Document:

Exhibit 10.16

 

PDF Solutions, Inc.

333 West San Carlos Street, Suite 700, San Jose, CA 95110 USA

 Telephone: 408 280 7900, Fax: 408
280 7915

www.pdf.com

 

December 29,
2008

 

Keith Jones

 

Dear Keith:

 

You
and PDF Solutions, Inc. (“PDF” or the “Company”),
signed an offer letter, dated October 10,
2005 (the “Offer Letter”).  This letter
agreement amends the Offer Letter in order for the cash severance payments
under the Offer Letter to be exempt from or comply with Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”).  Except as otherwise amended in this letter
agreement, the Offer Letter remains in full force and effect.

 

This letter agreement amends and restates Section 5
of the Offer Letter to read in its entirety as follows:

 

“5.           Termination.  In the
event that you experience an
involuntary separation, as defined in Treasury Regulation 1.409A-1(h) (“Separation”),
by the Company for a reason that is other than for (i) cause, (ii) death
or (iii) Permanent Disability (as defined below), provided that you
satisfy the Conditions (as defined below) within the Deadline (as defined
below), then the Company will provide you with the following severance:  (i) your base salary for a period of six
(6) months following your Separation (the “Salary Continuation Period”),
which will be payable at the then regular payroll rates over the Salary
Continuation Period in accordance with the Company’s standard payroll schedule,
commencing on the Company’s first regular payroll date that is at least five (5) days
after the Conditions have been satisfied and the Release’s effective date; (ii) monthly
premiums to continue your (and, if applicable, your eligible spouse and
dependents) Company health insurance under the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”) for the period equal in length to the Salary
Continuation Period, commencing on the first day that you (and your dependents)
lose health care coverage under the Company’s health plans; provided that you
(or, if applicable, your eligible spouse and dependents) timely elect to
continue your health insurance under COBRA and are, and continue to be,
eligible for such benefits; and, (iii) acceleration of the vesting of all
of your stock options outstanding as of the date of your Separation such that you
vest, effective as of the date of your Separation, in the number of shares you
would have vested in had you continued to provide services to the Company for
an additional six (6) months

 

 

following your Separation.  As a
condition to receiving the benefits stated in this paragraph, you hereby agree
to release the Company from potential claims through the date of Separation and
to return all Company property within
thirty (30) days following the Separation (collectively, the “Conditions”),
and you will be required, and you hereby agree, to sign a standard general
release of claims in a form prescribed by the Company (the “Release”) within thirty (30) days following the
Separation (the “Deadline”).

 

For purposes of Code Section 409A, each
payment that is paid under the preceding paragraph is hereby designated as a
separate payment.  Notwithstanding
anything to the contrary, each of the payments provided
in connection with your Separation is intended to be exempt from Code Section 409A
pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) and to
the extent it is exempt pursuant to such section, it will in any event be paid no later than the last day of your
second taxable year following the taxable year in which your Separation has
occurred; provided that, to the extent that any
of such payments and any other payments paid to you in connection with your Separation does not
qualify to be exempt from Code Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) or
otherwise exceeds the limit set forth in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) or
any similar limit promulgated by the Treasury or the IRS, the portion of the
payments that does not qualify or otherwise exceeds such limit, as determined
by the Company in its sole discretion, will be paid by no later than the
fifteenth (15th) day of the third (3rd) month following the end of your first
(1st) tax year in which your Separation occurs, or, if later, the fifteenth
(15th) day of the third (3rd) month following the end of the Company’s first
(1st) tax year in which your Separation occurs, as provided in Treasury
Regulation Section 1.409A-1(b)(4).

