EXHIBIT 4.1(h)
INDEMNIFICATION UNDERTAKING
INDEMNIFICATION UNDERTAKING DATED AS OF NOVEMBER 24, 2005 FROM VOCALTEC
COMMUNICATIONS LTD. TO ________ (THE "OFFICE HOLDER")
You are or have been appointed as a director or office holder of VocalTec
Communications Ltd. (the "COMPANY"), and in order to enhance your service to the
Company in an effective manner, the Company desires to provide hereunder for
your indemnification to the fullest extent permitted by law.
Notwithstanding anything to the contrary herein, the indemnification
agreement dated as of November 12, 2000 between you and the Company (and not
this indemnification undertaking) (the "Existing Indemnification Agreement")
shall apply with respect to any court judgment, including a settlement or a
court approved arbitrator's award, relating to any fundamental act or omission
taken or made by you in your capacity as a director or office holder of the
Company during the six-month period immediately prior to the date of the Share
Sale and Purchase Agreement dated as of October 27, 2005 by and among the
Company, Tdsoft Ltd. and shareholders of Tdsoft Ltd., provided that such court
judgment, settlement or court approved arbitrator's award are given in respect
of a claim that is made against you (alone or together with others) in writing
during the 12-month period following the date hereof.
In consideration of your continuing to serve the Company, the Company
hereby agrees as follows:
1. The Company hereby undertakes to indemnify you to the maximum extent
permitted by the Companies Law - 1999 (the "COMPANIES LAW") in respect of the
following:
1.1 any financial obligation imposed on you in favor of another person
by, or expended by you as a result of, a court judgment, including a
settlement or an arbitrator's award approved by court, in respect of any
act or omission ("ACTION") taken or made by you in your capacity as a
director or office holder of the Company;
1.2 all reasonable litigation expenses, including reasonable
attorneys' fees, expended by you or charged to you by a court, in a
proceeding instituted against you by the Company or on its behalf or by
another person, or in any criminal proceedings in which you are acquitted,
or in any criminal proceedings of a crime which does not require proof of
MENS REA (criminal intent) in which you are convicted, all in respect of
actions taken by you in your capacity as a director or officer of the
Company; and
1.3 all reasonable litigation expenses, including reasonable
attorneys' fees, expended by you due to an investigation or a proceeding
instituted against you by an authority qualified to conduct such
investigation or proceeding, where such investigation or proceeding is
concluded without the filing of an indictment against you (as defined in
the Companies Law) and without any financial obligation imposed on you in
lieu of criminal proceedings (as defined in the Companies Law), or that is
concluded without your indictment but with a financial obligation imposed
on you in lieu of criminal proceedings with respect to a crime that does
not require proof of mens rea (criminal intent), all in respect of actions
taken by you in your capacity as a director or office holder of the
Company;
2. The Company will not indemnify you for any amount you may be obligated
to pay in respect of:
2.1 a breach of your duty of loyalty to the Company, except, to the
extent permitted by the Companies Law, for a breach of a duty of loyalty to
the Company while acting in good faith and having reasonable cause to
assume that such act would not prejudice the interests of the Company;
2.2 a willful or reckless breach of the your duty of care to the
Company;
2.3 an action taken or omission by you with the intent of unlawfully
realizing personal gain;
2.4 a fine or penalty imposed upon you for an offense; and
2.5 a counterclaim brought by the Company or in its name in connection
with a claim against the Company filed by you, other than by way of defense
or by way of third party notice in connection with a claim brought against
you by the Company, or in specific cases in which the Company's Board of
Directors has approved the initiation or bringing of such suit by you,
which approval shall not be unreasonably withheld.
3. The Company will make available all amounts payable to you in accordance
with Section 1 above on the date on which such amounts are first payable by you
("TIME OF INDEBTEDNESS"), including with respect to any claim against you
initiated by the Company or in its right, and with respect to items referred to
in Sections 1.2 and 1.3 above, not later than the date on which the applicable
court renders its decision. Advances given to cover legal expenses in criminal
proceedings will be repaid by you to the Company if you are found guilty of a
crime which requires proof of criminal intent. Other advances will be repaid by
you to the Company if it is determined that you are not lawfully entitled to
such indemnification.
