FORM OF INDEMNIFICATION AGREEMENT
Exhibit
4.2
FORM
OF INDEMNIFICATION AGREEMENT
This
Indemnification Agreement ("Agreement") is effective as of July 26, 2005, by
and
between Alvarion Ltd., a company incorporated under the laws of the State of
Israel, with its principal offices at 00 X Xxxxxxxx Xx. Xxx Xxxx, 00000 (the
"Company"), and __XX__ ("Indemnitee"), residing at the address set forth beneath
Indemnitee's signature to this Agreement.
Whereas,
the Company and Indemnitee recognize the difficulty in obtaining full and
adequate liability insurance for directors and other office holders, as such
term is defined in the Israeli Companies Law, 1999 (collectively “Office
Holders”), the significant increases in the cost of such insurance and the
general reductions in the coverage of such insurance;
Whereas,
the Company and Indemnitee further recognize the substantial increase in
corporate litigation in general, subjecting Office Holders to expensive
litigation risks at the same time as the availability and coverage of liability
insurance have been severely limited;
Whereas,
the Company desires to attract and retain the services of highly qualified
individuals, such as Indemnitee, to serve the Company and, in part, in order
to
induce Indemnitee to continue to provide services to the Company, wishes to
provide for the indemnification and advancement of expense to Indemnitee and
to
exempt Indemnitee from liability to the Company, all of the foregoing to the
maximum extent permitted by law; and
Whereas,
in view of the considerations set forth above, the Company desires that
Indemnitee shall be indemnified and exempted by the Company, all as set forth
herein; and
Whereas
the Company has received, prior to the signing hereof, the approval of the
Company’s audit committee, Board of Directors and the General Assembly of the
shareholders, in accordance with the provisions of the Companies Law, 1999,
for
entering into this Agreement.
Now,
therefore, the Company and Indemnitee hereby agree as follows:
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1.
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Indemnification.
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a.
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Indemnification
of Expenses.
The Company shall indemnify Indemnitee, for liability or expense
Indemnitte incurs as a result of an act done by Indemnitee in Indemnitee’s
capicity as Office Holder of the Company as follows: (i) a financial
liability imposed on Indemnitee or in Indemnitee’s favor of another person
by a court, including a settlement, judgment or an arbitrator's
award
approved by a court; and (ii) reasonable costs of litigation, including
attorney’s fees, expended by an Indemnitee as a result of an investigation
or proceeding instituted against the Indemnitee by a competent
authority,
provided that such investigation or proceeding was concluded without
the
filing of an indictment against the Indemnitee or the imposition
of any
financial liability in lieu of criminal proceedings, or was concluded
without the filing of an indictment against the Indemnitee and
a financial
liability was imposed on the Office Holder in lieu of criminal
proceedings
with respect to a criminal offense in which proof of criminal intent
is
not required; and (iii) for reasonable litigation expenses, including
attorneys' fees, expended by an Indemnitee or charged to him or
her by a
court, in a proceeding filed against him or her by the Company
or on its
behalf or by another person, or in a criminal charge from which
Indemnitee
was acquitted, or in a criminal charge of which he was convicted
of a
crime which does not require a finding of criminal intent (collectively
all of the above referred to as a “Claim”)
(collectively, hereinafter "Expenses"),
including all interest, assessments and other charges paid or payable
in
connection with or in respect of such Expenses, provided that:
(i) in
respect of any specific Indemnifiable Event, the Expenses for which
Indemnitee may be indemnified hereunder will not exceed, individually
or
in the aggregate, the Limit Amount (as defined below); and (ii)
in respect
of all Idemnifiable Events the Expenses for which Indemnitee may
be
indemnified hereunder will not exceed, in the aggregate, the amount
of
$8,000,000. Such payments of Expenses shall be made by the Company
as soon
as practicable but in any event no later than twenty (20) days
after
written demand by Indemnitee therefor is presented to the Company.
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b.
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Indemnifiable
Event; Limit Amounts.
For the purpose of this Agreement, an Indemnifiable Event shall
mean any
event or occurrence falling, all or in part, within any one or
more of the
categories set forth in Exhibit A to this Agreement and related
to the
fact that Indemnitee is or was an Office Holder of the Company,
including
any occurance as aforesaid related to the Office Holder serving
or having
served, at the request of the Company, as an employee, consultant,
Office
Holder or agent of any subsidiary of the Company (regardless of
whether it
was a subsidiary of the Company at the time of the event giving
rise to
Claim), or any other corporation or partnership (any such other
corporation or partnership an “affiliate”), by reason of any action or
inaction on the part of Indemnitee while serving in such capacity.
