Document:

exv10w7wi

 

Exhibit 10.7 (i)

PERSONAL EMPLOYMENT AGREEMENT

THIS AGREEMENT (“Agreement”) is made and entered into this 9th day of December, 2002, by
and between TopSpin Medical (Israel) Ltd., of business address at 1 Lev Pesach St. North Industrial
Zone, Lod (“Company”), and Erez Golan (I.D. No.) of 35 Balfour Street, Tel Aviv, Israel
(“Employee”).

WHEREAS Employee has been employed by Company since May 1, 1999 (the “Commencement Date of
Employment”) under the terms and conditions of an employment agreement dated November 1, 1999
previously entered into between Company and Employee (the “Initial Employment Agreement”); and

WHEREAS, Company and Employee wish to continue the Employee’s employment with Company under a new
employment agreement as set forth below which shall replace the Initial Employment Agreement (the
“Agreement”); and

WHEREAS, the Initial Employment Agreement shall, as of the date hereof (the “Effective Date”),
terminate and be superseded by this Agreement, subject to, and in accordance with, the terms set
forth below; and

WHEREAS the parties wish to regulate their relationship in accordance with the terms and conditions
set forth in this Agreement;

NOW, THEREFOR, in consideration of the mutual premises, covenants and undertakings contained
herein, the parties hereto have hereby agreed as follows:

	1.	 	The Initial Employment Agreement

	 	1.1.	 	As of the Effective Date, the Initial Employment Agreement is terminated and
superseded by this Agreement, the terms of which shall apply as of the Effective Date.
	 
	 	1.2.	 	Notwithstanding the above, unless otherwise specifically stated in this Agreement,
all of those of Employee’s rights that are derived from the length of the period of his
employment with Company shall accrue as of the Commencement Date of Employment and all
rights that have accrued as of the Effective Date shall be carried over and shall continue
to accrue to Employee’s benefit during the Term (defined below).

	2.	 	Term

The term of this Agreement shall commence as of the Effective Date and shall continue until
terminated in accordance with the provisions of Section 11 hereof (the “Term”). The foregoing
notwithstanding, Employee undertakes not to furnish Company with a Termination Notice (defined
below), effective prior to completion of a three year period commencing on the Effective Date
(the “Initial Term”) other than for Good Reason (defined below).

	3.	 	Position 

	 	3.1.	 	On the Effective Date, Employee is employed and shall continue to be employed by the
Company (until otherwise determined by the Board of Directors of the Company) in the
position

 

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	 	 	 	of CEO of the Company, and within the framework of such position shall serve as
President and CEO of TopSpin Medical Inc. (the “Parent Company” and the “Position”,
respectively).
	 
	 	3.2.	 	During Employee’s employment with Company, Employee shall have the authority,
functions, duties and responsibilities, as from time to time may be stipulated by
Company’s Board of Directors. Employee shall report to the Company’s Board of Directors.
	 
	 	3.3.	 	During the term of this Agreement and unless and until otherwise agreed, Employee
shall be employed on a full-time basis. The Employee shall devote his entire business
time, attention and efforts to the performance of his duties and responsibilities under
this Agreement and the business and affairs of the Company. The Employee shall not, during
the term of this Agreement, be engaged (whether or not during normal business hours) in
any other business or professional activity whether or not such activity is pursued for
gain, profit or other pecuniary advantage, without the prior consent of the Company.
	 
	 	3.4.	 	It is hereby acknowledged and agreed that Employee’s Position in the Company is a
senior position and/or one which requires a special degree of trust, and/or is a position
which does not enable the Company to supervise the work and rest hours of the Employee;
therefore, the provisions of The Work and Rest Hours Law, 1951 (the “Work and Rest Hours
Law”), shall not apply to Employee’s employment with Company.

	4.	 	Employee’s Duties

Employee affirms and undertakes:

	 	4.1.	 	To devote his working time, know-how, energy, expertise, talent, experience and best
efforts to the business and affairs of Company and to the performance of his duties with
Company.
	 
	 	4.2.	 	To perform and discharge well and faithfully, with devotion, honesty and fidelity,
his obligations pursuant to his Position.
	 
	 	4.3.	 	To immediately and without delay inform Company’s Board of Directors of any affairs
and/or matters that might constitute a conflict of interest with Employee’s Position
and/or employment with Company.

	5.	 	Compensation 

	 	5.1.	 	Subject to, and in consideration of, Employee’s fulfillment of his obligations in
pursuance of this Agreement, Company shall pay Employee a monthly gross salary of NIS
40,000 (Forty Thousand New Israeli Shekel) (“Salary”); provided however that in the event
that, and at such time as, the Company or the Parent Company successfully achieves the
Milestone (as defined in the Series C Stock Purchase Agreement among the Parent Company,
the Employee and certain investors, dated on or about the date hereof, during the relevant
period, the Salary payable following the achievement of the Milestone shall be increased
to NIS45,000 (Forty Five Thousand New Israeli Shekel). The Salary shall be linked to the
CPI, adjusted on a quarterly basis to the CPI last published prior to the date of such
adjustment. The base index for each adjustment shall be the index last published prior to
the date of the preceding adjustment. The base index for the first linkage adjustment
shall be the index last published prior to the Effective Date.
	 
