EXHIBIT 10.1

FORM OF INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT is entered into as of this __ day of _____, 2006,
by and between Data Systems & Software Inc., a Delaware corporation (the
"Company"), and ___________________________________ ("Indemnitee").

RECITALS

A. The Company is aware that because of the increased exposure to litigation
costs, talented and experienced persons are increasingly reluctant to serve as
directors and officers of corporations unless they are protected by
comprehensive liability insurance and contractual indemnification provisions.

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 Board of Directors of the Company (the "Board") has concluded that, in
order to attract and retain talented and experienced individuals to serve as
officers and directors of the Company and/or its subsidiaries and to encourage
such individuals to the business judgements necessary for the management of the
Company and its subsidiaries, the Company should contractually indemnify its
officers and directors, and the officers and directors of its subsidiaries, in
connection with claims against such officers and directors in connection with
their services to the Company, and has further concluded that the failure to
provide such contractual indemnification could be detrimental to the Company and
its stockholders.

NOW, THEREFORE, the parties, intending to be legally bound, hereby agree as
follows:

1. Definitions.

(a) Agent. "Agent" with respect to the Company means any person who is or was a
director, officer, employee or other agent of the Company or a Subsidiary of the
Company; or is or was serving at the request of, for the convenience of, or to
represent the interests of, the Company or a Subsidiary of the Company as a
director, officer, employee or agent of another entity or enterprise; or was a
director, officer, employee or agent of a predecessor corporation (or other
predecessor entity or enterprise) of the Company or a Subsidiary of the Company,
or was a director, officer, employee or agent of another entity or enterprise at
the request of, for the convenience of, or to represent the interests of such
predecessor corporation.
 
 

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(b) Company.“Company” shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers, employees, agents or fiduciaries, so that if Indemnitee is or was an
Agent of such constituent corporation, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.

(c) Expenses. "Expenses" means all direct and indirect costs of any type or
nature whatsoever (including, without limitation, all attorneys' fees, costs of
investigation and related disbursements, judgments, fines, ERISA excise taxes or
penalties, and amounts paid in settlement) incurred by the Indemnitee in
connection with the investigation, settlement, defense or appeal of a claim or
Proceeding covered hereby or establishing or enforcing a right to
indemnification under this Agreement.

(d) Proceeding. "Proceeding" means any threatened, pending or completed claim,
counterclaim, suit or action, whether civil, criminal, administrative,
investigative or otherwise.

(e) Subsidiary. "Subsidiary" means any corporation or other entity of which more
than 10% of the outstanding voting securities or other voting interests are
owned directly or indirectly by the Company, and one or more other Subsidiaries,
taken as a whole.

2. Maintenance of Liability Insurance.

(a) The Company hereby covenants and agrees with Indemnitee that the Company
shall obtain and maintain in full force and effect directors' and officers'
liability insurance ("D&O Insurance") in reasonable amounts as the Board of
Directors shall determine from established and reputable insurers, which D&O
Insurance shall in no event be on terms less favorable than those of the current
policy, a copy of which has been provided to the Indemnitee.

(b) Upon request by Indemnitee, the Company shall provide evidence of the D&O
Insurance required by Section 2(a) above. The Company shall promptly notify
Indemnitee of any change in the Company's D&O Insurance coverage.

3. Mandatory Indemnification. 

(a) Third Party Actions. If Indemnitee is a person who was or is a party or is
threatened to be made a party to any Proceeding (other than an action by or in
the right of the Company, which action is covered by Section 3(b) below) by
reason of the fact that Indemnitee is or was or is claimed to be an Agent of the
Company, by reason of anything done or not done, or alleged to have been done or
not done by Indemnitee in any such capacity or by reason of the fact that
Indemnitee personally guaranteed any obligation of the Company at any time, the
Company shall defend, indemnify and hold harmless Indemnitee against any and all
Expenses and liabilities of any type whatsoever incurred by such person in
connection with the investigation, defense, settlement or appeal of such
Proceeding, so long as the Indemnitee acted in good faith and in a manner the
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, had no
reasonable cause to believe such person's conduct was unlawful.

