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EXHIBIT 10.41
To:
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LETTER OF INDEMNITY
1. GENERAL
1.1 We hereby inform you that in accordance with the decision of the
Audit Committee and the Board of Directors of Ituran Location and
Control Ltd ("THE COMPANY") dated August 24, 2005, and pursuant
to the decision of the Company's General Meeting dated September
15, 2005 (Hereinafter: "THE DETERMINING DATE"), the Company
undertook the obligation to indemnify the Company's
functionaries, including functionaries who are controlling
shareholders in the Company (Hereinafter: "FUNCTIONARIES") from
liability or expenditure as detailed in this letter of indemnity
it was decided that the Company shall grant (Hereinafter: "THIS
LETTER") as follows, and to pledge to the functionaries that the
Company shall indemnify each of them of any liability or expense,
as detailed in this letter below, which may be imposed upon him
due to any action he has done ex officio, by virtue of his being
a functionary in the Company.
1.2 The terms which have not been defined in this Letter shall be
interpreted as in the Companies Law, 5759 - 1999 (hereinafter:
"COMPANIES LAW"), save if the context of the matter shall require
otherwise.
2. COMMITMENT TO INDEMNIFY
Subject to the provisions hereof and the provisions of any law, the
Company hereby commits itself toward you to indemnify you of any
liability and/or expense as detailed in paragraph 5.1 below, which may be
imposed on you due to any action you have carried out and/or may carry
out in the Company and/or in a subsidiary and/or in an affiliated company
(as defined in the Securities Law 5728-1968) and/or in a related company
(hereinafter in this Letter, subsidiary and/or affiliated company and/or
related company: "RELATED COMPANY"), including actions carried out by you
before the date of signing this Letter, by virtue of your being a
functionary in the Company, and on condition that said actions were
directly and/or indirectly related to one (or more) of the types of
events specified in paragraph 5 below.
3. THE LIABILITY AND EXPENSES TO WHICH INDEMNITY SHALL APPLY
3.1 The indemnity pursuant hereto shall apply only due to liability
and/or expenses as follows:
3.1.1 Financial liability imposed on you in favor of another
person in accordance with a verdict, including a verdict
given in conciliation or an arbitration award authorized by
a Court of Law;
3.1.2 Reasonable litigation expenses, including attorney's fees,
which you have expended or for which you have been charged
due to an interrogation or a proceeding that has been
conducted against you by an authority competent to wage an
interrogation or a proceeding, and which has ended without
the filing of an indictment against you and without a
financial liability having been imposed on you as an
alternative to a criminal proceeding or that ended without
the filing of an indictment against you but with the
imposition of a financial liability as an alternative to a
criminal proceeding in an offense which does not require the
substantiation of criminal intent.
For the purpose of this paragraph - the ending of a
proceeding without the filing of an indictment in a matter
in which a criminal investigation has been opened -
signifies the closing of the case
pursuant to section 62 of the Criminal Procedure Law
[Consolidated Version], 5742-1982 ("the CRIMINAL PROCEDURE
LAW"), or a delay of proceedings by the Legal Advisor to the
Government pursuant to section 231 of the Criminal Procedure
Law.
"FINANCIAL ALTERNATIVE AS AN ALTERNATIVE TO CRIMINAL
PROCEEDING" - Financial liability imposed in accordance with
law as an alternative to a criminal proceeding, including an
administrative penalty according to the Administrative
Offenses Law 5746-1985, fine for an offense that has been
determined as a fineable offense in accordance with the
provisions of the Criminal Procedure Law, Financial Sanction
or Indemnity.
Reasonable litigation expenses, including attorney's fees,
which you have expended or been charged with by a court of
law, in a proceeding filed by the Company or on the
Company's behalf or by another person, or in a criminal
indictment from which you have been acquitted or in a
criminal indictment in which you have been convicted of an
offense which does not require the substantiation of
criminal intent.
3.2 It is hereby clarified that the indemnity pursuant to this Letter
shall not apply in the following cases:
3.2.1 Breach of fiduciary duty, save in the matter of indemnity
and insurance due to breach of fiduciary duty in cases in
which you have acted in good faith and for which you had a
reasonable basis to assume that the act would not compromise
the Company's interest;
3.2.2 Breach of the duty of care made intentionally or
impulsively, save if made in negligence only;
3.2.3 Acting with the intent of gaining unlawful personal profit;
3.2.4 A fine or redemption imposed upon you.
3.3 In cases in which you shall receive compensation from the
insurance company of the Company's insurance policy for the
Company's functionaries (hereinafter: "THE INSURER"), on account
of the matter subject
of the indemnity, the indemnity given by the Company in the amount
of the difference between the amount of financial liability
imposed on the functionary and/or the litigation expenses which
the functionary has expended or been charged with, as stated in
paragraph 3.1 above, and the amount received from the insurer on
account of that same matter, and on condition that the indemnity
amount for which the Company shall be charged as aforesaid shall
not be greater than the maximum indemnity amount (as defined
below).
