Document:

Exhibit 10.17

 

DEBENTURE - FLOATING CHARGE

 

UNLIMITED IN AMOUNT

 

BETWEEN

 

WHITESMOKE LTD.

as Company

 

AND

 

KREOS CAPITAL III LIMITED

as Creditor

 

DATED APRIL             , 2008

  

 

  

DEBENTURE - FLOATING CHARGE

 

THIS DEBENTURE - FLOATING CHARGE is dated the    day of APRIL 2008 between:

 

	
1.

	
WhiteSmoke Israel Ltd., a company organized under the laws of the State of Israel, with registered number 51-341091-0 and registered office at Kehilat Saloniki 11, Tel-Aviv 69513, Israel (the “Company”); and

 

	
2.

	
Kreos Capital III Limited, a company incorporated in Jersey under registered number 05981165 whose registered office is at 47 Esplanade, St Helier, Jersey (the “Creditor”).

 

WHEREAS:

 

	
(A)

	
The Creditor has agreed to lend certain sums to the Company pursuant to an agreement between the Company, its parent company, WhiteSmoke Inc., a Delaware corporation (“WhiteSmoke Inc.”) and the Creditor dated April _, 2008 (the “Venture Loan Agreement”); and

 

	
(B)

	
In order to secure the full and punctual payment and performance when due of the Secured Liabilities, the Company has agreed to: (i) charge and pledge by way of first ranking floating charge all of the Company’s assets in favour of the Creditor in accordance with the terms hereof, except that the Permitted Liens (as defined below), if any, in respect of the assets covered thereby, shall be senior in rank to the floating charge created hereunder; and (ii) charge and pledge by way of first ranking fixed charge various assets, in favour of the Creditor in accordance with the terms of the Debenture - Fixed Charge (as defined below).

 

NOW THEREFORE, the parties agree as follows:

 

	
1.

	
DEFINITIONS AND INTERPRETATION

 

	
  

	
1.1

	
In this Debenture, the following terms shall have the following meanings:

 

	
Charged Assets

	 	
Those assets of the Company charged, pledged or assigned by way of charge to the Creditor pursuant to Section 3 (Security).

	  	 	  
	
Debenture    This Debenture

	 	
Floating Charge.

	  	 	  
	
Debenture – Fixed Charge

	 	
Means the Debenture - Fixed Charge signed between the Company and the Creditor on the date hereof, as may be amended from time to time.

	  	 	  
	
Indemnified Persons

	 	
As defined in Section 12.

  

 

  

	
Insurances

	 	
Means:

 

(a)  all contracts and policies of insurance executed and/or issued from time to time in relation to the Charged Assets;

 

(b)  all payments to the Company in relation to (a) above, and

 

(c)   all claims, rights and remedies  of the Company arising from (a) and (b) above.

	  	 	  
	
Intellectual Property

	 	
As defined in Schedule 1 of this Debenture.

	  	 	  
	
Kreos Fixed Charge

	 	
Means the first ranking fixed charge created under the Debenture - Fixed Charge.

	  	 	  
	
Ordinary Course of Business

	 	
to the extent it relates to Intellectual Property (as such term is defined herein), includes any license agreement, any distribution agreement, any OEM or similar agreement, any manufacturing agreement, any joint development agreement, or any joint venture agreement in the context of any of the above, provided, however, that an agreement that constitutes an effective transfer, or includes a potentially effective transfer, of a significant part of the technology of the Company will not be regarded as in the Ordinary Course of Business. By way of example, an exclusive, perpetual, worldwide license for a core technology of the Company or an OEM agreement according to which a company was given an exclusive right to use a core technology for all potential applications of that technology would not be regarded as in the Ordinary Course of Business. Any escrow agreement entered into as part of a transaction which is in the Ordinary Course of Business will be regarded as part of the Ordinary Course of Business provided that, upon the release of the escrow, the beneficiary of the escrow is entitled to use the technology of the Company only as may be necessary to fulfil the Company’s undertakings under the main transaction.

  

 

  

	
Permitted Liens

	 	
Means (i) the first ranking fixed charge created in favour of IBM Israel Ltd. over the assets listed in Schedule 2 hereof (the “IBM Lien”); and (ii) a lien, if granted, or a floating charge, if created, by the Company, at any time following the date hereof and prior to the occurrence of an Event of Default, in connection with financings used for purchasing or leasing tangible assets, the aggregate amount of which will not exceed US$50,000 (not including IBM Lien).

	  	 	  
	
Receiver

	 	
A receiver, trustee, administrator, administrative receiver, custodian, conservator, special manager or other similar official appointed by or on application of the Creditor, pursuant to the terms of this Debenture.

	  	 	  
	
Secured Liabilities

	 	
As defined in Section 2.1.

	  	 	  
	
Security Interest

	 	
Any mortgage, pledge, lien, hypothecation, assignment by way of security, security interest or other charge or encumbrance over, of or in the relevant property.

	  	 	  
	
Venture Loan Agreement

	 	
As defined in the First Recital.

	
  

	
1.2

	
Words and defined terms denoting the singular number include the plural and vice versa and the use of any gender shall be applicable to all genders.

 

	
  

	
1.3

	
The paragraph headings are for the sake of convenience only and shall not affect the interpretation of this Debenture.

 

	
  

	
1.4

	
The recitals, schedules, appendices, annexes and exhibits hereto form an integral part of this Debenture.

 

	
2.

	
PURPOSE

 

	
  

	
2.1

	
Secured Liabilities

 

The Security Interests created by this Debenture are created to secure the full and punctual payment and performance of all the Company’s and/or WhiteSmoke Inc.’s obligations pursuant to the Venture Loan Agreement together with all expenses and other amounts due or to become due from the Company under the terms of this Debenture including, without limitation, reasonable legal fees, the fees and costs of any Receiver and any other costs incurred in realizing the Security Interests granted hereunder (all such amounts, the “Secured Liabilities”).

 

	
  

	
2.2

	
Prepayment

 

Except as expressly set forth in the Venture Loan Agreement: (i) the Company shall not be entitled to discharge any amount of the Secured Liabilities prior to the agreed date for payment thereof; and (ii) neither the Company nor any third party having a right liable to be affected by the charges hereby created or the realisation thereof shall have any right under Section 13(b) of the Pledges Law, 5727-1967 or any other statutory provisions in substitution therefor.

  

 

  

	
3.

	
SECURITY

 

	
  

	
3.1

	
Creation of Floating Charge

 

As security for the full and punctual payment or performance when due (whether at stated maturity, acceleration or otherwise) of the Secured Liabilities by the Company and/or WhiteSmoke Inc., the Company hereby, absolutely and unconditionally charges and pledges in favour of the Creditor by way of first ranking floating charge and pledge:

 

	
  

	
(a)

	
to the maximum extent possible, all of the Company’s rights, title and interests in and to all of its present and future tangible and intangible assets, properties, rights and interests of any kind, whether contingent or absolute, including (for purposes of illustration), but in no way limited to, the assets described in Schedule 1 and subject to the seniority of the Permitted Lien (if any) in respect of the assets covered thereby; and

 

	
  

	
(b)

	
to the extent not included in the foregoing, all present and future rights to compensation, indemnity, insurance proceeds, warranty or guaranty accruing to the Company by reason of the loss of, damage to or expropriation of, or any other event or circumstance with respect to, such Charged Assets and all proceeds, products and benefits deriving from such Charged Assets (including, without limitation, those received upon any collection, exchange, sale or other disposition of such Charged Assets and any property into which such Charged Assets are converted, whether cash or non-cash) (Sections 3.1(a) and (b), collectively, the “Charged Assets”).

 

In addition, to the extent required by applicable law to create and perfect a first ranking floating charge over the Charged Assets specified in paragraph (b) above, the Company also assigns such Charged Assets to the Creditor by way of first ranking floating charge and pledge.

 

In particular, the Company hereby assigns to and in favour of the Creditor by way of first ranking floating charge and pledge (and each of the following shall be deemed to be expressly included in paragraph (b) above):

 

	
  

	
(i)

	
all present and future rights, claims and remedies of the Company under and in respect of the Insurances and any monies paid or payable pursuant thereto whether held in or for the benefit of any trust or other account relative thereto or otherwise;

 

  

 

  

	
  

	
(ii)

	
all of the present and future rights, claims and remedies of the Company under and deriving from the Property Tax and Compensation Fund Law, 5721-1961 as in force from or at any relevant time, and under any other applicable law arising in connection with the Charged Assets;

 

	
  

	
(iii)

	
all present and future rights to compensation, indemnity, warranty or guaranty accruing to the Company by reason of the loss of, damage to or expropriation of, or any other event or circumstance with respect to, the Charged Assets.

 

Nothing in this Debenture in any way limits the Company in entering into any transactions with regard to its Intellectual Property in the Ordinary Course of Business and the charge and pledge hereunder will not apply to rights granted to third parties in such transactions.

 

	
  

	
3.2

	
First Ranking

 

The Company specifically acknowledges that all of the Security Interests created by the Company under Section 3 (Security) of this Debenture shall rank in priority to any other Security Interests created by the Company, subject only to the Kreos Fixed Charge and the Permitted Liens, if any.

 

	
4.

	
PRESERVATION OF SECURITY

 

	
  

	
4.1

	
Continuing Security

 

The Company declares and agrees that:

 

	
  

	
(a)

	
the Security Interests created by this Debenture shall remain in force as continuing security for the payment and discharge of the Secured Liabilities and shall remain in force notwithstanding any settlement of account or any other act, event or matter whatsoever, and, subject to Section 4.4, shall be released and discharged upon full payment of the Secured Liabilities and Company’s obligations under the Venture Loan Agreement (the “Discharge”). Within seven (7) Business Days of the Discharge, the Creditor shall take all reasonable appropriate actions necessary to release the Security Interests created by this Debenture;

 

	
  

	
(b)

	
the Security Interests created and the powers conferred by this Debenture are in addition to, and are not in any way prejudiced or affected by, any other agreement between the Company and the Creditor; and

 

	
  

	
(c)

	
the Creditor will not be bound to enforce any other Security Interests before enforcing the Security Interests created by this Debenture.

 

  

 

  

	
  

	
4.2

	
Nature of Security Interests

 

All Security Interests that have been or may be created in favour of the Creditor for payment and performance of the Secured Liabilities shall be independent of one another.

 

For the avoidance of doubt, it is hereby clarified that this Debenture is in addition to the Debenture - Fixed Charge (and in no manner in lieu thereof or replacement thereto), and each of this Debenture and the Debenture - Fixed Charge shall independently serve as aforesaid to secure the Secured Liabilities in their entirety. Without derogating from the generality of the foregoing or from any other right of the Creditor, the Creditor shall have the right to act on this Debenture, on the Debenture -Fixed Charge or on both, in each case in connection with the Security Interest created by each (including, without limitation, with respect to any and all assets, properties and rights subject to both this Debenture and the Debenture- Fixed Charge); and no action or omission relating to any such Security Interest shall prevent or estop the Creditor from invoking such other Security Interest, at the same time or subsequently.

