EXHIBIT 3.2
BLUEPHOENIX SOLUTIONS LTD.
LETTER OF INDEMNIFICATION
_________, 2005
Dear _____________
This Letter of Indemnification (this "LETTER") is written to you in recognition
that it is in the best interest of BluePhoenix Solutions Ltd. (the "COMPANY") to
retain and attract as directors and/or officers the most capable persons
available.
You are or have been appointed a director and/or officer of 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.
In consideration of your continuing service to the Company, the Company hereby
agrees as follows:
1. The Company hereby undertakes to indemnify you to the maximum extent
permitted by applicable law in respect of the following in respect of
any act or omission ("ACTION") taken or made by you in your capacity
as a director, officer and/or employee of the Company:
(1) any financial obligation imposed on, or incurred by you in favor
of another person by a court judgment, including a settlement or
an arbitrator's award approved by court,
(2) all reasonable litigation expenses, including attorney's fees,
expended by you as a result of an investigation or proceeding
instituted against you by a competent authority, provided that
such investigation or proceeding concluded without the filing of
an indictment against you and either (a) concluded without the
imposition of any financial liability in lieu of criminal
proceedings or (b) concluded with the imposition of a financial
liability in lieu of criminal proceeding but relates to a
criminal offense that does not require proof of MENS REA
(criminal intent); and
(3) all reasonable litigation expenses, including attorney's 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, officer and/or employee of the Company.
The above indemnification will also apply to any action taken by you in your
capacity as a director, officer and/or employee of any other company controlled,
directly or indirectly, by the Company (a "SUBSIDIARY"), or in your capacity as
a director, or observer at board of directors' meetings of a company not
controlled by the Company but where your appointment as a director or observer
results from the Company's holdings in such company ("AFFILIATE").
2. The Company will not indemnify you for any amount you may be obligated
to pay in respect of:
(4) a breach of your duty of loyalty, except, to the extent permitted
by law, for a breach of your duty of loyalty to the Company, a
Subsidiary or an Affiliate while acting in good faith and having
reasonable cause to assume that such act would not prejudice the
interests of the Company, Subsidiary or Affiliate, as applicable;
(5) a willful breach of your duty of care or reckless disregard for
the circumstances or to the consequences of a breach of your duty
of care, except if such breach of your duty of care is solely due
to negligence;
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(6) an action taken or not taken with the intent of unlawfully
realizing personal gain;
(7) a fine or penalty imposed upon you for an offense; and
(8) a counterclaim made by the Company or in its name in connection
with a claim against the Company filed by you.
3. The Company will make available all amounts needed in accordance with
Section 1 above on the date on which such amounts become payable by
you ("TIME OF INDEBTEDNESS") with respect to items referred to in
Section 1 above, even prior to a court 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. You further agree to repay advances 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, officer or employee of the
Company or of a Subsidiary or a director or board observer of an
Affiliate, as applicable, provided, that the obligations are in
respect of actions taken by you while you were a director, officer,
employee and/or board observer, as aforesaid, and in such capacity,
including if taken prior to the above resolutions.
5. Actions to be indemnified hereunder pursuant to paragraph 1shall
include your actions in the following matters or in connection
therewith, which the Company's Board of Directors has resolved are
foreseeable in light of the actual activities of the Company:
(9) The offering of securities by the Company and/or by a shareholder
to the public and/or to private investors or the offer by the
Company 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;
(10) Occurrences resulting from the Company's status as a public
company, and/or from the fact that the Company's securities were
offered to the public and/or are traded on a stock exchange,
whether in Israel or abroad;
(11) 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 you 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;
(12) The sale, purchase and holding of negotiable or non negotiable
securities or other investments for or in the name of the
Company, a Subsidiary and/or an Affiliate;
(13) Actions in connection with the merger of the Company, a
Subsidiary and/or an Affiliate with or into another entity;
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(14) Actions in connection with the sale of the operations and/or
business, or part thereof, of the Company, a Subsidiary and/or an
Affiliate;
(15) Actions taken in connection with the sale, purchase and/or
holding of securities (whether negotiable or not) and any other
assets on behalf of or in the name of the Company;
(16) A change of structure of the Company or the reorganization of the
Company or any decision pertaining to these issues, including,
but not limited to, split, merger, a change in the Company's
capital, the establishment of subsidiaries and their liquidation
or sale, an allotment or Distribution (as defined in the
Companies Law);
(17) An announcement, a statement, including position taken, or an
opinion made in good faith by an officer, in the course of his
duties and in conjunction with his duties, including during a
meeting of the Board of Directors of the Company or any committee
thereof;
(18) 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 providers, including
stock options granted or promised (or allegedly promised) thereto
or exchanges of such options with other securities;