4. MAXIMUM INDEMNITY AMOUNT
4.1 The indemnity amount that the Company shall pay (including amounts
which shall be received by the functionaries from insurance
companies, if such shall be received, in the frame of insurances
which the company has acquired, if it has acquired such) for all
the functionaries, cumulatively, pursuant to letters of indemnity
for functionaries shall not exceed a total amount equal to the
rate of 25% of the Company's equity (consolidated) in accordance
with the Company's last financial reports published before the
granting of the indemnity payment in practice (hereinafter: "the
MAXIMUM INDEMNITY AMOUNT"). The maximum indemnity amount has been
determined by the Company's Board of Directors as reasonable under
the circumstances.
4.2 Should and as far as the total of all the indemnity amounts that
the Company shall be required to pay shall exceed the maximum
indemnity amount or the balance of the maximum indemnity amount
(as it shall be at that time), the maximum indemnity amount or the
balance thereof, as applicable, shall be divided between the
functionaries who shall be entitled to indemnity, in a manner that
the indemnity amount which shall be received by each of the
functionaries, in practice, shall be calculated pursuant to the
ratio between the indemnity amount which shall be forthcoming to
each of the functionaries on account of the liabilities and/or the
expenses which each shall be obliged to bear as a result of the
legal proceeding and the indemnity amount which shall be
forthcoming to all
the said functionaries on account of liabilities and/or expenses
which they shall be obliged to bear as a result of the legal
proceeding, cumulatively on account of that same event.
5. THE EVENTS TO WHICH THE INDEMNITY SHALL APPLY
The indemnity in accordance with this letter of indemnity shall apply to
a liability and/or an expense as aforesaid, which stem from one (or more)
of the events detailed below, which have been determined by the Board of
Directors as anticipated in view of the Company's actual activities at
the time of providing the commitment:
5.1 A proposal and/or issue of the Company's equities and/or those of
a related company in Israel and/or abroad to the public and/or to
individuals, pursuant to a forecast and/or a private placement,
including the details which shall be included in the aforesaid
executable instruments;
5.2 Actions and/or reports stemming from the Company's and/or a
related company's being and/or should the Company and/or a related
company be in future a public company the shares of which shall be
issued to the public and shall be traded in the Israeli Stock
Exchange or in a stock exchange abroad;
5.3 Actions and/or decisions related to the making of investments in
the company and/or in subsidiaries and/or in related companies
and/or for the acquisition of properties, including the
acquisition of companies and/or businesses and/or investments in
companies and/or investment of funds in traded equities and/or in
any other form, and/or the sale of assets and/or sale of holdings
in related companies;
5.4 Events related to the terms of employment of employees and
employer-employee relations, including and without derogating from
the promotion of employees, handling of pension arrangements,
insurance funds, options and other benefits to the Company's
employees and/or those of a related company;
5.5 Decisions and/or actions related to the Company's engagements
and/or those of a related company with others, and/or between
themselves in the frame of the Company's ongoing business
(including with clients, suppliers, contractors);
5.6 Actions and/or decisions designated in this paragraph 5, connected
with related companies, including decisions and/or actions as
functionaries in the Company and/or in related companies;
5.7 Actions and/or decisions connected with the distribution of
dividends in the Company and/or in a related company and/or the
acquisition of the Company's shares;
5.8 An action and/or a decision connected with the provision of a
statement of opinion in a proposal for acquisition or any other
action connected with and/or related to a proposal for acquisition
in the company and/or a related company;
5.9 An action and/or a decision connected with a change in the
Company's structure and or that of a related company or the
reorganization or any decision with respect thereof, including,
but without derogating from the generality of the aforesaid, the
merger, splitting, change in the Company's capital, the
dissolution of companies or their sale, allocation or division;
5.10 Any legal proceeding in Israel or abroad, in matters that are
connected, either directly or indirectly, to trade restrictions
and including binding arrangements, mergers and monopolies in the
Company and/or in a related company;
5.11 Any action which has brought about a default in carrying out
proper insurance arrangements by the Company;
5.12 An action and/or a decision connected with the approval of
transactions with functionaries and/or with a controlling
shareholder in the Company and/or in a related company;
5.13 Any action which has caused damage including damage to property
including the loss of its use and which is connected to the
actions designated in this paragraph and/or to the Company's
products, or those of
its subsidiaries and/or related companies or to other activities
in the frame of the Company's ongoing business or that of related
companies.
