Exhibit 10.5
EXECUTION COPY
ESCROW AGREEMENT
This Escrow Agreement (the "AGREEMENT") is made and entered into as of this 5th
day of April, 2000, by and among LIOR SALANSKY of 19 Snir St. Yokne-am Elit
20692, Israel ("SALANSKY"), OSCAR GRUSS & SON INCORPORATED, with offices at 74
Broad St., New York, NY 10004-2247, YARON AMIR of 73 Kalaniot St., Givat Avni,
ILAN MELAMED, and the individuals listed in Schedule 3.2 attached hereto
(collectively the "PURCHASERS", and each of them individually a "PURCHASER"),
and RAVILLAN, VOLOVELSKY, DINSTEIN, SNEH & CO. Attorneys-at-Law, 76 Rothschild
Blvd., Mozes House, Tel-Aviv, Israel (the "TRUSTEE").
NOW THEREFORE in consideration of their mutual representations and obligations,
the parties hereto have hereby agreed as follows:
1. DEFENITIONS
Unless otherwise determined, all capitalized terms used herein shall bear
the meaning ascribed to them in the Share Purchase Agreement executed
between the parties hereto and concurrently herewith (the "SHARE PURCHASE
AGREEMENT").
2. APPOINTMENT
Trustee is hereby appointed as a trustee for and on behalf of both Salansky
and the Purchasers.
3. SALANSKY'S OBLIGATIONS
3.1. Upon executing this Agreement, Salansky shall deliver to the Trustee,
on behalf of the Purchasers, validly executed blank (i) transfer deeds,
(ii) transfer statements to the Registrar of Companies and (iii) share
certificates, representing a total of up to 5,853 Ordinary Shares.
3.2. If the Trustee receives from any party hereto adequate evidence, to
Trustee's satisfaction (after notifying all other parties of such
evidence and allowing them to bring forth any additional or contrasting
evidence), that, within twelve (12) months of the date hereof, the
Applicable Conversion Value, as defined in the Amended Articles, had
been adjusted in accordance with the terms of Article 21.4 thereof, and
is further sufficiently advised by such party of the new value of the
Applicable Conversion Value subsequent to such adjustment, then the
Trustee shall complete the transfer deeds, transfer statements and
share certificates to reflect the transfer from Salansky to the
Purchasers, for no additional consideration, of Ordinary Shares (to be
distributed among the Purchasers proportionally to their respective
maximum portion of additional shares specified in Schedule 3.2) in a
number
equal to the product of (i) 5,853 and (ii) a fraction, the numerator
of which is the difference between (X) $104.625 and (Y) the Applicable
Conversion Value after giving effect to the adjustment under Article
21.4, decreased by 22.5% (the "RETROSPECTIVE PRICE PER SHARE") (down
to a minimal Retrospective Price Per Share of $83.700 in the event
that no adjustment had taken place), and the denominator of which is
the difference between $104.625 and $83.700.
For illustration purposes only, if Salansky provides evidence that
within the twelve-month period following the date hereof, the
Applicable Conversion Price had been increased, for example, from $108
to $121.5, then the Trustee shall be authorized to take all actions
and complete all documents held by it in escrow as shall be required
to perfect the transfer, from Salansky to the Purchasers, of 2,927
shares, in accordance with the following computation:
5,853* [$104.625 - ($121.5*0.775) = 2,927
---------------------------------
($104.625 - $83.700)
If any of the parties shall demonstrate that, within the twelve-month
period commencing on the date hereof, the Applicable Conversion Price
had been increased to $135 (or above), the Trustee shall not transfer
any additional shares to the Purchasers, and shall return all deeds,
statements and certificates bestowed therewith back to Salansky upon
Salansky's first demand.
If, however, none of the parties shall apply to the Trustee in respect
of the adjustment of the Applicable Conversion Price within the
twelve-month period designated above, or shall not attach to such
application sufficient evidence of both the occurrence and the degree
of such adjustment in a manner satisfactory to the Trustee (or if the
Applicable Conversion Price had in fact remained unchanged (or had
been decreased) under the provisions of the Articles of Association of
Mind C.T.I. Ltd. (the "COMPANY")), then the Trustee shall, upon the
expiration of the twelve-month period, transfer all additional 5,853
to the Purchasers.
4. REPRESENTATIONS, WARRANTIES AND OBLIGATIONS OF TRUSTEE
4.1. The Trustee represents and warrants to Salansky and the Purchasers
that it has full power and authority to execute, deliver and perform
this Agreement.
4.2. The Trustee shall not be entitled to any compensation hereunder, other
than reimbursement of any expenses, including legal expenses, incurred
in connection with the performance of its duties hereunder.
4.3. Trustee shall not assign, sub-contract or otherwise transfer this
Agreement without the prior written consent of Principal Shareholders.
4.4 Trustee represents, and Salansky hereby acknowledges and recognizes,
that the Trustee has been involved with the purchase of the Purchased
Shares and represented several of the Purchasers in relation
therewith, and has a certain interest in the Purchased Shares and the
shares in escrow hereunder.