	 	 	 	In no event shall such adjustment be less than in the amounts and at the levels set
forth in the governmental directives published from time to time and binding on Company
(Tzavei Harhava) with respect to cost-of-living increases (Tosefet Yoker).
	 
	 	5.2.	 	The Salary shall be payable in accordance with the Company’s customary payroll
procedures, but not later than on the ninth (9th) day of the consecutive
calendar month following the calendar month of employment to which the payment relates.
	 
	 	5.3.	 	Israeli income tax and other applicable withholdings with respect to the Salary have
been and

 

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	 	 	 	shall be deducted from the Salary by the Company at source.

	6.	 	Social and Fringe benefits

	 	6.1.	 	Managers’ Insurance

	 	6.1.1.	 	Company has contributed certain monthly amounts as premium on a Managers’
Insurance (Bituach Menahalim) policy (“Managers’ Insurance Policy”) and shall
continue to contribute an aggregate monthly amount of up to 15.83% of the Salary to
said Managers’ Insurance Policy.
	 
	 	6.1.2.	 	The abovementioned contributions by Company shall be as follows: 5% towards
compensatory payments (the “Compensatory Payments Component”), 8.33% towards
severance payments (the “Severance Payments Component”), and up to 2.5% towards a
disability insurance.
	 
	 	6.1.3.	 	In addition, Employee has contributed and shall contribute, and for that purpose
Employee has irrevocably authorized and instructed Company to deduct from his
Salary at source, an aggregate monthly amount equal to 5% of the Salary to such
Managers’ Insurance Policy.
	 
	 	6.1.4.	 	Employee shall bear any and all taxes in connection with amounts paid by Employee
and/or Company to the Managers’ Insurance Policy pursuant to this Section 6.1.
	 
	 	6.1.5.	 	To the extent Employee’s Salary exceeds the recognized ceiling for contributions
to the Managers’ Insurance Policy that are exempted from taxes under the provisions
of applicable law as shall be in effect from time to time (the “Managers’ Insurance
Ceiling”), Employee shall have the option, to be exercised in his sole discretion,
to apply the following provisions in connection with the Managers’ Insurance
Policy:

	 	6.1.5.1.	 	The contributions of Company and Employee shall be calculated based on
that portion of the Salary up to, but not exceeding, the Managers’
Insurance Ceiling;
	 
	 	6.1.5.2.	 	Employee shall be entitled to an additional monthly gross payment in
an amount constituting 5% of that portion of the Salary that exceeds the
Managers’ Insurance Ceiling (the “Additional Managers’ Insurance
Payment”);
	 
	 	6.1.5.3.	 	The provisions of Sections 5.2 and 5.3 above shall apply to the
Additional Managers’ Insurance Payment and Employee will bear any and all
taxes applicable in connection with the payment by Company and/or the
receipt by Employee of the Additional Managers’ Insurance Payment.

	 	6.1.6.	 	In the event of termination of the Employee’s employment under this Agreement by
the Company for any reason other than a Termination for Cause (as defined
hereinafter), Employee shall be entitled to payment of severance pay which shall be
calculated in accordance with the Severance Pay Law – 1963, for the entire period
of Employee’s employment commencing as of the Commencement Date of Employment and
in accordance with Employee’s last Salary prior to said termination and all sums
accumulated in the Severance Payments Component of the aforesaid Managers’
Insurance Policy shall be on account of the aforesaid severance pay.
	 
	 	 	 	In the event of termination of the Employee’s employment under this Agreement
by the Employee for any reason all sums accumulated in the aforesaid Managers’
Insurance Policy shall be transferred to Employee, including without limitation
the Compensatory Component and the Severance Payments Component.
	 
	 	 	 	For the removal of doubt it is further hereby clarified that the terms of this
Section 6.1.6 shall apply to all contributions made to the Managers’ Insurance
Policy prior to the Effective Date.

	 	6.2.	 	Advanced Study Fund

	 	6.2.1.	 	Company has contributed certain monthly amounts and shall continue to contribute
an aggregate monthly amount equal to 7.5% of the Salary towards an advanced study
fund (Keren Hishtalmut) (the “Advanced Study Fund”).
	 
	 	6.2.2.	 	Employee shall contribute, and for that purpose, Employee irrevocably authorizes
and

 

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	 	 	 	instructs Company to deduct from his Salary at source, an aggregate monthly
amount equal to 2.5% of the Salary as Employee’s participation in such Advanced
Study Fund.
	 
