EXHIBIT 10.6
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "AGREEMENT") is made this 30th day of June
2001 by and between Dov Strikovsky, I.D. No. 051276897, of Akiva Street, Raanana
("STRIKOVSKY") and Marnetics Broadband Technologies Ltd. (formerly - Stav
Electrical Systems (1994) Ltd.), Israeli public company No. 52-004389-4 of 10
Haietzira Street, Industrial, Raanana ("MXB").
WHEREAS Marnetics Ltd. ("MARNETICS"), the shareholders of Marnetics (the
"SHAREHOLDERS") and MXB have entered into a Share Exchange Agreement
dated May 31, 2000, whereby, in consideration for the purchase of all
of Marnetics' shares by MXB, the shareholders of Marnetics were issued
shares of MXB equaling 75% of the issued and outstanding share capital
of MXB on a fully diluted basis (the "SEA"); and
WHEREAS pursuant to an addendum to the SEA dated October 30, 2000 (the
"ADDENDUM"), Strikovsky and/or any Company under his control agreed to
indemnify the shareholders of Marnetics against any loss or damage
incurred by MXB as a result of MXB's liability with respect to Current
Projects (as defined in the Addendum)(the "INITIAL INDEMNIFICATION");
and
WHEREAS pursuant to the Addendum, in order to secure the Initial
Indemnification, Strikovsky has transferred 200,000 shares of MXB (the
"ESCROW SHARES") to be held in escrow (the "ESCROW") by Advocate
Menahem Gurman (the "ESCROW AGENT") according to the Escrow Agreement
signed by Strikovsky and the Escrow Agent (the "ESCROW AGREEMENT") set
forth in ANNEX A hereto ; and
WHEREAS on the date hereof the status of the Current Projects, including
collection of debts from customers and issuance of invoices by
suppliers, evidence that MXB may face more liabilities than the ones
anticipated at the time of signature of the SEA, the Addendum and the
Escrow Agreement; and
WHEREAS, in light of the above, the parties wish to elaborate and add to the
terms and provisions of the Initial Indemnification (the Initial
Indemnification and its amendments hereunder: the "COMPLETE
INDEMNIFICATION") and the Escrow Agreement pursuant to the terms and
conditions of this Agreement.
NOW, WHEREFORE, the parties hereby agree as follows:
1. PREAMBLE; ANNEXES
The preamble to this Agreement and all its Annexes form an integral
part thereof.
2. THE BANK AGREEMENT
2.1. MXB UNDERTAKINGS
2.1.1. On May 9, 2001, an agreement (the "BANK AGREEMENT") was
signed between MXB and Bank Hapoalim, Ltd. (the "BANK")
with respect to MXB's debt to the Bank in the amount of
NIS 13,100,000 (Thirteen Million One Hundred
Thousand)(the "DEBT").
2.1.2. In accordance with the Bank Agreement, the Bank has
agreed to release MXB from its obligation to repay the
Debt and to cancel the floating charge and the liens
registered in favor of the Bank on properties of MXB
provided that, by May 31, 2001 at the latest, the
following shall occur:
2.1.2.1. Shlavor Systems Ltd., a company wholly owned
by Strikovsky, ("SHLAVOR") shall have agreed
in writing to assume liability for the Debt;
and
2.1.2.2. MXB shall have paid NIS 4,000,000 to the Bank
on account for the Debt (the "REPAID AMOUNT");
and
2.1.2.3. MXB shall have assigned to the Bank, by way of
a lien all the rights of MXB with respect to
the debt of the City of Hod Hasharon to MXB in
the sum of NIS 9,100,000.
2.1.2.4. MXB shall have provided a guarantee to the
Bank in the amount of NIS 3,000,000 (the
"GUARANTEE") to secure Shlavor's obligation to
repay the Debt, subject to reduction as
provided in the Bank Agreement.
2.2. STRIKOVSKY'S UNDERTAKINGS
2.2.1. In the framework of the Complete Indemnification,
Strikovsky and/or any
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Company under his control hereby agrees and undertakes
as follows:
2.2.1.1. To reimburse MXB the Repaid Amount; and
2.2.1.2. To reimburse MXB any amount that MXB may have
to pay to the Bank if the Bank exercises the
Guarantee; and
2.2.1.3. To indemnify and hold MXB harmless for all
costs, expenses and other amounts payable by
MXB in connection with the Debt pursuant to
the Bank Agreement.
2.2.2. All amounts due and payable to MXB pursuant to this
Section 2.2 shall be linked to the consumer cost of
living index and bear annual interest of four percent
(4%) per annum from the date of payment to the Bank by
MXB until the date of actual payment by Strikovsky to
MXB plus VAT.
2.2.3. All amounts due and payable to MXB pursuant to this
Section 2.2 shall be paid in monthly installments of NIS
200,000 (Two Hundred Thousand) commencing on June 1,
2004 until paid in full.