5. TRUSTEE'S LIABILITY AND INDEMNIFCATION
5.1. Liability of Trustee. In performing any of its duties under this
Agreement, the Trustee shall not be liable to any party for damages,
losses or expenses, except in the event of gross negligence or willful
misconduct on its part. Trustee shall not incur any such liability for
(i) any act or failure to act made or omitted in good faith, or (ii)
any action taken or omitted in reliance upon any instrument that the
Trustee shall in good faith believe to be genuine; nor will the
Trustee be liable or responsible for forgeries, fraud, impersonations,
or determining the scope of any agent's authority. The Trustee is not
responsible for determining and verifying the authority of any person
acting or purporting to act on behalf of the Company or any party to
this Agreement.
5.2. Indemnification of Trustee. Both Salansky and each of the Purchasers
(and their respective successors and assigns) agree jointly and
severally to indemnify and hold the Trustee harmless against any and
all losses, claims, damages, liabilities and expenses, including
reasonable costs of investigation and disbursements that may be
imposed on the Trustee or incurred by it in connection with the
performance of its duties under this Agreement, including but not
limited to any arbitration or litigation arising from this Agreement
or involving its subject matter.
6. NOTICES
All notices or other communications hereunder shall be in writing and shall
be given in person, by registered mail (registered air mail if mailed
internationally), by an overnight courier service which obtains a receipt
to evidence delivery, or by facsimile transmission (provided that written
confirmation of receipt is provided), addressed as set forth in the
preamble above, or such other address as any party may designate to the
other in accordance with the aforesaid procedure. All notices and other
communications delivered in person or by courier service shall be deemed to
have been given as of three business days after sending thereof, those
given by facsimile transmission shall be deemed given twenty-four hours
following transmission, provided a confirmation copy is sent by registered
mail, and all notices and other communications sent by registered mail
shall be deemed given five (5) days after posting.
7. GENERAL
7.1. The entire agreement between the parties with respect to the subject
matter hereof is contained in this Agreement. This Agreement supersedes
all prior oral and written proposals and communications related to this
Agreement between the parties.
7.2. No provision of this Agreement shall be deemed waived, amended or
modified by either party unless such waiver, amendment or modification
is expressly claimed.
7.3 Any provision of this Agreement which is unenforceable under the laws
of any jurisdiction which are applicable hereto shall be ineffective to
the extent such laws apply without invalidating the remaining
provisions of the Agreement.
7.4. All section headings herein are inserted for convenience only and shall
not modify or affect the construction or interpretation of any
provision of this Agreement.
7.5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws, and subject to the jurisdiction of the Courts
of the State of Israel.
IN WITNESS WHEREOF, the authorized representatives of the parties hereto have
executed this agreement on the dates set first above:
/s/ Ravillan, Volovelsky, Dinstein, Sneh & Co.
______________________________________________
RAVILLAN, VOLOVELSKY, DINSTEIN, SNEH & CO.
ATTORNEYS-AT-LAW
SCHEDULE 3.2
------------
(Page 1 of 2)
of the Escrow Agreement dated April 6th 2000
Signature Page and Allocation Table
-----------------------------------
Maximum Number of
Name of Purchaser Additional Shares Signature
- -------------------- --------------------- ---------------------
Rochelle Sivan 48 /s/ Rochelle Sivan
- ------------------------------------------- ---------------------
Gabi Bar Haim 48 /s/ Gabi Bar Haim
- ------------------------------------------- ---------------------
Zadok Eyal 72 /s/ Zadok Eyal
- ------------------------------------------- ---------------------
Ami Arel 119 /s/ Ami Arel
- ------------------------------------------- ---------------------
Gal Miara 119 /s/ Gal Miara
- ------------------------------------------- ---------------------
Sagee Aran 119 /s/ Sagee Aran
- ------------------------------------------- ---------------------
Shako Eli 119 /s/ Shako Eli
- ------------------------------------------- ---------------------
Eyal Oren 119 /s/ Eyal Oren
- ------------------------------------------- ---------------------
Sharli Bencherit 191 /s/ Sharli Bendrerit
- ------------------------------------------- ---------------------
Yuval Sarig 239 /s/ Yuval Sarig
- ------------------------------------------- ---------------------
Arie Ganot 239 /s/ Arie Ganot
- ------------------------------------------- ---------------------
Tudor Group Inc. 239 /s/ Eitan Lombard
- ------------------------------------------- ---------------------
SCHEDULE 3.2
------------
(Page 2 of 2)
of the Escrow Agreement dated April 6th 2000
Signature Page and Allocation Table
-----------------------------------
Yossi Azmon 239 /s/ Yossi Azmon
- ------------------------------------------- ------------------
David Shemla 239 /s/ David Shemla
- ------------------------------------------- ------------------
Gadi Lidror 239 /s/ Gadi Lidror
- ------------------------------------------- ------------------
Ilan Melamed 358 /s/ Ilan Melamed
- ------------------------------------------- ------------------
Yaron Amir 478 /s/ Yaron Amir
- ------------------------------------------- ------------------
Oscar Gruss & Son 2,629
Incorporated /s/ Michael Shaoul
- ------------------------------------------- ------------------
Total 5,853
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