INDEMNIFICATION AGREEMENT
Exhibit 4.7
This INDEMNIFICATION AGREEMENT (the “Agreement”) is made as of ______ __, 2007, by and between I.I.S Intelligent Information Systems Ltd., a company organized under the laws of the State of Israel (the “Company”), and _____________ (“Indemnitee”).
WHEREAS, the Company desires to attract and retain Indemnitee to serve as an Office Holder (as defined in the Companies Law-1999 (the “Law”)) in the Company and to provide Indemnitee with protection against liability and expenses incurred while acting in that capacity;
WHEREAS, the Company understands that Indemnitee has reservations about serving the Company without adequate protection against personal liability arising from such service, and that it is also of critical importance to Indemnitee that adequate provision be made for advancing costs and expenses of legal defense; and
WHEREAS, the Board of Directors and the shareholders of the Company have approved this Agreement as being in the best interests of the Company.
NOW, THEREFORE, in order to induce Indemnitee to serve or to continue to serve as an Office Holder of the Company the parties agree as follows:
| 1. | Contractual Indemnity. |
| The Company hereby agrees, subject to the limitations of Sections 2, 3, and 6 hereof, and the limitations mentioned in the Company’s Articles of Association, to indemnify Indemnitee, to the greatest extent possible under applicable law, against any liability or expense in respect of any act or omission of Indemnitee in his capacity as an Office Holder of the Company or of a company controlled, directly or indirectly, by the Company (a “Subsidiary”), or as a director or observer at Board meetings of a company not controlled by the Company but in which the appointment as a director or observer results from the Company’s holdings in such company or is made at the Company’s request (“Affiliate”), including: (i) a monetary obligation imposed on Indemnitee in favor of another person by a court judgment, including a judgment given in settlement or an arbitrator’s award approved by court; (ii) reasonable litigation expenses, including advocates’ professional fees, incurred by the Office Holder pursuant to an investigation or a proceeding commenced against him by a competent authority and that was terminated without an indictment and without having a monetary charge imposed on him in exchange for a criminal procedure (as such terms are defined in the Law), or that was terminated without an indictment but with a monetary charge imposed on him in exchange for a criminal procedure in a crime that does not require proof of criminal intent; (iii) reasonable litigation expenses, including attorneys’ fees, expended by Indemnitee or charged to Indemnitee by a court, in a proceeding instituted against Indemnitee 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 proceeding in which Indemnitee was convicted of an offense that does not require proof of criminal intent (collectively referred to hereinafter as “Claim”). |
| The Company shall indemnify the Indemnitee with respect to actions or omissions occurring during his position as an Office Holder, even if (i) the actions or omissions occurred prior to the signing of this document or (ii) at the time of Claim Indemnitee is no longer an Office Holder. |
| The termination of any action or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that (i) Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in the best interests of the Company, or (ii) with respect to any criminal action or proceeding, Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful. |
| 2. | Limitations on Contractual Indemnity. |
| 2.1 | Indemnitee shall not be entitled to indemnification under Section 1, for financial obligation imposed consequent to any of the following: (i) a breach of the duty of fidelity by Indemnitee, unless the Indemnitee acted in good faith and had reasonable basis to assume that the act would not harm the Company; or (ii) a violation of the Indemnitee’s duty of care towards the Company, which was committed intentionally or recklessly (but not where the breach was negligent only); or (iii) an act committed with the intention to realize a personal unlawful profit; or (iv) a fine or monetary penalty imposed on Indemnitee; or (v) a counterclaim made by the Company or in its name in connection with a claim against the Company filed by Indemnitee. |
| 2.2 | The Company undertakes to indemnify all Office Holders it has resolved to indemnify for the matters and in the circumstances described herein, jointly and in the aggregate, in excess of the insurance proceeds received pursuant to Section 9, a total amount over the years, that shall not exceed an amount equal to US$2,500,000 (two million five hundred thousand US dollars), or such greater sum as shall, from time to time, be approved by the shareholders of the Company. |
| 3. | Limitation of Categories of Claims. The indemnification pursuant to sub-section (i) of the first paragraph of Section 1 above, shall only relate to liabilities arising in connection with acts or omissions of Indemnitee in respect of the following events and circumstances which are deemed by the Board of Directors of the Company to be foreseeable at the date hereof: |
