Exhibit 10.17
PDF SOLUTIONS,
INC.
INDEMNIFICATION
AGREEMENT
This Indemnification Agreement (this
“ Agreement ”) is made as of
,
by and between PDF Solutions, Inc., a Delaware corporation
(the “ Company ”), and
(“ Indemnitee ”).
RECITALS
The Company and Indemnitee recognize
the increasing difficulty in obtaining liability insurance for
directors, officers and key employees, the significant increases in
the cost of such insurance and the general reductions in the
coverage of such insurance. The Company and Indemnitee
further recognize the substantial increase in corporate litigation
in general, subjecting directors, officers and key employees to
expensive litigation risks at the same time as the availability and
coverage of liability insurance has been severely limited.
Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee may not be
willing to continue to serve in Indemnitee’s current capacity
with the Company without additional protection. The Company
desires to attract and retain the services of highly qualified
individuals, such as Indemnitee, and to indemnify its directors,
officers and key employees so as to provide them with the maximum
protection permitted by law.
AGREEMENT
In consideration of the mutual
promises made in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and Indemnitee hereby agree as
follows:
1.
Indemnification
.
(a)
Third-Party Proceedings . To the fullest
extent permitted by applicable law, the Company shall indemnify
Indemnitee, if Indemnitee was, is or is threatened to be made, a
party to or a participant (as a witness or otherwise) in any
Proceeding (other than a Proceeding by or in the right of the
Company to procure a judgment in the Company’s favor),
against all Expenses, judgments, fines and amounts paid in
settlement (if such settlement is approved in advance by the
Company, which approval shall not be unreasonably withheld)
actually and reasonably incurred by Indemnitee in connection with
such Proceeding if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company and, in the case of a criminal Proceeding,
had no reasonable cause to believe Indemnitee’s conduct was
unlawful.
(b)
Proceedings By or in the Right of the Company .
To the fullest extent permitted by applicable law, the
Company shall indemnify Indemnitee, if Indemnitee was, is or is
threatened to be made a party to or a participant (as a witness or
otherwise) in any Proceeding by or in the right of the Company to
procure a judgment in the Company’s favor, against
all
Expenses actually and reasonably incurred by
Indemnitee in connection with such Proceeding if Indemnitee acted
in good faith and in a manner Indemnitee reasonably believed to be
in or not opposed to the best interests of the Company, except that
no indemnification shall be made in respect of any claim, issue or
matter as to which Indemnitee shall have been finally adjudicated
by court order or judgment to be liable to the Company unless and
only to the extent that the Court of Chancery or the court in which
such Proceeding is or was pending shall determine upon application
that, in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper.
(c)
Success on the Merits . To the fullest extent
permitted by applicable law and to the extent that Indemnitee has
been successful on the merits or otherwise in defense of any
Proceeding referred to in Section 1(a) or
Section 1(b) or the defense of any claim, issue or matter
therein, in whole or in part, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by
Indemnitee in connection therewith. Without limiting the
generality of the foregoing, if Indemnitee is successful on the
merits or otherwise as to one or more but less than all claims,
issues or matters in a Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by
Indemnitee in connection with such successfully resolved claims,
issues or matters to the fullest extent permitted by applicable
law. If any Proceeding is disposed of on the merits or
otherwise (including a disposition without prejudice), without
(1) the disposition being adverse to Indemnitee, (ii) an
adjudication that Indemnitee was liable to the Company,
(iii) a plea of guilty by Indemnitee, (iv) an
adjudication that Indemnitee did not act in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company, and (v) with respect to any
criminal Proceeding, an adjudication that Indemnitee had reasonable
cause to believe Indemnitee’s conduct was unlawful,
Indemnitee shall be considered for the purposes hereof to have been
wholly successful with respect thereto.
(d)
Witness Expenses . To the fullest extent
permitted by applicable law and to the extent that Indemnitee is a
witness or otherwise asked to participate in any Proceeding to
which Indemnitee is not a party, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by
Indemnitee in connection with such Proceeding.
2.
Indemnification
Procedure .
