and client or business associate entertainment. Requests for reimbursement for such expenses must be
accompanied by appropriate documentation.

 

		(f)	Disability Insurance: The Company will provide, by insurance or otherwise, continued base
salary for up to twelve months in the event you are disabled because of serious illness or accident. To the extent the Company
provides additional benefits to all executives for life, accidental death, dismemberment and disability, by insurance, you will
receive those benefits as well.

 

		(g)	Severance Benefits: In the event the Company terminates you as an executive during the initial
two years of your employment, you will be entitled to severance pay for six months at your base salary rate, plus accrued benefits,
including all vested stock options. Thereafter, severance will be paid for twelve months at the base salary rate, plus accrued
benefits.

		(h)	Long-Term Equity Compensation: Equity compensation for executives may be in the form of shares of stock, or options
to purchase shares of stock or both. You will be entitled to options or shares, or both, made under any long-term equity compensation
plan that may be adopted by the Company.

 

		4.	Confidentiality; Non-Solicitation: You acknowledge that AVRA possesses confidential information
that is peculiar to the businesses in which AVRA is or may be engaged. You hereby affirm that such confidential information is
the exclusive property of AVRA and that AVRA has proprietary interests in such Confidential Information. You will use confidential
information solely for the purpose of performing your duties on behalf of AVRA and for no other purpose, and you will not disclose
confidential information to any other person, except to AVRA’s officers as part of your duties as CEO, or use it to the detriment
of AVRA. At the end of your employment, you agree to return to AVRA all confidential information in your possession. If you terminate
your employment with AVRA, you agree that for a two-year period thereafter, you will not own, manage or control any business that
competes with AVRA, its subsidiaries and affiliates. If AVRA terminates your employment, the non-compete period will then be co-extensive
with the number of months for which you are entitled to severance pay.

 

		5.	Termination: Your employment may be terminated by your resignation, discharge by Company
or death. When your employment ends, you will be entitled to unpaid accrued salary and benefits to the date of termination. No
salary or benefits will accrue after termination.

 

		6.	Governing Law: This Agreement will be governed by and construed in accordance with the law
of the State of New York without giving effect to the rules of conflicts of law.

 

    	 

    	 

    

 

	Mr. Stephan Sagolla	2 August 2012	Page 3

 

		7.	Successors; Binding Agreement: AVRA and you agree that any successor company may assume
and agree to perform this Agreement in the same manner that AVRA is required to perform if no succession had taken place, such
as the planned merger of AVRA into a public company.

 

		8.	Entire Agreement: This Agreement embodies the entire understanding and agreement between
the parties concerning the subject matter hereof. It may not be changed, except by a writing signed by both parties.

 

		9.	Severability: If any provision, or portion thereof, of this Agreement, or its application
to any party or circumstances, shall be invalid, illegal or unenforceable to any extent, the remainder of this Agreement, such
provision and their application shall not be affected thereby, but shall be interpreted without such unenforceable provision or
portion thereof so as to give effect, insofar as is possible, to the original intent of the parties, and shall otherwise be enforceable
to the fullest extent permitted by law.

 

[Remainder
of this Page Intentionally Left Blank] 

 

    	 

    	 

    

 

	Mr. Stephan Sagolla	2 August 2012	Page 4

 

If this letter accurately
reflects your understanding of our employment agreement, please indicate your acceptance of the aforementioned terms by signing
your name in the space below and return one fully-executed copy of this letter to the Company within ten (10) business days.

 

We look forward to working with you.

 

	 	Very truly yours,
	 	 
	 	AVRA SURGICAL ROBOTICS, INC.
	 	 
	 	By:	 
	 	 	Barry F. Cohen
	 	 	President and Director

 

AGREED TO AND ACCEPTED:

 

The undersigned hereby agrees to and accepts
the terms of the offer set forth above. 

 

	 	 
	Stephan Sagolla	 

  

	Date:Exhibit 10.1

 

Magic Reports Strong Performance in the
Second Quarter of 2012 with 39% Growth in Non-GAAP Operating Income Year Over Year

 

Company Reports Solid Cash Position with
$13 Million Operating Cash Flow for the First Half of 2012 and $44 Million in Total Net Cash as of June 30, 2012

 

Or Yehuda, Israel, August 08, 2012
– Magic Software Enterprises Ltd. (NASDAQ: MGIC), a global
provider of software platforms for enterprise mobility, cloud applications, and business integration, announced today its financial
results for the first half of 2012.