| 3.1 | Claims arising from breach of: safety laws, tax laws, anti-trust laws, rules promulgated by any competent Government agency, accounting rules, and such other similar rules of any applicable jurisdiction, and any Claims arising in connection with violations of laws requiring the Company to obtain regulatory and governmental licenses, permits and authorizations in any jurisdiction; |
| 3.2 | Claims of service providers and suppliers of products, subcontractors, clients and users of the Company's products or technology; |
| 3.3 | The offering of securities (including, inter alia, Claims based on disclosure or non-disclosure of facts in the offering documents, any report or failure to report as required by applicable rules, or the compliance or non-compliance with the Law) by the Company, a Subsidiary, or an Affiliate and/or by a shareholder thereof to the public and/or to private investors or the offer by the Company, a Subsidiary, and/or an Affiliate to purchase securities from the public and/or from private investors or other holders pursuant to a prospectus, agreements, notices, reports, tenders and/or other proceedings, whether in Israel or abroad; |
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| 3.4 | Claims of shareholders or creditors pertaining to breach of the Law and other related rules; |
| 3.5 | Claims of creditors or security holders, including (inter alia) Claims in dissolution, winding-up, settlement with creditors and other similar proceedings; |
| 3.6 | Claims based upon breach of privacy and other civil rights, libel and slander, misleading or wrongful distribution of information; |
| 3.7 | Claims made by business associates, including joint venture partners; |
| 3.8 | Claims arising out of any incentive plan in favor of employees, office holders, consultants and service providers; |
| 3.9 | Any claim or demand made by any third party suffering injury and/or damage through any act or omission attributed to the Company, it’s subsidiaries or Affiliates, or their respective employees, agents or other persons acting or allegedly acting on their behalf; |
| 3.10 | Claims based upon the participation and/or non participation of the Beneficiary in board meetings and board committee meetings, bona fide expression of opinion and/or voting and/or abstention from voting at board and board committee meetings and including any approval of corporate actions, including the approval of the acts of the Company’s management, their guidance and their supervision, and further including any Claims of failure to exercise business judgment and a reasonable level of proficiency, expertise and care in regard of the Company’s business; |
| 3.11 | Any claim or demand made directly or indirectly in connection with the complete or partial failure of the Company or any Subsidiary or Affiliate entity, or their respective directors, officers and employees, to keep applicable records, report and pay all applicable taxes and other compulsory payments of any nature, in any jurisdiction and locality; whether disputed or not and Claims in connection with publishing or providing any information, including any filings with governmental authorities, on behalf of the Company or any Subsidiary or Affiliate entity in the circumstances required under applicable laws; |
| 3.12 | Claims based upon failure to maintain appropriate insurance, and Claims based upon inadequate safety measures and/or a malpractice of risk management; |
| 3.13 | Claims concerning financing matters, including purchase of securities for investment purposes, other investments, hedging or the non performance of any such matters or the results thereof; |
| 3.14 | Occurrences including reporting obligations resulting from the status of the Company and/or a Subsidiary and/or an Affiliate as a public company, and/or from the fact that the securities thereof were offered to the public and/or are traded on a stock exchange, or other stock market whether in Israel or abroad; |
| 3.15 | Occurrences in connection with investments the Company and/or Subsidiaries and/or Affiliates make in other corporations whether before and/or after the investment is made, entering into the transaction, the execution, development and monitoring thereof, including actions taken by an Office Holder in the name of the Company and/or a Subsidiary and/or an Affiliate as a director, officer, employee and/or board observer of the corporation the subject of the transaction and the like; |
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| 3.16 | The sale, purchase and holding of securities or other investments for or in the name of the Company, a Subsidiary and/or an Affiliate; |
| 3.17 | Actions in connection with the merger of the Company, a Subsidiary and/or an Affiliate with or into another entity or the purchase of shares or assets of another person or entity; |
| 3.18 | Actions in connection with the sale of the operations and/or business, or part thereof, of the Company, a Subsidiary and/or an Affiliate; |
| 3.19 | Without derogating from the generality of the above, actions in connection with the purchase or sale of companies, legal entities or assets, and the division or consolidation thereof; |
| 3.20 | Actions taken in connection with labor relations and/or employment matters in the Company, Subsidiaries and/or Affiliates and trade relations of the Company, Subsidiaries and/or Affiliates, including with employees, independent contractors, customers, suppliers and various service providersand including the handling of pension funds, provident funds, insurance and savings funds, options, bonuses etc; |