 

Notwithstanding
the above, if any of the payments provided in connection with your Separation
does not qualify for any reason to be exempt from Code Section 409A pursuant to
Treasury Regulation Section 1.409A-1(b)(9)(iii) or Treasury
Regulation Section 1.409A-1(b)(4) and you are deemed by the
Company at the time of your Separation to be a “specified employee,” as defined
in Code Section 409A, each such payment will not be made or commence until
the date which is the first (1st) business day of the seventh (7th) month after
your Separation and the installments that otherwise would have been paid during
the first six (6) months after your Separation will be paid in a lump sum
on the first (1st) business day of the seventh (7th) month after your
Separation. Such deferral will only be effected to the extent required to avoid
adverse tax treatment to you, including (without limitation) the additional
twenty percent (20%) federal tax for which you would otherwise be liable under Section 409A(a)(1)(B) of
the Code in the absence of such deferral.

 

For purposes of
this letter agreement, “Permanent Disability” means your inability to perform
the essential functions of your position with or without reasonable
accommodation for a period of one hundred and twenty (120) consecutive days
because of your physical or mental impairment.”

 

2

 

This amendment to the Offer Letter may be
executed by fax copies and scanned images (exchanged via electronic mail) in
two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.  To indicate your acceptance of this amendment
to the Offer Letter, please sign and date this letter in the space provided
below and return it to me.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  PDF SOLUTIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  John K. Kibarian

  
	
   

  	
  Chief Executive
  Officer & President

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE FOREGOING TERMS AND CONDITIONS

  	
   

  
	
  ARE HEREBY AGREED TO AND ACCEPTED:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signed:

  	
   

  	
   

  
	
   

  	
   

  
	
  Print Name: Keith A. Jones

  	
   

  
	
   

  	
   

  
	
  Date:
  December         , 2008

  	
   

  
			

 

3Exhibit 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-Party
Indemnitor before the Company must perform its expense advancement and
reimbursement, and indemnification obligations, under this Agreement.  No advancement or payment by the Third-Party
Indemnitors on behalf of Indemnitee with respect to any claim for which
Indemnitee has sought indemnification from the Company shall affect the
foregoing.  The Third-Party Indemnitors
shall be subrogated to the extent of such advancement or payment to all of the
rights 

 

5

 

of recovery
which Indemnitee would have had against the Company if the Third-Party
Indemnitors had not advanced or paid any amount to or on behalf of
Indemnitee.  If for any reason a court of
competent jurisdiction determines that the Third-Party Indemnitors are not
entitled to the subrogation rights described in the preceding sentence, the Third-Party
Indemnitors shall have a right of contribution by the Company to the
Third-Party Indemnitors with respect to any advance or payment by the
Third-Party Indemnitors to or on behalf of the Indemnitee.

 

4.                                       Partial Indemnification.  If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of
the Expenses, judgments, fines or amounts paid in settlement, actually and
reasonably incurred in connection with a Proceeding, but not, however, for the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion of such Expenses, judgments, fines and amounts paid in settlement
to which Indemnitee is entitled.

 

5.                                       Director and Officer Liability Insurance.

 

(a)           D&O
Policy.  The Company
shall, from time to time, make the good faith determination whether or not it
is practicable for the Company to obtain and maintain a policy or policies of
insurance with reputable insurance companies providing the directors and
officers of the Company with coverage for losses from wrongful acts, or to
ensure the Company’s performance of its indemnification obligations under this
Agreement.  Among other considerations,
the Company will weigh the costs of obtaining such insurance coverage against
the protection afforded by such coverage. 
In all policies of director and officer liability insurance, Indemnitee
shall be named as an insured in such a manner as to provide Indemnitee the same
rights and benefits as are accorded to the most favorably insured of the
Company’s directors, if Indemnitee is a director; or of the Company’s officers,
if Indemnitee is not a director of the Company but is an officer; or of the
Company’s key employees, if Indemnitee is not an officer or director but is a
key employee.  Notwithstanding the
foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company determines in good faith that such insurance is not
reasonably available, if the premium costs for such insurance are
disproportionate to the amount of coverage provided, if the coverage provided
by such insurance is limited by exclusions so as to provide an insufficient
benefit, or if Indemnitee is covered by similar insurance maintained by a
parent or subsidiary of the Company.