	 	6.2.3.	 	Employee shall bear any and all taxes applicable in connection with amounts
payable by Employee and/or Company to the Advanced Study Fund pursuant to this
Section 6.2.
	 
	 	6.2.4.	 	To the extent Employee’s Salary exceeds the recognized ceiling for contributions
to the Advanced Study Fund that are exempted from taxes under the provisions of
applicable law as shall be in effect from time to time (the “Advanced Study Fund
Ceiling”), Employee shall have the option, to be exercised in his sole discretion,
to apply the following provisions in connection with the Advanced Study Fund:

	 	6.2.4.1.	 	The contributions of Company and Employee shall be calculated based on
that portion of the Salary up to, but not exceeding, the Advanced Study
Fund Ceiling;
	 
	 	6.2.4.2.	 	Employee shall be entitled to an additional monthly gross payment in
an amount constituting 7.5% of that portion of the Salary that exceeds the
Advanced Study Fund Ceiling (the “Additional Advanced Study Fund
Payment”);
	 
	 	6.2.4.3.	 	The provisions of Sections 5.2 and 5.3 above shall apply to the
Additional Advanced Study Fund Payment and Employee will bear any and all
taxes applicable in connection with the payment by Company and/or the
receipt by Employee of the Additional Advanced Study Fund Payment.

	 	6.2.5.	 	In the event of termination of Employee’s employment under this Agreement for any
reason other than a Termination for Cause (as defined hereinafter) Employee shall
be entitled to all sums accumulated in the Advanced Study Fund.
	 
	 	 	 	For the removal of doubt it is hereby clarified that the terms of this Section
6.2.5 shall apply to all contributions made to the Advanced Study Fund prior to
the Effective Date.

	 	6.3.	 	Annual Leave
	 
	 	 	 	Employee shall be entitled to an annual leave totalling, in the aggregate, 22 working
days per year. Annual leave shall be taken with adequate regard to the needs of Company.
Unexploited leave days may be accumulated from year to year up to a total of 60 days.
Employee shall, upon termination of his employment, be entitled to redeem all
unexploited leave days.
	 
	 	6.4.	 	Sick Leave
	 
	 	 	 	Employee shall be entitled to sick leave in accordance with the provisions of the
Sickness Pay Law, 1976.
	 
	 	6.5.	 	Recreation Pay (Dmey Havra’a)
	 
	 	 	 	Employee shall be entitled to annual recreation pay (Dmey Havra’a) in an amount as
determined in accordance with Israeli regulations as in effect from time to time with
respect to such pay.
	 
	 	6.6.	 	Company Car

	 	6.6.1.	 	Company shall provide Employee with a car of a make and model of Employee’s
choice up to a class “C” car (“Company Car”) to be placed at Employee’s disposal,
for Employee’s business and personal use and for the use of Employee’s immediate
family only, provided that Company’s procedures in respect thereof are followed.
	 
	 	 	 	Employee may choose a car of a higher class than class “C”, in which event he
shall bear the difference in the leasing fees between the class “C” car and the
car of the class chosen by him.
	 
	 	6.6.2.	 	Employee shall take good care of such Company Car and ensure that Company’s rules
relating to Company Car are strictly, lawfully and carefully observed.
	 
	 	6.6.3.	 	Employee shall bear and pay all fines for any violation of law committed in

 

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	 	 	 	connection with the use of the Company Car.
	 
	 	6.6.4.	 	The value of the monthly use of the Company Car shall be added to the Salary, in
accordance with income tax regulations applicable thereto, as straightforward
income, and Employee will bear all taxes in connection with said Company Car and
the use thereof.
	 
	 	6.6.5.	 	Employee shall return Company Car to Company’s principal office upon termination
of Employee’s employment with Company.

	 	6.7.	 	Cellular Phone and Laptop Computer

	 	6.7.1.	 	Company shall provide Employee with, and pay for the use of, a cellular phone and
shall provide Employee with a laptop computer, for Employee’s use in the course of
performing his obligations under his Position (the “Cellular Phone” and the “Laptop
Computer”, respectively).
	 
	 	6.7.2.	 	Employee shall bear any and all taxes applicable to him in connection with the
Cellular Phone and/or the use thereof, and shall return the Cellular Phone to
Company’s principal office upon termination of Employee’s employment with Company.
	 
	 	6.7.3.	 	Employee shall be entitled to retain the Laptop Computer and shall not be
required to return it to the Company upon termination of Employee’s employment with
Company.

	 	6.8.	 	Business Expenses
	 
	 	 	 	Company shall pay, and/or reimburse Employee, for those out-of-pocket business expenses
incurred in connection with the performance of his duties under this Agreement, as
against receipts and/or other appropriate documentation as may be required by Company
from time to time and provided that the expenses are within the Company’s annual budget
for said expenses.
	 
