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Exhibit 10.22
FORM OF INDEMNIFICATION AGREEMENT
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THIS INDEMNIFICATION AGREEMENT is entered into as of this _____ day of _______,
2000 (the "Effective Date"), by and between Verisity Ltd., a company organized
under the laws of the State of Israel (the "Company"), and ______________
("Indemnitee").
RECITALS
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A. The Company is aware that because of the increased exposure to litigation
costs, talented and experienced persons are increasingly reluctant to
serve or continue serving as directors and officers of corporations unless
they are protected by indemnification and are exempted from certain
liabilities.
B. The statutes and judicial decisions regarding the duties of directors and
officers are often difficult to apply, ambiguous, or conflicting, and
therefore fail to provide such directors and officers with adequate
guidance regarding the proper course of action.
C. The Company believes that it is fair and proper to protect the Company's
directors and its officers from the risk and judgments, settlements and
other expenses which may occur as a result of their service to the
Company.
D. The Board of Directors of the Company after receiving the approval of the
Audit Committee (the "Board") has concluded that, to retain and attract
talented and experienced individuals to serve as officers and directors of
the Company and to encourage such individuals to take the business risks
necessary for the success of the Company, the Company should, to the
fullest extent permitted by any Applicable Law, contractually indemnify
its officers and directors with regard to certain events and up to
specified amounts, in connection with claims against such officers and
directors in connection with their services to the Company and exempt each
of them from certain liabilities towards the Company, and have further
concluded and approved that the failure to provide such contractual
indemnification and exemption from liability could be detrimental to the
Company and its shareholders.
E. The Board has further determined that the undertaking to indemnify
Indemnitee is limited to categories of events which, in the opinion of the
Board, can be foreseen in advance when this Agreement is executed by the
parties, and to amounts set by the Board as reasonable under the
circumstances, as specified within Exhibit A to this Agreement.
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NOW, THEREFORE, the parties, intending to be legally bound, hereby agree as
follows:
1. Definitions
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1.1 Agent. "Agent" means, subject to the provisions of any Applicable Law,
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any person who: is or was a director, officer or employee of the
Company including, without limitation, each of the persons defined as
"Nose Misra" in the Israeli Companies Law, 5759 - 1999 (the "Companies
Law"); is or was serving at the request of, for the convenience of, or
to represent the interests of, the Company as a director, officer,
employee or a Nose Misra of another entity or enterprise; or was a
director, officer, employee or a Nose Misra of a predecessor
corporation of the Company, or was a director, officer, employee or a
Nose Misra of another enterprise at the request of, for the
convenience of, or to represent the interests of such predecessor
corporation.
1.2 Proceeding. "Proceeding" means any threatened, pending, or completed
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claim, suit or action, whether civil, criminal, administrative,
investigative or otherwise, including claim, suit or action initiated
by the Company or anyone else in its name or on its behalf.
1.3 Applicable Law. "Applicable Law" means any Israeli and/or foreign law,
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regulation, statute, rule, enactment, order, decree, etc. which is
applicable to and/or governing the implementation of this Agreement,
including but not limited to the Companies Law.
2. Indemnification
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2.1 To the fullest extent permitted by any Applicable Law, the Company
shall defend, indemnify and hold harmless Indemnitee, if Indemnitee
was, or is, a party, or is threatened to be made a party, to any
Proceeding by reason of any act or omission of Indemnitee in
Indemnitee's capacity as an Agent of the Company and in connection
with any of the Indemnifiable Events set forth in Exhibit "A" to this
Agreement, and up to the relevant Limitation Amount specified opposite
each such Indemnifiable Event in Exhibit "A". For the removal of
doubt, the above shall apply to such acts and omissions, regardless of
whether they were performed prior or after the Effective Date of this
Agreement.
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Any indemnification under this Agreement shall apply only with respect
to (i) a financial obligation imposed on Indemnitee in favor of any
third party, including the Company or anyone acting in its name or on
its behalf, by a court judgment, including a settlement or other
compromise judgment or an arbitrator's award approved by a court, and
(ii) reasonable litigation expenses, including attorneys' fees,
incurred 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 within 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.
2.2 For the removal of doubt, the indemnification contained herein shall
not apply with respect to any liability arising out of (i)
Indemnitee's breach of the duty of loyalty to the Company, unless
Indemnitee has acted, or omitted to act in good faith and had
reasonable reason to believe such action will 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 intent
to unlawfully gain personal profit therefrom and (iv) any fine or
penalty payment.
