Document:

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 to reimburse the Company for any
advance of expenses until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been exhausted or
lapsed). Indemnitee’s obligation to reimburse the Company for any advance of
expenses shall be unsecured and no interest shall be charged thereon. If there
has not been a Change in Control, the Reviewing Party shall be selected by the
Board of Directors, and if there has been such a Change in Control (other than
a Change in Control which has been approved by a majority of the Company’s
Board of Directors who were directors immediately prior to such Change in
Control), the Reviewing Party shall be the Independent Legal Counsel. If there
has been no determination by the Reviewing Party or if the Reviewing Party
determines that Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, Indemnitee shall
have the right to commence litigation seeking an initial determination by the
court or challenging any such determination by the Reviewing Party or any
aspect thereof, including the legal or factual bases therefor, and the Company
hereby consents to service of process and to appear in any such proceeding. Absent
such litigation, any determination by the Reviewing Party shall be conclusive
and binding on the Company and Indemnitee.

 

(d)         Change in
Control.    The Company agrees that if there is a
Change in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company’s Board of Directors who were directors
immediately prior to such Change in Control), then, with respect to all matters
arising prior to the Change in Control, the rights of Indemnitee to payments of
expenses and advances of expenses under this Agreement or any other agreement
or under the Company’s Certificate of Incorporation or Bylaws as now or
hereafter in effect, Independent Legal Counsel, if desired by Indemnitee, shall
be selected by Indemnitee and approved by the Company (which approval shall not
be unreasonably withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law and the
Company agrees to abide by such opinion. The Company agrees to pay the
reasonable fees of the Independent Legal Counsel referred to above and to
indemnify fully such counsel against any and all expenses (including attorneys’
fees), claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto. Notwithstanding any other
provision of this Agreement, the Company shall not be required to pay expenses
of more than one Independent Legal Counsel in connection with all matters
concerning a single Indemnitee, and such Independent Legal Counsel shall be the
Independent Legal Counsel for any or all other Indemnitees unless (i) the
Company otherwise determines or (ii) any Indemnitee shall provide a
written statement setting forth in detail a reasonable objection to such
Independent Legal Counsel representing other Indemnitees.

 

(e)          Mandatory
Payment of Expenses.    Notwithstanding the other
provisions of this Section 2, to the extent that Indemnitee has been successful
on the merits or otherwise in defense of any action, suit or proceeding
referred to in Section 2(a) or Section 2(b) or the defense
of any claim, issue or matter therein, Indemnitee shall be indemnified against
expenses (including attorneys’ fees) actually and reasonably incurred by
Indemnitee in connection therewith.

 

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

 

4

 

4.              Expenses;
Indemnification Procedure.

 

(a)          Advancement
of Expenses.   Except as otherwise determined pursuant to Section 2(c),
the Company shall advance all expenses incurred by Indemnitee in connection
with the investigation, defense, settlement or appeal of any civil or criminal
action, suit or proceeding referred to in Section 2(a) or Section 2(b) (including
amounts actually paid in settlement of any such action, suit or proceeding). Indemnitee
hereby undertakes to repay such amounts advanced only if, and to the extent
that, it shall ultimately be determined that Indemnitee is not entitled to be
indemnified by the Company as authorized hereby.

 

(b)         Notice/Cooperation
by Indemnitee.   Indemnitee shall, as a condition
precedent to his or her right to be indemnified under this Agreement, give the
Company notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the Chief Executive
Officer of the Company and shall be given in accordance with the provisions of Section 11(d) below.
In addition, Indemnitee shall give the Company such information and cooperation
as it may reasonably require and as shall be within Indemnitee’s power.

 

(c)          Procedure.   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,
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
to recover the unpaid amount of the claim and, subject to Section 9 of
this Agreement, Indemnitee shall also be entitled to be paid for the expenses
(including attorneys’ fees) of bringing such action. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in connection with any action, suit or proceeding in advance of its
final disposition) 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. 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 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.

 

(d)         Notice of
Insurers.   If, at the time of the receipt of a notice of
a claim pursuant to Section 4(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 all
amounts payable as a result of such proceeding in accordance with the terms of
such policies.

