Exhibit 10.1
INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION
AGREEMENT (the “
Agreement ”) is made and entered into this
day of
,
, between Valence Technology, Inc., a Delaware corporation
(the “ Company ”), and
(“ Indemnitee ”).
INTRODUCTION:
A.
Indemnitee, as a member of the Company’s Board of Directors
and/or an officer of the Company, performs valuable services for
the Company;
B.
The Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for corporate directors, officers,
employees, controlling persons, agents and fiduciaries, the
significant increases in the cost of such insurance and the general
reductions in the coverage of such insurance.
C.
The Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors,
officers, employees, controlling persons, agents and fiduciaries to
expensive litigation risks at the same time as the availability and
coverage of liability insurance has been severely
limited.
D.
The stockholders of the Company have adopted Bylaws (the “
Bylaws ”) providing for the indemnification of
the officers, directors, agents and employees of the Company to the
maximum extent authorized by the Delaware General Corporation Law,
as amended (“ DGCL ”).
E.
Indemnitee does not regard the current protection available for the
Company’s directors, officers, employees, controlling
persons, agents and fiduciaries as adequate under the present
circumstances, and Indemnitee and other directors, officers,
employees, controlling persons, agents and fiduciaries of the
Company may not be willing to serve or continue to serve in such
capacities without additional protection.
F.
The Bylaws and the DGCL, by their non-exclusive nature, permit
contracts between the Company and its directors, officers,
employees, controlling persons, agents or fiduciaries with respect
to indemnification of such directors.
G.
The Company (i) desires to attract and retain the involvement
of highly qualified individuals, such as Indemnitee, to serve the
Company and, in part, in order to induce Indemnitee to be involved
with the Company, and (ii) wishes to provide for the
indemnification and advancing of expenses to Indemnitee to the
maximum extent permitted by law.
H.
In view of the considerations set forth above, the Company desires
that Indemnitee be indemnified by the Company as set forth
herein.
AGREEMENT:
NOW, THEREFORE
, in consideration of
Indemnitee’s service to the Company, the parties hereto agree
as follows:
1.
Indemnity of Indemnitee . The Company hereby
agrees to indemnify Indemnitee to the fullest extent permitted by
applicable law, even if such indemnification is not specifically
authorized by
the other provisions of this
Agreement, the Company’s Second Restated Certificate of
Incorporation (as the same may be amended from time to time, the
“ Certificate ”), the Bylaws or by
statute. In the event of any change after the date of this
Agreement in any applicable law, statute or rule that expands
the right of a Delaware corporation to indemnify a member of its
Board of Directors or an officer, employee, controlling person,
agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits
afforded by such change. In the event of any change in any
applicable law, statute or rule that narrows the right of a
Delaware corporation to indemnify a member of its Board of
Directors or an officer, employee, agent or fiduciary, such change,
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 except as set forth in
Section 9(a) hereof.
2.
Additional Indemnity . The Company hereby
agrees to hold harmless and indemnify the Indemnitee:
(a)
against any and all expenses incurred by Indemnitee, as set forth
in Section 3(a) below; and
(b)
otherwise to the fullest extent not prohibited by the Certificate,
the Bylaws or the DGCL.
3.
Indemnification Rights .
(a)
Indemnification of Expenses . The Company shall
indemnify and hold harmless Indemnitee, together with
Indemnitee’s partners, affiliates, employees, agents and
spouse and each person who controls any of them or who may be
liable within the meaning of Section 15 of the Securities Act
of 1933, as amended (the “ Securities Act ”), or Section 20
of the Securities Exchange Act of 1934, as amended (the
“ Exchange
Act ”), to the fullest
extent permitted by law if Indemnitee was or is or becomes a party
to or witness or other participant in, or is threatened to be made
a party to or witness or other participant in, any threatened,
pending or completed action, suit, proceeding or alternative
dispute resolution mechanism, or any hearing, inquiry or
investigation that Indemnitee in good faith reasonably believes
might lead to the institution of any such action, suit, proceeding
or alternative dispute resolution mechanism, whether civil,
criminal, administrative, investigative or other (hereinafter a
“ Claim
”) against
any and all expenses (including attorneys’ fees and all other
costs, expenses and obligations incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or
participate in, any such action, suit, proceeding, alternative
dispute resolution mechanism, hearing, inquiry or investigation),
judgments, fines, penalties and amounts paid in settlement (if such
settlement is approved in advance by the Company, which approval
shall not be unreasonably withheld) of any Claim and any federal,
state, local or foreign taxes imposed on Indemnitee as a result of
the actual or deemed receipt of any payments under this Agreement
(collectively, hereinafter “ Expenses ”), including all
interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses, incurred by
Indemnitee by reason of (or arising in part out of) any event or
occurrence related to the fact that Indemnitee is or was a
director, officer, employee, controlling person, agent or fiduciary
of the Company or any subsidiary of the Company, or is or was
serving at the request of the Company as a director, officer,
employee, controlling person, agent or fiduciary of another
corporation, partnership, joint venture, trust or other enterprise,
or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity including, without limitation, any
and all losses, claims, damages, expenses and liabilities, joint or
several (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of,
any action, suit, proceeding or any claim asserted) under the
Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, that
relate directly or indirectly to the registration, purchase, sale
or ownership of any securities of the Company or to any fiduciary
obligation owed with respect thereto
2
(hereinafter an
“ Indemnification
Event ”). Such payment
of Expenses shall be made by the Company as soon as practicable but
in any event no later than 25 days after written demand by
Indemnitee therefor is presented to the Company.