(19) Actions in connection with the testing of products developed by
the Company, Subsidiaries and/or Affiliates or in connection with
the distribution, sale license or use of such products or other
services provided by the Company, Subsidiaries and/or Affiliates;
(20) 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
property;
(21) Actions taken pursuant to or in accordance with the policies and
procedures of the Company, Subsidiaries and/or Affiliates,
including but not limited to implementation relating to the
Sarbanes Oxley Act, whether or not such policies and procedures
are published;
(22) Actions taken in connection with the financial reporting of the
Company or any of its Subsidiaries or Affiliates, and in
providing guidance to the public regarding future performance
thereof;
(23) Violations of laws requiring the Company to obtain regulatory and
governmental licenses, permits and authorizations in any
jurisdiction, including but not limited to antitrust
authorizations and/or exemptions;
(24) Actions relating to the operations and management of the Company
and/or any of its Subsidiaries and/or Affiliates;
(25) Actions relating to agreements and transactions of the Company
and/or any of its Subsidiaries and/or Affiliates with others,
including, for example: customers, suppliers, contractors, etc;
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(26) Actions concerning the approval of transactions of the Company
and/or Subsidiaries and/or Affiliates with officers and/or
directors and/or holders of controlling interests in the Company
and/or Subsidiaries and/or Affiliates and/or the approval of
corporate actions, including the approval of acts of the
Company's and/or its Subsidiaries and/or Affiliates management,
their guidance and their supervision; and
(27) Occurrences in connection with the lenders or other creditors or
for money borrowed by, or other indebtedness of, the Company,
including monetary liabilities to third parties relating to the
return of loans.
6. The total amount of indemnification that the Company undertakes under
Section 1 above, 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 an amount equal to twenty-five
percent (25%) of the Company's total shareholders equity at the time
of any claim for indemnification hereunder.
7. Notwithstanding anything contained herein to the contrary, 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
(100%) that you will be obligated to pay, in those circumstances for
which indemnification is permitted under the law.
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:
(28) 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, and that you deliver to the Company, or to its designee,
without delay all documents you receive in connection with these
proceedings.
(29) 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.
(30) 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 and/or the attorney as aforesaid
shall be entitled to conclude such proceedings conducted by it,
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.
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Notwithstanding the foregoing, in the case of a reasonable likely
conflict of interest between you and the Company, Affiliates or
Subsidiaries, you will be entitled to appoint an attorney of your
own to represent you in such proceedings. The Company shall
indemnify you for all reasonable expenses you incur in connection
with engaging such attorney.
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. Furthermore, in a civil
proceeding (whether before a court or as a part of a compromise
arrangement), the Company and/or its attorneys will not have the
right to admit to any occurrences that are not indemnifiable
pursuant to this Letter and/or pursuant to law, 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 Action.
(31) You agree to 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.
(32) If, in accordance with Section 10.3, the Company has taken upon
itself the conduct of your defense, the Company will have no
liability or obligation pursuant to this Letter or the above
resolutions to indemnify you for any legal expenses, including
any legal fees, that you may expend in connection with your
defense, except to which the Company in its absolute discretion
shall agree.
(33) The Company will have no liability or obligation pursuant to this
Letter or the above resolutions 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.
(34) If required by law, the Company's authorized governing organs
will consider the request for indemnification and the amount
thereof and will determine if you are entitled to indemnification
and the amount thereof.
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 paragraph 2 above.
12. If, for the validation of any of the undertakings in this Letter, 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 Letter or in the above resolutions derogate 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. The Company may, in
its discretion, following receipt of necessary corporate approvals,
and subject to applicable law, indemnify you retroactively for actions
committed prior to the date of this Letter.
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14. If any undertaking included in this Letter 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 undertakings 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 Letter and the agreements contained herein shall be governed by
and construed and enforced in accordance with the laws of the State of
Israel.
This Letter is being issued to you pursuant to the resolutions adopted by the
Company's Audit Committee on ____________, 2005, Board of Directors on
______________, 2005, and the shareholders of the Company on ______________,
2005. Kindly sign in the space provided below to acknowledge your agreement to
the contents hereof, and return this Letter to the Company.
Very truly yours,
BluePhoenix Solutions Ltd.
Agreed:
_____________________________________
Name: _______________________________
Title: ________________________________
Date: ________________________________
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