The above indemnification is also subject to Indemnitee's acting in
good faith and in a manner Indemnitee reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to
any criminal action or Proceeding, either had no reasonable cause to
believe Indemnitee's conduct was unlawful or was convicted of an
offense that does not require proof of criminal intent.
2.3 To the extent permissible by any Applicable Law, in the event
Indemnitee was or is a party or is threatened to be made a party to
any Proceeding as per Section 2.1 above, and prior to, during the
pendency of, or after completion of, such Proceeding, Indemnitee dies,
then the Company shall defend, indemnify and hold harmless the estate,
heirs and legatees of Indemnitee pursuant to this Agreement.
2.4 The expenses and liabilities covered hereby shall be net of any
payments to Indemnitee by directors' and officers' liability insurance
("D&O Insurance") carriers or others.
3. Partial Indemnification
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If Indemnitee is found under Section 2.2, 7 or 9 hereof not to be entitled
to indemnification for all of the amounts relating to a Proceeding, the
Company shall indemnify Indemnitee for any portion of such amounts not
specifically precluded by the operation of such Section 2.2, 7 or 9.
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4. Additional Indemnification Rights
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In the event of any subsequent change of any Applicable Law which broadens
the right of an Israeli corporation to indemnify an Agent, the parties
hereto hereby agree that Indemnitee shall enjoy by virtue of this Agreement
the additional privileges afforded by such subsequent change. In the event
of any such subsequent change in any Applicable Law which narrows the right
of an Israeli corporation to indemnify an Agent, the parties hereto hereby
agree that such change, to the extent permitted under such law, statute or
rule, shall have no effect on this Agreement or the parties' rights and
obligations hereunder, all subject to the terms of this Agreement and any
Applicable Law.
5. Exemption
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To the fullest extent permitted by any Applicable Law and subject to any
limitation contained in such law, the Company hereby exempts and releases
Indemnitee from any and all liability towards the Company related to damage
resulting from a breach by Indemnitee of his or her duty of care towards
the Company.
For the removal of doubt, the above release from liability shall not apply
with respect to any liability arising out of (i) intentional or reckless
breach by Indemnitee of his or her duty of care to the Company, (ii) an
action taken with the intent to unduly gain personal profit therefrom and
(iii) any fine or penalty payment.
6. Indemnification Procedures; Advance of Expenses
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6.1 Promptly after receipt by Indemnitee of notice of the commencement or
threat of any Proceeding covered hereby, Indemnitee shall notify the
Company of the commencement or threat thereof, provided that any
failure to so notify shall not relieve the Company of any of its
obligations hereunder, unless the Company has been prejudiced thereby.
6.2 Indemnitee will further reasonably cooperate with the Company as may
be required in order to handle the Proceeding (including by providing
the Company with documents and any other materials in Indemnitee's
possession or under Indemnitee's control, and which relates to the
Proceeding).
6.3 If, at the time of the receipt of a notice pursuant to Section 6.1
above, the Company has D&O Insurance in effect that might cover such
Proceeding or claim, the Company shall give prompt notice of the
Proceeding or claim to its insurers in accordance with the procedures
set forth in the applicable policies. The Company shall thereafter
take action to cause such insurers to pay all amounts payable as a
result of such Proceeding in accordance with the terms of such
policies.
6.4 The Company shall be entitled to assume the defense of such Proceeding
with counsel approved by Indemnitee, such approval not to be
unreasonably withheld, upon the delivery to Indemnitee of written
notice of its election to do so. After
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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 such Proceeding. The Company shall have the right to
conduct such defense as it deems fit in its sole discretion, including
the right to settle any claim against Indemnitee without the consent
of Indemnitee, provided however any such settlement includes (i) a
complete release and discharge of Indemnitee, and (ii) does not
contain any admittance of wrong doing by Indemnitee, and (iii) is
monetary only.
6.5 In the event that the Company does not assume the defense of a
Proceeding as per the above, Indemnitee shall be entitled to select,
in Indemnitee's sole discretion, and retain one or more counsel from
time to time to act as Indemnitee's counsel in and for the
investigation, defense, settlement or appeal of each Proceeding.
To the extent permitted by any Applicable Law, the Company shall bear
all reasonable fees and expenses (including invoices for advance
retainers) of such counsel, and all reasonable fees and expenses
invoiced by other persons or entities, in connection with the
investigation, defense, settlement or appeal of each such Proceeding.
