EXHIBIT 4.2
--------------------------------------------------------------------------------
SERVICES AGREEMENT
--------------------------------------------------------------------------------
This Services Agreement (the "Agreement") is made and entered into as of the
11th day of February 2002, by and between Marnetics Ltd., formed under and
existing in accordance with the laws of Israel (the "Company") and Netlogic
Ltd., formed under and existing in accordance with the laws of Israel (the
"Consultant").
WHEREAS the Company is wholly owned by Marnetics Broadband
Technologies Ltd. ("MXB") whose shares are registered for
trade on the American Stock Exchange and engages in the
development and marketing of network capacity solutions; and
WHEREAS the Company wishes to obtain executive managerial and other
related services with respect to the Company, MXB and any of
its Affiliated companies (the "Services") as may be
prescribed from time to time by the Board of Directors of
the Company (the "Board") in accordance with the terms of
this Agreement; and
WHEREAS the Consultant has the skills, experience, expertise and
resources required in order to ensure the provision of the
Services required pursuant to this Agreement by qualified
and competent individuals (the "Representative"); and
WHEREAS the parties wish to set forth in writing the terms and
conditions whereby the Company engages the Consultant.
NOW, WHEREFORE, THE PARTIES HERETO HAVE AGREED AS FOLLOWS:
1. INTRODUCTION
1.1 The preamble and all Schedules attached hereto form an integral
part hereof.
1.2 The paragraph headings used herein are for convenience purposes
only, and shall not be used or applied in construing any of the
provisions hereof.
1.3 For purposes of this Agreement and all Schedules attached hereto:
1.3.1 The term "person" shall mean any individual, company,
corporation, partnership, association, joint venture,
trust, organization or other incorporated or unincorporated
entity or any combination of the foregoing.
1.3.2 The term "Affiliate" shall mean any person controlling,
controlled by or under common control with the Company.
2. ENGAGEMENT
2.1 The Company hereby engages the Consultant, and the Consultant
hereby agrees to act, as an independent non-exclusive consultant
of the Company. In such capacity, the Consultant shall arrange for
rendition of the Services to the Company in a diligent,
conscientious and professional manner, pursuant to guidelines and
procedures set forth by the Company from time to time and at such
places as may be determined by the Board.
The above notwithstanding, it is agreed that the Consultant shall
receive and act in accordance with instructions provided by the
MXB's Executive Committee (consisting of MXB's Chairman of the
Board, MXB's director from Prime Technology Ventures and MXB's
External Director serving as Chairman of the Executive Committee,
or, in the event that MXB's External Director is not serving as
the Chairman of such Committee, as determined by the Board of
Directors of MXB) with respect to all matters concerning the
current and former operations of Stav Electrical Systems (1994)
Ltd., including without limitation with respect to its assets,
liabilities, employees, obligations and rights.
2.2 The Company and the Consultant acknowledge that that the provision
of the Services is based on the good faith of the parties and that
the position of Consultant and the Representative is of a
fiduciary nature. The Consultant guarantees that performance of
the Services shall be to the satisfaction of the Company, as
determined in the unrestricted discretion of the Board. The
provisions of Schedule 2.2 shall apply with respect to the
Representative and the Consultant. The Consultant represents and
warrants that, except as set forth in Section 5 of Schedule 2.2,
there are no restrictions limiting its ability to perform this
Agreement in accordance with the terms hereof.
2.3 On ___________, 2001 the Consultant entered into a
Confidentiality, Invention Transfer and Non-Competition
Undertaking (the "NDA"), a copy of which is attached hereto as
Schedule 2.3 and whose terms are hereby incorporated to this
Agreement. The Consultant and all officers, directors,
shareholders, employees, contractors, consultants and/or whom ever
on behalf, of the
-2-
Consultant, including, without limitation, the Representative,
that shall have access to confidential and proprietary information
of the Company shall be deemed to have signed the NDA and shall
act in accordance with its terms and conditions.
2.4 The Consultant represents and warrants that during the course of
its engagement with the Company, neither it nor any of its
employees, consultants or contractors shall disclose or use any
confidential or proprietary information of any third party in
breach of any obligations which may exist with respect to such
information.
2.5 Until otherwise mutually agreed by the parties to this Agreement,
the representative of the Consultant shall be Xx. Xxxxxxxx
Xxxxxxxxxxx. The Representative shall sign a confirmation
concerning this Agreement substantially in the form attached
hereto as Schedule 2.5.
2.6 The Consultant shall supervise the Representative and shall
maintain accurate records of the Services provided hereunder
including (without limitation) contacts made, third parties
contacted, correspondence, documents and information received from
and given to third parties in connection with the Services. The
Consultant shall require the Representative to provide such
reports as may be requested by the Board from time to time. The
Consultant shall keep all such records at a mutually agreed
location and shall otherwise keep the Company fully informed of
all actions hereunder.