 

	
  

	
4.3

	
Liability of the Company; Security Interest Absolute

 

	
  

	
(a)

	
The Company is a principal debtor and the Charged Assets are a principal security for the Secured Liabilities and, without prejudice to the foregoing, none of the rights of the Creditor, the Security Interests created hereunder or the liabilities or obligations of the Company or any third party, shall be impaired or discharged by (without limitation):

 

	
  

	
(i)

	
the Creditor releasing any of the Charged Assets or granting any time or any indulgence whatsoever to or making any settlement, composition or arrangement with any third party;

 

	
  

	
(ii)

	
the Creditor asserting or pursuing, failing or neglecting to assert or pursue, or delaying in asserting or pursuing, or waiving, any of its rights or remedies against the Company or any third party arising under or by virtue of this Debenture or otherwise;

 

	
  

	
(iii)

	
the parties making any variation, amendment or supplement to this Debenture, any agreement between the Creditor and the Company or any third party or any other document or instrument from time to time entered into between the Company or any third party and the Creditor;

 

	
  

	
(iv)

	
any change in the time, manner, place of payment or any other term or condition of the Secured Liabilities, or any other amendment or waiver of or under any agreement between the Creditor and the Company, the Charged Assets or any document related thereto;

 

  

 

  

	
  

	
(v)

	
the non-perfection of any Security Interest or any release, waiver or amendment from any guaranty for all or part of the Secured Liabilities;

 

	
  

	
(vi)

	
the Creditor taking, accepting, varying, dealing with, enforcing, abstaining from, enforcing, surrendering, exchanging or releasing any Security Interest in relation to the Company in such manner as it deems fit subject to the terms hereof and the Venture Loan Agreement, or claiming, proving for, accepting or transferring any payment in respect of the Secured Liabilities in any composition by, or abstaining from so claiming, proving, accepting or transferring;

 

	
  

	
(vii)

	
any lack of validity or enforceability of any or all of any agreement between the Creditor and the Company, the Secured Liabilities, any security therefor or any agreement or document relating thereto; or

 

	
  

	
(viii)

	
to the fullest extent permitted by applicable law, any other circumstance that could otherwise constitute a defence to or discharge of the Company or any third party, other than the payment and performance in full of the Secured Liabilities.

 

	
  

	
(b)

	
Notwithstanding anything to the contrary contained in this Debenture, the Company will remain liable to observe and perform all of the conditions and obligations relating to or constituting the Secured Liabilities or the Charged Assets and neither the Creditor nor any Receiver will be under any obligation or liability with respect to the Secured Liabilities or the Charged Assets by reason of or arising out of this Debenture, except for acts of fraud, gross negligence or wilful misconduct by the Receiver or the Creditor, as the case may be. Neither the Creditor nor any Receiver will be required in any manner to perform or fulfil any of the obligations of the Company in respect of the Secured Liabilities or the Charged Assets, or to make any payment, or to make any enquiry as to the nature or sufficiency of any payment received by it, or to present or file any claim or take any action or to collect any amount or enforce any right or remedy hereunder.

 

	
  

	
(c)

	
The exercise by the Creditor of any of the rights or remedies hereunder shall not release the Company from any of its liabilities or obligations under any agreement between the Creditor and the Company to the extent such liabilities and obligations have not been fulfilled in full through the exercise of the Creditor of any of its rights or remedies hereunder; for the avoidance of doubt, the application of the Charged Assets to satisfy part of the Secured Liabilities shall not release the Company from its obligation to pay and perform the Secured Liabilities in full.

 

  

 

  

	
  

	
4.4

	
Avoidance of Payments

 

To the extent that the Company or any third party on behalf of the Company makes a payment or payments to the Creditor, or the Creditor enforces any Security Interest or exercises any right of set-off and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently avoided or set aside, declared to be fraudulent or preferential or required to be repaid or refunded or reduced by virtue of any applicable law relating to bankruptcy, insolvency, administration, receivership, liquidation or similar proceedings, the Secured Liabilities or any part thereof originally intended to be satisfied, and this Debenture and all Security Interests, rights and remedies therefor shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or set-off had not occurred.

 

	
  

	
4.5

	
For purposes of Sections 4.3 and 4.4 above, the term “Company” shall include both the Company and WhiteSmoke Inc.

 

	
5.

	
REPRESENTATIONS AND WARRANTIES

 

The Company hereby represents and warrants as follows:

 

	
  

	
5.1

	
It is duly incorporated and validly existing under the laws of the State of Israel, with power and authority to own assets and to carry on its business as now being conducted.

 

	
  

	
5.2

	
It is duly and validly registered with the Israeli Registrar of Companies, with company number 51-341091-0

 

	
  

	
5.3

	
It has the power to enter into and perform, and has taken all necessary action to authorise the entry into, performance and delivery of, this Debenture and the transactions contemplated hereby.

 

	
  

	
5.4

	
All corporate action on the part of the Company, its directors, and its shareholders necessary for the authorisation, execution and delivery of the Debenture and the performance of all of its obligations hereunder have been taken.

 

	
  

	
5.5

	
This Debenture constitutes its legal, valid and binding obligation enforceable in accordance with its terms.

 

	
  

	
5.6

	
All authorisations required in connection with the entry into, performance, validity and enforceability of this Debenture and the transactions contemplated hereby have been obtained or effected and are in full force and effect and no steps have been taken to revoke or cancel any authorisation obtained or effected.

 

	
  

	
5.7

	
The Security Interests created hereby constitute a legal, valid and binding, first ranking floating charge over the Charged Assets, enforceable in accordance with the terms hereof subject to applicable law. This Debenture confers the Security Interests it purports to confer over all of the Charged Assets, and those Security Interests:

 

  

 

  

	
  

	
(a)

	
are not subject to any senior, pari passu, junior or subordinated Security Interests (other than (i) any lien arising by operation of law in the ordinary course of business; (ii) with regard to the Company’s Intellectual Property, any interests and rights created in the Ordinary Course of Business; (iii) the Kreos Fixed Charge; and (iv) the Permitted Liens, if any); and

 

	
  

	
(b)

	
are not liable to avoidance, due to (i) bankruptcy, winding-up, creditors’ arrangement or any other similar insolvency proceedings for the reorganisation of the affairs of the Company or (ii) any other similar act or circumstance of the Company on the date of execution of this Debenture.

 

	
  

	
5.8

	
It has good and marketable title to the Charged Assets, free and clear of any Security Interests, except for: (i) the Kreos Fixed Charge; (ii) the IBM Lien; and (iii) with regard to the Company’s Intellectual Property, any interests and rights created in the Ordinary Course of Business. With the exception of (i) the Kreos Fixed Charge and (ii) the IBM Lien, the Charged Assets are not affected by any restriction or condition relating to the transfer of ownership therein or to the mortgage, pledge or charge thereof, either at law or under any agreement whatsoever.

 

	
  

	
5.9

	
The Charged Assets that are tangible assets are in all material respects in good and substantial repair.

 

	
6.

	
UNDERTAKINGS

 

The Company hereby undertakes as follows:

 

	
  

	
6.1

	
It shall not sell, convey, transfer, grant or lease or otherwise dispose of (or agree to do any of the foregoing at any future time) (“Dispose”) any Charged Asset, other than in the Ordinary Course of Business, excluding any assets that are subject to the Kreos Fixed Charge (the “Equipment”) which shall be subject to the provisions of the Debenture - Fixed Charge.

 

	
  

	
6.2

	
It shall not create or permit to subsist any Security Interest on (or agree to do any of the foregoing at any future time) any of the Charged Assets (whether ranking in priority or parity to or after the Security Interests created hereby), except for: (i) the Kreos Fixed Charge; (ii) the Permitted Liens, if any; and (iii) with regard to the Company’s Intellectual Property, any interests and rights created in the Ordinary Course of Business.

 

	
  

	
6.3

	
It shall defend the Charged Assets or cause the Charged Assets to be defended against, and shall take, at its expense, any action necessary to remove any Security Interest over the Charged Assets (other than: (i) the Kreos Fixed Charge; (ii) the Permitted Liens, if any; and (iii) with regard to the Company’s Intellectual Property, any interests and rights created in the Ordinary Course of Business), and shall defend the right, title and interest of the Creditor in and to any Charged Asset against the claims and demands of all other persons.

 

  

 

  

	
  

	
6.4

	
It shall keep the Charged Assets in good working order and condition (normal wear and tear excepted). The Company shall repair any damage or defect which may occur to the Charged Assets, in whole or in part, as the result of use or for any other reason whatsoever. Without derogating from its obligations hereunder, the Company shall notify the Creditor immediately of any material damage or defect to the Charged Assets or any part thereof.

 

	
  

	
6.5

	
It will not take any action which could prejudice or damage the Charged Assets or the enforceability of the Security Interests created hereunder.

 

	
  

	
6.6

	
It shall deposit with the Creditor all certificates and other documents of title or evidence of ownership in the Charged Assets and all ancillary documents relating to or affecting the Charged Assets as the Creditor may from time to time reasonably specify.

 

	
  

	
6.7

	
Subject to confidentiality undertakings of the Creditor and the Creditor’s representative pursuant to Clause 7A of the Venture Loan Agreement, it will allow the Creditor or the Creditor’s representatives at all reasonable times to inspect the condition of the Charged Assets wherever the same may be.

 

	
  

	
6.8

	
The Company shall keep the Charged Assets insured at all times, for full value and shall comply with the terms of such insurance policies.

 

	
  

	
6.9

	
The Company shall, at the first request of the Creditor, and to the extent practicable, furnish the Creditor with any licence, confirmation, certificate, receipt or other document which, in the reasonable opinion of the Creditor, is required or necessary for purpose of proof of compliance by the Company with its obligations under this Section 6.

 

	
  

	
6.10

	
Without derogating from the rights of the Creditor, the Company shall notify the Creditor of any default under this Debenture (and the steps, if any, being taken to remedy it) promptly upon it becoming aware of the occurrence thereof. In particular, the Company shall:

 

	
  

	
(a)

	
notify the Creditor immediately of the occurrence of any seizure, requisition, expropriation or forfeiture of the Charged Assets or any part thereof;

 

	
  

	
(b)

	
notify the Creditor immediately of the imposition of any attachment or the issue of any execution proceedings or of any application for the appointment of a receiver, trustee, administrator, administrative receiver, custodian, conservator, special manager or other similar official (whether interim or permanent) over or with respect to the Charged Assets or any part thereof and shall immediately notify the authorities which levied such attachment or issued such execution proceedings or received the application for the appointment of such receiver, trustee, administrator, administrative receiver, custodian, conservator, special manager or other similar official and any third party who initiated or applied for such action, of this Debenture in favour of the Creditor, and forthwith to take, at the expense of the Company, all steps necessary for the discharge of such attachment, execution proceedings or appointment, as the case may be.

 

  

 

  

	
  

	
6.11

	
The Company shall, forthwith following the execution of this Debenture, register the Security Interests created by this Debenture with the Israeli Registrar of Companies, the Israeli Registrar of Pledges (if so required by the Creditor) and any other necessary registry and perfect such registration within 14 days from the date hereof and shall deliver to the Creditor original certificates of registration of such Security Interests.

 

	
  

	
6.12

	
The Company shall, forthwith following the execution of this Debenture, deliver to the Creditor, Notices of Assignment in the form of Schedule 3 and Schedule 5, duly executed by the Company or on its behalf and addressed, in the case of notices in the form of Schedule3, to each of the insurers liable on the Insurances and, in the case of the notice in the form of Schedule 5, to the relevant governmental agency, and shall use all reasonable endeavours to ensure that the said insurers and governmental agency execute an acknowledgement of receipt of every such Notice of Assignment in the form of Schedule 4 and Schedule 6 respectively.