As part of the aforementioned undertaking, the Company will make available
to you any security or guarantee that you may be required to post in accordance
with an interim decision given by a court or an arbitrator, including for the
purpose of substituting liens imposed on your assets.
4. The Company will indemnify you even if at the relevant Time of
Indebtedness you are no longer a director or office holder of the Company
provided that the obligations with respect to which you will be indemnified
hereunder are in respect of actions taken by you while you were a director or
office holder of the Company as aforesaid, and in such capacity.
5. The indemnification will be limited to the expenses mentioned in
Sections 1.2 and 1.3 (pursuant and subject to Section 3 and insofar as
indemnification with respect thereto is not restricted by law or by the
provisions of Section 2 above) and to the expenses mentioned in Section 1.1
above insofar as they result from, or are connected to, events and circumstances
set forth in SCHEDULE A hereto, which are deemed by the Company's Board of
Directors, based on the current activity of the Company, to be foreseeable as of
the date hereof.
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6. The indemnification that the Company undertakes towards all persons whom
it has resolved to indemnify for the matters and in the circumstances described
herein, jointly and in the aggregate, shall not exceed $4 million, provided that
if such amount is insufficient to cover all amounts to which such persons are
entitled pursuant to such undertaking of the Company, such amount shall be
allocated to such persons pro rata to the amounts to which they are so entitled.
7. The Company will not indemnify you for any liability with respect to
which you have received payment by virtue of an insurance policy or another
indemnification agreement other than for amounts which are in excess of the
amounts actually paid to you pursuant to any such insurance policy or other
indemnity agreement (including deductible amounts not covered by insurance
policies), within the limits set forth in Section 6 above.
8. Subject to the provisions of Sections 6 and 7 above, the indemnification
hereunder will, in each case, cover all sums of money that you will be obligated
to pay, in those circumstances for which indemnification is permitted under the
law and under this Indemnification Undertaking.
9. The Company will be entitled to any amount collected from a third party
in connection with liabilities indemnified hereunder.
10. In all indemnifiable circumstances, indemnification will be subject to
the following:
10.1 You shall promptly notify the Company of any legal proceedings
initiated against you and of all possible or threatened legal proceedings
without delay following your first becoming aware thereof, however, your
failure to notify the Company as aforesaid shall not derogate from your
right to be indemnified as provided herein (except to the extent that such
failure to notify causes the Company damages). You shall deliver to the
Company, or to such person as it shall advise you, without delay all
documents you receive in connection with these proceedings.
Similarly, you must advise the Company on an ongoing and current basis
concerning all events which you suspect may give rise to the initiation of legal
proceedings against you in connection with your actions or omissions as a
director or office holder of the Company.
10.2 Other than with respect to proceedings that have been initiated
against you by the Company or in its name, the Company shall be entitled to
undertake the conduct of your defense in respect of such legal proceedings
and/or to hand over the conduct thereof to any attorney which the Company
may choose for that purpose, except to an attorney who is not, upon
reasonable grounds, acceptable to you. The Company shall notify you of any
such decision to defend with ten (10) calendar days of receipt of notice of
any such proceeding.
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The Company and/or the attorney as aforesaid shall be entitled, within the
context of the conduct as aforesaid, to conclude such proceedings, all as it
shall see fit, including by way of settlement. At the request of the Company,
you shall execute all documents required to enable the Company and/or its
attorney as aforesaid to conduct your defense in your name, and to represent you
in all matters connected therewith, in accordance with the aforesaid.
For the avoidance of doubt, in the case of criminal proceedings the Company
and/or the attorneys as aforesaid will not have the right to plead guilty in
your name or to agree to a plea-bargain in your name without your consent.
However, the aforesaid will not prevent the Company and/or its attorneys as
aforesaid, with the approval of the Company, to come to a financial arrangement
with a plaintiff in a civil proceeding without your consent so long as such
arrangement will not be an admittance of an occurrence not indemnifiable
pursuant to this Indemnification Undertaking and/or pursuant to law. The Company
shall not, without your prior written consent, consent to the entry of any
judgment against you or enter into any settlement or compromise which (i)
includes an admission of your fault, (ii) does not include, as an unconditional
term thereof, the full release of you from all liability in respect of such
proceeding or (iii) is not fully indemnifiable pursuant to this Indemnification
Undertaking and/or pursuant to law. This paragraph shall not apply to a
proceeding brought by you under Section 10.7 below.