 

(b)           Tail
Coverage.  In the event of
a Change of Control or the Company’s becoming insolvent (including being placed
into receivership or entering the federal bankruptcy process and the like), the
Company shall maintain in force any and all insurance policies then maintained
by the Company in providing insurance (directors’ and officers’ liability,
fiduciary, employment practices or otherwise) in respect of Indemnitee, for a
period of six years thereafter.

 

6.                                       Severability.  Nothing in this Agreement is intended to
require or shall be construed as requiring the Company to do or fail to do any
act in violation of applicable law.  The
Company’s inability, pursuant to court order, to perform its obligations under
this Agreement shall not constitute a breach of this Agreement.  If this Agreement or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify Indemnitee to the full extent permitted by
any applicable 

 

6

 

portion of
this Agreement that shall not have been invalidated, and the balance of this
Agreement not so invalidated shall be enforceable in accordance with its terms.

 

7.                                       Exclusions.  Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

 

(a)           Claims
Initiated by Indemnitee. 
To indemnify or advance Expenses to Indemnitee with respect to
Proceedings initiated or brought voluntarily by Indemnitee and not by way of
defense, except with respect to Proceedings brought to establish, enforce or
interpret a right to indemnification under this Agreement or any other statute
or law or otherwise as required under Section 145 of the General
Corporation Law of Delaware, but such indemnification or advancement of
Expenses may be provided by the Company in specific cases if the Board of
Directors finds it to be appropriate; provided, however, that the exclusion set
forth in the first clause of this subsection shall not be deemed to apply to
any investigation initiated or brought by Indemnitee to the extent reasonably
necessary or advisable in support of Indemnitee’s defense of a Proceeding to
which Indemnitee was, is or is threatened to be made, a party;

 

(b)           Lack
of Good Faith.  To
indemnify Indemnitee for any Expenses incurred by Indemnitee with respect to
any Proceeding instituted by Indemnitee to establish, enforce or interpret a
right to indemnification under this Agreement or any other statute or law or
otherwise as required under Section 145 of the General Corporation Law of
Delaware, if a court of competent jurisdiction determines that each of the
material assertions made by Indemnitee in such proceeding was not made in good
faith or was frivolous;

 

(c)           Insured
Claims.  To indemnify
Indemnitee for Expenses to the extent such Expenses have been paid directly to
Indemnitee by an insurance carrier under an insurance policy maintained by the
Company; or

 

(d)           Certain
Exchange Act Claims.  To
indemnify Indemnitee in connection with any claim made against Indemnitee for (i) an
accounting of profits made from the purchase and sale (or sale and purchase) by
Indemnitee of securities of the Company within the meaning of Section 16(b) of
the Exchange Act or any similar successor statute or any similar provisions of
state statutory law or common law, or (ii) any reimbursement of the
Company by Indemnitee of any bonus or other incentive-based or equity-based
compensation or of any profits realized by Indemnitee from the sale of
securities of the Company, as required in each case under the Exchange Act
(including any such reimbursements that arise from an accounting restatement of
the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”), or the payment to the Company of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section 306
of the Sarbanes-Oxley Act); provided, however, that to the fullest extent
permitted by applicable law and to the extent Indemnitee is successful on the
merits or otherwise with respect to any such Proceeding, the Expenses actually
and reasonably incurred by Indemnitee in connection with any such Proceeding
shall be deemed to be Expenses that are subject to indemnification hereunder.

 

7

 

8.                                       Contribution Claims.

 

(a)           If the indemnification provided in Section 1
is unavailable in whole or in part and may not be paid to Indemnitee for any
reason other than those set forth in Section 7, then in respect to any
Proceeding in which the Company is jointly liable with Indemnitee (or would be
if joined in such Proceeding), to the fullest extent permitted by applicable
law, the Company, in lieu of indemnifying Indemnitee, shall pay, in the first
instance, the entire amount incurred by Indemnitee, whether for Expenses,
judgments, fines or amounts paid in settlement, in connection with any
Proceeding without requiring Indemnitee to contribute to such payment, and the
Company hereby waives and relinquishes any right of contribution it may have at
any time against Indemnitee.