 

	
  

	
6.13

	
For the avoidance of doubt, and notwithstanding anything to the contrary herein, it is hereby clarified that with respect to any and all of the assets, properties and rights of the Company which are, or which may in the future be, subject to the charge and pledge under the Debenture -Fixed Charge, the Company is and shall be subject to the terms, conditions, limitations and restrictions contained in the Debenture -Fixed Charge in addition to those contained herein.

 

	
7.

	
RIGHTS OF THE CREDITOR

 

	
  

	
7.1

	
Creditor’s Right to Perform

 

Without derogating from the rights of the Creditor to realize the Security Interests granted hereunder, if the Company for any reason whatsoever fails to duly and punctually observe or perform or comply with any of its obligations under this Debenture, including under Section 6, the Creditor shall, after giving written notice to the Company, have the power, on behalf of or in the name of the Company or otherwise, to perform the obligations and to take any steps which the Creditor may, in its absolute discretion, consider appropriate with a view to remedying, or mitigating the consequences of the failure, but without in any way becoming liable therefor and provided that the exercise of this power, or the failure to exercise it, shall in no circumstances prejudice the Creditor’s rights hereunder.

  

 

  

	
  

	
7.2

	
Set-Off

 

The Creditor may, at any time, set off any sum, whether in Israeli currency or in foreign currency, as the case may be, due or owing to the Company and/or WhiteSmoke Inc. from the Creditor in any account, manner or circumstance whatsoever, against the Secured Liabilities, in whole or in part. In no event and under no circumstances may the Company and/or WhiteSmoke Inc. set off any sum that may be due or owing to the Company and/or WhiteSmoke Inc. from the Creditor in any account, manner or circumstance whatsoever, against the Secured Liabilities, in whole or in part.

 

	
8.

	
DEFAULT AND ENFORCEMENT

 

	
  

	
8.1

	
Events of Default

 

The occurrence of any of the following events if not cured in accordance with the applicable cure period set forth below shall constitute an Event of Default:

 

	
  

	
(a)

	
Any event which constitutes an Event of Default occurs pursuant to the Venture Loan Agreement;

 

	
  

	
(b)

	
the Company breaches or fails to comply with the provisions of Section 6 of this Debenture except that with respect to sub-sections 6.4, 6.6, and 6.9, such breach shall not constitute an Event of Default if: (A) the breach has not put any of the Charged Assets at risk and is capable of remedy; and (B) within fourteen (14) Business Days after the Creditor serves on the Company a written notice of default under this Debenture, or such longer period as the Creditor may specify in such notice, the Company remedies the breach to the satisfaction of the Creditor;

 

	
  

	
(c)

	
the Company breaches or fails to comply with any other provision of this Debenture or any other agreement between the Creditor and the Company, and, if such breach is capable of being remedied in the reasonable opinion of the Creditor, such breach is not remedied within 30 days after the Company has received written notice from the Creditor to rectify such noncompliance;

 

	
  

	
(d)

	
any representation or warranty given by the Company and/or WhiteSmoke Inc. in the Venture Loan Agreement or in this Debenture was inaccurate in any material respect; provided however that such misrepresentation shall not constitute an Event of Default if such the misrepresentation has not put any of the Security for the Loan (as such terms are defined in the Venture Loan Agreement) immediately at risk and is cured by the Borrower within seven (7) Business Days;

 

	
  

	
(e)

	
any lien or attachment is imposed over any of the Charged Assets or any execution proceedings are carried out with respect to any of the Charged Assets.

 

  

 

  

	
  

	
8.2

	
Creditor’s Powers

 

	
  

	
(a)

	
On the occurrence of an Event of Default, the Creditor shall be entitled to declare any or all of the Secured Liabilities immediately due and payable.

 

	
  

	
(b)

	
On and at any time after the occurrence of an Event of Default the Creditor shall also be entitled to take all such steps as it sees fit to collect the Secured Liabilities from the Company to Dispose any of the Charged Assets (and such power shall include (to the extent necessary) a non-exclusive license of the Company to use any Intellectual Property required in order to use and operate any of the Charged Assets and in particular the Company’s inventory), and, in addition thereto, without prejudice to any and all of its other rights, to realise the Charged Assets, whether by the application for the appointment of a Receiver or whether by any other method the Creditor shall see fit.

 

	
  

	
(c)

	
The Creditor shall be entitled, in any proceedings concerning the bankruptcy, liquidation, winding up or receivership (or similar proceedings) of the Company, to:

 

	
  

	
(i)

	
demand, claim, collect and enforce and prove the Secured Liabilities and give acquittance thereunder;

 

	
  

	
(ii)

	
file any claims and proofs, give receipts and take all such proceedings and do all such things as the Creditor sees fit to recover the Secured Liabilities; and

 

	
  

	
(iii)

	
receive all distributions on and payments with respect to the Secured Liabilities.

 

	
  

	
(d)

	
The Creditor shall have all powers that it may, in its full discretion determine to be desirable or necessary to preserve the Charged Assets and the Security Interests created hereby and to take all such steps for such purpose at the Company’s expense.

 

	
  

	
(e)

	
Without derogating from all above mentioned, the Creditor shall notify IBM prior to any step influencing the assets listed in Schedule 2 in connection with the Permitted Lien.

 

	
  

	
8.3

	
Receiver

 

	
  

	
(a)

	
The Receiver shall have all powers conferred by applicable law, including, without limitation, the power:

 

	
  

	
(i)

	
to receive into his hands the Charged Assets and to take possession thereof;

 

  

 

  

	
  

	
(ii)

	
to require the Company to deliver or otherwise make available such of the Charged Assets as the Receiver may demand, and without the consent of the Company, enter into any premises of the Company or any place where the Charged Assets are located and take possession of any of the Charged Assets;

 

	
  

	
(iii)

	
to manage the Company’s business or participate in the management thereof as he may see fit;

 

	
  

	
(iv)

	
to sell or agree to the sale of the Charged Assets, in whole or in part, or to transfer the same in any other manner upon such conditions as he may see fit;

 

	
  

	
(v)

	
to exercise any right charged or pledged hereunder in the same manner in which the Company was entitled to exercise such right in accordance with the terms of Section 20 of the Pledges Law, 5727-1967;

 

	
  

	
(vi)

	
to employ accountants, lawyers, architects, surveyors, engineers, quantity surveyors, contractors, builders, workmen and others and to purchase or hire materials, tools, equipment or supplies;

 

	
  

	
(vii)

	
to call up any of the Company’s uncalled share capital;

 

	
  

	
(viii)

	
to do any other act or thing which the Receiver considers to be incidental or conducive to the exercise of any  other right exercisable by him; and

 

	
  

	
(ix)

	
to make any other arrangement with respect to the Charged Assets or any part thereof as he may see fit.

 

	
  

	
(b)

	
Should the payment date of the Secured Liabilities or any part thereof not yet have fallen due at the time of the sale of the Charged Assets, or the Secured Liabilities be due to the Creditor or Receiver on a contingent basis only, then the Creditor or Receiver shall be entitled to recover out of the proceeds of the sale an amount sufficient to cover the Secured Liabilities (or such part thereof) and the amount so recovered and yet to be appropriated to the discharge of the amounts due shall be charged to the Creditor or Receiver as security for, and be held by the Creditor or Receiver until the discharge in full of, the Secured Liabilities.

 

	
  

	
(c)

	
The Receiver will be the agent of the Company, and the Company alone shall be responsible for the acts and omissions of the Receiver and for the Receiver’s remuneration. In no event shall the Creditor be responsible for the acts and omissions of the Receiver or for the Receiver’s remuneration.

 

  

 

  

	
9. 

	
DISTRIBUTION OF PROCEEDS

 

All moneys and other assets arising from the exercise of the powers of the Receiver or the Creditor or otherwise received by the Creditor or the Receiver from the realisation of any Charged Asset shall be applied as follows:

 

	
  

	
(a)

	
in payment of the expenses incurred as a result of such realisation (including the appointment and remuneration of the Receiver);

 

	
  

	
(b)

	
in payment of all other expenses, interest and default interest (if any), linkage differentials (if any) and any other amounts due and payable by the Company to the Creditor and which have not been paid; and

 

	
  

	
(c)

	
in payment of all principal sums due and payable by the Company to the Creditor and which have not been paid.

 

	
10. 

	
FURTHER ACTION

 

The Company further covenants with the Creditor from time to time upon demand to execute, at the Company ‘s own cost, any document or do any act or thing which:

 

	
  

	
(a)

	
in the reasonable determination of the Creditor is necessary to create, perfect, register or give effect to any pledge, charge, assignment or Security Interest created or intended to be created by this Debenture;

 

	
  

	
(b)

	
in the reasonable determination of the Creditor is necessary to preserve or protect any of the rights of the Creditor; or

 

	
  

	
(c)

	
the Creditor or the Receiver may reasonably specify with a view to facilitating the exercise, or the proposed exercise, of any of their powers or the protection, management or realisation of the Charged Assets upon the occurrence and during the continuance of an Event of Default, failing which the Creditor may, and the Company hereby appoints the Creditor as its attorney-in-fact to, execute, at the Company’s expense, any such document or do any such act or thing, in the name and on behalf of the Company.

 

	
11. 

	
PROTECTION OF CREDITOR AND RECEIVER

 

	
  

	
(a)

	
Other than with respect to fraud or wilful misconduct, neither the Creditor nor the Receiver, nor any of their respective agents, managers, officers, directors, employees, delegates, and advisers shall be liable for any claim, demand, liability, loss, damage, cost or expense which arises out of the exercise or the attempted or purported exercise or the failure to exercise any of their respective rights, powers and discretions under this Debenture.

 

	
  

	
(b)

	
Neither the Creditor nor any Receiver, nor any of their respective agents, managers, officers, directors, employees, delegates, and advisers shall be under any duty to exercise any of their respective rights, powers and discretions under this Debenture.

 

  

 

  

	
  

	
(c)

	
To the extent permitted by applicable law, and other than the notice and other requirements set forth in this Agreement and the Venture Loan Agreement, the Company hereby waives any requirements with respect to notice, form or the terms of the exercise by the Creditor, the Receiver, or any of their respective agents, managers, officers, directors, employees, delegates, and advisers of their respective rights, powers and discretions under this Debenture.

 

	
12. 

	
INDEMNITY

 

	
  

	
12.1

	
The Company shall forthwith on demand indemnify each of the Creditor and the Receiver (as well as any subsidiaries or affiliates of the Creditor or the Receiver) and their respective officers, directors, agents, managers, servants and employees (the “Indemnified Persons”) against any loss, expense or liability incurred as a consequence of:

 

	
  

	
(a)

	
anything done or purported to be done by or on behalf of the Creditor or the Receiver under this Debenture or any other document as a result of any failure by the Company to comply with its obligations hereunder;

 

	
  

	
(b)

	
any payment in respect of the Secured Liabilities (whether made by the Company or a third person) being impaired or declared void for any reason whatsoever;

 

	
  

	
(c)

	
the exercise, or attempted or purported exercise, or the consideration of the exercise, by or on behalf of the Creditor or the Receiver of any of the rights or powers of the Creditor or of the Receiver or any other action taken by or on behalf of the Creditor or the Receiver with a view to or in connection with the recovery by the Creditor or Receiver of the Secured Liabilities from the Company or any other person; or

 

	
  

	
(d)

	
the carrying out of any other act or matter which the Creditor or the Receiver or any other person on behalf of either of them may consider to be necessary for the preservation of the Charged Assets,

 

provided that the Company shall not be obliged to indemnify an Indemnified Person for any loss, expense or liability incurred solely as a consequence of the fraud or wilful misconduct of such Indemnified Person.