2.7 The Consultant shall produce upon request such documentation and
authorization concerning corporate matters as may be reasonably
requested by the Company from time to time.
3. TERM AND TERMINATION
3.1 The term of this Agreement shall commence on December 2, 2001 (the
"Effective Date") and be in effect for a period of twelve (12)
months, unless terminated earlier in accordance with this
Agreement. One (1) month prior to the expiration of this
Agreement, the parties shall commence negotiations with respect to
any future relationship.
3.2 Either party may terminate this Agreement without cause upon an
advance written notice of at least 30 days. In such event, the
Consultant shall be entitled to all compensation due for such
period and the Consultant shall assist as
-3-
necessary with respect to the transfer of responsibilities to a
person designated by the Company.
3.3 In the event of a material breach of this Agreement that is not
cured within 15 days after the Consultant has provided written
notice to the Company specifying the breach, the Consultant may
terminate this Agreement upon written notice to the Company.
3.4 In the event of a failure by the Consultant or the Representative
to abide by the obligations set forth herein for any reason
(including death or disability), the Board may terminate this
Agreement on behalf of the Company upon five (5) days written
notice to the Consultant unless during such five day period the
Consultant presents a compelling explanation in writing to the
Board concerning such matter. For purposes hereof, a "compelling
explanation" shall be as determined by the Board in its
unrestricted discretion. In addition, the term "disability" shall
mean any physical or psychological impairment that prevents the
Representative from providing the Services in a reasonable and
businesslike manner for a period exceeding 30 days in any
consecutive 120 day period.
3.5 The Company may terminate this Agreement immediately for cause.
For purposes hereof, the term "cause" shall mean the Board's
declaration that:
3.5.1 The Consultant or the Representative is suspected of an
illegal or dishonest act involving the Company or any of
its assets;
3.5.2 The Consultant or the Representative is suspected of any
criminal offense which is punishable by incarceration in
excess of six (6) months;
3.5.3 The Consultant or the Representative is suspected of an
intentional action to harm the Company;
3.5.4 The Consultant or Representative has filed for bankruptcy
or a petition for involuntary dissolution has been filed
against the Consultant or the Representative and has not
been dismissed within sixty (60) days of filing.
-4-
3.5.5 The Consultant ceased to provide the Services hereunder
through the Representative as detailed in Section 2.5
above.
3.6 Upon termination of this Agreement for any reason, the Consultant
shall immediately return to the Company all equipment, information
and other property of the Company (or otherwise provided by the
Company) that is in the possession of the Consultant or any agent,
consultant, contractor or employee of the Consultant.
3.7 Upon termination of this Agreement, the non-terminating party
shall have no claim against the terminating party in connection
with such termination.
4. INDEPENDENT CONTRACTOR
4.1 The relationship between the parties under this Agreement is
strictly that of independent parties, where the Consultant, acting
solely as an independent contractor, shall supply the Services to
the Company and shall supervise the Representative. Nothing herein
shall be deemed to create the relationship of employer-employee,
agency, joint venture or partnership between the parties or
between either of the parties and any third person.
4.2 The Consultant shall be solely responsible for all fees, payments,
salaries and other benefits of its agents, consultants,
contractors and employees, including, without derogation, the
Representative.
4.3 The Consultant shall indemnify and hold the Company harmless from
all amounts payable or expenses incurred (including reasonable
legal fees) arising from or in connection with any breach by
Consultant of its undertakings in accordance with Section 4.2
above. The Consultant shall indemnify and pay to the Company all
such amounts within seven (7) days of the first written demand
therefor by the Company.
4.4 If for any reason whatsoever a competent authority, including a
judicial body, determines that the Consultant and/or the
Representative and/or any one on their behalf is the Company's
employee, the following provisions shall apply:
4.4.1 In lieu of the Consideration (as defined below) that was
paid to the Consultant, the Consultant shall be deemed to
have been entitled only to a reduced consideration (gross)
of
-5-
70% of the consideration actually paid to the Service
Provider (the "Reduced Consideration"), and in such event
the Consultant shall be deemed only entitled to the Reduced
Consideration.
4.4.2 The Consultant shall immediately refund to the Company any
amount that was paid in excess of the Reduced
Consideration, linked to the Israeli consumer price index
from the date of each payment to the date of actual refund.
5. CONSIDERATION AND EXPENSES
5.1 In consideration for the Services, the Consultant shall receive
the compensation designated in Schedule 5.1 (the "Consideration").
The Consideration constitutes the full and complete consideration
payable with respect to the Services.