The
Limit Amount with respect to each such category of events described
in
Exhibit A is specified following its description. The Indemnification
provided herein shall not be subject to the foregoing limits, if
and to
the extent such limits are no longer required by Israeli law, provided
they are amended as set forth herein and in accordance with Israeli
law,
then in effect. Without derogating from the foregoing, the Company
hereby
undertakes to employ its reasonable best efforts so that any subsidiary
or
affliate thereof shall (in addition to the Company’s undertakings
hereunder) undertake to idemnify the Idemnitee, under substantialy
the
same terms provided hereunder, in connection with an occurence
included in
Annex A hereof, related to the Idemnitee being an Office Holder
of such
subsidiary or affliate, in an amount no less than the applicable
Limit
Amount for such an occurence hereunder, provided that the total
indemnification amount actually received by the Indemnitee shall
not
exceed the sum the Indemnitee would have been entitled to get had
the
Indemnitee been indemnified solely by the Company under the terms
of this
Agreement.
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c.
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Agreement
is Subject to Applicable Law and Articles of
Association.
Notwithstanding the foregoing: (i) the obligations of the Company
under
Section 1(a) shall be subject to the provisions of applicable law
and the
Company’s Articles of Association applicable to idemnification of the
Idemnitee and (ii) the obligation of the Company to make an advance
payment of Expenses to Indemnitee pursuant to Section 2(a) (an
"Expense
Advance") shall be subject to the condition that, if, when and
to the
extent that a court of competent jurisdiction determines that Indemnitee
should not be permitted to be so indemnified under applicable law,
Indemnitee shall reimburse the Company in respect of all such amounts
theretofore paid; and Indemnitee hereby agrees to reimburse the
Company
for all such amounts.
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d.
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Reserved.
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e.
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Mandatory
Payment of Expenses.
Notwithstanding any other provision of this Agreement other than
Section 8
hereof, to the extent that Indemnitee has been successful on the
merits or
otherwise, including, without limitation, the dismissal of an action
without prejudice, in defense of any action, suit, proceeding,
inquiry or
investigation referred to in Section (1)(a) hereof or in the defense
of
any claim, issue or matter therein, Indemnitee shall be indemnified
against all Expenses incurred by Indemnitee in connection therewith.
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2.
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Expenses;
Indemnification Procedure.
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a.
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Advancement
of Expenses.
Subject to applicable law, the Company shall advance all Expenses
incurred
by Indemnitee estimated
by Company to cover Indemnitee’s reasonable Expenses with respect to which
Indemnitee is entitled to be indemnified under Section 1(a) above
due to
an Indemnifiable Event. The advances to be made hereunder shall
be
paid by the Company to Indemnitee as soon as practicable, but in
any event
not later than thirty (30) days following Indemnitee’s written demand to
the Company.
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b.
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Notice;
Cooperation by Indemnitee.
Indemnitee shall, as a condition precedent to Indemnitee's right
to be
indemnified under this Agreement, give the Company notice in writing
as
soon as practicable of any Claim made against Indemnitee for which
Indemnification will or could be sought under this Agreement, provided,
however, that any failure to provide such notice shall not affect
Indemnitee's rights to indemnification hereunder unless and to
the extent
such failure to provide notice materially and adversely prejudices
the
Company's right to defend against such action. Notice to the Company
shall
be directed to the Chief Executive Officer of the Company at the
address
shown on the signature page of this Agreement (or such other address
as
the Company shall designate in writing to Indemnitee), or if the
Indemnitee is then the Chief Executive Officer of the Company,
such notice
shall be directed to the Chairman of the Company's Board of Directors,
at
the same address. In addition, Indemnitee shall give the Company
such
information and cooperation as it may reasonably require and as
shall be
within Indemnitee's power.
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c.
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No
Presumptions; Burden of Proof.
For purposes of this Agreement, the termination of any Claim by
judgement,
order, settlement (whether with or without court approval) or conviction,
or upon a plea of guilty, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular
belief or that a court has determined that indemnification is not
permitted by applicable law.
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d.
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Notice
to Insurers.
Without derogating from Section 1(a) above, if, at the time of
the receipt
by the Company of a notice of a claim pursuant to Section 2(b)
hereof, the
Company has liability insurance in effect which may cover such
Claim, the
Company shall give prompt notice of the commencement of such Claim
to the
insurers in accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary or desirable
action to cause such insurers to pay, on behalf of the Indemnitee,
all
amounts payable as a result of such action, suit, proceeding, inquiry
or
investigation in accordance with the terms of such policies.