 
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(b) Actions by or in the Right of the Company. If Indemnitee is a person who was
or is a party or is threatened to be made a party to any Proceeding by or in the
right of the Company by reason of the fact that he is or was an Agent of the
Company, or by reason of anything done or not done, or alleged to have been done
or not done, by him in any such capacity, the Company shall defend, indemnify
and hold harmless Indemnitee against any and all Expenses and liabilities of any
type whatsoever incurred by such person in connection with the investigation,
defense, settlement or appeal of such Proceeding, so long as the Indemnitee
acted in good faith and in a manner the Indemnitee reasonably believed to be in
or not opposed to the best interests of the Company and so long as permitted by
applicable law; except that no indemnification under this subsection shall be
made, and Indemnitee shall repay all amounts previously advanced by the Company,
in respect of any claim, issue or matter for which such person is judged in a
final, non-appealable decision to be liable to the Company by a court of
competent jurisdiction, unless and only to the extent that the court in which
such Proceeding was brought or the Court of Chancery of Delaware shall determine
that Indemnitee is fairly and reasonably entitled to indemnity

(c) Actions Where Indemnitee Is Deceased. If Indemnitee is a person who was or
is a party or is threatened to be made a party to any Proceeding by reason of
the fact that he is or was an Agent of the Company, or by reason of anything
done or not done by him in any such capacity, and prior to, during the pendency
of, or after completion of, such Proceeding, the Indemnitee shall die, then the
Company shall defend, indemnify and hold harmless the estate, heirs and legatees
of the Indemnitee against any and all Expenses and liabilities incurred by or
for such persons or entities in connection with the investigation, defense,
settlement or appeal of such Proceeding on the same basis as provided for the
Indemnitee in Sections 3(a) and 3(b) above.

(d) No Duplication of Payments. The Expenses and liabilities covered hereby
shall be net of any payments actually received by the Indemnitee under any D&O
Insurance, the Company’s Certificate of Incorporation or By-laws, or otherwise.

4. Partial Indemnification. If Indemnitee is found under Section 3, 7 or 12
hereof not to be entitled to indemnification for all of the Expenses relating to
a Proceeding, the Company shall indemnify the Indemnitee for any portion of such
Expenses not specifically precluded by the operation of such Section 3, 7 or 12.

5. Mandatory Advancement of Expenses. Until a determination to the contrary
under Section 7 hereof is made, and unless the provisions of Section 10 apply,
the Company shall advance all Expenses incurred by Indemnitee in connection with
the investigation, defense, settlement or appeal of any Proceeding to which
Indemnitee is a party or is threatened to be made a party covered by the
indemnification in Section 3 hereof. To the extent permitted by law, as a
condition to such advances, Indemnitee shall, at the request of the Company,
undertake in a reasonable manner to repay such amounts advanced if it shall
ultimately be determined by a final order of a court that Indemnitee is not
entitled to be indemnified by the Company by the terms hereof or under
applicable law. Subject to Section 6 hereof, the advances to be made hereunder
shall be paid by the Company to Indemnitee within 20 days following delivery of
a written request by Indemnitee to the Company, which request shall be
accompanied by vouchers, invoices and similar evidence documenting the amounts
requested.

 
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6. Indemnification Procedures.

(a) Promptly after receipt by Indemnitee of notice to him or her 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,
except to the extent that such failure or delay increases the liability of the
Company hereunder.

(b) Upon receipt of notice, pursuant to Section 6(a) above, the Company shall
give prompt notice of the Proceeding to its insurers in accordance with the
procedures set forth in the applicable policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay all amounts
payable as a result of such Proceeding in accordance with the terms of such
policies, and the Indemnitee shall not take any action (by waiver, settlement or
otherwise) which would adversely affect the ability of the Company to obtain
payment from its insurers.