 

(e)          Selection of
Counsel.   In the event the Company shall be obligated
under Section 4(a) hereof to pay the expenses of any proceeding
against Indemnitee, the Company 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,

 

5

 

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 other
counsel subsequently incurred by Indemnitee with respect to the same
proceeding, provided that Indemnitee shall have the right to employ additional
counsel in any such proceeding at Company’s expense if:  (i) the employment of counsel by
Indemnitee has been previously authorized by the Company, (ii) Indemnitee
shall have reasonably concluded that there is a conflict of interest between
the Company and Indemnitee in the conduct of any such defense or (iii) the
Company shall not, in fact, have employed counsel to assume the defense of such
proceeding.

 

5.              Additional
Indemnification Rights; Nonexclusivity.

 

(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 additional rights to indemnification 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 the State of Delaware, or otherwise, both as to action in
Indemnitee’s official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee for any action taken or not taken while serving in an
indemnified capacity even though he or she may have ceased to serve in any
such capacity at the time of any action, suit or other covered proceeding.

 

6.              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 penalties actually or reasonably incurred in
the investigation, defense, appeal or settlement of any civil or criminal
action, suit or proceeding, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion of such
expenses, judgments,  fines or penalties
to which Indemnitee is entitled.

 

7.              Mutual
Acknowledgment.   Both the Company and Indemnitee acknowledge
that in certain instances, federal law or public policy may override
applicable state law and prohibit the Company from indemnifying its directors
and officers under this Agreement or otherwise. For example, the Company and
Indemnitee acknowledge that the Securities and Exchange Commission (the “SEC”) has taken the position that
indemnification is not permissible for liabilities arising under certain
federal securities laws, and federal legislation prohibits indemnification for
certain ERISA violations. Indemnitee understands and acknowledges that the
Company has undertaken or may be required in the future to undertake with
the SEC to submit the question of indemnification to a court

 

6

 

in certain circumstances
for a determination of the Company’s right under public policy to indemnify
Indemnitee.

 

8.              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. The provisions of
this Agreement shall be severable as provided in this Section 9. 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 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.

 

9.              Exceptions.   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 or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except with
respect to proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law, 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;

 

(b)         Lack of Good
Faith.   To indemnify Indemnitee for any expenses incurred
by Indemnitee with respect to any proceeding instituted by Indemnitee to
enforce or interpret this Agreement, 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 or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) to the
extent such expenses or liabilities have been paid directly to Indemnitee by an
insurance carrier under a policy of officers’ and directors’ liability
insurance maintained by the Company; or

 

(d)         Claims Under
Section 16(b).   To indemnify Indemnitee for expenses
or the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange
Act of 1934, as amended, or any similar successor statute.

 

10.       Attorneys’ Fees.   In
the event that any action is instituted by either Indemnitee or by or in the
name of the Company under this Agreement, the prevailing party shall be
entitled to such party’s costs of suit and reasonable attorneys’ fees, which
shall be payable whether or not such action or proceeding is prosecuted to
judgment.

 

11.       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 conflict of law.

 

7

 

(b)         Entire
Agreement; Enforcement of Rights.   This Agreement sets
forth the entire agreement and understanding of the parties relating to the
subject matter herein and merges all prior discussions between them. 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.

 

(c)          Construction.
  This Agreement is the result of negotiations between and
has been reviewed by each of the parties hereto and their respective counsel,
if any;  accordingly, this Agreement
shall be deemed to be the product of all of the parties hereto, and no
ambiguity shall be construed in favor of or against any one of the parties
hereto.

 

(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 confirmed facsimile or twenty-four (24) hours after being
deposited with a nationally recognized overnight courier or forty-eight (48)
hours after being 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 facsimile number as set forth below or as subsequently modified by
written notice.

 

(e)          Counterparts.
  This Agreement may be executed in two or more
counterparts, and delivery of a signed counterpart by facsimile transmission
will constitute due execution and delivery of this Agreement.