	 	6.9	 	Loan

	 	6.9.1	 	Following execution hereof, the Company shall extend to the Employee
a non-recourse loan in the amount of $50,000 (the “Loan”), which loan shall bear
interest of 5% compounded annually from the date of extension of the Loan to the
Employee and until the date of repayment thereof (the “Interest”; the Loan
together with the Interest, the “Loan Amount”).
	 
	 	6.9.2	 	As a security to ensure the full and timely repayment of the Loan
Amount, the Employee hereby creates and grants to the Company for its benefit and
its successors and assigns, a security interest in the Employee’s securities of
the Parent Company (such securities subject to the security interest are referred
to as the “Pledged Shares”). In furtherance of the above, the Employee’s
securities in the Parent Company shall be stamped with a legend, as of the
Effective Date, stating that such securities have been pledged to the benefit of
the Company. In addition, the Employee undertakes to execute any document
required to register the pledge of the Pledged Shares with the Registrar of
Pledges.
	 
	 	6.9.3	 	So long as any part of the Loan Amount remains unpaid, if the
Employee becomes entitled to receive or receives any securities of the Parent
Company or other property (except for cash) in addition to, in substitution of, or
in exchange for any of the Pledged Shares (whether as a distribution in connection
with any recapitalization, reorganization, rearrangement of capital structure or
reclassification, a stock dividend, or otherwise), the Employee shall accept such
securities or other property on behalf of and for the benefit of the Company as
additional security for the Employee’s obligations hereunder (shares of the Parent
Company and the other securities and instruments described above in this sentence
are included in the term “Pledged Shares”).
	 
	 	6.9.3	 	In the event of any default in repayment of the Loan Amount, the
Company shall be entitled to take possession of the Pledged Shares and, with
respect to the Pledged Shares only, to exercise any and all rights afforded to a
secured party under any applicable law.

 

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	 	 	 	The Company hereby represents, warrants and agrees that in the event that the
Loan Amount will not be repaid in full for any reason whatsoever, the Company’s
sole remedy shall be the foreclosure upon the Pledged Shares. The Company hereby
irrevocably waives any and all other rights it may have both in law and equity
with respect to any default in repayment of the Loan Amount (“Default”), and
releases and forever discharges the Employee from any and all actions, causes of
action, suits, debts, dues, claims, liabilities, complaints and demands
whatsoever, however referred to and of any kind and/or nature, both in law and
equity, with respect to such Default, except with respect to the Pledged Shares.
	 
	 	6.9.4	 	The Employee hereby represents and warrants to the Company that he
shall have good and valid title to all of the Pledged Shares, free and clear of
all liens, security interests and other encumbrances; provided however that the
Employee shall be entitled to create another security interest in the Pledged
Shares for the benefit of the Company which security interest will be on a pari
passu basis with the one granted to the Company hereunder, to secure other loans
received by him from the Company, provided however that the aggregate amount of
such other loans including the Loan Amount shall not exceed US$150,000. The
Employee further represents and warrants that upon any transfer of the Pledged
Shares to the Company, the Company will acquire such Pledged Shares free and clear
of all liens, security interests and other encumbrances.
	 
	 	6.9.5	 	The Loan Amount shall be repaid to the Company upon Transfers of the
Pledged Shares by the Employee, the consideration for which is received in cash or
securities freely tradeable by the Employee (i.e. the securities are registered
and there are no restrictions under any applicable law or any agreement or
undertaking preventing the Employee from selling the securities). Within 30 days
following a Transfer of Pledged Shares by the Employee , he shall repay the
Company on account of the Loan Amount still outstanding an amount equal to at
least one sixth of the consideration received by the Employee in such Transfer and
the Pledged Shares which were not transferred in such Transfer will continue to
serve as a security for the repayment of the Loan Amount.
	 
	 	6.9.6	 	The Employee shall repay any outstanding amount of the Loan Amount
upon the first to occur of (i) the closing of a firmly underwritten IPO of the
Company or the Parent Company; provided that at least 30 days from the date on
which the Employee’s securities in the Company become freely tradeable (i.e. the
securities are registered and there are no restrictions under any applicable law
or any agreement or undertaking that will prevent the Employee from selling the
securities), within the framework of such IPO, have passed; (ii) (x) a merger or
consolidation of the Company or the Parent Company with or into another entity or
any other corporate reorganization, where the Company or the Parent Company, as
applicable, is not the surviving entity; or (y) the lapse of 30 days following a
sale, transfer or other disposition of all or substantially all of the Company’s
or the Parent Company’s assets; provided that at least part of the consideration
in such transaction is cash or securities freely tradeable by the Employee (i.e.
the securities are registered and there are no restrictions under any applicable
law or any agreement or undertaking that will prevent the Employee from selling
the securities); or (iii) a date not later than 6 months following termination of
his employment with the Company for any reason; (the “Repayment Date”). In the
event that the Company or the Parent Company successfully achieves the sales
target described in Exhibit A hereto prior to the Repayment Date, the remaining
amount of the Loan Amount shall become a grant and the Employee shall not be
required to repay the remaining amount of the Loan Amount to the Company.
	 