 

(b)           With respect to a Proceeding brought
against directors, officers, employees or agents of the Company (other than
Indemnitee), to the fullest extent permitted by applicable law, the Company
shall indemnify Indemnitee from any claims for contribution that may be brought
by any such directors, officers, employees or agents of the Company (other than
Indemnitee) who may be jointly liable with Indemnitee, to the same extent
Indemnitee would have been entitled to such indemnification under this
Agreement if such Proceeding had been brought against Indemnitee.

 

9.                                       No Imputation.  The knowledge and/or actions, or failure to
act, of any director, officer, agent or employee of the Company or the Company
itself shall not be imputed to Indemnitee for purposes of determining any
rights under this Agreement.

 

10.                                 Determination of Good Faith.  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 Enterprise, including
financial statements, or on information supplied to Indemnitee by the officers
of the Enterprise in the course of their duties, or on the advice of legal
counsel for the Enterprise or the Board of Directors of the Enterprise or any
counsel selected by any committee of the Board of Directors of the Enterprise
or on information or records given or reports made to the Enterprise by an
independent certified public accountant or by an appraiser, investment banker,
compensation consultant, or other expert selected with reasonable care by the
Enterprise or the Board of Directors of the Enterprise or any committee
thereof.  The provisions of this Section 10
shall not be deemed to be exclusive or to limit in any way the other
circumstances in which the Indemnitee may be deemed to have met the applicable
standard of conduct.  Whether or not the
foregoing provisions of this Section are satisfied, it shall in any event
be presumed that Indemnitee has at all times acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company.

 

11.                                 Defined Terms and Phrases.  For purposes of this Agreement, the following
terms shall have the following meanings:

 

(a)           “Beneficial Owner” and “Beneficial
Ownership” shall have the meanings set forth in Rule 13d-3 promulgated
under the Exchange Act as in effect on the date hereof.

 

(b)           “Change of Control” shall be
deemed to occur upon the earliest of any of the following events:

 

8

 

(i)            Acquisition of Stock by Third
Party.  Any Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing fifteen percent (15%) or more of the combined voting power of the
Company’s then outstanding securities entitled to vote generally in the
election of directors, unless (1) the change in the relative Beneficial
Ownership of the Company’s securities by any Person results solely from a
reduction in the aggregate number of outstanding shares of securities entitled
to vote generally in the election of directors, or (2) such acquisition
was approved in advance by the Continuing Directors and such acquisition would
not constitute a Change of Control under part (iii) of this definition.

 

(ii)           Change in Board of Directors.  Individuals who, as of the date of this
Agreement, constitute the Company’s Board of Directors (the “Board”),
and any new director whose election by the Board or nomination for election by
the Company’s stockholders was approved by a vote of at least two thirds of the
directors then still in office who were directors on the date of this Agreement
(collectively, the “Continuing Directors”), cease for any reason to
constitute at least a majority of the members of the Board.

 

(iii)          Corporate Transaction.  The effective date of a reorganization,
merger, or consolidation of the Company (a “Business Combination”), in
each case, unless, following such Business Combination:  (1) all or substantially all of the
individuals and entities who were the Beneficial Owners of securities entitled
to vote generally in the election of directors immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 51% of
the combined voting power of the then outstanding securities of the Company
entitled to vote generally in the election of directors resulting from such
Business Combination (including a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Business
Combination, of the securities entitled to vote generally in the election of
directors and with the power to elect at least a majority of the Board or other
governing body of the surviving entity; (2) no Person (excluding any
corporation resulting from such Business Combination) is the Beneficial Owner,
directly or indirectly, of 15% or more of the combined voting power of the then
outstanding securities entitled to vote generally in the election of directors
of such corporation except to the extent that such ownership existed prior to
the Business Combination; and (3) at least a majority of the Board of
Directors of the corporation resulting from such Business Combination were
Continuing Directors at the time of the execution of the initial agreement, or
of the action of the Board of Directors, providing for such Business Combination.

