Exhibit 10.19
MONOLITHIC SYSTEM
TECHNOLOGY, INC.
INDEMNITY
AGREEMENT
This Indemnification Agreement (the
“Agreement” ) is made as of
March 20, 2006, by and between Monolithic System
Technology, Inc., a Delaware corporation (the
“Company” ), and James Pekarsky (
“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 and agents
of the Company may not be willing to continue to serve as
agents of 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, receipt of which is hereby acknowledged, the Company
and Indemnitee hereby agree as follows:
1.
Certain Definitions; Construction
of Phrases.
(a)
“Change in Control”
shall mean, and shall be deemed to have occurred if, on or after
the date of this Agreement, (i) any “person” (as
such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than a trustee
or other fiduciary holding securities under an employee benefit
plan of the Company acting in such capacity or a corporation owned
directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of
the Company, becomes the “beneficial owner” (as defined
in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing more than 50% of the total
voting power represented by the then outstanding securities of the
Company that vote generally at elections ( “Voting
Securities” ), (ii) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for
election by the Company’s stockholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof, or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation other than
a merger or consolidation which would result in the Voting
Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity) at
least
80% of the total voting power
represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a
series of related transactions) all or substantially all of
the Company’s assets.
(b)
References to the
“Company” shall include, in addition to the Company,
any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger to which the
Company (or any of its wholly owned subsidiaries) is a party 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 a director,
officer, employee, agent or fiduciary of such constituent
corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, 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)
“Independent Legal
Counsel” shall mean an attorney or firm of attorneys,
selected in accordance with the provisions of
Section 2(d) hereof, who shall not have otherwise
performed services for the Company or Indemnitee within the last
three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or of other indemnitees
under similar indemnity agreements).
(d)
For purposes of this Agreement,
references to “other enterprises” shall include
employee benefit plans; references to “fines” shall
include any excise taxes assessed on Indemnitee with respect to an
employee benefit plan; and references to “serving at the
request of the Company” shall include any service as a
director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and if Indemnitee acted in good
faith and in a manner Indemnitee reasonably believed to be in the
interest of the participants and beneficiaries of an employee
benefit plan, Indemnitee shall be deemed to have acted in a manner
“not opposed to the best interests of the Company” as
referred to in this Agreement.
(e)
“Reviewing Party” shall
mean a majority of the Company’s Board of Directors who are
not parties to the particular Claim (even if less than a quorum)
for which Indemnitee is seeking indemnification, or Independent
Legal Counsel.
2.
Indemnification.
(a)
Third Party Proceedings.
The
Company shall indemnify Indemnitee if Indemnitee is or was a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that Indemnitee is or
was a director, officer, employee or agent of the Company, or any
subsidiary of the Company, by reason of any action or inaction on
the part of Indemnitee while an officer or director or by
reason of the fact that Indemnitee is or was serving at the request
of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses
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(including attorneys’ fees),
judgments, fines and amounts paid in settlement (if such settlement
is approved in advance by the Company, which approval shall not be
unreasonably withheld) and other amounts actually and reasonably
incurred by Indemnitee in connection with such action, suit or
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, with respect to any criminal action
or proceeding, had no reasonable cause to believe
Indemnitee’s conduct was unlawful. The termination of any
action, suit or 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, with respect to any criminal action or proceeding,
that Indemnitee had reasonable cause to believe that
Indemnitee’s conduct was unlawful.
(b)
Proceedings By or in the Right of
the Company. The Company shall indemnify Indemnitee if
Indemnitee was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the
right of the Company or any subsidiary of the Company to procure a
judgment in its favor by reason of the fact that Indemnitee is or
was a director, officer, employee or agent of the Company, or any
subsidiary of the Company, by reason of any action or inaction on
the part of Indemnitee while an officer or director or by
reason of the fact that Indemnitee is or was serving at the request
of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys’ fees) and, to the
fullest extent permitted by law, amounts paid in settlement (if
such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld), in each case to the
extent actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit 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
its stockholders. Termination of any action, suit or proceeding by
judgment or settlement 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
interest of the Company. Notwithstanding the foregoing, no
indemnification under this Section 2(b) 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 in the performance of
Indemnitee’s duty to the Company and its stockholders unless
and only to the extent that the court in which such action or
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 determine.
(c)
Review of Indemnification.
Notwithstanding the foregoing, (i) the
obligations of the Company under Sections 2(a) and
2(b) (unless ordered by a court) shall be subject to the
condition that the Reviewing Party shall authorize (in a written
opinion, in any case in which the Independent Legal Counsel
referred to in Section 2(d) hereof is involved)
indemnification in the specific case, upon a determination that
indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct set
forth in Sections 2(a) and 2(b), (ii) the obligation
of the Company to make an advance of expenses pursuant to
Section 4(a) shall be subject to the condition that, if,
when and to the extent that the Reviewing Party determines that
Indemnitee would not be permitted to be so indemnified under
applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings
in a court of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing
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Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be
binding and Indemnitee shall not be required