6. DEALING WITH THE SUIT
In any case in which you will be entitled to compensation in accordance
with this statement, the following instructions will apply:
6.1 You will notify the company in writing of any legal procedure
taken against you and any chance and/or threat that a legal
procedure will be taken against you and circumstances brought to
your knowledge that may lead to a legal procedure against you
(hereinafter: "THE PROCEDURE"), this as soon as possible to the
time it becomes known to you, and you will transfer without
delay to the company, or to whoever the company decides, a copy
of any document regarding the procedure.
6.2 You will fully cooperate with the company and with anyone it
decides, including the insurer, and you will transfer any
information required regarding the procedure and you will follow
the rest of the instructions of the insurance policy of the
employees of the company (at the time) regarding the defense
from the procedure.
6.3 The company will be entitled to take upon itself your defense in
the procedure and to transfer the defense in the case to a
lawyer to be determined by the company, according to its
judgment, and while taking into consideration the company's
obligations according to the policy and the option to appoint a
lawyer on behalf of the insurer (hereinafter: "the company's
advocate").
6.4 Despite the mentioned in section 6.3 above, you will be entitled
to object to the representation by the company's advocate due to
reasonable reasons and/or under circumstances that in your
opinion and/or the opinion of the company's advocate there is a
conflict of interests between your defense and the defense of
the company.
6.5 If within 14 days from accepting the notice as mentioned in
section 6.1 above, the company and the insurer did not take your
defense upon themselves in the procedure, or if you or the
company's advocate object to the representation by the company
according to the mentioned above in section 6.4, you will be
entitled to appoint an advocate of your choice (hereinafter:
"the other advocate"), providing the sum of the professional
fees of the advocate will be approved by the inspection
committee that will examine the reasonableness. The professional
fee determined for the company's advocate will be considered a
reasonable basis in order to examine the fee of the other
advocate. You will be given the opportunity to appear and argue
before the committee and it will explain its decision. You will
de entitled to appeal to the directorate and you will be given
the opportunity to appear and argue before them. If the entire
sum of the fee is not approved by the company and you decide not
to concede the advocate, you will be entitled to receive the
amount approved, and to pay the rest on your known.
6.6 Despite the mentioned above in sections 6.4 and 6.5, if the
policy refers to the matter, the company will act according to
the instructions of the mentioned policy regarding disagreements
with the insurer regarding the identity of the advocate
representing according to the instructions of the policy when
the case is transferred to the other advocate under the
circumstances will enable the insurer to be released of its
obligation or to minimize it and the instructions of the policy
will override any agreement between you and the company, the
company will however make every reasonable effort to honor your
wish.
6.7 If the company decides to take upon itself the defense in the
procedure and you did not object under the circumstances
mentioned in section 6.4 above, you will sign, to the request of
the company, an authorization authorizing the company (as well
as its advocate), to deal with the defense in your name and to
represent you in any thing regarding the defense and the company
and its advocate will be entitled to deal with the mentioned
above exclusively (while reporting to you) and will be
entitled to end the procedure as they see right, this subject to
mentioned in section 6.15.
6.8 You will cooperate with the company and its advocate in any
reasonable way required by them regarding the procedure,
including signing requests, depositions and any other document.
6.9 If the company decided to take upon itself to deal with the
defense in the procedure and you did not object under the
circumstance mentioned in 6.4, the company will bear the
expenses up to the maximum compensation (subject to the
instructions of section 4.2), so that you will not have to pay
them yourself, and the company will not be liable for any legal
expenses including the lawyer's professional fees spent during
the procedure.
6.10 To your request, the company will pay an advance payment to you
that you need to cover the reasonable costs you will be due to
pay and/or are due to pay, including the lawyer fees, this
according to the estimate made by the company and at the time
decided by it, compensation to which you are entitled according
to this statement, providing the total sum will not be more than
the maximum compensation (subject to the instructions of section
4.2 above).
6.11 If the company should pay you any amount from the power of this
statement, as an advance or otherwise, and it then becomes clear
that you are to return it, all or part, due to the fact that you
were not entitled to compensation, for any reason, you will
return it to the company bearing linkage differences of the
consumer price index (as it is publicized from time to time by
the CBS) as well as interest determined by the Finance minister,
approved by the finance committee of the Knesset, according to
section 3 (i) of the Tax Law (new version), 1961.