10.3 You will fully cooperate with the Company and/or any attorney as
aforesaid in every reasonable way as may be required of you within the
context of their conduct of such legal proceedings, including but not
limited to the execution of power(s) of attorney and other documents,
provided that the Company shall cover all costs incidental thereto such
that you will not be required to pay the same or to finance the same
yourself.
10.4 Notwithstanding the provisions of Sections 10.2 and 10.3 above,
(i) if in a proceeding to which you are a party by reason of your status as
a director or officer of the Company and the named parties to any such
proceeding include both you and the Company or any subsidiary of the
Company, a conflict of interest or potential conflict of interest
(including the availability to the Company and its subsidiary, on the one
hand, and you, on the other hand, of different or inconsistent defenses or
counterclaims) exists between you and the Company, or (ii) if the Company
fails to assume the defense of such proceeding in a timely manner, you
shall be entitled to be represented by separate legal counsel, which shall
represent other persons similarly situated, of the Company's choice and
reasonably acceptable to you and other person's choice, at the expense of
the Company. In addition, if the Company fails to comply with any of its
material obligations under this Indemnification Undertaking or in the event
that the Company or any other person takes any action to declare this
Indemnification Undertaking void or unenforceable, or institutes any
action, suit or proceeding to deny or to recover from you the benefits
intended to be provided to you hereunder, except with respect to such
actions, suits or proceedings brought by the Company that are resolved in
favor of the Company, you shall have the right to retain counsel of your
choice, and reasonably acceptable to the Company and at the expense of the
Company, to represent you in connection with any such matter.
10.5 If, in accordance with Section 10.2 (but subject to Section
10.4), the Company has taken upon itself the conduct of your defense, the
Company will have no liability or obligation pursuant to this
Indemnification Undertaking or the above resolutions to indemnify you for
any legal expenses, including any legal fees, that you may expend in
connection with your defense, unless (i) the Company shall not have assumed
the conduct of your defense as contemplated, (ii) the Company refers the
conduct of your defense to an attorney who is not, upon reasonable grounds,
acceptable to you, (iii) the named parties to any such action (including
any impleaded parties) include both you and the Company, and joint
representation is inappropriate under applicable standards of professional
conduct due to a conflict of interest between you and the Company, or (iv)
the Company shall agree to such expenses in either of which events all
reasonable fees and expenses of your counsel shall be borne by the Company.
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10.6 The Company will have no liability or obligation pursuant to this
Indemnification Undertaking to indemnify you for any amount expended by you
pursuant to any compromise or settlement agreement reached in any suit,
demand or other proceeding as aforesaid without the Company's consent to
such compromise or settlement.
10.7 If required by law, the Company's authorized organs will consider
the request for indemnification and the amount thereof and will determine
if you are entitled to indemnification and the amount thereof. In the event
that you make a request for payment of an amount of indemnification
hereunder or a request for an advancement of indemnification expenses
hereunder and the Company fails to determine your right to indemnification
hereunder or fails to make such payment or advancement, you may petition
any court which has jurisdiction to enforce the Company's obligations
hereunder. The Company agrees to reimburse you in full for any reasonable
expenses incurred by you in connection with investigating, preparing for,
litigating, defending or settling any action brought by you under the
immediately preceding sentence, except where such action or any claim or
counterclaim in connection therewith is resolved in favor of the Company.
11. The Company hereby exempts you, to the fullest extent permitted by law,
from any liability for damages caused as a result of a breach of your duty of
care to the Company, provided that in no event shall you be exempt with respect
to any actions listed in Section 2 above or breach of your duty of care in
connection with distribution of Company's assets.
12. If for the validation of any of the undertakings in this
Indemnification Undertaking any act, resolution, approval or other procedure is
required, the Company undertakes to cause them to be done or adopted in a manner
which will enable the Company to fulfill all its undertakings as aforesaid.