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e.
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Selection
of Counsel.
In
the event the Company shall be obligated hereunder to pay the Expenses
of
any Claim, the Company shall be entitled to assume the defense
of such
Claim with counsel approved by Indemnitee, which approval shall
not be
unreasonably withheld, upon the delivery to Indemnitee of written
notice
of its election to do so. After delivery of such written confirmation
and
such notice, approval of such counsel by Indemnitee and the retention
of
such counsel by the Company, the Company will not be liable to
Indemnitee
under this Agreement for any fees of counsel subsequently incurred
by
Indemnitee with respect to the same Claim; the Company shall have
the
right to conduct such defense as it sees fit in its sole discretion,
including the right to settle any claim against Indemnitee without
the
consent of the Indemnitee provided any such settlement includes
(i) a
complete release and discharge of Indemnitee; (ii) does not contain
any
admittance of wrongdoing by Indemnitee; and (iii) is monetary
only.
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3.
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Additional
Indemnification Rights; Nonexclusivity.
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a.
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Scope.
In the event of any change after the date of this agreement of
any
applicable law, statute or rule which expands the right of a corporation
of the Company's state of incorporation to indemnify an Office
Holder, it
is the intent of the parties hereto that Indemnitee shall enjoy
by this
Agreement the greater benefits afforded by such change. In the
event of
any change in any applicable law, statute or rule which narrows
the right
of a corporation of the Company's country or state of incorporation
to
indemnify an Office Holder such change, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement,
shall have no effect on this Agreement or the parties' rights and
obligations hereunder except as set forth in Section 8(a) hereof.
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b.
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Nonexclusivity.
The indemnification provided by this Agreement shall be in addition
to any
rights to which Indemnitee may be entitled under the Company's
Memorandum
and Articles of Association, as may from time to time be amended
or
replaced, any agreement, any vote of shareholders or disinterested
directors, the laws of the Company's state of incorporation, or
otherwise.
The indemnification provided under this Agreement shall continue
as to
Indemnitee for any action Indemnitee took or did not take while
serving in
an indemnified capacity even though Indemnitee may have ceased
to serve in
such capacity.
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4.
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No
Duplication of Payments.
The Company shall not be liable under this Agreement to make any
payment
in connection with any Claim made against Indemnitee to the extent
Indemnitee has otherwise actually received payment (under any insurance
policy, payment made by a subsidiary of the Company or an affiliate,
the
Articles or Memorandum of Association or otherwise) of the amounts
otherwise Indemnifiable hereunder (such amounts “Additional Payments”),
except for the difference, if any, between the Additional Payments
and the
total Expenses incurred by Indemnitee in connection with such Claim.
To
the extent that the Indemnitee has received any Additional Payment,
subsequent to receipt of Expenses from the Company in accordance
with this
Agreement, Indemnitee shall immediately and in any event no later
than
seven days subsequent to receipt of the Additional Payment, advise
the
Company of its receipt. For the avoidance of doubt, the Indemnitee
shall
reimburse the Company for all Expenses which, in accordance with
this
Section 4, the Company is not liable for, whether such Expenses
were paid
to Idemnitee prior or after receipt by Idemnitee of any Additional
Payments.
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5.
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Partial
Indemnification.
If Indemnitee is entitled under any provision of this Agreement
to
indemnification by the Company for a portion of the Expenses incurred
in
connection with any Claim, but not, however, for the total amount
thereof,
the Company shall nevertheless indemnify Indemnitee for the portion
of
such Expenses to which Indemnitee is entitled.
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6.
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Reserved.
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7.
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Exemption.
To the maximum extent permitted by law, the Company hereby exempts
and
releases Indemnitee from any and all liability to the Company related
to
any breach by Indemnitee of his or her duty of care to the Company.
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8.
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Exceptions.
Any other provision herein to the contrary notwithstanding, the
Company
shall not be obligated pursuant to the terms of this
Agreement:
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a.
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Excluded
Acts and Omissions.
To indemnify or exempt Indemnitee from or against any liability
arising
out of (i) Indemnitee's breach of fiduciary duty to the Company,
unless
Indemnitee has acted or omitted to act in good faith and had reasonable
grounds to believe such action would not harm the Company's interests,
(ii) intentional or reckless breach by Indemnitee of his or her
duty of
care to the Company; (iii) an action taken with the intention to
unduly
profit therefrom; or (iv) any fine or penalty payment to propitiate
an
offense. or
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b.
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Claims
Initiated by Indemnitee.