 

(f)            Successors
and Assigns.   This Agreement shall be binding upon the
Company and its successors and assigns, and inure to the benefit of Indemnitee
and Indemnitee’s heirs and legal representatives.

 

(g)         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.

 

8

 

The parties hereto have
executed this Agreement as of the day and year set forth on the first page of
this Agreement.

 

	
   

  	
  MONOLOTHIC SYSTEM TECHNOLOGY, INC.

  A Delaware Corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Chet Silvestri

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  755 N. Mathilda Ave.

  Sunnyvale, CA 94085

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED TO AND ACCEPTED:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  \s\ Jim Pekarsky

  	
   

  	
   

  
	
   

  	
   

  
	
  Jim Pekarsly

  	
   

  	
   

  
	
  Name

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Facsimile Number:

  	
   

  
										

 

9Exhibit 10.20

 

MONOLITHIC SYSTEM TECHNOLOGY, INC.

CHANGE-IN-CONTROL AGREEMENT

 

THIS
CHANGE-IN-CONTROL AGREEMENT (this “Agreement”), made
and entered into as of March 20, 2006, by and between Monolithic System
Technology, Inc., a Delaware corporation (“MoSys”), and Jim Pekarsky (the “Officer”).

 

WHEREAS, MoSys
considers it essential to its best interests to foster the continued employment
of key management personnel and recognizes the distraction and disruption that
the possibility of a Change-in-Control (as defined in Section 1(d) below)
may raise to the detriment of MoSys and its stockholders; and

 

WHEREAS, MoSys has
determined to take appropriate steps to reinforce and encourage the continued
attention and dedication of key management personnel to their assigned duties
in the face of a possible Change-in-Control;

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein, MoSys
and the Officer hereby agree as follows:

 

1.                                      DEFINITIONS

 

(a)                                  “Base Salary” shall mean the
annual salary of the Officer at the time of termination of his employment
within the application of this Agreement.

 

(b)                                  “Beneficiary” shall mean (i) the
person or persons named by the Officer, by notice to MoSys, to receive any
compensation or benefit payable under this Agreement or (ii) in the event
of his death, if no such person is named and survives the Officer, his estate.

 

(c)                                  “Board” shall mean the Board of
Directors of MoSys.

 

(d)                                  “Change-in-Control”
means the occurrence of any of the following:

 

(i)  an acquisition
after the Effective Date by an individual, an entity or a group in one or more
related transactions (excluding MoSys or an employee benefit plan of MoSys or a
corporation controlled by MoSys’s stockholders) of 45 percent or more of MoSys’s
common stock or voting securities; or

 

(ii)  consummation
of a complete liquidation or dissolution of MoSys or a merger, consolidation,
reorganization or sale of all or substantially all of MoSys’s assets
(collectively, a “Business Combination”) other than a Business Combination in
which (A) the stockholders of MoSys receive 50 percent or more of the
stock of the corporation resulting from the Business Combination and (B) at
least a majority of the board of directors of such resulting corporation were
incumbent directors of MoSys immediately prior to the consummation of the
Business Combination, and (C) after which no individual, entity or group
(excluding any corporation or other entity resulting from the Business
Combination or any employee benefit plan of such corporation or of MoSys) who
did not own 45 percent or more of the stock of the resulting

 

 

corporation or other entity immediately before the
Business Combination owns 45 percent or more of the stock of such resulting
corporation or other entity.

 

(e)                                  “Good Reason” means, without the
Officer’s prior written consent or acquiescence:

 

(i)  assignment to
the Officer of duties incompatible with the Officer’s position, failure to
maintain the Officer in this position and its reporting relationship or a substantial
diminution in the nature of the Officer’s authority or responsibilities;

 

(ii)  reduction in
the Officer’s then current Base Salary or in the bonus or incentive
compensation opportunities or benefits coverage available during the term of
this Agreement, except pursuant to an across-the-board reduction similarly
affecting all senior executives of MoSys;

 

(iii)  termination
of the Officer’s employment, for any reason other than death, disability,
voluntary termination or Misconduct (as defined below);

 

(iv)  relocation of
the Officer’s principal place of business to a location more than 30 miles from
the location of such office on the date of this Agreement;

 

(v)  MoSys’s failure
to pay the Officer any material amounts otherwise vested and due the Officer
hereunder or under any plan, program or policy of MoSys; or

 

(vi)  failure of a
successor to MoSys following a Change-in-Control to expressly assume or affirm
MoSys’s obligations under this Agreement as specified in Section 6.