 

Financial Highlights for
the Six-Month Period Ended June 30, 2012

 

		·	Revenues for the first half of 2012 increased 10% to $58.1 million compared to $52.9 million
in the same period last year.

 

		·	Operating income for the first half of 2012 increased 23% to $8.0 million compared to $6.5 million
in the same period last year; Non-GAAP operating income for the first half of 2012 increased 50% to $9.0 million compared
to $6.0 million in the same period last year.

 

		·	Net income for the first half of 2012 increased 17% to $7.8 million compared to $6.7 million
in the same period last year; Non-GAAP net income for the first half of 2012 increased 41% to $8.6 million compared to $6.1 million
in the same period last year.

 

		·	Operating cash flow for the first half of 2012 totaled $13 million.

 

		·	Total net cash, cash equivalents and short-term investments as of June 30, 2012, amounted
to $43.7 million.

 

Financial Highlights for
the Second Quarter Ended June 30, 2012

 

		·	Second quarter revenues increased 2% to $28 million compared to $27.4 million in the
same period last year.

 

		·	Operating income for the second quarter increased 12% to $3.8 million, compared to $3.4 million
in the same period last year; Non-GAAP operating income for the second quarter increased 39% to $4.3 million, compared to
$3.1 million in the same period last year.

 

		·	Net income for the second quarter increased 2% to $3.6 million compared to $3.5 million
in the same period last year. Non-GAAP net income for the second quarter increased 24% to $4.1 million compared to $3.3 million
in the same period last year. Net income for the second quarter of 2012 was affected by $0.3 million of expenses related to
the devaluation of the Euro versus the US dollar.

 

    	

    	 	

    

 

Results

 

		·	For the six-month period ended June 30, 2012, total revenues were $58.1 million, with
net income of $7.8 million, or $0.21 per fully diluted share. This compares with revenues of $52.9 million and net income
of $6.7 million, or $0.18 per fully diluted share, for the same period last year.

 

		·	For the second quarter ended June 30, 2012, total revenues were $28.0 million, with net
income of $3.6 million, or $0.1 per fully diluted share. This compares with revenues of $27.4 million and net income
of $3.5 million, or $0.1 per fully diluted share for the same period last year.

 

Comments of Management

 

Commenting on the results, Guy Bernstein,
Chief Executive Officer of Magic Software Enterprises, said: “The first half of 2012 was a very successful period for Magic,
with strong performance across the board. We recently extended our mobile offering to include support for the iOS and Android mobile
platforms for smartphones and tablets, enhancing the flexibility and future-readiness of our productive and scalable solution for
enterprise mobility.”

 

“Our expectations for stronger demand
during the second half of 2012, combined with our continued strong cash position, provide us with a positive outlook towards further
growth in 2012," concluded Mr. Bernstein.

 

Non-GAAP Financial Measures

This release includes non-GAAP operating
income, net income, basic and diluted earnings per share and other non-GAAP financial measures. These non-GAAP measures exclude
the following items:

 

		·	Amortization of purchased intangible assets

 

		·	In-process research and development capitalization and amortization

 

		·	Equity-based compensation expense and

 

		·	Related tax effect

 

Magic’s management believes that
the presentation of non-GAAP measures provides useful information to investors and management regarding financial and business
trends relating to the Company’s financial condition and results of operations as well as the net amount of cash generated
by its business operations after taking into account capital spending required to maintain or expand the business.

 

These non-GAAP financial measures are not
in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial
measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting
rules or principles. Magic believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts
associated with Magic’s results of operations as determined in accordance with GAAP and that these measures should only be
used to evaluate Magic’s results of operations in conjunction with the corresponding GAAP measures. Please refer to the Reconciliation
of Selected Financial Metrics from GAAP to Non-GAAP tables below.

 

    	2

    	 	

    
 

About Magic Software Enterprises

 

Magic Software Enterprises (NASDAQ: MGIC)
empowers customers and partners around the globe with smarter technology that provides a multichannel user experience of enterprise
logic and data.

 

For more information, visit www.magicsoftware.com.

 

Press Contact:

 

Tania Amar | VP Global Marketing

 

Magic Software Enterprises

tania@magicsoftware.com

 

Except for any historical information contained herein, matters
discussed in this press release might include forward-looking statements that involve a number of risks and uncertainties. Regarding
any financial statements, actual results might vary significantly based upon a number of factors including, but not limited to,
risks in product and technology development, market acceptance of new products and continuing product conditions, both locally
and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in Magic's
most recent annual report and other filings with the Securities and Exchange Commission. These
forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the
forward-looking statements, whether as a result of new information, future events or otherwise.