 

(iv)          Liquidation.  The approval by the Company’s stockholders of
a complete liquidation of the Company or an agreement or series of agreements
for the sale or disposition by the Company of all or substantially all of the
Company’s assets, other than factoring the Company’s current receivables or
escrows due (or, if such approval is not required, the decision by the Board to
proceed with such a liquidation, sale or disposition in one transaction or a
series of related transactions).

 

(v)           Other Events.  There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A (or a 

 

9

 

response to
any similar item or any similar schedule or form) promulgated under the
Exchange Act whether or not the Company is then subject to such reporting
requirement.

 

(c)           “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, and employees or agents, so that if
Indemnitee is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, trustee, general partner, managing member,
fiduciary, employee or agent of any 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.

 

(d)           “Enterprise” means the Company
and any other enterprise that Indemnitee was or is serving at the request of
the Company as a director, officer, partner (general, limited or otherwise),
member (managing or otherwise), trustee, fiduciary, employee or agent.

 

(e)           “Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

(f)            “Expenses” shall include all
direct and indirect costs, fees and expenses of any type or nature whatsoever,
including all attorneys’ fees and costs, retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, fees of private
investigators and professional advisors, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees, any federal,
state, local or foreign taxes imposed on Indemnitee as a result of the actual
or deemed receipt of any payment under this Agreement (including taxes that may
be imposed upon the actual or deemed receipt of payments under this Agreement
with respect to the imposition of federal, state, local or foreign taxes), fax
transmission charges, secretarial services and all other disbursements,
obligations or expenses in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, being or preparing to be a witness in,
settlement or appeal of, or otherwise participating in a Proceeding.  Expenses also shall include any of the
forgoing expenses incurred in connection with any appeal resulting from any
Proceeding, including the principal, premium, security for, and other costs
relating to any costs bond, supersedes bond, or other appeal bond or its
equivalent.  Expenses also shall include
any interest, assessment or other charges imposed thereon and costs incurred in
preparing statements in support of payment requests hereunder.  Expenses, however, shall not include amounts
paid in settlement by Indemnitee or the amount of judgments or fines against
Indemnitee.

 

(g)           “Person” shall have the
meaning as set forth in Section 13(d) and 14(d) of the Exchange
Act as in effect on the date hereof; provided, however, that “Person” shall
exclude: (i) the Company; (ii) any direct or indirect majority owned
subsidiaries of the Company; (iii) any employee benefit plan of the
Company or any direct or indirect majority owned subsidiaries of the Company or
of any corporation owned, directly or indirectly, by the Company’s stockholders
in substantially the same proportions as their ownership of stock of the
Company (an “Employee Benefit Plan”); and (iv) any trustee or other
fiduciary holding securities under an Employee Benefit Plan.

 

10

 

(h)           “Proceeding” shall include any
actual, threatened, pending or completed action, suit, arbitration, mediation,
alternate dispute resolution mechanism, investigation, inquiry, administrative
hearing or any other actual, threatened or completed proceeding, whether
brought by a third party, a government agency, the Company or its Board of
Directors or a committee thereof, whether in the right of the Company or
otherwise and whether of a civil (including intentional or unintentional tort
claims), criminal, administrative, legislative or investigative (formal or
informal) nature, including any appeal therefrom, in which Indemnitee was, is,
will or might be involved as a party, potential party, non-party witness or
otherwise by reason of the fact that Indemnitee is or was a director, officer,
employee or agent of the Company, by reason of any action (or failure to act)
taken by Indemnitee or of any action (or failure to act) on Indemnitee’s part
while acting as a director, officer, employee or agent of the Company, or by
reason of the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, partner (general, limited or otherwise), member
(managing or otherwise), trustee, fiduciary, employee or agent of any other
enterprise, in each case whether or not serving in such capacity at the time
any liability or expense is incurred for which indemnification, reimbursement
or advancement of expenses can be provided under this Agreement.

 

(i)            In addition, references to “other
enterprise” shall include another corporation, partnership, limited
liability company, joint venture, trust, employee benefit plan or any other
enterprise; references to “fines” shall include any excise taxes
assessed on Indemnitee with respect to an employee benefit plan; 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 Indemnitee 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; references to “include” or “including”
shall mean include or including, without limitation; and references to
Sections, paragraphs or clauses are to Sections, paragraphs or clauses in this
Agreement unless otherwise specified.