(a)
Advancement of Expenses . To the fullest
extent permitted by applicable law, the Company shall advance all
Expenses actually and reasonably incurred by Indemnitee in
connection with a Proceeding within thirty (30) days after receipt
by the Company of a statement requesting such advances from time to
time, whether prior to or after final disposition of any
Proceeding. Such advances shall be unsecured and interest
free and shall be made without regard to Indemnitee’s ability
to repay the Expenses and without regard to Indemnitee’s
ultimate entitlement to indemnification under the other provisions
of this Agreement. Indemnitee shall be entitled to continue
to receive advancement of Expenses pursuant to this
Section 2(a) unless and until the matter of
Indemnitee’s entitlement to indemnification hereunder has
been finally adjudicated by court order or judgment from which no
further right of appeal exists. Indemnitee hereby undertakes
to repay such amounts advanced only if, and to the extent that, it
ultimately is determined that Indemnitee is not entitled to be
indemnified by the Company under the other provisions of this
Agreement. Indemnitee shall qualify for advances upon the
execution and
2
delivery of this Agreement, which shall
constitute the requisite undertaking with respect to repayment of
advances made hereunder and no other form of undertaking shall be
required to qualify for advances made hereunder other than the
execution of this Agreement.
(b)
Notice and Cooperation by Indemnitee .
Indemnitee shall promptly notify the Company in writing upon being
served with any summons, citation, subpoena, complaint, indictment,
information or other document relating to any Proceeding or matter
for which indemnification will or could be sought under this
Agreement. Such notice to the Company shall include a
description of the nature of, and facts underlying, the Proceeding,
shall be directed to the Chief Executive Officer of the Company and
shall be given in accordance with the provisions of
Section 10(d) below. In addition, Indemnitee shall
give the Company such additional information and cooperation as the
Company may reasonably request. Indemnitee’s failure to
so notify, provide information and otherwise cooperate with the
Company shall not relieve the Company of any obligation which it
may have to Indemnitee under this Agreement, except to the extent
that the Company is adversely affected by such failure.
(c)
Determination of Entitlement . Notwithstanding
any other provision in this Agreement, no determination as to
entitlement to indemnification under this Agreement shall be
required to be made prior to the final disposition of the
Proceeding. Subject to the foregoing, promptly after receipt
of a statement requesting payment with respect to the
indemnification rights set forth in Section 1, to the extent
required by applicable law, the Company shall take the steps
necessary to authorize such payment in the manner set forth in
Section 145 of the General Corporation Law of Delaware.
If a claim under this Agreement, under any statute, or under any
provision of the Company’s Certificate of Incorporation or
Bylaws providing for indemnification or advancement of Expenses, is
not paid in full by the Company within thirty (30) days after a
written request for payment thereof has first been received by the
Company, Indemnitee may, but need not, at any time thereafter bring
an action against the Company in the Delaware Court of Chancery to
recover the unpaid amount of the claim and, subject to
Section 9, Indemnitee shall also be entitled to be paid for
all Expenses actually and reasonably incurred by Indemnitee in
connection with bringing such action. It shall be a defense
to any such action (other than an action brought to enforce a claim
for advancement of Expenses under Section 2(a)) that
Indemnitee has not met the standards of conduct which make it
permissible under applicable law for the Company to indemnify
Indemnitee for the amount claimed. In making a determination
with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume
that Indemnitee is entitled to indemnification under this Agreement
and the Company shall have the burden of proof to overcome that
presumption with clear and convincing evidence to the
contrary. The termination of any Proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that Indemnitee did not act in good faith and in a
manner which Indemnitee reasonably believed to be in or not opposed
to the best interests of the Company, or, in the case of a criminal
Proceeding, that Indemnitee had reasonable cause to believe that
Indemnitee’s conduct was unlawful. In addition, it is
the parties’ intention that if the Company contests
Indemnitee’s right to indemnification, the question of
Indemnitee’s right to indemnification shall be for the court
to decide, and neither the failure of the Company (including its
Board of Directors, any committee or subgroup of the Board of
Directors, independent legal counsel, or its stockholders) to have
made a determination that indemnification of Indemnitee is proper
in the circumstances because Indemnitee has met the applicable
standard
3
of conduct required by applicable law, nor an
actual determination by the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors,
independent legal counsel, or its stockholders) that Indemnitee has
not met such applicable standard of conduct, shall create a
presumption that Indemnitee has or has not met the applicable
standard of conduct. If any requested determination with
respect to entitlement to indemnification hereunder has not been
made within ninety (90) days after the final disposition of the
Proceeding, the requisite determination that Indemnitee’s
entitlement to indemnification shall be deemed to have been
made.
(d)
Payment Directions . To the extent payments
are required to be made hereunder, the Company shall, in accordance
with Indemnitee’s request (but without duplication),
(i) pay such Expenses on behalf of Indemnitee,
(b) advance to Indemnitee funds in an amount sufficient to pay
such Expenses, or (c) reimburse Indemnitee for such
Expenses.