(c) If the Company shall be obligated to pay the Expenses of the Indemnitee
under this Agreement, the Company may (and shall if requested by Indemnitee in
writing) assume the defense of the Proceeding to which the Expenses relate, in
which event the Company shall deliver a notice of assumption to Indemnitee. Any
counsel employed by the Company in connection with the defense of such
Proceeding shall be subject to approval by Indemnitee, such approval not to be
unreasonably withheld or delayed. The Company will not be liable to Indemnitee
under this Agreement for any fees or expenses of counsel incurred by Indemnitee
after delivery of such notice of assumption with respect to such Proceeding;
provided; however, that if Indemnitee shall have provided the Company with an
opinion of counsel stating that there is a strong argument that a conflict of
interest exists between the Company and Indemnitee in the conduct of any such
defense, the fees and Expenses of Indemnitee's counsel shall be at the expense
of the Company. Notwithstanding the fact that the Company assumes the defense of
a Proceeding pursuant to the preceding sentence, Indemnitee shall have the right
to employ his or her own counsel in any such Proceeding at Indemnitee's expense.
 

7. Determination of Right to Indemnification.

(a) To the extent Indemnitee has been successful on the merits or otherwise in
defense of any Proceeding, claim, issue or matter covered hereby, Indemnitee
need not repay any of the Expenses advanced in connection with the
investigation, defense or appeal of such Proceeding.

(b) If Section 7(a) is inapplicable, the Company shall remain obligated to
indemnify Indemnitee, and Indemnitee need not repay Expenses previously
advanced, unless the Company, by motion before a court of competent
jurisdiction, obtains an order for preliminary or permanent relief suspending or
denying the obligation to advance or indemnify for Expenses.

 
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(c) Notwithstanding a determination by the Board or a court that Indemnitee is
not entitled to indemnification with respect to a specific Proceeding,
Indemnitee shall have the right to apply to the Court of Chancery of Delaware
for the purpose of enforcing Indemnitee's right to indemnification pursuant to
this Agreement.

(d) Notwithstanding any other provision in this Agreement to the contrary, the
Company shall indemnify Indemnitee against all Expenses incurred by Indemnitee
in connection with any Proceeding under Section 7(b) or 7(c) and against all
Expenses incurred by Indemnitee in connection with any other Proceeding between
the Company and Indemnitee involving the interpretation or enforcement of the
rights of Indemnitee under this Agreement unless a court of competent
jurisdiction finds that the material claims and/or defenses of Indemnitee in any
such Proceeding were frivolous or made in bad faith.

8. Presumptions and Burden of Proof; Expenses of Enforcement.

(a) For purposes of this Agreement, the termination of any Proceeding by
judgment or otherwise shall not create a presumption that Indemnitee did not
meet any particular standard of conduct or have any particular belief or that a
court has determined that indemnification is not permitted by this Agreement or
applicable law. In connection with any determination as to whether the
Indemnitee is entitled to indemnification or Expense advances hereunder, the
burden of proof shall be on the Company to establish that the Indemnitee is not
so entitled, by clear and convincing evidence. For purposes of any determination
of good faith, Indemnitee shall be deemed to have acted in good faith if
Indemnitee’s action is based on the records or books of account of the Company
or relevant Subsidiary, including financial statements, or on information
supplied to Indemnitee by the officers of the Company or relevant Subsidiary in
the course of their duties, or on the advice of legal counsel for the Company or
relevant Subsidiary, by an independent certified public accountant or by an
appraiser or other expert selected with reasonable care by the Company or
relevant Subsidiary, provided that it was reasonable under the circumstances for
the Indemnitee to rely upon such information or advice. The knowledge and/or
actions, or failure to act, of any other director, officer, agent or employee of
the Company or any of its Subsidiaries shall not be imputed to Indemnitee for
purposes of determining the right to indemnification under this Agreement.