	 	6.9.7	 	Any tax liability in connection with the Loan shall be completely
borne by the Employee.

 

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	7.	 	Bonuses

	 	7.1.	 	On an annual basis during the Term, but no earlier than 12 months after the Effective
Date, the Company’s Board of Directors shall consider granting the Employee a bonus based
upon the performance of the Company and of the Employee during the previous annual period.
The decision to grant such a bonus as well as the amount of any such bonus shall be
determined by the Board of Directors of the Company at its sole discretion.
	 
	 	7.2.	 	Upon the successful achievement of the Milestone within the relevant period, Employee
shall be entitled to a one-time lump sum bonus in the gross amount of NIS 120,000.
	 
	 	7.3.	 	Upon the first to occur of (i) the closing of a firmly underwritten IPO of the
Company or the Parent Company or the date on which the Company or the Parent Company
becomes an “Issuer” as defined in the Sarbanes-Oxley Act of 2002; (ii) (x) a merger or
consolidation of the Company of the Company or the Parent Company with or into another
entity or any other corporate reorganization, where the Company or the Parent Company, as
applicable, is not the surviving entity; or (y) a sale, transfer or other disposition of
all or substantially all of the Company’s or the Parent Company assets’; (each an “Exit”),
the Employee shall be entitled to an exit bonus as follows:

7.3.1 if the Employee is employed by the Company at such time, then the amount of the
exit bonus shall be $120,000 gross;

7.3.2 if the Employee is no longer in the employ of the Company at such time, then the
amount of the exit bonus shall be $120,000 gross;

7.3.2 in connection with the IPO of the Company or the Parent Company, in the event the
Employee is no longer in the employ of the Company at such time, but the Employee is
required at such time to repay to the Company any outstanding loan that the Employee
received from the Company, then the amount of the exit bonus shall be $120,000 gross.

	8.	 	Termination

This Agreement may be terminated in accordance with the following provisions:

	 	8.1.	 	Either party may furnish the other party, at any time and for any reason, with a
written notice that Employee’s employment shall be terminated (the “Termination Notice”)
effective upon the completion of a three-month period commencing on the date of the
Termination Notice (the “Notice Period”). Notwithstanding the foregoing provision to the
contrary, Employee shall not furnish a Termination Notice effective prior to completion of
the Initial Term unless such termination is for Good Reason (defined below). The
Termination Notice shall set forth both the date on which said notice is being furnished
and the date on which the Termination Notice shall be effective.
	 
	 	8.2.	 	Notwithstanding the provisions of Section 8.1 above, to the contrary, Employee shall
be entitled to furnish Company with a Termination Notice prior to completion of the
Initial Term where such termination is for good reason (“Good Reason”). Any one or more of
the following shall constitute Good Reason:

	 	8.2.1.	 	Material reduction in Employee’s Salary and/or in any of the social and fringe
benefits as they existed immediately prior to such reduction;
	 
	 	8.2.2.	 	Material reduction in the level or scope of job responsibility or status of
Employee, relative to the level or responsibility immediately prior to such
reduction; provided however that the Company may change the Employee’s title and/or
position without such action being deemed a Good Reason, if such Employee is
offered another senior and/or comparable management position in the Company or the
Parent Company (as applicable) ;
	 
	 	8.2.3.	 	Relocation to an office or company which is more than 50 miles from the office
where Employee was previously located to which Employee has not agreed;

 

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	 	8.2.4.	 	A delay of more than 60 days in paying the Salary to Employee and/or a delay of
more than 60 days in paying and/or providing any of the social and fringe benefits,
provided for under this Agreement;
	 
	 	8.2.5.	 	Any material change in the business of the Company and/or the Parent Company.

	 	8.3.	 	In the event that a Termination Notice is delivered by either party, Employee shall
be obligated to continue to discharge and perform all of his duties and obligations with
Company and to take all steps, satisfactory to Company, to ensure the orderly transition
to any persons designated by Company of all matters handled by Employee during the course
of his employment with Company, unless Company waives Employee’s services during the
Notice Period, or any part thereof. In either case, during the Notice Period, Company
shall continue to pay Employee his Salary and provide Employee with all the social and
fringe benefits, as detailed in Section 6 and its subsections and other rights and/or
benefits as were paid or provided to him during the term of his employment.
	 