13. For the avoidance of doubt, it is hereby clarified that nothing
contained in this Indemnification Undertaking derogates from the Company's right
to indemnify you post factum for any amounts which you may be obligated to pay
as set forth in Section 1 above without the limitations set forth in Sections 5
and 6 above.
14. If any undertaking included in this Indemnification Undertaking is held
invalid or unenforceable, such invalidity or unenforceability will not affect
any of the other undertakings which will remain in full force and effect.
Furthermore, if such invalid or unenforceable undertaking may be modified or
amended so as to be valid and enforceable as a matter of law, such undertaking
will be deemed to have been modified or amended, and any competent court or
arbitrator are hereby authorized to modify or amend such undertaking, so as to
be valid and enforceable to the maximum extent permitted by law.
15. This Indemnification Undertaking and the agreements herein shall be
governed by and construed and enforced in accordance with the laws of the State
of Israel.
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16. This Indemnification Undertaking cancels any preceding letter of
indemnification or arrangement for indemnification that may have been issued to
you by the Company, including without limitation the Existing Indemnification
Agreement (except as set forth in the second paragraph of this undertaking).
17. Neither the settlement or termination of any proceeding nor the failure
of the Company to award indemnification or to determine that indemnification is
payable shall create an adverse presumption that you are not entitled to
indemnification hereunder. In addition, the termination of any proceeding by
judgment or order (unless such judgment or order provides so specifically) or
settlement, shall not create a presumption that you did not act in good faith
and in a manner which you reasonably believed to be in or not opposed to the
best interests of the Company or, with respect to any criminal action or
proceeding, had reasonable cause to believe that your action was unlawful.
18. This Indemnification Undertaking shall be (a) binding upon all
successors and assigns of the Company (including any transferee of all or a
substantial portion of the business, stock and/or assets of the Company and any
direct or indirect successor by merger or consolidation or otherwise by
operation of law), and (b) binding on and shall inure to the benefit of your
heirs, personal representatives, executors and administrators. This
Indemnification Undertaking shall continue for your benefit and your heirs',
personal representatives', executors' and administrators' benefit after you
cease to be a director or office holder of the Company.
19. Except with respect to changes in the governing law which expand your
right to be indemnified by the Company, no supplement, modification or amendment
of this Indemnification Undertaking shall be binding unless executed in writing
by each of the parties hereto. No waiver of any of the provisions of this
Indemnification Undertaking shall be deemed or shall constitute a waiver of any
other provisions of this Indemnification Undertaking (whether or not similar),
nor shall such waiver constitute a continuing waiver.
This Indemnification Undertaking is being issued to you pursuant to the
resolutions adopted by the Board of Directors of the Company on September 30,
2005 and by the shareholders of the Company on November 24, 2005. The Board of
Directors has determined, based on the current activity of the Company, that the
amount stated in Section 6 is reasonable and that the events listed in SCHEDULE
A are reasonably anticipated.
Kindly sign and return the enclosed copy of this letter to acknowledge your
agreement to the contents hereof.
Very truly yours,
VocalTec Communications Ltd.
By: ______________
Name:
Title: Chief Executive Officer
Date: November 24, 2005
Accepted and agreed to:
Name: _________________
Date: November __, 2005
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SCHEDULE A
1. Negotiations, execution, delivery and performance of agreements on behalf
of the Company and any subsidiary thereof ("Subsidiary") including, inter
alia, any claim or demand made by a customer, supplier, contractor or other
third party transacting any form of business with the Company, its
Subsidiaries or affiliates relating to the negotiations or performance of
such transactions, representations or inducements provided in connection
thereto or otherwise.
2. Anti-competitive acts and acts of commercial wrongdoing.
3. Acts in regard of invasion of privacy including with respect to databases
and acts in regard of slander.
4. Any claim or demand made for actual or alleged infringement,
misappropriation or misuse of any third party's intellectual property
rights including, but not limited to confidential information, patents,
copyrights, design rights, service marks, trade secrets, copyrights,
misappropriation of ideas by the Company, its Subsidiaries or affiliates.
5. Actions taken in connection with the intellectual property of the Company
and any Subsidiary and its protection, including the registration or
assertion of rights to intellectual property and the defense of claims
relating thereof.