5.2 The Consultant shall not be entitled to any additional payments
with respect to medical, life or disability insurance, Managers
Insurance, retirement benefits, or any amounts with respect to
severance, recuperation, sickness or vacation or any other amounts
whatsoever.
6. INSURANCE
The Company will include the Consultant and the Representative in the
Company's officers and directors liability insurance policy, and cause
that the Consultant and the Representative to be included in such
insurance policy of MXB, subject to the following: (i) the Company's
discretion regarding the extent, terms and conditions of such insurance
coverage; (ii) that the inclusion of the Consultant and the
Representative in such insurance policy will not materially effect the
Company's and/or MXB's insurance expenditure or materially adversely
effect the terms and conditions of such insurance policy.
In the event that the Company is not able to include the Representative
in the Company's officers and Directors liability insurance policy as
provided for in this Section 6, then the Consultant shall have the right
to terminate this Agreement upon 10 days prior written notice to the
Company. The provisions of Section 3 of this Agreement shall apply to
such termination mutatis mutandis.
7. MISCELLANEOUS
7.1 In the event that any provision hereof is not enforceable, such
provision shall be interpreted in a reasonable fashion
-6-
in order to satisfy the intent of the parties. Alternatively, the
provision shall be severed from this Agreement and the remaining
provisions shall be enforceable in accordance with their terms.
7.2 The Representative shall have the authority to sign reports,
returns, contracts and other documents and binding commitments on
behalf of the Company as may be determined by the Board from time
to time.
7.3 Each payment to be made under this Agreement shall be made against
a detailed invoice issued by the Consultant, to the full
satisfaction of the Company.
The Consultant shall present to the Company an exemption from the
payment of income taxes and the payments to be made by the Company
to the Consultant hereunder are inclusive of all taxes, levies and
other compulsory payments of any kind, all of which shall be borne
by the Consultant solely. To the extent required under any
applicable law, the Company may withhold any tax from any payment
to the Consultant hereunder and remit the balance to the
Consultant.
The Consultant shall be exclusively responsible for reporting all
amounts received from the Company and paying all taxes due in
accordance with applicable law (including value-added tax).
The Consultant is responsible for all taxes that may be imposed on
all transfers (whether in cash, in kind or in securities) by the
Company to the Consultant in accordance with the terms of this
Agreement. The Consultant shall indemnify and hold the Company
harmless from all losses, costs and expenses (including reasonable
legal fees) due to any claim or demand by any governmental agency
or other body with respect to the payment of any taxes or other
amounts imposed on (or due and unpaid as a result of) amounts paid
to the Consultant pursuant to this Agreement. The Consultant shall
indemnify and hold the Company harmless from all losses, costs and
expenses (including reasonable legal fees) due to any claim by any
person (including the Representative) concerning amounts owed by
the Consultant to any agent, consultant, contractor or employee of
the Consultant for any reason. The Consultant shall indemnify and
pay to the Company all such amounts within seven (7) days of the
first written demand therefor by the Company.
7.4 All notices required pursuant to this Agreement shall be in
writing and sent by (i) registered or certified mail, postage
prepaid, or by (ii) facsimile with simultaneous mailing of a copy
thereof by prepaid courier or prepaid registered mail, or by (iii)
hand delivery. Notices hereunder shall become effective four
business days after mailing by registered airmail, or one business
day after sending by facsimile with simultaneous sending by
courier or mail as provided above, or one business days
-7-
after hand delivery. Upon execution of this Agreement, the parties
shall provide each other with addresses and facsimile numbers for
rendition of notices.
7.5 This Agreement, together with all the Schedules attached hereto,
contains all of the terms and conditions agreed upon by the
parties hereto with reference to the subject matter hereof and
supersedes all prior agreements, understandings or drafts
exchanged between the parties regarding this matter, whether oral
or written. This Agreement may only be modified or changed by an
instrument signed by both parties hereto. The failure or delay by
either party to enforce its rights hereunder shall not operate as
a waiver of such right unless in writing and signed by the waiving
party.
7.6 The Consultant and the Company have each had access to legal
counsel, have participated jointly in the preparation of this
Agreement and have voluntarily entered into this Agreement. No
rule of interpretation shall apply to construe any provision
hereof against either party as a result of the preparation of this
Agreement.
7.7 This Agreement shall be governed by and construed under the laws
of Israel. All disputes between the parties arising in connection
with this Agreement shall, failing amicable settlement, be
resolved by binding arbitration in accordance with the Arbitration
Law, 1968 to be held in Tel Aviv or at an alternative location
designated by the Company. The parties hereto irrevocably submit
to the personal jurisdiction of courts in Tel Aviv-Yaffo for
enforcement of any award or to enforce the provisions of this
Agreement. Each party shall bear its costs with respect to any
arbitration or litigation. This Agreement shall be deemed to
constitute an agreement for arbitration as set forth in the
Arbitration Law, 1968.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first mentioned above.