(b)
Reviewing Party . Notwithstanding the foregoing,
(i) the obligations of the Company under Section 2 shall
be subject to the condition that the Reviewing Party (as described
in Section 11(e) hereof) shall not have determined (in a
written opinion, in any case in which the Independent Legal Counsel
as defined in Section 11(d) hereof is involved) that
Indemnitee would not be permitted to be indemnified under
applicable law, and (ii) and Indemnitee acknowledges and
agrees that the obligation of the Company to make an advance
payment of Expenses to Indemnitee pursuant to
Section 4(a) (an “ Expense Advance ”) 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 such Expense Advance; 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 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 Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights
of appeal therefrom have been exhausted or lapsed) and until such
time, Indemnitee shall be entitled to receive interim payments of
expenses pursuant to Section 3(a). Indemnitee’s
obligation to reimburse the Company for any Expense Advance shall
be unsecured and no interest shall be charged thereon. If
there has not been a Change in Control (as defined in
Section 11(c) hereof), 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 that 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 referred
to in Section 3(e) hereof. 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. Any
determination by the Reviewing Party otherwise shall be conclusive
and binding on the Company and Indemnitee.
(c)
Contribution . If the indemnification provided for in
Section 3(a) above is for any reason held by a court of
competent jurisdiction to be unavailable to an Indemnitee in
respect of any losses, claims, damages, expenses or liabilities
referred to therein (after a final judicial determination is made
with respect thereto, and as to which all rights of appeal
therefrom have been exhausted or lapsed), then the Company, in lieu
of indemnifying Indemnitee thereunder, shall contribute to the
amount paid or payable by Indemnitee as a result of such losses,
claims, damages, expenses or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits
received by the Company and Indemnitee, or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and Indemnitee in connection
with the action or inaction that resulted in such losses, claims,
damages, expenses or liabilities, as well as any other relevant
equitable considerations. In connection with the registration
of the Company’s securities, the relative benefits received
by the Company and Indemnitee shall be deemed to be in the same
respective proportions that the net proceeds from the offering
(before deducting expenses) received by the Company and the
Indemnitee, in each case as set forth in the table on the cover
page of the applicable prospectus, bear to the aggregate
public offering price of the securities so offered. The
relative fault of the Company and Indemnitee shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a
3
material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or Indemnitee and the
parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or
omission.
The Company and Indemnitee agree
that it would not be just and equitable if contribution pursuant to
this Section 3(c) were determined by pro rata or per
capita allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. In connection with the
registration of the Company’s securities, in no event shall
an Indemnitee be required to contribute any amount under this
Section 3(c) in excess of the lesser of (i) that
proportion of the total of such losses, claims, damages or
liabilities indemnified against equal to the proportion of the
total securities sold under such registration statement that is
being sold by Indemnitee or (ii) the proceeds received by
Indemnitee from its sale of securities under such registration
statement. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of
the Securities Act) shall be entitled to contribution from any
person who was not found guilty of such fraudulent
misrepresentation.
(d)
Survival Regardless of Investigation . The
indemnification and contribution provided for herein will remain in
full force and effect regardless of any investigation made by or on
behalf of Indemnitee or any officer, director, employee, agent or
controlling person of Indemnitee.
(e)
Change in Control . After the date hereof, the Company
agrees that if there is a Change in Control of the Company (other
than a Change in Control that 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 thereafter arising concerning the rights of Indemnitee
to payments of Expenses under this Agreement or any other agreement
or under the Company’s Certificate or Bylaws as now or
hereafter in effect, Independent Legal Counsel (as defined in
Section 11(d) hereof) shall be selected by Indemnitee and
approved by the Company (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall
render
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