(b) The Company shall be precluded from asserting in any judicial proceeding
commenced in enforcement of this Agreement that the procedures and presumptions
of this Agreement are not valid, binding and enforceable and shall stipulate in
any such court that the Company is bound by all the provisions of this
Agreement.

(d) In the event that a determination shall have been made pursuant to Section 7
of this Agreement that Indemnitee is not entitled to indemnification, any
judicial proceeding commenced in enforcement of this Agreement shall be
conducted in all respects as a de novo trial, on the merits, and Indemnitee
shall not be prejudiced by reason of that adverse determination.

(e) In the event that any action is instituted by Indemnitee under this
Agreement or under any liability insurance policies maintained by the Company to
enforce or interpret any of the terms hereof or thereof, Indemnitee shall be
entitled to be indemnified for all Expenses incurred by Indemnitee with respect
to such action, regardless of whether Indemnitee is ultimately successful in
such action, and shall be entitled to the advancement of Expenses with respect
to such action. In the event of an action instituted by or in the name of the
Company under this Agreement to enforce or interpret any of the terms of this
Agreement, Indemnitee shall be entitled to be indemnified for all Expenses
incurred by Indemnitee in defense of such action (including without limitation
Expenses incurred with respect to Indemnitee’s counterclaims and cross-claims
made in such action), and shall be entitled to the advancement of Expenses with
respect to such action.

 
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9. Contribution. If the indemnification provided for in Section 3 above is
unavailable for any reason other than the statutory limitations set forth in the
DGCL, then in respect of any Proceeding in which the Company is jointly liable
with the Indemnitee the Company shall contribute to the amount of the
Indemnitee’s Expenses in such proportion as is appropriate to reflect (a) the
relative benefits received by the Company on the one hand and by the Indemnitee
on the other hand from the transaction from which such Proceeding arose, and (b)
the relative fault of the Company on the one hand and of the Indemnitee on the
other hand in connection with the events which resulted in such Expenses, as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of the Indemnitee on the other shall be determined
by reference to, among other things, the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent the circumstances
resulting in such Expenses. The Company agrees that it would not be just and
equitable if contribution pursuant to this Section 9 was determined by pro rata
or per capita allocation or any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
sentence. The foregoing provisions notwithstanding, no person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
found guilty of such fraudulent misrepresentation.

10. Certificate of Incorporation and By-Laws. The Company agrees that the
Company's Certificate of Incorporation and By-laws in effect on the date hereof
shall not be amended to reduce, limit, hinder or delay (i) the rights of
Indemnitee granted hereby or (ii) the ability of the Company to indemnify
Indemnitee as required hereby. The Company further agrees that it shall exercise
the powers granted to it under its Certificate of Incorporation, its By-laws and
by applicable law to indemnify Indemnitee to the fullest extent possible as
required hereby.

11. Witness Expenses. The Company agrees to compensate Indemnitee for the
reasonable value of his or her time spent, and to reimburse Indemnitee for all
Expenses (including attorneys' fees and travel costs) incurred by him or her, in
connection with being a witness, or if Indemnitee is threatened to be made a
witness, with respect to any Proceeding, by reason of his or her serving or
having served as an Agent of the Company.

12. Exceptions. Notwithstanding any other provision hereunder to the contrary,
the Company shall not be obligated pursuant to the terms of this Agreement:

 
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(a)  Claims Initiated by Indemnitee. To indemnify or advance Expenses to
Indemnitee with respect to any Proceeding 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 Certificate of Incorporation or By-laws unless a
court of competent jurisdiction determines that each of the material assertions
made by Indemnitee in such Proceeding were not made in good faith or were
frivolous);

(b)  Unauthorized Settlements. To indemnify Indemnitee under this Agreement for
any amounts paid in settlement of a Proceeding covered hereby without the prior
written consent of the Company to such settlement;