Marnetics Broadband Technologies Ltd. Netlogic Ltd.
By: /s/ Xxxxxxxx Xxxxxxxxxxx By: /s/ Xxxxxxxx Xxxxxxxxxxx
------------------------ ------------------------
Xxxxxxxx Xxxxxxxxxxx Xxxxxxxx Xxxxxxxxxxx
/s/ Xxxxx Xxxxxxxx
------------------------
Xxxxx Xxxxxxxx
-8-
SCHEDULE 2.2
General Guidelines Regarding the Consultant and the Representative
1. The Services shall be rendered with respect to such activities, matters
and projects as the Board may designate from time to time commencing with
the Effective Date. In light of the Company's parent company's (MXB)
status on the American Stock Exchange, the Services will include
responsibility of the Representative for preparation of and signature on
a variety of reports to Israeli and United States tax authorities, the
relevant securities regulatory authorities, AMEX and other entities
responsible for supervision and regulation of the activities of the
Company and any of its Affiliated companies.
2. During the term of the Agreement, the Representative shall be a full time
employee of the Consultant. The Representative shall be subject to the
exclusive control and supervision of the Consultant.
3. The Representative shall report regularly to the Board or to such person
designated by the Board from time to time.
4. Except as set forth in Section 5 below, the Consultant shall require the
Representative to dedicate his entire working time to provision of the
Services. The Representative shall be entitled to 21 vacation days per
year and the Consultant shall advise the Company of all vacation days
that are utilized by the Representative and shall coordinate such days
with the Board.
5. The Consultant shall be entitled, for the benefit of the Representative,
to one cellular phone, for which the Company shall pay all related
expenses.
6. The Company acknowledges that the Consultant and the Representative have
existing obligations to third parties and that the framework of such
activities (i.e., their form and substance as well as the time required
for such activities) has been disclosed to the Company (the
"Activities"). The Consultant and the Representative shall be entitled to
continue the Activities within such framework but neither the Consultant
nor the Representative shall deviate from such framework (by increasing
such activities or rendering additional services to any third party)
except with the prior written consent of the Company.
The Consultant and the Representative represent and warrant to the
Company that the Activities do not and shall not impair and/or conflict
in any manner their ability to render the Services to the Company or any
of their undertakings under the Agreement.
-9-
SCHEDULE 2.5
Confirmation/Undertaking by the Representative
I hereby confirm that I am fully familiar with the terms and conditions of the
Services Agreement entered into by and between Marnetics Ltd. (the "Company")
and Netlogic Ltd. ("Consultant") on the 11th day of February 2002 (the
"Agreement"). I agree to abide by the provisions of the Agreement as if I (and
not the Consultant) have personally entered into the Agreement with the Company.
I agree not to take any action that may adversely affect the Consultant's
performance or ability to perform its undertakings under the Agreement. I
personally guarantee the full performance by the Consultant of its obligations
under the Agreement.
Signed this ___ day of ________ 2002.
/s/ Xxxxxxxx Xxxxxxxxxxx
----------------------------
Xxxxxxxx Xxxxxxxxxxx
-10-
SCHEDULE 5.1
Compensation
As full and complete compensation for the Services, the Company agrees as
follows:
1. To pay a monthly amount in NIS equivalent to US$11,000 (the "Service
Fee"), plus value added tax, if applicable, and subject to withholding of
taxes at source. Such amount shall be paid within seven (7) days of the
submission of a valid tax receipt with respect to services rendered in
the previous calendar month. The "NIS equivalent" shall be determined in
accordance with the Representative Rate known as of the last day of the
month prior to payment. Due to the high level of personal trust and the
substantial management skills and discretion required with respect to
rendition of the Services, the parties agree that no additional amounts
shall be payable to the Representative apart from those detailed below.
2. To provide an automobile (the "Vehicle") for use by the Representative in
accordance with the prevailing procedures of the Company. The
Representative shall ensure that the Vehicle shall be driven cautiously
with due concern for persons and properties. The use of the Vehicle shall
be in accordance with all traffic laws and regulations. The
Representative shall ensure the proper maintenance of the Vehicle. The
Company shall reimburse all actual expenses incurred by the
Representative directly in connection with use of the Vehicle, excluding
any fines which are the sole obligation of the Representative to pay in a
timely fashion. All tax consequences of the benefits of use of the
Vehicle pursuant to this provision shall be borne by the Consultant. The
Company is authorized to withhold at source such amounts of income tax as
it deems appropriate in connection therewith.
55496-1/0/69/(symbol)
55496-4/0/68/(symbol)
-11-