  

 

  

	
  

	
12.2

	
Reserved.

 

	
13.

	
COSTS AND EXPENSES

 

	
  

	
13.1

	
The Company shall pay all stamp duty and filing fees payable in respect of this Debenture or the transactions contemplated hereby.

 

	
  

	
13.2

	
All the fees, costs and expenses incurred by the Creditor or any Receiver in connection with the preparation, registration, perfecting or enforcement of this Debenture and realization of the Charged Assets shall be paid by the Company to the Creditor on its first demand and shall form part of the Secured Liabilities.

 

	
14.

	
ASSIGNMENT

 

	
  

	
14.1

	
Subject to Section 14.3 below, this Debenture shall be binding upon and inure to the benefit of each party hereto and its permitted successors and assigns.

 

	
  

	
14.2

	
The Company may not assign or transfer all or any part of its rights and/or obligations under this Debenture.

 

	
  

	
14.3

	
The Creditor and all those claiming under it shall be entitled, at all times, to assign to others their rights under this Debenture, without the necessity of obtaining the Company’s consent thereto, provided that such assignees agree in writing to be bound by the terms hereof, provided that such assignment does not require the Borrower to incur any additional expenses with respect to such assignment (to the extent such additional expenses exceed the fees and expenses to be borne by the Company pursuant to this Debenture and the Venture Loan Agreement) and further provided that such assignment does not prejudice the rights of the Company hereunder and under the Venture Loan Agreement.

 

	
15.

	
MISCELLANEOUS

 

	
  

	
15.1

	
Communications

 

All notices or other communications hereunder shall be in writing and shall be given in person, by registered mail (registered international 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) with a copy by mail, addressed as set forth below:

 

	
If to the Company:

	  	
WhiteSmoke Israel Ltd.

	  	  	
Kehilat Saloniki 11, Tel-Aviv 69513, Israel

	  	  	
Fax: +972-3-6486133

	  	  	  
	  	  	
Attn: Hilla Ovil-Brener

  

 

  

	  	  	
with a copy to (not constituting notice):

	  	  	  
	  	  	
Fischer Behar Chen Well Orion & Co.

	  	  	
3 Daniel Frisch St.

	  	  	
Tel Aviv 64731 Israel

	  	  	
Fax +972-3-6091116

	  	  	
Attn: Atir Hardoffe-Jaffe, Adv.

	  	  	  
	
If to the Creditor:

	  	
Kreos Capital III Limited

	  	  	
47 Esplanade, St Helier, Jersey

	  	  	
Fax: +44 1534 889 884

	  	  	
Attn: The Directors

	  	  	  
	  	  	
with a copy to:

	  	  	
Sharir, Shiv, Kadouch & Co., Law Offices

	  	  	
3 Azrieli Center

	  	  	
Tel Aviv 67023, Israel

	  	  	
Fax: +972 3 607 4778

	  	  	
Attn: Emmanuel Kadouch, Adv.

or such other address as any party may designate to the other in accordance with the aforesaid procedure. All communications delivered in person or by courier service shall be deemed to have been given upon delivery together with written confirmation of receipt of such delivery, those given by facsimile transmission shall be deemed given on the business day following transmission with confirmed answer back, and all notices and other communications sent by registered mail (or air mail if the posting is international) shall be deemed given ten (10) days after posting.

 

	
  

	
15.2

	
Delays or Omissions: Waiver

 

The rights of either party may be waived only in writing and specifically; the conduct of the Creditor shall not be deemed a waiver of any of its rights pursuant to this Debenture and/or as a waiver or consent on its part as to any breach or failure to meet any of the terms of this Debenture or as an amendment hereto. A waiver by the Creditor in respect of a breach by the Company of its obligations shall not be construed as a justification or excuse for a further breach of its obligations.

 

No delay or omission to exercise any right, power, or remedy accruing to any party upon any breach or default by the other party 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.

 

The rights of the Creditor hereunder may be exercised as often as necessary and are cumulative and not exclusive of its rights under the general law.

 

  

 

  

	
  

	
15.3

	
Amendments

 

Any term of this Debenture may be amended or modified only by a written document signed by the Company and the Creditor.

 

	
  

	
15.4

	
Reserved.

 

	
  

	
15.5

	
Entire Agreement

 

This Debenture together with the Debenture - Fixed Charge and the Venture Loan Agreement and all ancillary documents thereto, all as may be amended and/or supplemented from time to time in writing by the parties, contain the entire understanding of the parties with respect to their subject matter and all prior negotiations, discussions, agreements, commitments and understandings between them with respect thereto not expressly contained herein shall be null and void in their entirety, effective immediately with no further action required.

 

	
  

	
15.6

	
Severability

 

If a provision of this Debenture is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect the validity or enforceability in that jurisdiction of any other provision hereof or the validity or enforceability in other jurisdictions of that or any other provision hereof.

 

Where provisions of any applicable law resulting in such illegality, invalidity or unenforceability may be waived, they are hereby waived by each party to the full extent permitted so that this Debenture shall be deemed valid and binding agreements, in each case enforceable in accordance with its terms.

 

	
  

	
15.7

	
Counterparts. Facsimile Signatures

 

This Debenture may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Debenture. A signed Debenture received by a party hereto via facsimile will be deemed an original, and binding upon the party who signed it.

 

	
  

	
15.8

	
Governing Law and Venue

 

This Debenture shall be governed by and construed in accordance with the laws of the State of Israel, without giving effect to the principles thereof relating to conflict of laws. The competent courts of the city of Tel Aviv-Jaffa shall have exclusive jurisdiction to hear all disputes arising in connection with this Debenture and no other courts shall have any jurisdiction whatsoever in respect of such disputes.

 

  

 

  

	
  

	
15.9

	
Further Actions

 

Each of the parties hereto shall perform such further acts and execute such further documents as may reasonably be necessary to carry out and give full effect to the provisions of this Debenture and the intentions of the parties as reflected thereby.

 

	
  

	
15.10

	
No Third-Party Beneficiaries

 

Nothing in this Debenture shall create or confer upon any person or entity, other than the parties hereto or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities, except as expressly provided herein.

 

	
  

	
15.11

	
VAT

 

To the extent that any amount payable under this Debenture is subject to VAT by law, the party paying such amount shall pay the VAT against receipt of a duly issued VAT invoice.

 

[rest of page intentionally left blank]

  

 

  

|Signature Page of Debenture|

 

IN WITNESS WHEREOF this Debenture has been executed by the Parties, on the day and year first above written.

 

	
      

	  	
      

	
WhiteSmoke Israel Ltd.

	  	
Kreos Capital III Limited

	  	  	  
	
By: /s/ Hilla Ovil-Brenner

	  	
By:  /s/ Kreos Capital II Limited

	  	  	  
	
Title:  CEO

	  	
Title

  

 

  

SCHEDULE 1

List of Assets

 

1.           All goods and equipment now owned or hereafter acquired, including, without limitation, all machinery, fixtures, vehicles, and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located, and any documents of title representing any of the above and any uncalled share capital. For the avoidance of doubt, all the assets and equipment charged and pledged (or that will be charged and pledged in the future) under the Debenture - Fixed Charge, shall be part of the assets covered hereunder;

 

2.           All intellectual property rights of the Company now owned or hereafter acquired (“Intellectual Property”), including but not limited to intangible legal rights, title and interest related to (i) copyrights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished, now owned or hereafter acquired; (ii) patents and all applications, registrations, and renewals in connection therewith; (iii) trademarks, service marks, trade names, trade styles, goodwill, mask works, Internet domain names and all applications, registrations, and renewals in connection therewith; (iv) all trade secrets, rights to unpatented inventions, know how and confidential information; (v) all computer software programs (including data, computer discs, computer tapes and related documentation); (vi) all intellectual property embodied in or pursuant to contract rights and general intangibles now owned or hereafter acquired, including such intellectual property rights as may be embodied in or pursuant to research agreements, consulting agreements, license agreements and license rights, franchise agreements, blueprints, drawings, reports, catalogues, operating manuals and design rights, and; (vii) all claims for damages by way of any past, present and future infringement of any of the foregoing and rights to payment thereof of any kind.

 

3.           All inventory, now owned or hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packaging and shipping materials, work in process and finished products including such inventory as is temporarily out of the Company’s custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above;

 

4.           All contract rights and general intangibles of the Company now owned or hereafter acquired, including, without limitation, leases, license agreements, distribution agreements, supply agreements, franchise agreements, purchase orders, customer lists, route lists, computer discs, computer tapes, income tax refunds, payments of insurance; all existing and future claims, rights, causes of actions, judgments, remedies and security interests, whether voluntary, involuntary, absolute, contingent or by operation of law;

 

5.           All now existing and hereafter arising accounts, royalties and all other forms of obligations owing to the Company arising out of the sale or lease of goods, the licensing of technology or the rendering of services by the Company, whether or not earned by performance, and any and all credit insurance, guaranties, and other security of the Company, as well as all merchandise returned to or reclaimed by the Company;

 

  

 

  

6.           All documents, cash, deposit, savings or other accounts, securities, securities entitlements, securities accounts, investment property, financial assets, letters of credit, certificates of deposit, instruments and chattel paper now owned or hereafter acquired and the Company’s books relating to the foregoing;

 

7.           All the Company’s books and records, including records relating to the Company’s assets or liabilities, the Charged Assets, business operations or financial condition and all computer programs or discs or any equipment containing such information; and

 

8.           All claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds thereof.

 

9.          All insurance policies or the proceeds thereof in respect of the above described assets.

 

10.        All accounts receivables.

 

  

 

  

SCHEDULE 2

Equipment subject to the IBM Lien

  

 

  

SCHEDULE 3

Form of Notice of Assignment

 

To:           [Insurer]

 

Date: [                                ]

 

Dear Sirs,

 

We hereby give you notice (the “Notice”) that we have assigned by way of security (the “Assignment”) all of our right, title and interest in and to [insurance policy no. and the proceeds thereof] (the “Relevant Documents”) to Kreos Capital 111 Limited (the “Creditor”), pursuant to a Debenture entered into by us in favour of the Creditor dated the date hereof, in relation to the Assets as set out in the attached Appendix.

 

Notwithstanding the Assignment, we remain liable to perform all our obligations under the Relevant Documents, if any, and the Creditor will have no liability in respect of those obligations.

 

We hereby irrevocably instruct and authorise you to:

 

	
(i)

	
make all payments under or arising from the Relevant Documents to the following account with the Creditor (or such other account as the Creditor may notify you in writing):

 

Name:

Number:

Branch:

 

	
(ii)

	
disclose to the Creditor without any reference to or further authority from us and without any enquiry by you as to the justification for such disclosure, such information relating to the Relevant Documents as the Creditor may at any time and from time to time request, to the extent we were entitled to request such information pursuant to the terms of the Relevant Documents;

 

	
(iii)

	
comply with the terms of any written notice or instructions in any way relating to, or purporting to relate to, the Assignment, the sums payable to us from time to time in respect of the Relevant Document or the debts represented thereby which you receive at any time from the Creditor in respect of the Relevant Document without any reference to or further authority from us and without any enquiry by you as to the justification for or validity of such notice or instruction, to the extent we were entitled to issue such instruction or notice pursuant to the terms of the Relevant Document; and

 

	
(iv)

	
send copies of all certificates, notices, documents and other information supplied to us in relation to the Relevant Document to the Creditor.

