EXHIBIT 10.3
                                                                    ------------


                        FORM OF INDEMNIFICATION AGREEMENT


                  This Agreement is made as of the day of  _____________,  200_,
by and between  Innovative Micro Technology,  Inc., a Delaware  corporation (the
"Company"),  and the  undersigned  Director  and/or  Officer of the Company (the
"Indemnitee "), with reference to the following:

                  A. The Indemnitee is willing, under certain circumstances,  to
serve as an Director and/or Officer of the Company. The Indemnitee has indicated
that he does not regard the indemnities available under the Company's By-laws as
adequate to protect him  against  the risks  associated  with his service to the
Company. In this connection,  the Company and the Indemnitee now agree that they
should enter into this  Indemnification  Agreement  in order to provide  greater
protection to Indemnitee against such risks of service to the Company.

                  B. Section 145 of the General  Corporation Law of the State of
Delaware,  under which Law the Company is organized,  empowers  corporations  to
indemnify  a person  serving as a  director,  officer,  employee or agent of the
Company  and a person who serves at the  request of the  Company as a  director,
officer, employee or agent of another corporation,  partnership,  joint venture,
trust, or other enterprise,  and said Section 145 and the By-laws of the Company
specify  that  the  indemnification  set  forth in said  Section  145 and in the
By-laws,  respectively,  shall not be deemed  exclusive  of any other  rights to
which those seeking indemnification may be entitled under any By-law, agreement,
vote of stockholders or disinterested directors or otherwise.

                  C. In order to induce the  Indemnitee  to serve as an Director
and/or Officer of the Company and in consideration of his continued service, the
Company  hereby agrees,  as of the date first set forth above,  to indemnify the
Indemnitee as follows:

         1. Indemnity. The Company will indemnify the Indemnitee, his executors,
administrators  or  assigns,  for any  Expenses  (as  defined  below)  which the
Indemnitee  is or  becomes  legally  obligated  to pay in  connection  with  any
Proceeding.  As used in this Agreement the term  "Proceeding"  shall include any
threatened,  pending or completed  claim,  action,  suit or proceeding,  whether
brought by or in the right of the  Company  and/or  otherwise  and  whether of a
civil, criminal, administrative or investigative nature, in which the Indemnitee
may be or may have been involved as a party or otherwise,  by reason of the fact
that Indemnitee is or was, or has agreed to become, a Director and/or Officer of
the  Company,  by  reason of any  actual or  alleged  error or  misstatement  or
misleading statement made or suffered by the Indemnitee, by reason of any action
taken by him or of any inaction on his part while acting as such Director and/or

                                      -1-
<PAGE>


Officer,  or by reason of the fact that he was  serving  at the  request  of the
Company as a  director,  trustee,  officer,  employee or agent of the Company or
another  corporation,  partnership,  joint venture,  trust or other  enterprise;
provided,  that in each such case Indemnitee acted in good faith and in a manner
which he reasonably  believed to be in, or not opposed to, the best interests of
the  Company,  and, in the case of a criminal  proceeding,  in  addition  had no
reasonable  cause to believe  that his  conduct  was  unlawful.  As used in this
Agreement,  the term  "other  enterprise"  shall  include  (without  limitation)
employee  benefit  plans and  administrative  committees  thereof,  and the term
"fines" shall include (without  limitation) any excise tax assessed with respect
to any employee benefit plan.

         2.  Expenses.  As used in this  Agreement,  the term  "Expenses"  shall
include (without limitation) damages, judgments,  fines, penalties,  settlements
and costs,  attorneys' fees and disbursements and costs of attachment or similar
bonds,   investigations,   and  any   expenses  of   establishing   a  right  to
indemnification under this Agreement.

         3. Enforcement.  If a claim or request under this Agreement is not paid
by the Company, or on its behalf,  within thirty (30) days after a written claim
or request has been  received by the  Company,  the  Indemnitee  may at any time
thereafter  bring suit  against the Company to recover the unpaid  amount of the
claim or request and if successful  in whole or in part,  the  Indemnitee  shall
also be entitled to be paid the Expenses of  prosecuting  such suit. The Company
shall  have the right to recoup  from the  Indemnitee  the amount of any item or
items of Expenses theretofore paid by the Company pursuant to this Agreement, to
the extent such Expenses are not reasonable in nature or amounts.

         4.  Subrogation.  In the event of  payment  under this  Agreement,  the
Company  shall be  subrogated to the extent of such payment to all of the rights
of recovery of the  Indemnitee,  who shall execute all papers required and shall
do everything that may be reasonably necessary to secure such rights,  including
the execution of such documents  necessary to enable the Company  effectively to
bring suit to enforce such rights.