Magic is a registered trademark of Magic
Software Enterprises Ltd. All other product and company names mentioned herein are for identification purposes only and are the
property of, and might be trademarks of, their respective owners.

 

    	3

    	 	

    
 

MAGIC SOFTWARE ENTERPRISES LTD.                

CONSOLIDATED STATEMENTS OF INCOME                

U.S. dollars in thousands (except per share data)                

         
        

	 	 	Three Months Ended	 	 	Six Months Ended	 
	 	 	June 30,	 	 	June 30,	 
	 	 	2012	 	 	2011	 	 	2012	 	 	2011	 
	 	 	Unaudited	 	 	Unaudited	 
	Revenues	 	 	28,030	 	 	 	27,380	 	 	 	58,072	 	 	 	52,868	 
	Cost of Revenues	 	 	16,101	 	 	 	16,318	 	 	 	33,018	 	 	 	31,474	 
	Gross profit	 	 	11,929	 	 	 	11,062	 	 	 	25,054	 	 	 	21,394	 
	Research and development, net	 	 	336	 	 	 	454	 	 	 	1,242	 	 	 	820	 
	Selling, marketing and general and	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	   administrative expenses	 	 	7,790	 	 	 	7,205	 	 	 	15,784	 	 	 	14,040	 
	Total operating costs and expenses	 	 	8,126	 	 	 	7,659	 	 	 	17,026	 	 	 	14,860	 
	Operating income	 	 	3,803	 	 	 	3,403	 	 	 	8,028	 	 	 	6,534	 
	Financial income (expenses) , net	 	 	(234	)	 	 	149	 	 	 	(198	)	 	 	251	 
	Other income, net	 	 	67	 	 	 	62	 	 	 	67	 	 	 	73	 
	Income before taxes on income	 	 	3,636	 	 	 	3,614	 	 	 	7,897	 	 	 	6,858	 
	Taxes on income	 	 	23	 	 	 	—	 	 	 	67	 	 	 	43	 
	Net income	 	 	3,613	 	 	 	3,614	 	 	 	7,830	 	 	 	6,815	 
	Net income attributable to non-controlling interests	 	 	(9	)	 	 	(67	)	 	 	(15	)	 	 	(155	)
	Net income attributable to Magic Shareholders	 	 	3,604	 	 	 	3,547	 	 	 	7,815	 	 	 	6,660	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Earnings per share (basic)	 	 	0.10	 	 	 	0.10	 	 	 	0.21	 	 	 	0.18	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Earnings per share (diluted)	 	 	0.10	 	 	 	0.10	 	 	 	0.21	 	 	 	0.18	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Number of shares used in computing earnings per share (basic)	 	 	36,503	 	 	 	36,299	 	 	 	36,458	 	 	 	36,192	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Number of shares used in computing earnings per share (diluted)	 	 	37,170	 	 	 	37,144	 	 	 	37,170	 	 	 	37,109	 

 

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MAGIC SOFTWARE ENTERPRISES LTD.                  

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION            

U.S. dollars in thousands (except per share data)                

           
            

	 	 	Three Months Ended	 	 	Six Months Ended	 
	 	 	June 30,	 	 	June 30,	 
	 	 	2012	 	 	2011	 	 	2012	 	 	2011	 
	 	 	Unaudited	 	 	Unaudited	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	GAAP operating income	 	 	3,803	 	 	 	3,403	 	 	 	8,028	 	 	 	6,534	 
	Amortization of capitalized software and other intangible assets	 	 	1,471	 	 	 	880	 	 	 	2,893	 	 	 	1,763	 
	Capitalization of software development	 	 	(1,091	)	 	 	(1,304	)	 	 	(2,213	)	 	 	(2,593	)
	Stock-based compensation	 	 	143	 	 	 	144	 	 	 	297	 	 	 	308	 
	Total adjustments to GAAP	 	 	523	 	 	 	(280	)	 	 	977	 	 	 	(522	)
	Non-GAAP operating income	 	 	4,326	 	 	 	3,123	 	 	 	9,005	 	 	 	6,012	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GAAP net income	 	 	3,604	 	 	 	3,547	 	 	 	7,815	 	 	 	6,660	 
	Amortization of capitalized software and other intangible assets	 	 	1,471	 	 	 	880	 	 	 	2,893	 	 	 	1,763	 
	Capitalization of software development	 	 	(1,091	)	 	 	(1,304	)	 	 	(2,213	)	 	 	(2,593	)
	Stock-based compensation	 	 	143	 	 	 	144	 	 	 	297	 	 	 	308	 
	Taxes on the above items	 	 	(63	)	 	 	—	 	 	 	(157	)	 	 	—	 
	Total adjustments to GAAP	 	 	460	 	 	 	(280	)	 	 	820	 	 	 	(522	)
	Non-GAAP net income	 	 	4,064	 	 	 	3,267	 	 	 	8,635	 	 	 	6,138	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Non-GAAP earnings per share (basic)	 	 	0.11	 	 	 	0.09	 	 	 	0.24	 	 	 	0.17	 
	Weighted average number of shares used in	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  computing earnings per share (basic)	 	 	36,503	 	 	 	36,299	 	 	 	36,458	 	 	 	36,192	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Non-GAAP earnings per share (diluted)	 	 	0.11	 	 	 	0.09	 	 	 	0.23	 	 	 	0.17	 
	Weighted average number of shares used in	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  computing earnings per share (diluted)	 	 	37,286	 	 	 	37,247	 	 	 	37,293	 	 	 	37,210	 