	 	8.4.	 	The provisions of Section 8.3 above notwithstanding, Company, by furnishing a notice
to Employee, shall be entitled to terminate his employment with Company with immediate
effect at any time during the Term where said termination is a Termination for Cause. In
the event of such termination, Employee shall not be entitled to severance pay.
	 
	 	8.5.	 	As used in this Agreement, the term “Termination for Cause” shall mean termination of
Employee’s employment with Company as a result of the occurrence of (a) a serious breach
of trust, including but not limited to theft, embezzlement, conviction of a felony or of
any crime involving moral turpitude, self-dealing or prohibited disclosure to unauthorized
persons or entities of confidential or proprietary information of or relating to the
Company or the Parent Company; (b) a willful failure to adhere to or comply with
directives of the Board of Directors; (c) a material breach of Section 9, 10 or 11 of this
Agreement by the Employee (d) any willful act or gross negligence of the Employee
resulting in material loss to the Company or the Parent Company which, if rectifiable, is
not rectified within 14 business days after the Employee receives written notice from the
Company detailing the Board’s intention to terminate Employee if such loss or damage is
not rectified or recovered within such period; or (e) any of the events provided for in
Sections 16 and 17 of the Severance Pay Law, 1963.

	9.	 	Proprietary Information and Confidentiality

	 	9.1.	 	Employee is aware that in the course of his employment with Company during the Term
and/or in connection therewith, Employee may have access to, and be entrusted with,
technical, proprietary, sales, legal, financial, and other data and information with
respect to the affairs and business of the Company, its affiliates, customers and
suppliers, all of which data and information, whether documentary, written, oral or
computer generated, shall be deemed to be, and referred to as “Proprietary Information”,
which, by way of illustration but not limitation, shall include trade and business
secrets, processes, patents improvements, ideas, inventions (whether reduced to practice
or not), techniques, products, technologies (actual or planned), financial statements,
marketing plans, strategies, forecasts, customer and/or suppliers lists and/or relations,
research and development activities, formulas, data, know-how, designs, discoveries,
models, vendors, computer hardware and software, drawings, operating procedures, pricing
methods, marketing strategies, future plans, dealings and transactions, except for such
information which is now, or hereafter becomes, available in the public domain or is
generally known, or hereafter becomes known, in the industry through no fault on the part
of Employee.
	 
	 	9.2.	 	Employee agrees and declares that all Proprietary Information, patents and/or patent
applications, copyrights and other intellectual property rights in connection therewith,
are and shall remain the sole property of Company and its assigns.
	 
	 	9.3.	 	At all times, during the Term and upon its expiration thereafter, Employee shall keep
in confidence and trust all Proprietary Information, and any part thereof, and will not
use or

 

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	 	 	 	disclose and/or make available, directly or indirectly, to any third party any
Proprietary Information without the prior written consent of Company, except and to the
extent as may be necessary in the ordinary course of performing Employees’ duties
pertaining to the Company and except and to the extent as may be required under any
applicable law, regulation, judicial decision or determination of any governmental
entity.
	 
	 	9.4.	 	Without derogating from the generality of the foregoing, Employee agrees as follows:

	 	9.4.1.	 	He will not copy, transmit, reproduce, summarize, quote, publish and/or make any
commercial or other use whatsoever of the Proprietary Information, or any party
thereof, without the prior written consent of Company, except as may be necessary
in the performance of his duties pertaining to the Company;
	 
	 	9.4.2.	 	He shall exercise the highest degree of care in safeguarding the Proprietary
Information against loss, theft or other inadvertent disclosure and will take all
reasonable steps necessary to ensure the maintaining of confidentiality;
	 
	 	9.4.3.	 	He shall not enter into the data bases of Company for any purpose whatsoever,
including, without limitation, review, download, insert, change, delete and/or
relocate any information, except as may be necessary in the performance of his
duties pertaining to the Company;
	 
	 	9.4.4.	 	Upon termination of his employment, and/or as otherwise requested by Company, he
shall promptly deliver to Company all Proprietary Information. For the removal of
doubt, it is hereby clarifed that Employee shall be entitled to keep copies of
corporate documents signed by him and which relate to his rights, including without
limitation, his rights as an employee of the Company and/or as director of the
Company and/or the Parent Company and/or as shareholder and/or holder of Options in
the Parent Company.

	 	9.5.	 	The provisions of this Section 9 shall survive termination of this Agreement and
shall remain in full force and effect thereafter.

	10.	 	Non-Competition and Non-Solicitation

	 	10.1.	 	Employee hereby covenants that throughout the Term and for a period of eighteen (18)
months following the effective date of termination of Employee’s employment howsoever
arising thereafter, Employee will not:

	 	10.1.1.	 	Engage, directly or indirectly, in any capacity whatsoever, whether
independently or as an employee, consultant or otherwise, through any corporate
body and/or with or through others, in any activity competing directly with the
products and technologies of the Company and its affiliates, as same have existed
and shall exist from time to time during the Term.
	 