         5. Exclusions.  The Company shall not be liable under this Agreement to
pay any Expenses in connection with any claim made against the Indemnitee:

            (a) to the extent that  payment is actually  made to the  Indemnitee
under a valid, enforceable and collectible insurance policy;

            (b) to the extent that the  Indemnitee is  indemnified  and actually
paid otherwise than pursuant to this Agreement;

            (c) in connection  with a judicial  action by or in the right of the
Company,  in respect of any  claim,  issue or matter as to which the  Indemnitee

                                      -2-
<PAGE>

shall  have been  adjudged  to be liable for  negligence  or  misconduct  in the
performance  of his duty to the  Company  unless and only to the extent that any
court in which such action was brought shall  determine upon  application  that,
despite the  adjudication of liability but in view of all the  circumstances  of
the case, the Indemnitee is fairly and reasonably entitled to indemnity for such
expenses as such court shall deem proper;

            (d) if it is  proved  by final  judgment  in a court of law or other
final  adjudication to have been based upon or attributable to the  Indemnitee's
in fact  having  gained any  personal  profit or  advantage  to which he was not
legally entitled;

            (e) for a disgorgement of profits made from the purchase and sale by
the  Indemnitee  of  securities  pursuant  to  Section  16(b) of the  Securities
Exchange Act of 1934 and amendments  thereto or similar  provisions of any state
statutory law or common law;

            (f)  brought  about  or  contributed  to by  the  dishonesty  of the
Indemnitee seeking payment hereunder;  however,  notwithstanding  the foregoing,
the  Indemnitee  shall be protected  under this  Agreement as to any claims upon
which suit may be brought against him by reason of any alleged dishonesty on his
part,  unless a judgment  or other  final  adjudication  thereof  adverse to the
Indemnitee  shall  establish that he committed (i) acts of active and deliberate
dishonesty,  (ii) such acts with actual dishonest purpose and intent, (iii) acts
which were material to the cause of action so adjudicated; or

            (g)  for  any  judgment,  fine  or  penalty  which  the  Company  is
prohibited by applicable law from paying as indemnity or for any other reason.

         6. Indemnification of Expenses of Successful Party. Notwithstanding any
other  provision of this  Agreement,  to the extent that the Indemnitee has been
successful on the merits or otherwise in defense of any Proceeding or in defense
of any claim,  issue or matter therein,  including  dismissal without prejudice,
Indemnitee  shall  be  indemnified  against  any and all  Expenses  incurred  in
connection therewith.

         7. Partial  Indemnification.  If the  Indemnitee is entitled  under any
provision  of this  Agreement  to  indemnification  by the Company for some or a
portion of Expenses, but not, however, for the total amount thereof, the Company
shall nevertheless  indemnify the Indemnitee for the portion of such Expenses to
which the Indemnitee is entitled.

         8.  Advance  of  Expenses.  Expenses  incurred  by  the  Indemnitee  in
connection  with any Proceeding,  except the amount of any settlement,  shall be
paid by the Company in advance upon request of the  Indemnitee  that the Company
pay such Expenses.  The Indemnitee hereby undertakes to repay to the Company the
amount of any Expenses  theretofore paid by the Company to the extent that it is

                                      -3-
<PAGE>

ultimately  determined  that  such  Expenses  were  not  reasonable  or that the
Indemnitee is not entitled to indemnification.

         9.  Approval of  Expenses.  No Expenses  for which  indemnity  shall be
sought  under this  Agreement,  other than  those in  respect of  judgments  and
verdicts actually  rendered,  shall be incurred without the prior consent of the
Company, which consent shall not be unreasonably withheld.

         10. Notice of Claim.  The Indemnitee,  as a condition  precedent to his
right to be indemnified  under this Agreement,  shall give to the Company notice
in  writing  as soon as  practicable  of any claim  made  against  him for which
indemnity  will or could be sought under this  Agreement.  Notice to the Company
shall be given at its  principal  office and shall be directed to the  Corporate
Secretary (or such other  address as the Company  shall  designate in writing to
the  Indemnitee);  notice  shall be  deemed  received  if sent by  prepaid  U.S.
certified mail, return receipt requested,  properly addressed,  the date of such
notice being the date  postmarked.  In addition,  the Indemnitee  shall give the
Company such  information  and  cooperation as it may reasonably  require and as
shall be within the Indemnitee's power.

         11.  Counterparts.  This  Agreement  may be  executed  in any number of
counterparts, all of which taken together shall constitute one instrument.

         12.  Indemnification  Hereunder Not Exclusive.  Nothing herein shall be
deemed  to  diminish  or   otherwise   restrict   the   Indemnitee's   right  to
indemnification  under any  provision of the  Certificate  of  Incorporation  or
Bylaws of the Company and amendments thereto or under law.

         13. Governing Law. This Agreement shall be governed by and construed in
accordance with Delaware law,  without regard to the conflicts of law provisions
thereof.

         14. Saving Clause.  Wherever there is conflict between any provision of
this Agreement and any applicable  present or future statute,  law or regulation
contrary  to  which  the  Company  and the  Indemnitee  have no  legal  right to
contract, the latter shall prevail, but in such event the affected provisions of
this Agreement shall be curtailed and restricted only to the extent necessary to
bring them within applicable legal requirements.

         15. Coverage. The provisions of this Agreement shall apply with respect
to the  Indemnitee's  service as a Director and/or Officer of the Company or any
subsidiary of the Company  prior to the date of this  Agreement and with respect
to all periods of such service after the date of this Agreement, even though the
Indemnitee may have ceased to be a Director and/or Officer of the Company.

                                      -4-
<PAGE>

                            (Signature Page Follows)




















































                                      -5-
<PAGE>



         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.

INNOVATIVE MICRO TECHNOLOGY, INC.


By:      __________________________________
         John Foster, President



"INDEMNITEE"


By:      ___________________________________
         Name:  ____________________________







































                                      -6-