 

Please also note that these instructions are not to be revoked or amended without the prior written consent of the Creditor.

  

 

  

This letter shall be governed by and construed in accordance with Israeli law.

 

Yours faithfully,

	
      

	
WhiteSmoke Israel Ltd.

  

 

  

APPENDIX

 

Assets

  

 

  

SCHEDULE 4

 

Acknowledgement of assignment of Insurances

 

	
To:

	
(1) Kreos Capital III Limited

 

(2) WhiteSmoke Israel Ltd.

 

[Date]

 

Dear Sirs,

 

We acknowledge receipt of the attached notice of assignment (the “Notice”) and we irrevocably and unconditionally consent to the assignment set out in it and we undertake to be bound by its terms.

 

We confirm that we have not received notice of any other assignment of the Relevant Document. This Acknowledgement will be governed by and construed in accordance with Israeli law.

 

	
       

	
For and on behalf of

	
 [                      ]

  

 

  

SCHEDULE 5

 

Notice of assignment of Compensation Proceeds

 

To:  [                                ]

 

[Date]

 

Re: The assets set out in the attached schedule (the “Assets”)

 

We hereby give you notice (the “Notice”) that we have assigned by way of security (the “Assignment”) to Kreos Capital HI Limited (the “Creditor”), all of our right, title and interest, present and future, to all amounts that are payable under the Property Tax and Compensation Fund Law, 5721-1961, and under any other applicable law, arising in connection with the Assets (“Compensation Proceeds”).

 

Please acknowledge that you have received this Notice by signing and returning to each of the Creditor and ourselves a copy of the attached Acknowledgement.

 

This Notice will be governed by and construed in accordance with Israeli law.

 

	
      

	
For and on behalf of

	
WhiteSmoke Israel Ltd.

  

 

  

SCHEDULE

 

Description of Assets

  

 

  

Schedule 6

Acknowledgement of assignment of Compensation Proceeds

 

Re:  The assets set out in the attached schedule (the “Assets”)

 

	
To:

	
(1) Kreos Capital III Limited

 

(2) WhiteSmoke Israel Ltd.

 

[Date]

 

Dear Sirs,

 

We acknowledge receipt of the attached notice of assignment (the “Notice”) and we irrevocably and unconditionally consent to the assignment set out in it and we undertake to be bound by its terms.

 

We confirm that we have not received notice of any other assignment of the Compensation Proceeds.

 

This Acknowledgement will be governed by and construed in accordance with Israeli law.

 

	
     

	
For and on behalf of

	
 [                      ]

  

 

  

SCHEDULE

 

Description of Assets

  

 

  

 

	  	  	
SCHEDULE 1

	  	
SCHEDULE 2

	  	
SCHEDULE 3

	  	
SCHEDULE 1

	  	  	  	
SCHEDULE 2

	  	  	  	
SCHEDULE 3

	  	  	  	  
	