Such fees and expenses are referred to herein as "Covered Expenses".
Any such advance shall be subject to the determination of Right to
Indemnification under Section 7 hereof. If required by any Applicable
Law, as a condition to such advances, Indemnitee shall, at the request
of the Company, agree to repay such amounts advanced if it is
ultimately determined that Indemnitee is not entitled to be
indemnified by the Company by the terms hereof or under Applicable
Law.
7. Determination of Right to Indemnification
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7.1 Upon the conclusion of any Proceeding, the Company shall, in
accordance with the requirement of any Applicable Law, determine
whether Indemnitee is entitled to Indemnification under this Agreement
and any Applicable Law.
7.2 Any amount Indemnitee is entitled to receive hereunder shall be paid
to Indemnitee within 10 days from the date of the determination
specified in Section 7.1 above. In such event, Indemnitee shall not be
required to repay to the Company any Covered Expenses. In any other
event and in the event the Company has determined that Indemnitee is
not entitled to indemnification, the Covered Expenses shall be
immediately repaid by him to the Company.
8. Company's Right to Recover
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In the event of payment of Covered Expenses by the Company under this
Agreement, the Company shall have the right of subrogation with respect to
Indemnitee's rights of recovery to the extent such rights exists.
Indemnitee shall execute any and all documents required and shall do all
acts that may be reasonably necessary to secure such rights and to enable
the Company effectively to enforce such rights.
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9. Exceptions
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Notwithstanding any other provision hereunder to the contrary, the Company
shall not be obligated pursuant to the terms of this Agreement:
9.1 To indemnify or advance Covered Expenses to Indemnitee with respect to
Proceedings or claims initiated or brought voluntarily by Indemnitee
and not by way of defense (other than Proceedings brought to establish
or enforce a right to indemnification under this Agreement or the
provisions of the Company's Articles of Association).
9.2 To indemnify Indemnitee under this Agreement for any amounts paid in
settlement of any Proceeding covered hereby without the prior written
consent of the Company to such settlement.
10. Non-exclusivity
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This Agreement is not the exclusive arrangement between the Company and
Indemnitee regarding the subject matter hereof and shall not diminish or
affect any other rights which Indemnitee may have under any provision of
law, the Company's Articles of Association, other agreements, or otherwise.
Furthermore, it is hereby specifically clarified that this Agreement shall
not limit the Company from indemnifying Indemnitee post factum without
giving effect to the occurrences and/or amounts specified in Exhibit "A" to
this Agreement, if and to the extent that the Company resolves to do so in
its sole and absolute discretion, subject always to the provisions of any
Applicable Law, including but not limited the approvals required under the
Companies Law.
11. Condition Precedent; Continuation After Term
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This Agreement is subject to the receipt of all required approvals under
the Companies Law, and it shall only become effective upon such approvals
being actually obtained. Indemnitee's rights hereunder with respect to any
Proceeding under Section 2.1 above shall continue after Indemnitee has
ceased acting as an Agent of the Company and the benefits hereof shall
inure to the benefit of the heirs, executors and administrators of
Indemnitee.
12. Interpretation of Agreement
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This Agreement shall be interpreted and enforced so as to provide
indemnification to Indemnitee to the fullest extent now or hereafter
permitted by any Applicable Law.
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13. Severability
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If any provision or provisions of this Agreement shall be held by a court
or tribunal of competent jurisdiction to be invalid, illegal or
unenforceable, the other provisions of this Agreement shall not in any way
be affected or impaired thereby, and, to the fullest extent possible under
any Applicable Law, the invalid, illegal or unenforceable provisions shall
be construed or altered by the court or tribunal so as to remain
enforceable and to provide Indemnitee with as many of the benefits
contemplated hereby as permitted under any Applicable Law.
14. Counterparts, Modifications and Waiver
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This Agreement may be signed in counterparts. This Agreement constitutes a
separate Agreement between the Company and Indemnitee and may be
supplemented or amended as to Indemnitee only by a written instrument
signed by the Company and Indemnitee, with such amendment binding only the
Company and Indemnitee. All waivers must be in a written document signed by
the party to be charged. No waiver of any of the provisions of this
Agreement shall be imposed by the conduct of the parties. A waiver of any
right hereunder shall not constitute a waiver of any other right hereunder.