(e)
Notice to Insurers . If, at the time of the
receipt of a notice of a claim pursuant to
Section 2(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice
of the commencement of such Proceeding to the insurers in
accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of
Indemnitee, all amounts payable as a result of such Proceeding in
accordance with the terms of such policies.
(f)
Defense of Claim and Selection of Counsel . In
the event the Company shall be obligated under
Section 2(a) hereof to advance Expenses with respect to
any Proceeding, the Company, if appropriate, shall be entitled to
assume the defense of such Proceeding, with counsel reasonably
acceptable to Indemnitee, upon the delivery to Indemnitee of
written notice of its election so to do. After delivery of
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 the same
Proceeding, provided that (i) Indemnitee shall have the right
to employ counsel in any such Proceeding at Indemnitee’s
expense; and (ii) if (A) the employment of counsel by
Indemnitee has been previously authorized by the Company,
(B) Indemnitee shall have reasonably concluded that there may
be a conflict of interest between the Company and Indemnitee in the
conduct of any such defense or (C) the Company shall not, in
fact, have employed counsel to assume the defense of such
Proceeding, then the fees and expenses of Indemnitee’s
counsel shall be at the expense of the Company. In addition,
if there exists a potential, but not an actual conflict of interest
between the Company and Indemnitee, the actual and reasonable legal
fees and expenses incurred by Indemnitee for separate counsel
retained by Indemnitee to monitor the Proceeding (so that such
counsel may assume Indemnitee’s defense if the conflict of
interest between the Company and Indemnitee becomes an actual
conflict of interest) shall be deemed to be Expenses that are
subject to indemnification hereunder. The existence of an
actual or potential conflict of interest, and whether such conflict
may be waived, shall be determined pursuant to the rules of
attorney professional conduct and applicable law. The Company
shall not be required to obtain the consent of Indemnitee for the
settlement of any Proceeding the Company has undertaken to defend
if the Company assumes full and sole responsibility for each such
settlement; provided, however, that the Company shall be required
to obtain Indemnitee’s prior written approval, which shall
not be unreasonably withheld, before
4
entering into any settlement which (1) does
not grant Indemnitee a complete release of liability,
(2) would impose any penalty or limitation on Indemnitee, or
(3) would admit any liability or misconduct by
Indemnitee.
3.
Additional Indemnification
Rights .
(a)
Scope . Notwithstanding any other provision of
this Agreement, the Company hereby agrees to indemnify Indemnitee
to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other
provisions of this Agreement, the Company’s Certificate of
Incorporation, the Company’s Bylaws or by statute. In
the event of any change, after the date of this Agreement, in any
applicable law, statute, or rule which expands the right of a
Delaware corporation to indemnify a member of its board of
directors or an officer, such changes shall be deemed to be within
the purview of Indemnitee’s rights and the Company’s
obligations under this Agreement. In the event of any change
in any applicable law, statute or rule which narrows the right
of a Delaware corporation to indemnify a member of its board of
directors or an officer, such changes, to the extent not otherwise
required by such law, statute or rule to be applied to this
Agreement shall have no effect on this Agreement or the
parties’ rights and obligations hereunder.
(b)
Nonexclusivity . The indemnification provided
by this Agreement shall not be deemed exclusive of any rights to
which Indemnitee may be entitled under the Company’s
Certificate of Incorporation, its Bylaws, any agreement, any vote
of stockholders or disinterested members of the Company’s
Board of Directors, the General Corporation Law of Delaware, or
otherwise, both as to action in Indemnitee’s official
capacity and as to action in another capacity while holding such
office.
(c)
Interest on Unpaid Amounts . If any payment to
be made by the Company to Indemnitee hereunder is delayed by more
than ninety (90) days from the date the duly prepared request for
such payment is received by the Company, interest shall be paid by
the Company to Indemnitee at the legal rate under Delaware law for
amounts which the Company indemnifies or is obligated to indemnify
for the period commencing with the date on which Indemnitee
actually incurs such Expense or pays such judgment, fine or amount
in settlement and ending with the date on which such payment is
made to Indemnitee by the Company.
(d)
Third-Party Indemnification . The Company
hereby acknowledges that Indemnitee has or may from time to time
obtain certain rights to indemnification, advancement of expenses
and/or insurance provided by one or more third parties
(collectively, the “ Third-Party Indemnitors
”). The Company hereby agrees that it is the indemnitor
of first resort ( i.e., its obligations to Indemnitee are
primary and any obligation of the Third-Party Indemnitors to
advance expenses or to provide indemnification for the same
expenses or liabilities incurred by Indemnitee are secondary), and
that the Company will not assert that the Indemnitee must seek
expense advancement or reimbursement, or indemnification, from any
Third