DUE DATE

	  	
PAYMENT TYPE

SCHEDULE 1

	  	
PAYMENT TYPE

SCHEDULE 2

	  	
PAYMENT TYPE

SCHEDULE 3

	  	
CAPITAL

	  	
INTEREST

	  	
CAPITAL

	  	
INTEREST

	  	
CAPITAL

	  	
INTEREST

	  	
TOTAL

	
08-[_______]-01

	  	
Interest only Period

	  	  	  	  	  	  	  	
5;000,00

	  	  	  	  	  	  	  	  	  	
5,000.00

	
08-[_______]-01

	  	
Interest only Period

	  	  	  	  	  	  	  	
5,000.00

	  	  	  	  	  	  	  	  	  	
5.000.00

	
08-[_______]-01

	  	
Interest only Period

	  	  	  	  	  	  	  	
5.000.00

	  	  	  	  	  	  	  	  	  	
5.000.00

	
08-[_______]-01

	  	
Repayment - Month 1

	  	
Interest only Period

	  	  	  	
12,764.71

	  	
4,922.79

	  	  	  	
5,000.00

	  	  	  	  	  	
22.687.50

	
08-[_______]-01

	  	
Repayment - Month 2

	  	
Interest only Period

	  	  	  	
12,913.88

	  	
4,773.62

	  	  	  	
5,000.00

	  	  	  	  	  	
22,687:50

	
08-[_______]-01

	  	
Repayment - Month 3

	  	
Interest only Period

	  	  	  	
13,063.06

	  	
4,624.44

	  	  	  	
5.000.00

	  	  	  	  	  	
22.687.50

	
08-[_______]-01

	  	
Repayment - Month 4

	  	
Repayment - Month 1

	  	
Repayment - Month 1

	  	
13,212.23

	  	
4,475.27

	  	
12,764.71

	  	
4,922.79

	  	
11,466.22

	  	
4,983.78

	  	
51,825.00

	
09-[_______]-01

	  	
Repayment - Month 5

	  	
Repayment- Month 2

	  	
Repayment- Month 2

	  	
13,361.41

	  	
4,326.09

	  	
12,913.88

	  	
4,773.62

	  	
11,604.65

	  	
4,845.35

	  	
51,825.00

	
09-[_______]-01

	  	
Repayment - Month 6

	  	
Repayment - Month 3

	  	
Repayment - Month 3

	  	
13,510.58

	  	
4,176.92

	  	
13,063.06

	  	
4,624.44

	  	
11,743.09

	  	
4,706.91

	  	
51,825.00

	
09-[_______]-01

	  	
Repayment - Month 7

	  	
Repayment - Month 4

	  	
Repayment - Month 4

	  	
13,659.76

	  	
4,027.74

	  	
13.21Z23

	  	
4.475.27

	  	
11,881.53

	  	
4.568,47

	  	
51,825.00

	
09-[_______]-01

	  	
Repayment - Month 8

	  	
Repayment - Month 5

	  	
Repayment - Month 5

	  	
13,808.93

	  	
3,878.57

	  	
13,361.41

	  	
4,326.09

	  	
12.019.97

	  	
4,430.03

	  	
51,825.00

	
09-[_______]-01

	  	
Repayment - Month 9

	  	
Repayment - Month e

	  	
Repayment - Month e

	  	
13,958.11

	  	
3,729.39

	  	
13,510.58

	  	
4.176.92

	  	
12,158.41

	  	
4,291.59

	  	
51,825.00

	
09-[_______]-01

	  	
Repayment - Month 10

	  	
Repayment - Month 7

	  	
Repayment - Month 7

	  	
14,107.29

	  	
3,680.21

	  	
13,659.76

	  	
4,027.74

	  	
12,296.85

	  	
4,153.15

	  	
51,825.00

	
09-[_______]-01

	  	
Repayment - Month 11

	  	
Repayment - Month 8

	  	
Repayment - Month 8

	  	
14,256.46

	  	
3,431.04

	  	
13,808.93

	  	
3,878.57

	  	
12.435.29

	  	
4,014.71

	  	
51,825.00

	
09-[_______]-01

	  	
Repayment - Month 12

	  	
Repayment - Month 9

	  	
Repayment - Month 9

	  	
14,405.64

	  	
3,281.86

	  	
13.958.11

	  	
3,729.39

	  	
12,573.72

	  	
3,876.28

	  	
51,825.00

	
09-[_______]-01

	  	
Repayment - Month 13

	  	
Repayment - Month 10

	  	
Repayment - Month 10

	  	
14,554.81

	  	
3,132.69

	  	
14,107.29

	  	
3,580.21

	  	
12,712.16

	  	
3,737.64

	  	
51,825.00

	
09-[_______]-01

	  	
Repayment -Month 14

	  	
Repayment - Month 11

	  	
Repayment - Month 11

	  	
14,703.99

	  	
2,983.51

	  	
14,256.46

	  	
3.431.04

	  	
12,850.60

	  	
3,599.40

	  	
51,825.00

	
09-[_______]-01

	  	
Repayment - Month 15

	  	
Repayment - Month 12

	  	
Repayment - Month 12

	  	
14,853.16

	  	
2,834.34

	  	
14,405.64

	  	
3,281.86

	  	
12,989.04

	  	
3,460.96

	  	
51,825.00

	
09-[_______]-01

	  	
Repayment - Month 16

	  	
Repayment - Month 13

	  	
Repayment - Month 13

	  	
15,002.34

	  	
2,685.16

	  	
14,554.81

	  	
3,132.69

	  	
13,127.48

	  	
3,322.52

	  	
51,825.00

	
10-[_______]-01

	  	
Repayment - Month 17

	  	
Repayment - Month 14

	  	
Repayment - Month 14

	  	
15,151,52

	  	
2,535.98

	  	
14,703.99

	  	
2,983:51

	  	
13,265.92

	  	
3,184.08

	  	
51,825.00

	
10-[_______]-01

	  	
Repayment - Month 18

	  	
Repayment - Month 15

	  	
Repayment - Month 15

	  	
15,300:69

	  	
2386.81

	  	
14,853.16

	  	
2,834.34

	  	
13,404.35

	  	
3,045.65

	  	
51,825.00

	
10-[_______]-01

	  	
Repayment - Month 19

	  	
Repayment -Month 16

	  	
Repayment -Month 16

	  	
15,449,87

	  	
2,237.63

	  	
15,002.34

	  	
2,685.16

	  	
13,542.79

	  	
2,907.21

	  	
51,825.00

	
10-[_______]-01

	  	
Repayment - Month 20

	  	
Repayment- Month 17

	  	
Repayment- Month 17

	  	
15,599.04

	  	
2,088.46

	  	
15,151.52

	  	
2,535.98

	  	
13.681.23

	  	
2,768.77

	  	
51,825.00

	
10-[_______]-01

	  	
Repayment-Month 21

	  	
Repayment - Month 18

	  	
Repayment - Month 18

	  	
15,748.22

	  	
1,939.28

	  	
15,300.69

	  	
2,386.81

	  	
13.819.67

	  	
2,630.33

	  	
51,825.00

	
10-[_______]-01

	  	
Repayment - Month 22

	  	
Repayment - Month 19

	  	
Repayment - Month 19

	  	
15,897.39

	  	
1,790;11

	  	
15,449.87

	  	
2,237.63

	  	
13,958.11

	  	
2,491.89

	  	
51,825.00

	
10-[_______]-01

	  	
Repayment - Month 23

	  	
Repayment - Month 20

	  	
Repayment - Month 20

	  	
16,046.57

	  	
1,640.93

	  	
15,599.04

	  	
2,088.46

	  	
14,096.55

	  	
2,353.45

	  	
51,825,00

	
10-[_______]-01

	  	
Repayment - Month 24

	  	
Repayment - Month 21

	  	
Repayment - Month 21

	  	
16,195.74

	  	
1,491.76

	  	
15,748.22

	  	
1,939.28

	  	
14,234.98

	  	
2,215.02

	  	
51,825.00

	
10-[_______]-01

	  	
Repayment - Month 25

	  	
Repayment - Month 22

	  	
Repayment - Month 22

	  	
16,344.92

	  	
1,342.58

	  	
15,897.’39

	  	
1,790.11

	  	
14,373.42

	  	
2,076.58

	  	
51,825.00

	
10-[_______]-01

	  	
Repayment - Month 25

	  	
Repayment - Month 23

	  	
Repayment - Month 23

	  	
16,494.10

	  	
1.193.40

	  	
16,046.57

	  	
1,640,93

	  	
14,511.86

	  	
1,938.14

	  	
51,825,00

	
10-[_______]-01

	  	
Repayment - Month 27

	  	
Repayment - Month 24

	  	
Repayment - Month 24

	  	
16,643,27

	  	
1,044.23

	  	
16,195.74

	  	
1,49176

	  	
14,650.30

	  	
* 1,799.70

	  	
51,825.00

	
10-[_______]-01

	  	
Repayment - Month 28

	  	
Repayment - Month 25

	  	
Repayment - Month 25

	  	
16,792.45

	  	
895.05

	  	
16.344.92

	  	
1,342.58

	  	
14,788.74

	  	
1.661.26

	  	
51,825.00

	
11-[_______]-01

	  	
Repayment - Month 29

	  	
Repayment - Month 26

	  	
Repayment - Month 26

	  	
16,941.62

	  	
745.88

	  	
16,494.10

	  	
1,193.40

	  	
14,927.18

	  	
1,522.62

	  	
51,825.00

	
11-[_______]-01

	  	
Repayment - Month 30

	  	
Repayment- Month 27

	  	
Repayment- Month 27

	  	
17,090.80

	  	
596.70

	  	
1,6,643.27

	  	
1.044.23

	  	
15,065.62

	  	
1,384.38

	  	
51,825.00

	
11-[_______]-01

	  	
Repayment - Month 31

	  	
Repayment - Month 28

	  	
Repayment - Month 28

	  	
17.239.97

	  	
447.53

	  	
16,792.45

	  	
895.05

	  	
15,204.05

	  	
1.245.95

	  	
51,825.00

	
11-[_______]-01

	  	
Repayment - Month 32

	  	
Repayment - Month 29

	  	
Repayment - Month 29

	  	
17,389.15

	  	
298.35

	  	
16,941.62

	  	
745.88

	  	
15,342.49

	  	
1,107.51

	  	
51.825.00

	
11-[_______]-01

	  	
Repayment - Month 33

	  	
Repayment - Month 30

	  	
Repayment - Month 30

	  	
17,538.32

	  	
149,18

	  	
17,090.80

	  	
596.70

	  	
15,480.93

	  	
969.07

	  	
51.825.00

	
11-[_______]-01

	  	  	  	
Repayment - Month 31

	  	
Repayment - Month 31

	  	  	  	  	  	
17,239.97

	  	
447.53

	  	
15,619.37

	  	
830.63

	  	
34,137.50

	
11-[_______]-01I

	  	  	  	
Repayment - Month 32

	  	
Repayment - Month 32

	  	  	  	  	  	
17.389.15

	  	
298.35

	  	
15,757.81

	  	
692.19

	  	
34,137,50

	
11-[_______]-01

	  	  	  	
Repayment - Month 33

	  	
Repayment - Month 33

	  	  	  	  	  	
17,538.32

	  	
149,18

	  	
15,896.25

	  	
553.75

	  	
34,137.50

	
11-[_______]-01

	  	  	  	  	  	
Repayment - Month 34

	  	  	  	  	  	  	  	  	  	
16,034.68

	  	
415.32

	  	
16,450.00

	
11-[_______]-01

	  	  	  	  	  	
Repayment - Month 35

	  	  	  	  	  	  	  	  	  	
16,173.12

	  	
276.88

	  	
16,450.00

	
11-[_______]-01

	
  

	  	
  

	  	
  

	
Repayment - Month 36

	
  

	  	
  

	  	
  

	  	
  

	  	
  

	
16.311.56

	
  

	
138.44

	
  

	
16,450.00Exhibit 10.21

 

EMPLOYMENT AGREEMENT

 

This Agreement constitutes an advance notice to the Employee under the Notice to the Employee Law (Employment Terms), 2002.

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of _____, _____, by and between WhiteSmoke Israel Ltd., having its offices at 11 Kehilat Saloniki St., Tel Aviv 69513, Israel (“Company”), and Asaf Hanukaev, an Israeli citizen, holder of ID no. 305838294, from Hadera, Israel (“Employee”) (each, a “Party” and collectively, “Parties”).

 

WHEREAS, the Company desires to hire the Employee in the position of a Director of on-line media, and the Employee represents that he has the requisite skills, qualifications and knowledge to work in the Company in such position; and

 

WHEREAS, the Parties desire to state the terms and conditions of the Employee’s employment by the Company:

 

NOW, THEREFORE, the Parties hereby agree as follows:

 

	
1.

	
Position and Duties

 

	
1.1

	
The Employee shall work in the Company in the position of Director of on-line media and search on a full time basis.

 

	
1.2

	
The Employee shall be subject and report to the Company’s Online Marketing Director.

 

	
1.3

	
The Employee shall comply with the policy and working arrangements of the Company and shall follow the Company’s policy and procedures as shall be determined from time to time by the Company’s management.

 

	
1.4

	
During the Employee’s employment with the Company, he shall devote all his working time, efforts and skill to promote the business and affairs of the Company.  Accordingly, the Employee shall not assume any additional professional obligations unrelated to the Company, unless approved in advance by the Company.

 

	
1.5

	
The Employee shall notify the Company immediately and without delay of any matter that might constitute a conflict of interests between his position in the Company and his personal affaires.

 

	
2.

	
Salary

 

	
2.1

	
The Company agrees to pay to the Employee during the term of this Agreement a gross monthly salary of NIS 13,000 (thirteen thousand New Israeli Shekels) (the “Base Salary”).

 

  

  

  

 

	
2.2

	
In addition to the Base Salary, the Company estimates that from time to time, for the purpose of fulfilling the Employee’s responsibilities, the Employee will also be required to undertake work during overtime or outside of standard office hours to the extent of up to 60 hours per month.  So as not to have to perform an accounting each month, the Employee shall be paid a total gross amount of NIS 2,0000 (two thousands New Israeli Shekels) as global remuneration in respect of work during such overtime hours (the “Overtime Remuneration”).  It is clarified that the Overtime Remuneration shall be the Employee’s sole consideration in respect of any overtime hors the Employee worked.  Accordingly, Employee shall not be entitled to overtime pay on the basis of actual performance (and in any event the Employee is not authorized or permitted to work overtime more than 60 hours per month), and the Company shall not be entitled to deduct any sum from the Employee’s salary in the event that the Employee works fewer overtime hours or works no overtime hours at all.  In any event, the Employee is not entitled to work overtime hours beyond the scope permitted in the relevant permit of the Labor Minister.

 

	
2.3

	
In addition to paying the Overtime Remuneration itself, and without affecting the character and essence of the Overtime Remuneration, and although not required by law, the Company shall also make payments of the employment benefits referred to in Section 3, calculated based on the Overtime Remuneration as well as the Base Salary.  The Overtime Remuneration and the Base Salary will be called collectively in this Agreement the “Salary”.

 

	
  

	
In addition, the employee will receive commissions based on the company’s sales as stated on appendix B.

 

	
2.4

	
The Employee’s Salary shall be paid no later than the 9th day of each month, for the proceeding month.

 

	
2.5

	
Except as specifically set forth herein, the Salary and the Commissions includes any and all payments, including for the non-compete obligations and IP assignment as set forth in Exhibit A hereto, which the Employee is entitled to receive from the Company under any applicable law, regulation, or agreement.

 

	
2.6

	
Israeli income tax, social security service, health tax and other applicable withholdings with respect to the Salary and the Commissions shall be deducted from the Salary or all other payments to the Employee, which are subject to withholding.  The Salary may be payable by the Company or by a parent company or a subsidiary or another affiliate of the Company, all as shall be determined by the Company.

 

	
3.

	
Benefits.

 

In addition to the Salary, the Employee shall be entitled to the following benefits:

 

	
3.1

	
Manager’s Insurance

 

  

2

  

	
  

	
3.1.1

	
The Company and the Employee will contribute on a monthly basis, as part of a plan acceptable to both the Company and the Employee or as premiums on a manager’s insurance policy elected by the Company, as follows:  (A) the Company shall contribute (i) an amount equal to 8.33% of the Salary for severance pay, (ii) an amount equal to 5% of the Salary towards pension insurance (or 6% in case of a pension fund) and up to (iii) an amount equal to (x) 2.5% of the Salary, or (y) the sum which shall provide for a disability allowance equal to seventy-five percent (75%) of the Employee’s Salary during the disability period of the Employee, the lower of the two, towards disability insurance (not applicable in case of a pension fund); (B) the Employee shall contribute an amount equal to 5% of the Salary (or 5.5% in case of a pension fund) to such plans or managers’ insurance policy.  The sums contributed by the Employee shall be deducted from his Salary at source.

 

	
  

	
3.1.2

	
Upon the termination of the Employee’s employment, for any reason whatsoever, other than termination in the events described in Section 9.5 bellow, the Company shall release to the Employee amounts then contained in such plans or in the policies (including the Company’s contributions).

 

	
  

	
3.1.3

	
Subject to the payment by the Company of all payments under this Section 3, including the transfer of the Managers’ Insurance Plan to the Employee upon the termination of his employment (subject to the terms of sub-section 3.1.2 above), payments by the Company under sub-section 3.1 shall be in lieu of its statutory obligation to pay severance pay, if required, under the Severance Pay Law, 5723-1963, and the Company shall be relieved from any additional or other obligation to pay the Employee severance payment.  Concurrently with the execution of this Agreement, the Parties shall execute an acknowledgement and undertaking letter (a ‘Section 14 Undertaking’) in the form attached hereto as Schedule 3.1.3.

 

	
  

	
3.1.4

	
The Employee shall be responsible for any tax imposed on him in connection with the above plans or insurance policies and/or in connection with the Company’s contributions thereto.

 

	
3.2

	
Education Fund (Keren Hishtalmut)

 

	
  

	
3.2.1

	
The Company shall contribute an amount equal to 7.5% of the Salary per month towards a continuous education fund (Keren Hishtalmut), subject to Employee’s contribution of an additional 2.5% of the Salary per month towards such a fund.  If and to the extent the amounts payable to Keren Hishtalmut hereunder exceeds the maximum amount permitted by law, the remaining amount shall be added to the Gross Salary and treated as a part thereof (such additional amount shall not entitle the Employee to any benefit whatsoever).

 

	
  

	
3.2.2

	
The Employee shall bear and pay (and hereby irrevocably authorizes the Company to deduct and set off from his Salary) all lax imposed in connection with any amounts of the above fund exceeding the maximum non-taxable gross amount allowed by Israel income tax law.

 

  

3

  

 

	
  

	
3.2.3

	
Upon the termination of the Employee’s employment, other than termination in the events described in Section 9.5 bellow, the Company shall release to the Employee amounts then contained in such plans (including the Company’s contributions).  In the events as described in Section 9.5 bellow, it shall be in the Company’s sole discretion whether the Employee shall be entitled to release the Company’s contribution (7.5%) from the Fund.

 

	
3.3

	
Company Car

 

	
  

	
3.3.1

	
The employee will be entitled to receive a company car as set below, subject to a deduction of a total sum of 2,000 NIS gross from his Salary (will be deducted respectively from the Base Salary and the Overtime Remuneration.  In such case, all benefits, entitlements and payments will be made from the reduced Salary, and not the Salary set in section 2.