2.3. ADDITIONAL ESCROW SHARES
2.3.1. As a security for the performance of Strikovsky's
undertakings under this Section 2, Strikovsky shall
deliver 100,000 additional shares of MXB (the
"ADDITIONAL ESCROW SHARES") to the Escrow Agent, which
shall be held, upon their delivery to the Escrow Agent,
pursuant to the terms of the Escrow Agreement.
2.3.2. In addition, the Escrow Shares and the Additional Escrow
Shares shall be subject to the following conditions:
2.3.2.1. The Escrow Shares and the Additional Escrow
Shares shall be released by the Escrow Agent
to Strikovsky, pursuant to the Escrow
Agreement and this Section 2.3 upon
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satisfaction of the terms of the Escrow
Agreement and after the receipt by the Escrow
Agent of a certificate from the independent
auditors of MXB that (a) no further amounts
are owed by MXB with respect to the Repaid
Amount and the Guarantee pursuant to the Bank
Agreement and (b) all amounts to be reimbursed
to MXB by Strikovsky pursuant to Section 2.2.1
hereto and the Initial Indemnification.
2.3.2.2. In the event that, prior to receipt of the
certificate described in Section 2.3.2.1
above, the Escrow Agent receives notice of a
claim against Strikovsky and/or any Company
under his control pursuant to the initial
Indemnification or the Complete
Indemnification, the Escrow Agent shall be
authorized to retain any or all of the Escrow
Shares and/or Additional Shares until such
claim is resolved and, in the unrestricted
discretion of the Escrow Agent, shall be
authorized to sell or otherwise dispose of all
or any portion of the Escrow Shares and/or
Additional Shares so as to satisfy any alleged
liability.
2.3.2.3. In the event that, at any time, (even before
the amounts under Section 2.2.3 become due)
the price per share of MXB shares shall equal
US$ 15, then, subject to MXB's written
consent, the Escrow Agent shall sell or
otherwise dispose of 100,000 shares out of the
Escrow Shares or the Additional Shares and
transfer the consideration therefor to MXB in
satisfaction of any indemnification due by
Strikovsky and/or any Company under his
control to MXB at such time and any amount due
by Strikovsky and/or any Company under his
control as indemnification at that time
(including the Indemnity Amount defined below)
shall be reduced proportionately.
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2.3.2.4. In the event that, at any time, (even before
the amounts under Section 2.2.3 become due)
the price per share of MXB shares shall equal
US$ 20, then, subject to MXB's written
consent, the Escrow Agent shall sell or
otherwise dispose of an additional 100,000
shares out of the Escrow Shares or the
Additional Shares and transfer the
consideration therefor to MXB in satisfaction
of any indemnification due by Strikovsky
and/or any Company under his control to MXB at
such time and any amount due by Strikovsky
and/or any Company under his control as
indemnification at that time (including the
Indemnity Amount) shall be reduced
proportionately.
2.3.2.5. In no event shall the Escrow Agent be subject
to any liability with respect to any actions
taken pursuant to this Section 2.3. Each of
Strikovsky and/or Company under his control
and MXB agrees to indemnify and hold the
Escrow Agent harmless from all cost, loss or
expense which may be incurred by him in
connection with performance of his duties
hereunder and under the Escrow Agreement.
3. INDEMNITY AMOUNT
3.1. In the framework of the Complete Indemnification, Strikovsky
hereby agrees to pay to MXB, not later than July 30, 2001, an
amount of NIS 1,932,316 (One Million Nine Hundred Thirty Two
Thousand Three Hundred and Sixteen) (the "INDEMNITY AMOUNT").
The parties hereby acknowledge that the Indemnity Amount
represents the aggregate of missing invoices that should have
been issued to MXB by the entities listed in Annex 3.3. hereto.
3.2. The Indemnity Amount shall be paid in the form of the delivery
by the Escrow Agent of bank guaranties deposited by Strikovsky
in escrow with the Escrow Agent. Strikovsky hereby instructs the
Escrow Agent to deliver the bank guaranties to MXB not later
than the above-mentioned date.
3.3. Subject to the payment of the Indemnity Amount by Strikovsky
and/or any Company under his control to MXB as set forth above,
MXB hereby assigns to Strikovsky all right, title and interest
to any
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claim, demand, and/or cause of action whatsoever that MXB may
have now or shall have in the future against or with respect to
the entities set forth in ANNEX 3.3 hereto.
4. IRREVOCABLE WAIVER AND RELEASE
4.1. This Agreement sets forth the complete obligations of Strikovsky
with respect to the subject matters of this Agreement and
vis-a-vis the entities referred to in this Agreement.
4.2. Each of MXB and each of the Shareholders hereby irrevocably
waives any claim and/or demand it has now or may have in the
future against Strikovsky and/or any Company under his control
for any liability covered by this Agreement and the Addendum
other than pursuant to this Agreement and grants Strikovsky an
irrevocable release therefrom.