| 3.21 | Actions in connection with the developing, testing and manufacturing of products by the Company, Subsidiaries and/or Affiliates or in connection with the distribution, sale, license or use of such products, including without limitation in connection with clinical trials, professional liability and product liability claims; |
| 3.22 | Actions taken in connection with the intellectual property of the Company, Subsidiaries and/or Affiliates, and its protection, including the registration or assertion of rights to intellectual property and the defense of claims related to intellectual propertyand any other Claim or demand based upon actual or alleged infringement, misuse or misappropriation of any third party’s intellectual property rights, including but not limited to confidential information, patents, copyrights, design rights, trade and service marks, trade secrets, copyrights, misappropriation of ideas; and any actions taken in connection with the Intellectual Property of the Subsidiary or Affiliate and its protection, including the registration or assertion of rights to intellectual property and the defense of claims relating thereof; and |
| 3.23 | Actions taken pursuant to or in accordance with the policies and procedures of the Company, Subsidiaries and/or Affiliates, that have been decided upon, whether such policies and procedures are published or not. |
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| 4. | Expenses; Indemnification Procedure. The Company shall advance Indemnitee all expenses incurred by Indemnitee in connection with a Claim on the date on which such amounts are first payable, but has no duty to advance payments in less than twenty (20) days following delivery of a written request therefor by Indemnitee to the Company. Advances given to cover legal expenses in criminal proceedings will be repaid by Indemnitee to the Company if Indemnitee is found guilty of a crime that requires criminal intent. Any Advances to repay pursuant to this Section 4 shall be unsecured and interest free. Other advances will be repaid by Indemnitee to the Company if it is determined by the Company’s legal counsel that Indemnitee is not lawfully entitled to such indemnification; provided, however, that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Company that Indemnitee would be not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Advance until a final judicial determination is made with respect thereto (and as to which all rights of appeal therefrom have been exhausted or lapsed). |
| 5. | Notification and Defense of Claim. If any action, suit, proceeding or other Claim is brought against Indemnitee in respect of which indemnity may be sought under this Agreement: |
| 5.1 | Indemnitee will promptly notify the Company in writing of the commencement thereof, and the Company will be entitled to participate therein at its own expense or to assume the defense thereof and to employ counsel reasonably satisfactory to Indemnitee. Indemnitee shall have the right to employ his own counsel in connection with any such Claim and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of Indemnitee unless (i) the Company shall not have assumed the defense of the Claim and employed counsel for such defense, or (ii) the named parties to any such action include both Indemnitee and the Company, and Indemnitee shall have reasonably concluded that joint representation is inappropriate under applicable standards of professional conduct due to a material conflict of interest between Indemnitee and the Company. |
| 5.2 | The Company shall not be liable to indemnify Indemnitee for any amounts paid in settlement of any Claim effected without the Company’s written consent, and the Company shall not settle any Claim in a manner which would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent; provided, however, that neither the Company nor Indemnitee will unreasonably withhold its consent to any proposed settlement and, provided further, that if a Claim is settled by the Indemnitee with the Company’s written consent, or if there be a final judgment or decree for the plaintiff in connection with the Claim by a court of competent jurisdiction, the Company shall indemnify and hold harmless Indemnitee from and against any and all losses, costs, expenses and liabilities incurred by reason of such settlement or judgment. |
| 5.3 | Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee’s power. |
| 6. | Partial Indemnification. If Indemnitee is entitled to indemnification by the Company for some or a portion of the expenses, judgments, fines or penalties incurred by him in the investigation, defense, appeal or settlement of any civil or criminal action or proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such expenses, judgments, fines or penalties to which Indemnitee is entitled. |
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| 7. | Other Indemnification. The Company will not indemnify Indemnitee for any liability with respect to which Indemnitee has received payment by virtue of an insurance policy or other indemnification agreement, other than for amounts which are in excess of the amount actually paid to Indemnitee pursuant to such agreements. |