	 	10.1.2.	 	Whether on his own account and/or on behalf of others, in any way interfere with
and/or endeavor to entice away, or offer or solicit for the purpose of so
interfering and/or enticing away, from Company and/or any of its affiliates, any
person, firm or company with whom Company and/or any of its affiliates shall have
any contractual and/or commercial relationship as an employee, consultant,
licenser, joint venturer, supplier, customer, distributor, agent or contractor of
whatsoever nature, existing or under negotiation on, or within the eighteen (18)
months prior to, the effective date of termination of Employee’s employment with
Company.

	11.	 	Inventions

	 	11.1.	 	Employee agrees to promptly and from time to time fully inform and disclose to
Company all inventions, designs, improvements and discoveries which Employee may have
during the Term which pertain to or relate to Company or to any experimental work
performed by Company,

 

10

	 	 	 	whether conceived by Employee alone or with others and whether or not conceived during
regular working hours (“Inventions”).
	 
	 	11.2.	 	All Inventions, and any and all rights, interests and title therein, including the
droit moral therein, shall be the exclusive property of Company.
	 
	 	11.3.	 	In the event that by operation of law, any Invention shall be deemed Employee’s, the
Employee hereby assigns and shall in the future take all the requisite steps (including by
way of illustration only, signing all appropriate documents) to assign to Company and/or
its designee any and all of his foregoing rights, titles and interests, on a worldwide
basis and hereby further acknowledges and shall in the future acknowledge Company’s full
and exclusive ownership in all such Inventions. To the extent necessary, Employee shall,
during the Term or at any time thereafter, execute all documents and take all steps
necessary to fully effectuate the assignment to Company and/or its designee and/or assist
Company to obtain the exclusive and absolute rights, title and interests in and to all
Inventions, whether by the registration of patent, trade mark, trade secret and/or any
other applicable legal protection, provided however that in the event Employee is
requested to take any of the aforesaid actions subsequent to the termination of this
Agreement, Employee be reasonably compensated for his time and effort in so doing. This
provision shall apply with equal force and effect to all items that may be subject to
copyright or trademark protection.
	 
	 	11.4.	 	The provisions of this Section 11 shall survive termination of this Agreement and
shall be and remain in full force and effect at all times thereafter.

	12.	 	Indemnification; Directors and Officers Insurance

	 	12.1.	 	Company shall exempt, indemnify and insure Employee from and against any and all
liabilities which the Employee may incur in the performance of his duties hereunder, to
the maximum extent permitted by law, in accordance with an Indemnity Agreement
substantially in the form attached hereto as Exhibit B.
	 
	 	12.2.	 	Without limiting or qualifying Company’s obligation to indemnify as aforesaid in
Section 15.1 above, Company shall insure Employee under the Directors and Officers
liability insurance policy to be maintained by Company for its office holders at its sole
cost and expense, and which shall indemnify Employee and hold him harmless from any loss,
claim, damage or liability as aforestated in Section 12.1 above.

	13.	 	General Provisions

	 	13.1.	 	For the purpose of Sections 9 to 11 of this Agreement, the term “Company” shall mean
the Company, the Parent Company, and/or any affiliate of the Parent Company, as
applicable.
	 
	 	13.2.	 	Employee shall bear any and all taxes applicable in connection with any benefits
provided to Employee under this Agreement.
	 
	 	13.3.	 	Either party’s failure or delay in enforcing any of the provisions of this Agreement
shall not, in any way, be construed as a waiver of any such provisions, or prevent said
party thereafter from enforcing each and every other provision of this Agreement which
were previously not enforced.
	 
	 	13.4.	 	Notices given hereunder shall be in writing and shall be deemed to have been duly
given on the date of personal delivery, on the date of postmark if mailed by certified or
registered mail, or on the date sent by facsimile upon transmission and electronic
confirmation of receipt or (if transmitted and received on a non-business day) on the
first business day following transmission and electronic confirmation of receipt,
addressed as set forth above or such other address as either party may designate to the
other in accordance with the aforesaid procedure.
	 
	 	13.5.	 	This Agreement shall be interpreted and construed in accordance with the laws of the
State of Israel.

 

11

	 	13.6.	 	This Agreement constitutes the entire agreement of the parties hereto with respect
to the subject matters hereof, and supersedes all prior agreements and understandings
between the parties with respect thereto.
	 
	 	13.7.	 	Captions and paragraph headings used in this Agreement are for convenience purposes
only and shall not be used for the interpretation thereof.
	 
	 	13.8.	 	The provisions of this Agreement are in lieu of the provisions of any collective
bargaining agreement, and therefore, no collective bargaining agreement shall apply with
respect to the relationship between the parties hereto (subject to the applicable
provisions of law).
	 