6. Participation and/or non-participation at the Company's board meetings,
bona fide expression of opinion and/or voting and/or abstention from voting
at the Company's board meetings.
7. Approval of corporate actions including the approval of the acts of the
Company's management, their guidance and their supervision.
8. Claims of failure to exercise business judgement and a reasonable level of
proficiency, expertise and care in regard of the Company's business.
9. Violations of securities laws of any jurisdiction, including without
limitation, fraudulent disclosure claims, failure to comply with SEC and/or
the Israeli Securities Authority and/or any stock exchange disclosure or
other rules and any other claims relating to relationships with investors,
shareholders and the investment community and any claims related to the
Xxxxxxxx-Xxxxx Act of 2002, as amended from time to time.
10. 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
shareholders, or prospective shareholders, or related to the purchasing,
holding or disposition of securities of the Company or any other investment
activity involving or affected by such securities, including any actions
relating to an offer or issuance of securities of the Company or of its
subsidiaries and/or affiliates to the public by prospectus or privately by
private placement, in Israel or abroad, including the details that shall be
set forth in the documents in connection with execution thereof.
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11. Violations of laws requiring the Company to obtain regulatory and
governmental licenses, permits and authorizations or laws related to any
governmental grants in any jurisdiction.
12. Claims in connection with publishing or providing any information,
including any filings with any governmental authorities, on behalf of the
Company in the circumstances required under any applicable laws
13. 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.
14. Resolutions and/or actions relating to employment matters of the Company
and/or its Subsidiaries and/or affiliates.
15. Events, pertaining to the employment conditions of employees and to the
employer - employee relations, including the promotion of workers, handling
pension arrangements, insurance and saving funds, options and other
benefits.
16. Any claim or demand made by any lenders or other creditors or for moneys
borrowed by, or other indebtedness of, the Company, its Subsidiaries or
affiliates.
17. Any claim or demand made by any third party suffering any personal injury
and/or bodily injury and/or property 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.
18. 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, of any foreign, federal, state, country,
local, municipal or city taxes or other compulsory payments of any nature
whatsoever, including without limitation, income, sales, use, transfer,
excise, 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.
19. Any claim or demand made by purchasers, holders, lessors or other users of
products or assets of the Company, or individuals treated with such
products, for damages or losses related to such use or treatment.
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20. 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 potential responsibility or liability
(including potential responsibility or liability for costs of enforcement,
investigation, cleanup, governmental response, removal or remediation, for
natural resources damages, property damage, personal injuries, or penalties
or contribution, indemnification, cost recovery, compensation, or
injunctive relief) arising out of, based on or related to (x) the presence
of, release spill, emission, leaking, dumping, pouring, deposit, disposal ,
discharge, leaching or migration into the environment (each a "Release") or
threatened Release of, or exposure to, any hazardous, toxic, explosive or
radioactive substance, wastes or other substances or wastes of any nature
regulated pursuant to any environmental law, at any location, whether or
not owned, operated, leased or managed by the Company or any of its
subsidiaries, or (y) circumstances forming the basis of any violation of
any environmental law, environmental permit, license, registration or other
authorization required under applicable environmental and/or public health
law.
21. Actions in connection with the Company's development, use, sale, licensing,
distribution, marketing or offer of products and/or services.
22. Resolutions and/or actions relating to a merger of the company and/or of
its subsidiaries and/or affiliates, the issuance of shares or securities
exercisable into shares of the Company, changing the share capital of the
Company, formation of subsidiaries, reorganization, winding up or sale of
all or part of the business, operations or shares the Company.
23. Resolutions and/or actions relating to investments in the Company and/or
its subsidiaries and/or affiliated companies and/or the purchase or sale of
assets, including the purchase or sale of companies and/or businesses,
and/or investments in corporate or other entities and/or investments in
traded securities and/or any other form of investment.
24. 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 of its
subsidiaries and/or affiliates, or any of their respective business
operations.
25. Any claim or demand, not covered by any of the categories of events
described above, which, pursuant to any applicable law, a director or
officer of the Company may be held liable to any government or agency
thereof, or any person or entity, in connection with actions taken by such
director or officer in such capacity.
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