To indemnify or advance expenses to Indemnitee with respect to
Claims
initiated or brought voluntarily by Indemnitee and not by way of
defense,
except in specific cases if the Board of Directors has approved
the
initiation or bringing of such suit. or
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c.
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Claims
Under Section 16(B).
To
indemnify Indemnitee for expenses and the payment of profits arising
from
the purchase and sale by Indemnitee of securities in violation
of Section
16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to the extent such Section shall apply to the Company, or
any
similar successor or Israeli statute.
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9.
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Reserved.
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10.
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Counterparts.
This Agreement may be executed in one or more counterparts, each
of which
shall constitute an original.
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11.
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Binding
Effect; Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of
and be
enforceable by the parties hereto and their respective successors,
assigns, including any direct or indirect successor by purchase,
merger,
consolidation or otherwise to all or substantially all of the business
and/or assets of the Company, spouses, heirs, and personal and
legal
representatives. The Company shall require and cause any successor
(whether direct or indirect by purchase, merger, consolidation
or
otherwise) to all, substantially all, or a substantial part, of
the
business and/or assets of the Company, by written agreement in
form and
substance satisfactory to Indemnitee, expressly to assume and agree
to
perform this Agreement in the same manner and to the same extent
that the
Company would be required to perform if no such succession had
taken
place. This Agreement shall continue in effect with respect to
Claims
relating to Indemnifiable Events regardless of whether Indemnitee
continues to serve as an Office Holder of the Company or any other
enterprise at the Company's request.
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12.
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Reserved.
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13.
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Notice.
All notices and other communications required or permitted hereunder
shall
be in writing, shall be effective when given and shall in any event
be
deemed to be given: (a) five (5) business days after deposit with
the
applicable postal service, if delivered by first class mail, postage
prepaid, (b) upon delivery, if delivered by hand, (c) one business
day
after the business day of deposit with Federal Express or similar
overnight courier, freight prepaid, or (d) one day after the business
day
of delivery by facsimile transmission, if delivered by facsimile
transmission, with copy by first class mail, postage prepaid, and
shall be
addressed if to Indemnitee, at the Indemnitee's address as set
forth
beneath Indemnitee's signature to this Agreement and if to the
Company at
the address of its principal corporate offices or at such other
address as
such party may designate by ten days' advance written notice to
the other
party hereto.
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14.
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Consent
to Jurisdiction.
The Company and Indemnitee each hereby irrevocably consent to the
jurisdiction of the courts of the State of Israel for all purposes
in
connection with any action or proceeding which arises out of or
relates to
this Agreement and agree that any action instituted under this
Agreement
shall be commenced, prosecuted and continued only in the competent
Courts
of the Tel-Aviv District, which shall be the exclusive and only
proper
forum for adjudicating such a claim.
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15.
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Severability.
The provisions of this Agreement shall be severable in the event
that any
of the provisions hereof (including any provision within a single
section,
paragraph or sentence) is held by a court of competent jurisdiction
to be
invalid, void or otherwise unenforceable, and the remaining provisions
shall remain enforceable, to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of
this
Agreement (including, without limitations, each portion of this
Agreement
containing any provision held to be invalid, void or otherwise
unenforceable that is not itself invalid, void or unenforceable)
shall be
construed so as to give effect to the intent manifested by the
provision
held invalid, illegal or unenforceable.
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16.
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Choice
of Law.
This Agreement shall be governed by and its provisions construed
and
enforced in accordance with the laws of the State of Israel, as
applied to
contracts between Israeli residents, entered into and to be performed
entirely within the State of Israel, without regard to the conflict
of
laws principles thereof or of any other jurisdiction.
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17.
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Subrogation.
In the event of payment under this Agreement, the Company shall
be
subrogated to the extent of such payment to all of the rights of
recovery
of Indemnitee, who shall execute all documents required and shall
do all
acts that may be necessary to secure such rights and to enable
the Company
effectively to bring suit to enforce such rights.
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18.
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Amendment
and Termination.
No amendment or modification, of this Agreement shall be effective
unless
it is in writing signed by both parties hereto. No waiver of any
of the
provisions of this Agreement shall be deemed or shall constitute
a waiver
of any other provision hereof (whether or not similar) nor shall
such
waiver constitute a continuing waiver. This Agreement shall terminate
upon
the lapse of the of eight (8) years from the termination, for whatever
reason, of the Indemnitee’s service with the Company, as an Office Holder.
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19.
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Integration
and Entire Agreement.
This Agreement sets forth the entire understanding between the
parties
hereto and supersedes and merges all previous written and oral
negotiations, commitments, understandings and agreements relating
to the
subject matter hereof between the parties hereto.