	 	13.9.	 	This Agreement shall not be amended, modified or varied by any oral agreement or
representation other than by a written instrument executed by both parties or their duly
authorized representatives.

IN WITNESS WHEREOF, the parties hereto have hereby duly executed this Agreement on the day and year
first set forth above.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	TopSpin Medical Ltd	 	 	 	Erez Golan	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:exv10w7wii

 

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Exhibit 10.7 (ii)

			
	 	 	 
	To: Erez Golan
	 	Date: August 22, 2005

Re: Revision of your personal employment agreement of December 9, 2002 (“Employment
Agreement”)

We hereby put in writing that which is agreed between you and Topspin Medical
(Israel) Ltd. (the ”Company”) regarding the modification of your Employment
Agreement, in the event that TopSpin Medical, Inc. issues its securities to the
public and lists the securities for trading on the Tel Aviv Stock Exchange (the
“IPO”). Capitalized terms used herein shall have the meaning ascribed to them in the
Employment Agreement, unless the context requires otherwise.

Upon consummation of the IPO the following provisions shall enter into effect:

	 	1.	 	The following paragraph shall follow on to Section 2:
	 
	 	 	 	“Your term of employment shall be for five years from the date of the IPO,
unless terminated. Without derogating for the generality foregoing, it is
hereby clarified that either party may terminate the Personal Employment
Agreement at any time on providing written notice to the other party three
months in advance. Both the parties to this contract are required to notify
the other party, in writing, of their desire to extend the employment contract
beyond the initial five year term, no later than six months prior to the end
of the five year term. For the removal of doubt if both parties do not notify
the other party of their desire to extend this contract the employment of Erez
Golan by the Company will be automatically terminated at the end of the five
year term.
	 
	 	2.	 	Section 5.1 shall be deleted in its entirety and replaced with
the following:
	 
	 	 	 	“Your monthly salary shall be NIS 50,000 gross linked to
the increase of the CPI, adjusted upwards on a quarterly
basis to the CPI last published prior to the date of
such adjustment. The base index for each adjustment
shall be the

 

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	 	 	 	index last published prior to the date of the preceding
adjustment. The base index for the first linkage
adjustment shall be the index last published prior to
the IPO. In addition your monthly salary (as may be
increased pursuant to the terms hereof) shall be further
increased to reflect any increase required pursuant to
the governmental directives to be published from time to
time and binding on the Company (Tzavei Harhava) with
respect to the cost-of-living increases (Tosefet
Yoker)”.
	 
	 	3.	 	The following shall follow on after Section
6.9.1
	 
	 	 	 	“This loan and the interest accrued thereon shall be converted to a grant on
the one year anniversary of the IPO, subject to your being an employee or a
consultant of either the Company or any affiliate at the time.
	 
	 	4.	 	Section 6.9.2 shall be deleted and replaced with the following:
	 
	 	 	 	“As of the Effective Date as a security to ensure the full and timely
repayment of the Loan Amount, the Employee hereby creates and grants to the
Company for its benefit and its successors and assigns, a security interest in
the securities held by Erez Golan in Erez Golan Holdings Ltd. (such
securities subject to the security interest are referred to as the “Pledged
Shares”). In furtherance of the above, the Pledged Shares shall be stamped
with a legend, as of the date of the IPO, stating that such securities have
been pledged to the benefit of the Company. In addition, the Employee
undertakes to execute any document required to register the pledge of the
Pledged Shares with the Registrar of Pledges.
	 
	 	5.	 	Section 6.9.6 will be deleted in its entirety.
	 
	 	6.	 	Section 7.1 and 7.2 shall be deleted and replaced with the
following:
	 
	 	 	 	“On an annual basis, starting one year after the IPO and ending three years
after

 

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	 	 	 	the IPO, the Company shall grant Erez Golan a bonus of U.S. $ 10,000 each
year, subject to Erez Golan working for the either Company or an affiliate
thereof in the capacity of employee or providing services to the Company or an
affiliate thereof as a consultant. For the avoidance of doubt, it is hereby
clarified that the bonus shall not be regarded as a part of the monthly salary
for any purpose whatsoever including for the purpose of calculating severance
pay, if you shall be entitled to such.”

 

-4-

This letter constitutes an appendix to the Employment Agreement and shall be deemed
due notification in accordance with the provisions of the Notice Of Employment Terms
Law (Employment Terms), 5762-2002 and the regulations thereunder. All other
provisions of the Employment Agreement remain unchanged.

	 	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	TopSpin Medical (Israel) Ltd.	 	 

I hereby declare that I have read and understood this letter and I
agree to its contents.

	 	 	 	 	 	 	 	 	 
	Signature:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	Employee’s name:	 	 	 	 
	 

	 	 	 	 	 

	 	 
	ID No.:

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