4.3. If any liability and/or obligation related to the liabilities
covered by this Agreement and/or the Addendum is imposed on
Strikovsky not pursuant to this Agreement or if any action or
measure is taken by MXB and/or any of the Shareholders and/or
any other person or entity which results in Strikovsky becoming
liable or obligated other than pursuant to this Agreement or the
Addendum, this Agreement shall be null and void and MXB shall
indemnify Strikovsky in full against any such liability and/or
obligation.
5. APPLICABLE LAW
The laws of the State of Israel shall govern the interpretation and
enforcement of this Agreement. The parties irrevocably consent to the
personal jurisdiction of the courts of Tel Aviv-Yaffo with respect to
any dispute arising out of or in connection with this Agreement. If any
provision hereof is deemed unenforceable, said provision shall be
severed and the remainder of this Agreement shall be enforced in
accordance with its terms.
6. MISCELLANEOUS
6.1. NOTICES. All communications provided for in this Agreement shall
be in writing and shall be sent or faxed to each party at such
address as a party may from time to time designate in writing to
the other parties. Notices shall be sent by personal delivery,
by registered mail, return receipt requested, express courier,
facsimile copy or electronic mail. Notices shall be deemed to be
received three business days after being mailed or on the next
business day after being faxed.
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6.2. ENTIRE AGREEMENT. This Agreement, together with the attached
Annexes, constitutes the entire agreement among the parties
regarding the transactions contemplated herein and therein and
supercedes all prior agreements and arrangements between or
among the parties with respect to the subject matter hereof,
whether oral or written, except for the SEA, the Addendum and
the Escrow Agreement. In the event of discrepancies between the
provisions of SEA, the Addendum, the Escrow Agreement and the
provisions of this Agreement, the provisions of this Agreement
shall prevail.
6.3. HEADINGS. The headings contained in this Agreement are solely
for convenience of reference and shall not affect the
interpretation of this Agreement.
6.4. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
6.5. SUCCESSORS AND ASSIGNS; ASSIGNMENT. Neither party shall sell,
assign, transfer, or otherwise convey any of its rights or
delegate any of its duties under this Agreement, except to a
company which has succeeded to substantially all of the business
and assets of the Company and has assumed in writing its
obligations under this Agreement.
6.6. DELAYS OR OMISSIONS: WAIVER. No delay or omission to exercise
any right, power, or remedy accruing to any party upon any
breach or default by any other party under this Agreement shall
impair any such right or remedy nor shall it be construed to be
a waiver of any such breach or default, or any acquiescence
therein or in any similar breach or default thereafter
occurring.
6.7. FURTHER ACTIONS. At any time and from time to time, each party
agrees, without further consideration, to take such actions and
to execute and deliver such documents as may be reasonably
necessary to effectuate the purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
set forth above.
/S/ DOV STRIKOVSKY /S/ DAVID SHEETRIT
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Dov Strikovsky Marnetics Broadband Technologies Ltd.
By: DAVID SHEETRIT
---------------------------------
Title: ACTING CHIEF EXECUTIVE OFFICER
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/S/ ISAAC NISSIM
-------------------------------------
Marnetics Broadband Technologies Ltd.
By: ISAAC NISSIM
---------------------------------
Title: CHIEF FINANCIAL OFFICER
-------------------------------
We, the undersigned, agree and are bound by the terms and provision of this
Agreement.
GAP TECHNOLOGIES LTD SAHAR (SECURITIES) TECHNOLOGIES
LTD
By: __________________
By: __________________ Title: __________________
Title: __________________
DERMISTOCK (1998) LTD LIMASSA ENTERPRISES CORPORATION
(BVI)
By: __________________
By: __________________ Title: __________________
Title: __________________
TECHBYTE L.L.C. ECI TELECOMMUNICATIONS LTD
By: __________________ By: __________________
Title: __________________ Title: __________________
OFEK RECHASIM TECHNOLOGIES 1999
LTD
By: __________________
______________________ Title: __________________
EMANUEL VIND
DUGAZ MARKETING (1995) LTD SUNNY.COM LTD
By: __________________
Title: __________________ By: __________________
Title: __________________
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LINKWARE LTD STI Ventures INVESTMENTS NO. 2
NV
By: __________________ By: __________________
Title: __________________ Title: __________________
Docor International BV Ronchal Investments NV
By: __________________ By: __________________
Title: __________________ Title: __________________
Prime Technology Ventures NV
By: __________________
Title: __________________
I, the undersigned, hereby agree to the content of Sections __of this Agreement.
/S/ MENAHEM GURMAN
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Menahem Gurman, Adv.
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ANNEX 3.3
1. Zur Neeman
2. David Bar- Aquiva
3. Kivnun Electricity Works (98) LTD.