(c) Claims Under Section 16(b). To indemnify Indemnitee for any Proceeding,
Expenses or the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Exchange Act or
any similar successor statute; or

(d) Claims Excluded Under Section 145 of the Delaware General Corporation Law.
To indemnify Indemnitee if (i) Indemnitee did not act in good faith or in a
manner reasonably believed by such Indemnitee to be in or not opposed to the
best interests of the Company, or (ii) with respect to any criminal action or
proceeding, Indemnitee had reasonable cause to believe Indemnitee’s conduct was
unlawful, or (iii) Indemnitee shall have been adjudged to be liable to the
Company unless and only to the extent the court in which such action was brought
shall permit indemnification as provided in Section 145(b) of the Delaware
General Corporation Law.

13. Non-exclusivity. 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 Certificate of Incorporation or By-laws, under
employment or other agreements, or otherwise.

14. Continuation After Term. Indemnitee's rights hereunder shall continue after
the Indemnitee has ceased acting as a director or Agent of the Company and the
benefits hereof shall inure to the benefit of the heirs, executors and
administrators of Indemnitee.

15. Severability. If any provision or provisions of this Agreement shall be held
to be invalid, illegal or unenforceable, provisions of the Agreement shall not
in any way be affected or impaired thereby, and to the fullest extent possible,
the provisions of this Agreement shall be construed or altered by the court so
as to remain enforceable and to provide Indemnitee with as many of the benefits
contemplated hereby as are permitted under law.

16. Counterparts, Modification and Waiver. 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 implied by the conduct of the parties. A
waiver of any right hereunder shall not constitute a waiver of any other right
hereunder (whether or not similar) nor shall such waiver constitute a continuing
waiver.

 
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17. Notices. All notices, demands or other communications required or permitted
hereunder shall be in writing and shall be deemed to have been given to a party
(a) when delivered to such party at the address of such party by any means
(including, without limitation, courier service or personal delivery), (b) three
business days after the same are mailed to such party (through deposit in the
United States mail), by first-class certified or registered mail, return receipt
requested, postage prepaid, to the address of such party, or (c) one day after
the business day of delivery by facsimile transmission, if deliverable by
facsimile transmission, with copy by first class mail, postage prepaid to the
address of such party. The respective address of each party for purposes of
receiving notices, demands or other communications as aforesaid shall be as
follows (or such other address as a party may hereafter designate by notice
delivered to the other parties in accordance with this subsection): (i) for the
Company, the address of its principal executive offices, attention Chief
Executive Officer (with a copy attention Assistant Secretary) and (ii) for
Indemnitee, the most recent address of the Indemnitee on the Company's records.

18. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware.

19. Binding Effect; Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors, heirs or
assigns. This Agreement shall continue in effect with respect to Claims relating
to indemnifiable events regardless of whether any Indemnitee continues to serve
as an Agent of the Company.
 

20. Consent to Jurisdiction.
The Company and Indemnitee each hereby irrevocably consent to the jurisdiction
of the courts of the State of Delaware for all purposes in connection with any
action or proceeding which arises out of or relates to this Agreement and agree
that any action instituted under this Agreement shall be commenced, prosecuted
and continued only in the Court of Chancery of the State of Delaware in and for
New Castle County, which shall be the exclusive and only proper forum for
adjudicating such a claim.

21. No Construction as Employment Agreement.
Nothing contained in this Agreement shall be construed as giving the Indemnitee
any right to be retained in the employ of the Company or any of its
subsidiaries.

22. Corporate Authority.
The Board of Directors of the Company has approved the terms of this Agreement.

[Signatures appear on next page]

 
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IN WITNESS WHEREOF, the parties hereto have entered into this Indemnification
Agreement effective as of the date first above written.

 

        DATA SYSTEMS & SOFTWARE INC.  
   
   
    By:      

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Name:   Title:            INDEMNITEE:  
 
 
 

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[Name]

 
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