 

	
  

	
3.3.2

	
The Company shall provide the Employee with a category 2 car for work purposes, (the “Company Car”) subject to the Employee’s execution of the Company’s standard form leasing agreement in place at such time, and subject to the provisions of such leasing agreement.

 

	
  

	
3.3.3

	
The Employee will bear and pay (and hereby irrevocably authorizes Company to deduct and set off from his Salary) all taxes in connection with said Company Car and the use thereof, in accordance with income tax regulations applicable thereto.

 

	
  

	
3.3.4

	
Employee hereby undertakes to return the Company Car to the Company no later than four (4) business days from his actual last day of work.  The Employee shall not be entitled to use the vehicle as a lien

 

	
  

	
3.3.5

	
The Employee will make use of the vehicle in accordance with the Company’s procedures and policies as established and updated from time to time.

 

4.            Vacation.

 

	
4.1

	
The Employee shall be entitled to paid annual leave of twelve (12) days, with respect to and during each 12 (twelve) month period of his employment hereunder, such leave to be taken with adequate regard for the needs of the Company.

 

	
4.2

	
The Employee will make every effort to exercise his annual vacation; however, if the Employee is unable to utilize all the vacation days, he shall be entitled to accumulate the unused balance of the vacation days standing to his credit up to a maximum amount of Thirty (30) days (the “Maximum Amount”), provided that he will take at least seven consecutive annual working days vacation each year.  Any accumulation of vacation days, in excess of the Maximum Amount (excluding those days that have been accumulated with the written approval of the Board) shall lapse and the Employee shall not be entitled to any rights with respect thereto (including redemption rights).

 

  

4

  

 

5.            Other Payments

 

	
5.1

	
Sick Leave.  The Employee shall be entitled to sick leave (“Yemei Mahala”) as provided by the Sickness Pay Law, 5736-1976.  Unused sick leave may not be redeemed.  Should the Employee receive any payments under the Employee’s disability insurance policy and/or pension fund, such payments will be in place of any payment that would otherwise be due to the Employee from the Company under law

 

	
5.2

	
Recreation Pay.  The Employee shall be entitled to annual recreation pay (“Dmey Mavra-ah”) in an amount to be determined in accordance with applicable law.

 

	
5.3

	
Military Reserve Duty.  In the event of the Employee being called to military reserve duly (including a “one-day” military reserve duty), the Company shall pay the Employee his full salary for those dates he is called to military reserve duty, provided that he supplies the Company with an appropriate certificate in order to receive the amounts due from the National Insurance Institute.

 

6.            The Exclusivity of the Agreement

 

	
6.1

	
This Agreement is personal and the terms and conditions of the employment shall be solely as set forth herein.

 

	
6.2

	
This Agreement is personal and shall not invoke the provisions of any collective bargaining agreement (“Heskem Kibutsi”), collective arrangement (“Hesder Kibutsi”), extension orders (“Tzavei Har’hava”) or any other custom, except and only to the extent so mandated by law.

 

	
6.3

	
This Agreement is the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior understandings, agreements and discussions between the Parties, oral or written.

 

7.            No Impediment

 

The Employee warrants confirms and undertakes that he is entitled to enter into this Agreement and to assume all the obligations pursuant hereto, that there is no contractual or other impediment on his entering into this Agreement and to his engagement by the Company, and that in entering into this Agreement he is not in breach of any other agreement or obligation to which he is or had been a party.

 

8.            Confidentiality, Non-Competition and Intellectual Property Assignment

 

	
8.1

	
As a condition precedent to the entering into effect of this Agreement, the Employee has executed the Confidentiality, Non-Competition and Proprietary Information Assignment Undertaking in the form appended hereto as Exhibit A.

 

	
8.2

	
The Employee agrees that the terms and conditions of this Agreement shall remain confidential at all times, and shall not be disclosed to any other person, including any employees of Company.

 

  

5

  

 

9.            Term of Employment

 

	
9.1

	
The Employee’s employment by the Company shall continue in full force and effect until terminated pursuant to the terms hereof.

 

	
9.2

	
Subject to Section 9.5 hereunder, either party shall have the right to terminate this Agreement and the Employee’s employment by the Company hereunder, for any reason whatsoever, upon delivery of a prior written notice to the other party as set by law (the “Notice Period”).

 

	
9.3

	
During the Notice Period and unless otherwise directed, the Employee shall continue to render services to the Company until the termination of the Notice Period, and cooperate with the Company in assisting the integration of the person who will assume his responsibilities.  Notwithstanding the aforementioned, the Company shall have the right not to take advantage of the full Notice Period and may terminate the Employee’s employment at any time during the Notice Period.  In the event of such termination, the Company shall pay the Employee in lieu of the Notice Period (or the remaining of it).  —

 

	
9.4

	
To avoid any doubt, it is hereby expressed that the Company reserves the right not to take advantage of the Notice Period, in the event that the notice of termination of employment was delivered by the Employee, and such an event shall not constitute a dismissal of employment by the Company

 

	
9.5

	
Notwithstanding the foregoing, the Company may terminate the employment without the delivery of a prior written notice or without payment in lieu of it, in the event of (i) termination in circumstances in which the Employee commits a fundamental breach of this Agreement (including any breach of his obligations under Section 1 or Exhibit A of this Agreement); or (ii) which would deprive an employee of severance payment, in full or in part, according to Israeli Law and/or a breach of fiduciary duties;

 

	
9.6

	
In the event that the Employee terminates his employment with the Company, for any reason, without the delivery of prior written notice, the Company shall be entitled to deduct from any debt which it owes the Employee an amount equal to the Salary that would have been due to him during the Notice Period he should have worked pursuant hereto.

 

10.          Representations and Undertakings

 

The Employee hereby warrants, confirms and undertakes that:

 

	
10.1

	
He is entitled to enter into this Agreement and to assume all the obligations pursuant hereto, and that there are no other undertakings, impediments, contracts, agreements, hindrances and/or restrictive covenants preventing him from entering into this Agreement or performing any of his obligations and undertakings herein.

 

	
10.2

	
To the best of his knowledge he suffers from no health-related problem that might impair his ability to carry out his undertakings under this Agreement.

 

  

6

  

 

	
10.3

	
He possesses all required knowledge, means, permits, authorizations, licenses and skills for the carrying out of its duties under this Agreement, as required by law.

 

	
10.4

	
He shall assist the Company, subsequent to the termination of his employment, with any issue and for any reason, including without limitation, for the purpose of providing any information relating to his employment or actions taken thereby, whether or not such shall be required in connection with disputes, including legal or quasi-legal proceedings.  If the Company requires the Employee’s assistance after the termination of this Agreement, it shall reimburse the Employee for his reasonable expenses in connection thereof.

 

	
10.5

	
In carrying out the Employee’s duties under this Agreement, the Employee shall not make any representations or make any commitments on behalf of the Company, except as authorized to do so expressly and in advance.

 

	
10.6

	
The Employee acknowledges and agrees that the Company is entitled to conduct inspections within the Company’s offices and on the Company’s computers, including inspections of electronic mail transmissions, internet usage and inspections of their content, and the Company hereby notifies that it performs such actions on a regular basis.  For the avoidance of any doubt, it is hereby clarified that findings of any such examinations shall be the Company’s sole property.  The Employee acknowledges and agrees that any messages and data sent from, received by, or stored in or on the Company’s computers and communications systems are the sole property of the Company, regardless of the form and/or content of these messages and data.  The Employee should not consider messages and data sent from, received by, or stored in or upon the Company’s computer and communications systems to be private and should not send, receive, or store sensitive personal or private information using these systems.  The Employee is deemed to have consented to any reasonable use, transfer and disclosure of all messages and data contained or sent via the Company’s computer and communications systems, including electronic mail.

 

	
10.7

	
The Employee grants consent to the Company and its affiliates, and their employees, wherever they may be located, to utilize and process the Employee’s personal information, including data collected by the Company for purposes related to the Employee’s employment.  This may include transfer of the Employee’s personnel records outside of Israel and further transfers thereafter.  All personnel records are considered confidential and access will be limited and restricted to individuals with a need to know or process that information solely for purposes relating to the Employee’s employment, such as management teams and human resource personnel.  The Company may share personnel records as needed solely for such purposes with third parties assisting human resources administration.—

 

  

7

  

 

11.          Miscellaneous

	
11.1

	
The Company’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 the Company thereafter from enforcing each and every other provision of this Agreement which were previously not enforced.

 

	
11.2

	
Any modification or amendment to the provisions of this Agreement and the exhibits hereto shall be valid only if effected in writing and signed by both Parties hereto.

 

	
11.3

	
This Agreement may be assigned by the Company to any third party, at its sole discretion.  The Employee may not assign or delegate his rights and obligations under this Agreement to any other party without the Company’s prior written approval.

 

	
11.4

	
This Agreement shall be governed by the laws of the State of Israel, and the competent courts in the district of Tel Aviv shall have exclusive jurisdiction over any dispute arising between the Parties with respect of this Agreement.

 

	
11.5

	
The division into clauses and the headings thereto are designated for convenience purposes and shall not be used in the interpretation hereof.  All exhibits attached hereto comprise an integral part hereof.

 

12.          Notice to Employee (Employment Terms)

 

	
12.1

	
The parties agree that this Agreement constitutes, among other things, notification in accordance with the Notice to Employees (Employment Terms) Law, 2002.  Nothing in this Agreement shall derogate from the Employee’s rights according to applicable law.

 

IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties as of the date first above written

 

	
        

	 	
         

	
WhiteSmoke Israel Ltd.

	 	  

  

8

  

Exhibit A

 

CONFIDENTIALITY, NON-COM PETITION AND

INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT

 

My obligations under this Confidentiality, Non-Competition and Intellectual Property Assignment Agreement are towards WhiteSmoke, Inc. and WhiteSmoke Israel Ltd. (collectively, “Company”), and towards their present and future parent companies, subsidiaries, affiliates and successors. All of the aforementioned entities shall be referred to collectively as the “Company’s Entities”.

 

1.            Confidentiality

 

I will regard and retain as confidential and will not divulge to any third party, or use for any unauthorized purposes either during or after the term of my employment by the Company, any confidential information, as defined below, that I have acquired during my service or in connection with my service or contacts with the Company’s Entities, without the written approval consent of an authorized representative of the Company.

 

2.            Confidential Information

 

Confidential Information shall include, but will not be limited to, information regarding research and development related to actual or anticipated products, inventions, whether patentable or non-patentable, hardware, software or other products, methods of manufacture, trade secrets, business plans, customer lists, finances, and any other data related to the business or affairs of the Company or the Company’s Entities. Confidential Information will include information in written, oral or any other form of communication. Confidential information includes the terms of this Agreement.

 

3.            Return of Confidential Information

 

All materials including, but not limited to, documents, notes, memoranda, records, diagrams, blueprints, bulletins, formulas, reports, computer programs, and any other material of any kind and in any form, coming into my possession or prepared by me in connection with my service, are the exclusive property of the Company (“Documents”). I agree to return to the Company all such Documents upon termination of my engagement by the Company, unless I acquire the Company’s specific written consent to release any such Document.