 

(f)                                    “Misconduct” means the commission
of any act of fraud, embezzlement or dishonesty or other violation of MoSys’s
Code of Business Conduct and Ethics for Employees, Executive Officers and
Directors by the Officer, any unauthorized use or disclosure by the Officer of
confidential information or trade secrets of MoSys or other breach by the
Officer of a material agreement between the Company and the Officer, or any
other intentional misconduct by the Officer adversely affecting the business
affairs of MoSys in a material manner.

 

(g)                                 “MoSys” when used herein shall be
deemed to refer to MoSys and any entity or entities that succeed to the assets
and properties of MoSys following a Change-in-Control, or any other corporation
or other entity which is a subsidiary or parent of such successor entity or
entities for whom the Officer is employed at any time within two years
following the Change-in-Control.

 

2.                                      TERM
OF AGREEMENT

 

This Agreement shall be
effective immediately upon its execution by MoSys and the Officer (the “Effective
Date”) and shall remain in effect until the earliest to occur of:  (a) termination of the Officer’s
employment with MoSys following a Change-in-Control (i) by reason of death
or disability, (ii) by the Officer other than for Good Reason, or (iii) by
MoSys for Misconduct, or (b) two years after the date of a
Change-in-Control.

 

2

 

3.                                      CHANGE
IN CONTROL BENEFITS

 

In the event of termination of the Officer’s
employment by the Officer for Good Reason within two years following a
Change-in-Control, the Officer will be entitled to the following:

 

(a)                                  Salary
and Benefits:

 

(i)  his Base Salary
through the date of termination;

 

(ii)  payment in
lieu of any unused vacation, in accordance with MoSys’s vacation policy and applicable
laws;

 

(iii)  any annual or
discretionary bonus earned but not yet paid to the Officer for any calendar
year prior to the year in which his termination occurs;

 

(iv)  any
compensation under any deferred compensation plan of MoSys or deferred compensation
agreement with MoSys then in effect;

 

(v)  any other
compensation or benefits, including without limitation any benefits under
long-term incentive compensation plans, any benefits under equity grants and
awards and employee benefits under plans that have vested through the date of
termination or to which the Officer may then be entitled in accordance
with the applicable terms of each grant, award or plan; and

 

(vi)  reimbursement
of any business expenses incurred by the Officer through the date of termination
but not yet paid to the Officer.

 

(b)                                  Stock Option Acceleration:  Immediate and unconditional
vesting of 50 percent of the then unvested stock options and stock awards
previously granted to the Officer and, for the one-year period following termination,
the right to exercise any stock options or other awards held by him.

 

(c)                                  Release.  MoSys will require, as a condition
of receiving the Change-in-Control payments under subsection (b) above,
that the Officer execute a general release substantially in the form attached
as Exhibit A, which upon execution shall be deemed incorporated herein by
reference as a material part of this Agreement.

 

4.                                      NO
MITIGATION

 

MoSys agrees that if the Officer’s employment
with MoSys terminates, the Officer will not be obligated to seek other
employment or to attempt to reduce any amount payable to the Officer under this
Agreement. Further, no amount of any payment under this Agreement shall be
reduced by any compensation earned by the Officer as the result of employment by
a subsequent employer or otherwise.