   

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MAGIC SOFTWARE ENTERPRISES LTD.        

CONSOLIDATED BALANCE SHEETS        

U.S. dollars in thousands        

 

	 	 	June 30,	 	 	December 31,	 
	 	 	2012	 	 	2011	 
	 	 	Unaudited	 	 	 	 
	ASSETS	 	 	 	 	 	 	 	 
	CURRENT ASSETS:	 	 	 	 	 	 	 	 
	    Cash and cash equivalents	 	 	42,400	 	 	 	28,711	 
	    Short-term bank deposits	 	 	397	 	 	 	2,170	 
	    Available-for-sale marketable securities	 	 	878	 	 	 	1,241	 
	    Trade receivables, net	 	 	23,685	 	 	 	24,946	 
	    Other accounts receivable and  prepaid expenses	 	 	5,563	 	 	 	6,401	 
	Total current Assets	 	 	72,923	 	 	 	63,469	 
	 	 	 	 	 	 	 	 	 
	LONG-TERM RECEIVABLES:	 	 	 	 	 	 	 	 
	   Severance pay fund	 	 	360	 	 	 	351	 
	   Other Long-term receivables	 	 	3,572	 	 	 	3,824	 
	Total other long-term receivables	 	 	3,932	 	 	 	4,175	 
	 	 	 	 	 	 	 	 	 
	PROPERTY AND EQUIPMENT, NET	 	 	1,908	 	 	 	2,029	 
	IDENTIFIABLE INTANGIBLE ASSETS AND	 	 	 	 	 	 	 	 
	   GOODWILL, NET	 	 	65,672	 	 	 	66,512	 
	 	 	 	 	 	 	 	 	 
	TOTAL ASSETS	 	 	144,435	 	 	 	136,185	 
	 	 	 	 	 	 	 	 	 
	LIABILITIES AND EQUITY	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	CURRENT LIABILITIES:	 	 	 	 	 	 	 	 
	    Short-term credit and current maturities	 	 	 	 	 	 	 	 
	       of long term loans	 	 	—	 	 	 	4	 
	    Trade payables	 	 	3,894	 	 	 	3,545	 
	    Accrued expenses and other accounts payable	 	 	13,416	 	 	 	16,797	 
	    Deferred tax liability	 	 	2,368	 	 	 	2,359	 
	     Deferred revenues	 	 	9,421	 	 	 	5,092	 
	Total current liabilities	 	 	29,099	 	 	 	27,797	 
	 	 	 	 	 	 	 	 	 
	NON CURRENT LIABILITIES:	 	 	 	 	 	 	 	 
	    Long-term loans	 	 	25	 	 	 	9	 
	    Deferred tax Liabilities	 	 	720	 	 	 	296	 
	    Liability due to acquisition activities	 	 	—	 	 	 	1,350	 
	    Accrued severance pay	 	 	1,083	 	 	 	1,087	 
	Total non-current Liabilities	 	 	1,828	 	 	 	2,742	 
	 	 	 	 	 	 	 	 	 
	EQUITY:	 	 	 	 	 	 	 	 
	  Magic Shareholders' equity	 	 	113,003	 	 	 	105,156	 
	  Non-controlling interests	 	 	505	 	 	 	490	 
	Total equity	 	 	113,508	 	 	 	105,646	 
	 	 	 	 	 	 	 	 	 
	TOTAL LIABILITIES AND EQUITY	 	 	144,435	 	 	 	136,185	 

  

    	6

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