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20.
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No
Construction as Employment Agreement.
Nothing contained in this Agreement shall be construed as giving
Indemnitee any right to be retained in the employ or otherwise
in the
service of the Company or any of its
subsidiaries.
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IN
WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement
as of the date first written above.
By:
_________________________________
AGREED
TO
AND ACCEPTED AS OF THE DATE FIRST WRITTEN ABOVE:
_____________________________________
__XX__
Address:
_____________________________
_____________________________________
_____________________________________
Exhibit
A
INDEMNIFIABLE
EVENTS AND LIMIT AMOUNTS
The
Limit
Amount in the event of an Indemnifiable Event is US$50,000,000 for all directors
and Office Holders in the aggregate. Solely for the avoidance of doubt, it
is
hereby clarified, that unless otherwise explicitly stated in this Exhibit,
any
reference below to a claim or demand made shall be deemed to include a claim
or
demand made by way of a deriviative action, and shall further be deemed to
include any claim or demand made by any person acting in a capacity of a:
(i)
liquidator; (ii) reciever; or (iii) trustee.
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Indemnifiable
Event
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1.
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Any
claim or demand made by customers, suppliers, contractors or other
third
parties transacting any form of business with the Company, its
subsidiaries or affiliates, in the ordinary course of their respective
businesses, relating to the negotiations or performance of such
transactions, representations or inducements provided in connection
thereto or otherwise.
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2.
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Any
claim or demand made in connection with any transaction not in
the
ordinary course of business of either the Company, its subsidiaries
or
affiliates or the party making such claim.
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3.
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Any
claim or demand made, pertaining to the Company or its subsidiaries
or
affiliates, in connection with: (i) any Merger, Tender Offer, Forced
Sale
of Shares, Arrangement and Compromise, within the meaning of such
terms
under the Israeli Companies Law, 1999, as amended from time to
time or as
replaced by any successor legislation; or (ii) any reorganization,
merger
or consolidation of whatever kind or nature within the meaning
of any law
applicable to such claim or demand; (iii) the sale, lease, purchase,
acquisition or any other form of disposition, of any assets, business,
securities, companies or other corporate entities.
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4.
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Any
claim or demand made by employees, consultants, agents or other
individuals or entities employed by or providing services to the
Company
relating to compensation owed to them or damages or liabilities
suffered
by them in connection with such employment or service.
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5.
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Any
claim or demand made under any securities laws or by reference
thereto, or
related to the failure to disclose any information in the manner
or time
such information is required to be disclosed pursuant to such laws,
or
related to inadequate or improper disclosure of information to
stockholders, or prospective stockholders, or related to the purchase,
holding or disposition of securities of the Company or any other
investment activity involving or effected by such
securities.
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6.
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Any
claim or demand made for actual or alleged infringement, misappropriation
or misuse of any third party's intellectual property rights by
the
Company, its subsidiaries or affiliates.
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7.
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Any
claim or demand made by any lenders or other creditors or for monies
borrowed by, or other indebtedness of, the Company, its subsidiaries
or
affiliates.
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8.
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Any
claim or demand made by any third party suffering any personal
injury or
damage to business or personal property through any act or omission
attributed to the Company, its subsidiaries or affiliates, or their
respective employees, agents or other persons acting or allegedly
acting
on their behalf.
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9.
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Any
claim or demand made directly or indirectly in connection with
complete or
partial failure, by the Company or any subsidiary or affiliate
thereof, or
their respective directors, officers and employees, to pay, report,
keep
applicable records or otherwise, any foreign, federal, state, county,
local, municipal or city taxes or other mandatory payments of any
nature
whatsoever, including, without limitation, income, sales, use,
transfer,
excise, sales, value added, registration, severance, stamp, occupation,
customs, duties, real property, personal property, capital stock,
social
security, unemployment, disability, payroll or employee withholding
or
other withholding, including any interest, penalty or addition
thereto,
whether disputed or not.
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10.
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Any
claim or demand made by purchasers, holders, lessors or other users
of
products of the Company, or individuals treated with such products,
for
damages or losses related to such use or treatment.
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11.
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Any
administrative, regulatory or judicial actions, orders, decrees,
suits,
demands, demand letters, directives, claims, liens, investigations,
proceedings or notices of noncompliance or violation by any governmental
entity or other person alleging the failure to comply with any
statute,
law, ordinance, rule, regulation, order or decree of any governmental
entity applicable to the Company or any of its subsidiaries, or
any of
their respective businesses or
operations.
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