 

3

 

5.                                      NOTICES

 

Any notice or other communication required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given when delivered by hand, electronic transmission (with a copy
following by hand, mail or overnight courier), by registered or certified mail,
postage prepaid, return receipt requested or by overnight courier addressed to
the other party. All notices shall be addressed as follows, or to such other
address or addresses as may be substituted by notice in writing: 

 

	
  To Monolithic System Technology, Inc.:

  	
   

  	
  To the Officer:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  755 N Matilda Drive

  	
   

  	
  Jim Pekarsky

  
	
  Suite 100

  	
   

  	
   

  
	
  Sunnyvale, CA 94085

  	
   

  	
   

  
	
  Attention:  Chairman, Compensation

  Committee of the Board of Directors

  	
   

  	
  Fax:

  
	
  Fax: (408) 731-1893

  	
   

  	
   

  

 

6.                                      SUCCESSORS

 

(a)                                  MoSys’s Successors.  Any successor to MoSys (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) or to all or substantially all of MoSys’s business
and/or assets shall assume MoSys’s obligations under this Agreement in the same
manner and to the same extent as MoSys would be required to perform such
obligations in the absence of a succession.

 

(b)                                  Officer’s Successors.  Without the written consent of
MoSys, the Officer can not assign or transfer this Agreement or any right or
obligation under this Agreement to any other person or entity. Notwithstanding
the foregoing, the terms of this Agreement and all rights of the Officer under
this Agreement shall inure to the benefit of, and be enforceable by, the
Officer’s personal or legal representatives, executors, administrators,
successors, heirs, distributes, devisees and legatees.

 

7.                                      GENERAL
PROVISIONS

 

(a)                                  Amendments.  No provision of this Agreement may be
amended, modified or waived unless such amendment, modification or waiver shall
be agreed to in writing and signed by the Officer and by a member of the
Compensation Committee of the Board.

 

(b)                                  Severability.  If any provision of this Agreement shall be
determined to be invalid or unenforceable by a court of competent jurisdiction,
the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect to the fullest extent permitted by law. If
any provision of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remaining provisions shall nevertheless
continue in full force without being impaired or invalidated in any way.

 

4

 

(c)                                  Governing Law.  This Agreement shall be construed, interpreted
and governed in accordance with the laws of the state of California without
regard to its conflicts of laws rules.

 

(d)                                  Inconsistencies.  The terms of this Agreement supersede any
inconsistent prior promises, policies, representations, understandings,
arrangements or agreements between the parties, whether by employment contract
or otherwise.

 

(e)                                  Survival.  Notwithstanding the termination of the term of
this Agreement, the duties and obligations of MoSys, if any, following the
termination of the Officer’s employment following a Change-in-Control shall
survive indefinitely.

 

(f)                                    Withholding.  MoSys may deduct and withhold from any
payments hereunder the amount that MoSys, in its reasonable judgment, is
required to deduct and withhold for any federal, state or local income or
employment taxes.

 

(g)                                 No Other Compensation; Employee at Will.
 Except as provided in Section 3
above, no amount or benefit shall be payable to the Officer under this
Agreement in respect of termination of the Officer’s employment within two
years following a Change-in-Control. This Agreement shall not be construed as
creating an express or implied contract of employment and, except as otherwise
agreed in writing between the Officer and MoSys, the Officer is and shall
remain an “employee at will” and shall not have any right to be retained in the
employ of MoSys.

 

(h)                                 Counterparts.
 This Agreement may be executed
in counterparts.

 

IN WITNESS WHEREOF, the parties have executed
this Agreement as of the day and year first above written.

 

 

	
   

  	
  MONOLITHIC SYSTEM TECHNOLOGY,

  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  \s\ Chet Silvestri

  	
   

  
	
   

  	
   

  
	
   

  	
  Chet Silvestri

  
	
   

  	
   

  
	
   

  	
  Title: CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Jim Pekarsky

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  \s\ Jim Pekarsky

  	
   

  
	
   

  	
  (Signature)

  
					

 

5

 

EXHIBIT A

RELEASE
AGREEMENT

 

In consideration of the
benefits I will receive under Monolithic System Technology, Inc.’s
Change-in-Control Agreement, I hereby release, acquit and forever discharge
Monolithic System Technology, Inc. (the “Company”), its parents,
subsidiaries, predecessors, successors and affiliates, and each of their
respective officers, directors, agents, servants, employees, attorneys
shareholders, and assigns (the “Released Parties”), of and from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorneys’
fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed, arising out of or in any way related to agreements, events,
acts or conduct at any time prior to and including the date I sign this Release
Agreement. This release of claims includes, but is not limited to:

 

• any and all
claims and demands directly or indirectly arising out of or in any way
connected with my employment with the Company or the termination of that
employment, including, but not limited to, claims, demands or agreements
related to salary, bonuses, commissions, vacation pay, personal time off,
fringe benefits, expense reimbursements, sabbatical benefits, severance
benefits, stock, stock options, any other ownership or equity interest in the
Company, or any other form of compensation or benefit;

 

• claims
pursuant to any federal, state or local law, statute, common law or cause of
action including, but not limited to, Title VII of the federal Civil
Rights Act of 1964, as amended, or any other statute, agreement or source of
law, the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”),
the federal Americans with Disabilities Act of 1990, the Family and Medical
Leave Act, the Employee Retirement Income Security Act, the Equal Pay Act, the
Worker Adjustment and Retraining Notification Act, the California Fair
Employment and Housing Act, as amended, and the California Labor Code;

 

• all tort
law claims, including claims for fraud, misrepresentation, defamation, libel,
emotional distress and breach of the implied covenant of good faith and fair dealing;
and

 

• all
claims arising under contract law, or the law of wrongful discharge,
discrimination or harassment.

 

I represent
that I have no lawsuits, claims or actions pending in my name, or on behalf of
any other person or entity, against any of the Released Parties. I agree that
in the event I bring a claim covered by this release in which I seek damages
against the Company or in the event I seek to recover against the Company in
any claims brought by a governmental agency on my behalf, this Agreement shall
serve as a complete defense to such claims.

 

ADEA Waiver and Release:  I acknowledge that I am knowingly and
voluntarily waiving and releasing any rights I may have under ADEA. I also
acknowledge that the consideration given for the waiver and release herein is
in addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (a) my waiver and release do not apply to any rights or claims that may arise
after

 

6

 

the execution date of this Agreement; (b) I have been advised
hereby that I have the right to consult with an attorney prior to executing
this Agreement; (c) I have 21 days from the date I receive this Agreement
to consider this Agreement (although I voluntarily may choose to execute
this Agreement earlier); (d) I have seven days following the execution of
this Agreement to revoke the Agreement; and (e) this Agreement shall not
be effective until the later of (i) the date upon which the revocation
period has expired, which shall be the eighth day after I execute this
Agreement, or (ii) the date I return this Agreement, fully executed, to
the Company.

 

I acknowledge that for this
Release Agreement to be effective, I must sign and return it to the Company
within 21 days after the date I receive it and I must not revoke it at any time
during the above-referenced seven-day revocation period.

 

I acknowledge that I have read
and understand Section 1542 of the California Civil Code which reads as
follows: “A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor.” I hereby expressly waive and relinquish all rights and benefits under
that section and any law of any jurisdiction of similar effect with
respect to my release of any unknown or unsuspected claims I may have
against any of the Released Parties.

 

I understand that this Release
Agreement, together with the Change-in-Control Agreement, constitutes the
complete, final and exclusive embodiment of the entire agreement between the
Company and me with regard to the subject matter hereof. I am not relying on
any promise or representation by the Company that is not expressly stated in
this Release Agreement.

 

 

	
   

  	
  Jim Pekarsky

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  \s\ Jim Pekarsky

  	
   

  
	
   

  	
   

  
	
   

  	
  Its: 

  	
  CFO

  	
   

  
	
   

  	
   

  
	
   

  	
  Date: 

  	
  March 20, 2006

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACCEPTED AND
  AGREED:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  MONOLITHIC
  SYSTEM TECHNOLOGY, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  \s\ Chet
  Silvestri

  	
   

  	
   

  
	
   

  	
   

  
	
  Its: 

  	
  CEO

  	
   

  	
   

  
	
   

  	
   

  
	
  Date: 

  	
  March 20,
  2006

  	
   

  	
   

  
														

 

7

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