 

12.                                 Attorneys’ Fees.  In the event that any Proceeding is
instituted by Indemnitee under this Agreement to enforce or interpret any of
the terms hereof, the Company shall indemnify Indemnitee against all Expenses
actually and reasonably incurred by Indemnitee in connection with such
Proceeding, unless a court of competent jurisdiction determines that each of
the material assertions made by Indemnitee as a basis for such Proceeding were
not made in good faith or were frivolous. 
In the event of a Proceeding instituted by or in the name of the Company
under this Agreement or to enforce or interpret any of the terms of this
Agreement, the Company shall indemnify Indemnitee against all Expenses actually
and reasonably incurred by Indemnitee in connection with such Proceeding
(including with respect to Indemnitee’s counterclaims and cross-claims made in
such action), unless a court of competent jurisdiction determines that each of
Indemnitee’s material defenses to such action were made in bad faith or were
frivolous.

 

11

 

13.                                 Miscellaneous.

 

(a)           Governing
Law.  This Agreement and
all acts and transactions pursuant hereto and the rights and obligations of the
parties hereto shall be governed, construed and interpreted in accordance with
the laws of the State of Delaware, without giving effect to principles of
conflicts of law.

 

(b)           Entire
Agreement; Binding Effect. 
Without limiting any of the rights of Indemnitee described in Section 3(b),
this Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter herein and merges all prior discussions and
supersedes any and all previous agreements between them covering the subject
matter herein.  The indemnification
provided under this Agreement applies with respect to events occurring before
or after the effective date of this Agreement, and shall continue to apply even
after Indemnitee has ceased to serve the Company in any and all indemnified
capacities.

 

(c)           Amendments
and Waivers.  No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the
parties to this Agreement.  The failure
by either party to enforce any rights under this Agreement shall not be
construed as a waiver of any rights of such party.

 

(d)           Notices.  Any notice, demand or request required or
permitted to be given under this Agreement shall be in writing and shall be
deemed sufficient when delivered personally or sent by fax or 48 hours after
being sent by nationally-recognized courier or deposited in the U.S. mail, as
certified or registered mail, with postage prepaid, and addressed to the party
to be notified at such party’s address or fax number as set forth below or as
subsequently modified by written notice.

 

(e)           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

 

(f)            Successors
and Assigns.  This
Agreement shall be binding upon the Company and its successors (including any
direct or indirect successor by purchase, merger, consolidation or otherwise to
all or substantially all of the business and/or assets of the Company) and
assigns, and inure to the benefit of Indemnitee and Indemnitee’s heirs,
executors, administrators, legal representatives and assigns.  The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to Indemnitee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if no such
succession had taken place.

 

(g)           No
Employment Rights. 
Nothing contained in this Agreement is intended to create in Indemnitee
any right to continued employment.

 

(h)           Company
Position.  The Company
shall be precluded from asserting, in any Proceeding brought for purposes of
establishing, enforcing or interpreting any right to indemnification under this
Agreement, that the procedures and presumptions of this Agreement 

 

12

 

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 and is precluded from making
any assertion to the contrary.

 

(i)            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 Indemnitee, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Company to effectively bring suit to enforce such rights.

 

[Signature Page Follows]

 

13

 

The parties have executed this Agreement as
of the date first set forth above.

 

	
   

  	
   

  	
  THE
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PDF SOLUTIONS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  333 West San Carlos Street

  
	
   

  	
   

  	
  Suite 700

  
	
   

  	
   

  	
  San Jose, California 95110

  
	
   

  	
   

  	
  Fax: (408) 280-7915

  
	
   

  	
   

  	
   

  
	
  AGREED TO
  AND ACCEPTED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INDEMNITEE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (PRINT NAME)

  	
   

  	
   

  	
   

  
	
  (Signature)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fax:

  	
   

  	
   

  	
   

  
								

 

14

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