15. Notices
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All notices, demands, consents, requests, approvals and other
communications required or permitted hereunder shall be in writing and
shall be deemed to have been properly given if hand delivered (effective
upon receipt or when refused), or if sent by a courier freight prepaid
(effective upon receipt or when refused), in the case of the Company, at
the address listed below, and in the case of Indemnitee, at Indemnitee's
address of record at the office of the Company, or to such other addresses
as the parties may notify each other in writing.
To the Company: Verisity Ltd.
2041 Landings Drive, Buliding N
Mountain View, California 94043
Attention: General Counsel
16. Evidence of Coverage
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Upon request by Indemnitee, the Company shall provide evidence of any
liability insurance coverage maintained by the Company. The Company shall
promptly notify Indemnitee of any change in the Company's D&O Insurance
coverage, if any.
17. Governing Law
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It is hereby agreed that the internal laws of the State of Israel
(irrespective of its choice of law principles) shall govern this Agreement
including the validity thereof, the construction of its terms and the
interpretation of the rights and duties of the parties hereunder.
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18. No Construction as Employment Agreement
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This Agreement shall not be construed as giving Indemnitee any right to be
retained in the employ or otherwise in the service of the Company.
IN WITNESS WHEREOF, the parties hereto have entered into this Indemnification
Agreement effective as of the date first above written.
VERISITY LTD.
By: __________________________________
INDEMNITEE:
______________________________________
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INDEMNIFICATION AGREEMENT
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Exhibit A
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Indemnifiable Event Limitation Amount
(In Million US$)
. Any claim, demand, suit or action (all of which shall 10
be referred to hereafter as "Claim") in connection with
the holding, offering, sale or disposition of
securities of or by the Company and/or its subsidiaries
and/or affiliates (all of which shall be referred to
hereafter as "the Company") and/or by a shareholder of
the Company to the public and/or to private investors
pursuant to a prospectus, memorandum, agreement or
otherwise.
. Any Claim made in connection with any applicable 10
securities law, including but not limited to Claim
relating to the failure to timely and/or properly
disclose any information required to be disclosed
pursuant to any Applicable Law, or relating to
inadequate or improper disclosure of information to the
Company's shareholders, potential or prospective
shareholders or any relevant authority.
. Any Claim arising out of investments of or by the 10
Company in other entities, negotiation and/or entering
into the transaction, the execution and observance
thereof and actions in connection with the purchase,
sale or merge of companies, legal entities or assets,
and the division or consolidation thereof.
. Any Claim made by employees, officers, directors, 10
consultants, agents, suppliers, contractors,
distributors, representatives or any other third party
providing services to the Company or employed by it, in
connection with their employment and/or contractual
relations with the Company, or the termination of such
relations.
. Any Claim made by licensees, customers, end-users, 10
suppliers, contractors, distributors, representatives
or other third party in connection with any business
transacted by or with the Company, whether or not in
the ordinary course of its business, including but
without limitation Claim relating to the negotiations
towards such transactions or the implementation thereof
or representations or warranties provided in connection
thereto or otherwise.
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Indemnifiable Event Limitation Amount
(In Million US$)
. Any Claim made by any third party, including licensees, 10
customers, and end-users of the Company's products,
relating to personal injury, damage to property or
damage to business (including but without limitation
loss of revenue, loss of savings and loss of
clientele), resulting from or connected with any act or
omission of the Company, its employees, officers,
directors, agents, representatives, or other persons
acting on its behalf, or in connection with the use of
products sold or licensed by the Company and the
distribution, sale or use of the Company's products.
. Any Claim made for actual, alleged or otherwise 10
infringement, misappropriation or misuse by the Company
of any third party's rights with respect to any
proprietary rights or intellectual property and any
actions taken in connection with the registration of
any form of protection with respect to any proprietary
rights or intellectual property rights of the Company.
. Any Claim made by any lenders and/or creditors for 10
moneys borrowed by, credits granted to, or other
indebtedness of the Company.
. Any Claim arising out of administrative, regulatory or 10
judicial actions (including but without limitation
orders, decrees, directives, liens, investigations,
proceedings and the like) or the violation, alleged or
actual, of any such administrative, regulatory or
judicial actions or any Applicable Law relating to the
Company or to any of its businesses or operations.
. Any Claim made, directly or indirectly, in connection 10
with any failure by the Company or its employees,
officers or directors, to effect payments, cause
reports to be filed or obtained, keep applicable
records or otherwise, regarding any compulsory payments
of any form, origin or nature whatsoever, and under any
Applicable Law, including any interest, penalty or
addition thereto.
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