SkillSoft has agreed to indemnify its directors and executives against a raft of legal suits which they will face later this year.
The US firm said it made the decision because its executives have found it difficult to obtain liability insurance due to the extent of the ongoing litigation involving the company.
An indemnity agreement - which was filed recently with the Securities and Exchange Commission - shows SkillSoft will pay litigation costs for its executives.
The firm, which is currently the subject of an investigation by the Securities and Exchange Commission (SEC), recently disclosed that it pays legal fees worth almost €5 million every quarter. But its liabilities could run into hundreds of millions of dollars if it loses a raft of class action law suits from shareholders and separate disputes over the theft of trade secrets from a rival firm.
SkillSoft, which acquired the Irish e-learning firm SmartForce last September, faces six class action lawsuits from investors related to the misstatement of financial information last year.
Several directors, including the former SmartForce directors Mr Gregory Priest and Mr William McCabe, are named in the class actions legal suits.
The former SmartForce executives also face a class action lawsuit dating back to 1998. This law suit alleges a similar misstatement of financial information relating to SmartForce. A trial date has been set for September 2003.
The indemnity agreement was drawn up by SkillSoft when it merged with SmartForce in September 2002. It covers civil, administrative, criminal and investigative proceedings.
As well as indemnifying executives who act in good faith, it provides for the advancement of expenses to help them prepare a legal defence against court cases.
The agreement says it recognises the increasing difficulty in obtaining directors' and officers' liability insurance, the significant increases in the cost of such insurance and the general reductions in the coverage of this insurance.
However, a SkillSoft spokeswoman said the filing of the indemnification agreement was standard business practice.
Both SkillSoft and Smartforce have filed indemnification agreements in the past and there was nothing unusual or remarkable about the filing of the new agreements, she said.