| 7A. | Remedies of Indemnitee. In the event that (i) a determination is made pursuant to Sections 2 and 3 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) an Advance is not timely made pursuant to Section 4 of this Agreement, (iii) no determination of entitlement to indemnification is made by the Company after receipt by the Company of Indemnitee’s request for indemnification pursuant to Section 5 of this Agreement, or (iv) payment of indemnification is not made after a determination has been made that Indemnitee is entitled to indemnification, the Company shall not oppose Indemnitee’s right to seek adjudication of his entitlement to such indemnification in any court of competent jurisdiction. |
| 8. | Collection from a Third Party. The Company will be entitled to any amount collected from a third party in connection with liabilities indemnified hereunder. |
| 9. | Insurance. The Company shall maintain an insurance with a reputable insurer (the “Insurer”) to insure the liability of the Indemnitee for an obligation imposed on him in consequence of an act done in his capacity as an Office Holder of the Company, in any of the following cases: |
| 9.1 | a breach of the duty of care vis-à-vis the Company or vis-a-vis another person. |
| 9.2 | a breach of the duty of fidelity vis-à-vis the company, provided that the director acted in good faith and had reasonable basis to assume that the act would not harm the Company. |
| 9.3 | a monetary obligation imposed on him in favor of another person. |
| The abovementioned insurance for all of the Office Holders of the Company shall be in the total amount of not less than US$5,000,000 (five million US Dollars) (the “Insurance Policy”). The Company undertakes to maintain such insurance during the period the Indemnitee serves as a director of the Company and for a period of 7 (seven) years commencing on the day Indemnitee has ceased from serving as a director of the Company. Indemnitee shall be covered by such insurance in accordance with its terms to the maximum extent of the coverage available for any director, officer, employee, agent or fiduciary under such policy. |
The Company shall give prompt written notice of any Claim to the Insurer in accordance with the procedures set forth in the Insurance Policy. The Company shall thereafter take all necessary or desirable action to cause the Insurer to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of the Insurance Policy.
| 10. | No Restrictions. For the avoidance of doubt, it is hereby clarified that nothing contained in this Agreement or in the above resolutions derogate from the Company’s right to indemnify the Indemnitee post factum for any amounts which the Indemnitee may be obligated to pay as set forth in Section 1 above without the limitations set forth in Sections 2 and 3 above. |
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| 11. | Non-Exclusivity. The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the incorporation documents of the Company, any agreement, a vote of stockholders, a resolution of directors or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his role as Officer Holder of the Company prior to such amendment, alteration or repeal. To the extent that change in the law, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the incorporation documents of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or nor ow hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy. |
| 12. | Severability. Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof. In any event, the undertakings of the Company and the categories of claims in Section 3, shall be construed as widely as permitted by law. |
| 13. | Duration of Agreement. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer or director of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and shall continue thereafter so long as Indemnitee shall be subject to any Claim (or any proceeding commenced under Section 7A hereof) by reason of his being an Office Holder of the Company, whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement and with the expiration of any applicable statute of limitations with respect thereto. |
| 14. | Attorneys’ Fees. In the event of any litigation or other action or proceeding to enforce or interpret this Agreement, the prevailing party as determined by the court shall be entitled to an award of its reasonable attorneys’ fees and other costs, in addition to such relief as may be awarded by a court or other tribunal. |
| 15. | Notice. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand or by fax or other means of electronic communication and receipted for by the party addressee, on the date of such receipt, or (ii) if mailed by certified or registered mail with postage prepaid, on the third business day after the date postmarked. |
| 16. | Governing Law; Binding Effect; Amendment. This Agreement shall be governed by and construed under the laws of the State of Israel. The parties agree to submit themselves to the exclusive jurisdiction of the courts in Tel-Aviv or Jerusalem. This Agreement shall be binding upon Indemnitee and the Company, their successors and assigns, and shall inure to the benefit of Indemnitee, his heirs, personal representatives and assigns and to the benefit of the Company, its successors and assigns. No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto. |
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
| I.I.S Intelligent Information Systems Ltd. | Indemnitee |
| By: _______________________ | Name __________ |
| Name: _____________________ | |
| Title: ______________________ |
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