 

4.            Acknowledgement of Ownership: Assignment of Inventions.

 

	
4.1

	
Proprietary Rights. The term “Proprietary Rights” shall mean all trade secret, patent, copyright, mask work, design, and other intellectual property rights throughout the world.

 

  

9

  

	
4.2

	
Disclosure of Inventions. I will promptly disclose in writing to the Company all Inventions, made or discovered or conceived or reduced to practice or developed by me, either alone or jointly with others, during the term of my employment. I will also disclose to the Company all Inventions made, discovered, conceived, reduced to practice, or developed by me within three (3) months after the termination of my employment with the Company which resulted, in whole or in part, from my prior employment by the Company. Such disclosures shall be received by the Company in confidence, to the extent such Inventions are not assigned to the Company pursuant to this Agreement.

 

	
4.3

	
Assignment of Inventions. Subject to Sections 2.4, I hereby assign and agree to assign in the future (when any such Inventions or Proprietary Rights are first reduced to practice or first fixed in a tangible medium, as applicable) to the Company all my right, title and interest in and to any and all Inventions whether or not patentable or registrable under copyright or other statutes, made or conceived or reduced to practice or learned by me, either alone or jointly with others, during the period of my employment with the Company. Inventions assigned to the Company, or to a third party as directed by the Company pursuant to this Section 2, are hereinafter referred to as “Company Inventions”.

 

	
4.4

	
Nonassignable Inventions. Notwithstanding, this Agreement will not be deemed to require assignment of any invention which was developed entirely on my own time without using the Company’s equipment, supplies, facilities, or Proprietary Information and which is not related to the Company’s actual business, research or development.

 

	
4.5

	
Government or Third Party. I also agree to assign all my right, title and interest in and to any particular Company Invention to any third party, including without limitation government agency, as directed by the Company.

 

	
4.6

	
Works Made for Hire. I acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope of my employment and which are protectable by copyright are the sole property of the Company pursuant to applicable copyright law.

 

	
4.7

	
Assignment or Waiver of Moral Rights. Any assignment of copyright hereunder (and any ownership of a copyright as a work made for hire) includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights” (collectively “Moral Rights”). To the extent such Moral Rights cannot be assigned under applicable law and to the extent the following is allowed by the laws in the various countries where Moral Rights exist, I hereby waive such Moral Rights and consent to any action of the Company that would violate such Moral Rights in the absence of such consent.

 

	
4.8

	
Enforcement of Proprietary Rights. I will assist the Company in every proper way to obtain, and from time to time enforce, any Proprietary Rights relating to Company Inventions in any and all countries. To that end, 1 will execute, verify and deliver such documents and perform such other acts (including appearances as a witness) as the Company may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary-Rights and the assignment thereof. In addition, I will execute, verify and deliver assignments of such Proprietary Rights to the Company or its designee. My obligation to assist the Company with respect to Proprietary Rights relating to such Company Inventions in any and all countries shall continue beyond the termination of my employment, but the Company shall compensate me at a reasonable rate after my termination for the time actually spent by me at the Company’s request on such assistance.

 

  

10

  

 

	
4.9

	
Service Inventions. For the removal of any doubt, I agree that the provisions contained in Sections 2.2, 2.3 and 2.5 above will apply also to any “Service Inventions” as defined in the Israeli Patent Law, 1967 (the “Patent Law”). However, in no event will such Service Invention become my property, and the provisions contained in Section 132(b) of the Patent Law shall not apply unless the Company provides in writing otherwise. 1 acknowledge and agree that the compensation and consideration I receive from the Company includes all compensation and consideration to which I may be entitled under law for Service Inventions, including, but without limitation to, the provisions contained in Section 134 of the Patent Law, and that I will not be entitled to additional royalties, consideration or other payments with regard to any Prior Inventions. Company Inventions, Service Inventions or any of the intellectual property rights set forth above, including any commercialization of such Prior Inventions, Company Inventions, Service Inventions or other intellectual properly rights.

 

	
4.10

	
Records. I agree to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that may be required by the Company) of all of the Company’s Proprietary Information developed by me and all of the Company’s Inventions made by me during the period of my employment at the Company, which records shall be available to and remain the sole property of the Company at all times.

 

5.           Disclosure and Assignment of Inventions

 

I will promptly disclose and describe to the Company all of the inventions which 1 may conceive, make, reduce to practice, develop, author, or work on, in whole or in part, independently, or jointly with others, during the period of my employment by the Company, which either; (i) relate to the Company’s Entities’ business or actual or demonstrably anticipated research or development, (ii) are developed in whole or in pan on the Company’s time or with the use of any of the Company’s equipment, supplies, facilities or trade secret information, or (iii) results directly or indirectly from any work I performed for the Company (“Inventions”). I agree to assign and do hereby assign to the Company any right, title and interest I might have worldwide in such Inventions and any intellectual property right based upon such Inventions.

 

6.           Assistance

 

I will, at the Company’s expense, assist in preparation and registration of patents and any other intellectual property right in favor of the Company, in any jurisdiction deemed appropriate by the Company. Such assistance shall include, without limitation, the preparation of documents, drawings and other data and execution of assignments, applications and other forms. I agree to perform this obligation during and after my employment by the Company. In order to give full effect to this section I hereby irrevocably appoint the Company (and its representatives) as my attorney in fact, authorized in my name and on my behalf to execute all such documents.

 

  

11

  

 

7.           Non Competition

 

	
7.1

	
In any event of termination of my engagement with the Company, I agree that I will not, for a period of 12 months following such termination, either alone or jointly with others or as an agent, consultant or employee of any person, firm or company, directly or indirectly, carry on or engage in any activity or business which shall be in competition with the business of the Company’s Entities (“Competing Entities”), while exploiting Confidential Information, and in particular the text enrichment technology.

 

	
7.2

	
Without derogating from the generality of the above, for the purpose of this Agreement. Competing Entities shall include any person or entity, that are engaged in development, production, or commercial activities similar to those of the Company, or major clients of the Company.

 

8.           Non-Solicitation

 

During the term of my employment by the Company and thereafter for a period of 24 months, I will not solicit or encourage or cause others to solicit or encourage any employees of the Company’s Entities to terminate their employment with the Company, and I will not assist any employees of the Company’s Entities to engage with any Competing Entities.

 

9.           No Conflicting Obligations

 

I will not disclose to the Company any proprietary or confidential information belonging to any third party, including any prior or current employer or contractor, unless I have first received the written approval of that third party and present it to the Company. 1 undertake not to perform any activity related to my engagement with the Company on the premises of any third party, or while using any equipment or materials that belong to any such third party, unless instructed to do so by the Company.

 

10.         Third Party Information

 

I recognize that the Company has received and will in the future receive from third parties their confidential or proprietary information, subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. I agree to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or entity or to use it except as necessary in carrying out my position with the Company, consistent with the Company’s agreement with such third party.

 

11.         Breach of Obligation

 

I am aware that a breach of any of the obligations under this Agreement will cause the Company or the Company’s Entities’ serious and irreparable harm, to which no monetary compensation can be an appropriate remedy. Therefore, I agree that if such a breach occurs, the Company shall be entitled, without prejudice, to take all legal means necessary, including any injunctive relief, to restrain any continuation or further breach of this Agreement, without any objection from my side.

 

  

12

  

 

12.         Assignment

 

This Agreement may be assigned by the Company. I may not assign or delegate my obligations under this Agreement without the Company’s prior written approval.

 

13.         Survival

 

My obligations under this Agreement shall remain in full force for a period of 5 years from termination, for any reason, of my engagement with the Company.

 

14.         Condition to Engagement

 

I acknowledge that execution of this Agreement is a condition to the Company’s engagement with me and the disclosure of any Confidential Information.

 

IN WITNESS WHEREOF, I hereunto set my hand:

 

	
      

	 	
        

	
Asaf Hanukaev

	 	
Date

  

13

  

Schedule 3.1.3

 

GENERAL APPROVAL REGARDING PAYMENTS BY EMPLOYERS TO A PENSION FUND AND INSURANCE FUND IN LIEU OF SEVERANCE PAY

 

By virtue of my power under section 14 of the Severance Pay Law, 1963 (hereinafter: the “Law”). I certify that payments made by an employer commencing from thee date of the publication of this approval publication for his employee to a comprehensive pension benefit fund that is not an insurance fund within the meaning thereof in the Income Tax (Rules for the Approval and Conduct of Benefit Funds) Regulations, 1964 (hereinafter: the “Pension Fund”) or to managers insurance including the possibility of an insurance pension fund or a combination of payments to an annuity fund and to a non-annuity fund (hereinafter: the “Insurance Fund”), including payments made by him by a combination of payments to a Pension Fund and an Insurance Fund, whether or not the Insurance Fund has an annuity fund (hereinafter: the “Employer’s Payments”), shall be made in lieu of the severance pay due to the said employee in respect of the salary from which the said payments were made and for the period they were paid (hereinafter: the “Exempt Salary”), provided that all the following conditions are fulfilled:

 

	
(1)

	
The Employer’s Payments -

 

	
  

	
(a)

	
To the Pension Fund are not less than 14 1⁄3% of the Exempt Salary or 12% of the Exempt Salary if the employer pays for his employee in addition thereto also payments to supplement severance pay to a benefit fund for severance pay or to an Insurance Fund in the employee’s name in an amount of 2 1⁄3% of the Exempt Salary. In the event the employer has not paid an addition to the said 12%, his payments shall be only in lieu of 72% of the employee’s severance pay:

 

	
  

	
(b)

	
To the Insurance Fund are not less than one of the following:

 

	
(2)

	
13 1⁄3% of the Exempt Salary, if the employer pays for his employee in addition thereto also payments to secure monthly income in the event of disability, in a plan approved by the Commissioner of the Capital Market. Insurance and Savings Department of the Ministry of Finance, in an amount required to secure at least 75% of the Exempt Salary or in an amount of 2 1⁄2% of the Exempt Salary, the lower of the two (hereinafter: “Disability Insurance”);

 

	
(3)

	
11% of the Exempt Salary, if the employer paid, in addition, a payment to the Disability Insurance, and in such case the Employer’s Payments shall only replace 72% of the Employee’s severance pay: In the event the employer has paid in addition to the foregoing payments to supplement severance pay to a benefit fund for severance pay or to an Insurance Fund in the employee’s name in an amount of 2 1⁄2% of the Exempt Salary, the Employer’s Payments shall replace 100% of the employee’s severance pay.

 

	
(4)

	
No later than three months from the commencement of the Employer’s Payments, a written agreement is executed between the employer and the employee in which -

 

  

14

  

 

	
  

	
(a)

	
The employee has agreed to the arrangement pursuant to this approval in a text specifying the Employer’s Payments, the Pension Fund and Insurance Fund, as the case may be; the said agreement shall also include the text of this approval;

 

	
  

	
(b)

	
The employer waives in advance any right, which it may have to a refund of monies from his payments, unless the employee’s right to severance pay has been revoked by a judgment by virtue of Section 16 and 17 of the Law, and to the extent so revoked and/or the employee has withdrawn monies from the Pension Fund or Insurance Fund other than by reason of an entitling event; in such regard “Entitling Event” means death, disability or retirement at, after the age of 60.

 

	
(5)

	
This approval is not such as to derogate from the employee’s right to severance pay pursuant to any law, collective agreement, extension order or employment agreement, in respect of salary over and above the Exempt Salary.

 

	
Employee:

	
       

	  
	
Company:

	
       

	  

  

15

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