6.12 If the company paid any amount of this statement, and then the
obligation due to which the payment was made was cancelled or
was reduced for any reason, you will write a check to return the
sum from the plaintiff in the procedure and you will do what
ever is necessary so that the check is valid and the company can
cash it, and once you do this you will not be obligated to
return the sum that was cancelled. If you do not do so- you will
have to return the sum to the company, or its part, according to
the matter, plus linkage differences and interest accordingly.
6.13 If the company's advocate represented you and the company in the
procedure, and it later became clear that you are not entitled
to compensation, for any reason, and a disagreement rises
regarding your obligation to return the trial expenses or the
amount to be returned, the disagreement will be transferred to
an arbitrator to be agreed upon according to section 6.14. The
company will bear the expense of the arbitrary, including lawyer
fees, unless the arbitrator decides that you used the arbitrary
not in good faith.
6.14 In signing this statement, you are obligated to do all you can,
within the framework of the law, to reduce the amount of
compensation you are entitled to as much as possible. You will
not agree to compromise and/or to arbitrary, unless the company
agreed in advance and in writing, and if it is necessary the
agreement of the insurer, that it was received. The company will
not agree to compromise unless the compromise does not expose
the company to other suits on part of the plaintiff and that the
agreement will not be considered admission and/or recognizing of
liability regarding the causes of the procedure. The company
will bring to the knowledge of the employees the details of the
agreement. In case there is disagreement between the company and
employees, regarding if the agreement answers to the
instructions of this section, it will be brought before an
arbitrator for a quick decision to be appointed by the company.
The arbitrator will be appointed within 7 days from the time one
side demanded arbitrary agreed upon the sides and if there is no
agreement, the identity of the arbitrator (that will be a former
district or high court judge) by the head of the lawyer's
chamber in Israel, unless the arbitrator decides that the
arbitrary was used not in good faith.
6.15 The company, as well as the company's advocate, will not agree
to compromise if the sum is more than the compensation you will
be entitled to, unless you agree in advance in writing and if
there is need for the agreement of the insurer- with the
advanced agreement of the insurer.
6.16 In case you appeal the decision of a court in the procedure, you
will have to receive the approval of the company in advance and
in writing. The company will be entitled to refuse a request as
mentioned due to relevant considerations regarding the incident.
7. THE VALIDITY OF THE OBLIGATION
7.1 The obligation for compensation will be valid according to this
statement regarding procedures against you during your work or
office as well as procedures afterwards, providing they refer to
actions you took from the time you were appointed to a position
in the company, while you were in the position or as a result.
The compensation obligation will stand for your inheritors
and/or replacements according to law.
7.2 The company will not be required to pay any sum paid to you for
yourself or in your place, in any way, in the framework of
insurance acquired by the company or in the framework of
insurance acquired by a company controlled by the company or a
connected company (if you have a position in them) or an
obligation to any compensation of a company controlled by the
company or anyone else.
7.3 This statement does not cancel or concede or reduce any other
compensation the position holder is entitled to from any other
source according to any law and/or obligation.
7.4 This statement does not prevent or limit the company from giving
you additional special compensations, providing it does not harm
the compensation obligation of this statement.
7.5 This statement does not prevent or limit the company from
increasing the maximum compensation due to the incidents
regarding the compensation, providing the decision is reached
according to law.
7.6 The company's obligations will be interpreted according to this
statement at length and in order to fulfill them, as permitted
by law. In case of a contradiction between any instruction in
this statement and any law that cannot be changed, added to or
conditioned, the mentioned law will override, but this will not
reduce the validity of the other instructions in this statement.
7.7 This statement is not a contract for a third party and cannot be
conceded.
7.8 This statement of compensation cancels any other statement of
compensation, compensation obligation and/or compensation
agreements granted to you as a bearer of a position in the
company.
7.9 It is hereby agreed that the court authorized to deal with
conflicts and/or disagreements regarding this statement, is the
Tel Aviv-Jaffa court alone. The laws of the state of Israel
alone will apply to this statement.
8. THE PAYMENT
8.1 To any payment paid to you, VAT will be added, when it applies.
8.2 Any payment the company has to pay according to this statement
will be paid within 30 days from the day it was requested.
Respectfully,
Ituran Location and Control Ltd.
Date:
CONFIRMATION:
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I hereby confirm that I received the above statement and agree to everything in
it and am obligated to act according to its conditions.
Name:
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Signature:
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Date:
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