Document:

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

 

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(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

 

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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 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.  The
Company agrees to abide by such opinion and to pay the reasonable fees of the
Independent Legal Counsel referred to above and to fully indemnify such counsel
against any and all reasonable expenses (including attorneys’ fees), claims,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.

 

(f)            Mandatory Payment of Expenses.  Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee has been successful on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, in the defense of any action, suit, proceeding, inquiry or
investigation referred to in Section 3(a) hereof or in the defense of
any claim, issue or matter therein, Indemnitee shall be indemnified against all
Expenses incurred by Indemnitee in connection herewith.

 

4.             Expenses; Indemnification
Procedure.

 

(a)           Advancement of Expenses.  The Company shall advance all Expenses
incurred by Indemnitee.  The advances to
be made hereunder shall be paid by the Company to Indemnitee as soon as
practicable but in any event no later than twenty five business days after
written demand by Indemnitee therefor to the Company.

 

(b)           Notice/Cooperation by Indemnitee.  Indemnitee shall give the Company notice in
writing in accordance with Section 15 of this Agreement as soon as
practicable of any Claim made against Indemnitee for which indemnification will
or could be sought under this Agreement.

 

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(c)           No Presumptions; Burden of Proof.  For purposes of this Agreement, the
termination of any Claim by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court
has determined that indemnification is not permitted by applicable law.  In addition, neither the failure of the
Reviewing Party to have made a determination as to whether Indemnitee has met
any particular standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under applicable law, shall be a defense to Indemnitee’s
claim or create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief. In connection with
any determination by the Reviewing Party or otherwise as to whether Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Company to establish that Indemnitee is not so entitled.

 

(d)           Notice to Insurers.  If, at the time of the receipt by the Company
of a notice of a Claim pursuant to Section 4(b) hereof, the Company
has liability insurance in effect that may cover such Claim, the Company shall
give prompt notice of the commencement of such Claim to the insurers in
accordance with the procedures set forth in each of the Company’s 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 action, suit, proceeding,
inquiry or investigation in accordance with the terms of such policies.

 

(e)           Selection of Counsel.  In the event the Company shall be obligated
hereunder to pay the Expenses of any Claim, the Company shall be entitled to
assume the defense of such Claim, with counsel approved by the Indemnitee
(which approval shall not be unreasonably withheld) upon the delivery to
Indemnitee of written notice of its election to do so. 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 Claim; provided that (i) Indemnitee shall have the
right to employ Indemnitee’s counsel in any such Claim 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 is a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (C) the Company shall
not continue to retain such counsel to defend such Claim, then the fees and
expenses of Indemnitee’s counsel shall be at the expense of the Company.

 

5.             Nonexclusivity.  The
indemnification provided by this Agreement shall be in addition to any rights
to which Indemnitee may be entitled under the Company’s Certificate, its
Bylaws, any agreement, any vote of stockholders or disinterested directors, the
DGCL, or otherwise. The indemnification provided under this Agreement shall
continue as to Indemnitee for any action Indemnitee took or did not take while
serving in an indemnified capacity even though Indemnitee may have ceased to
serve in such capacity.

 

6.             No Duplication of Payments. 
The Company shall not be liable under this Agreement to make any payment
in connection with any Claim made against any Indemnitee to the extent
Indemnitee has otherwise actually received payment (under any insurance policy,
Certificate of Incorporation, Bylaws or otherwise) of the amounts otherwise
indemnifiable hereunder.

 

7.             Partial Indemnification. 
If any Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for any portion of Expenses incurred in
connection with

 

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any Claim, but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such Expenses to which Indemnitee is entitled.

 

8.             Mutual Acknowledgement. 
The Company and Indemnitee acknowledge that in certain instances,
Federal law or applicable public policy may prohibit the Company from
indemnifying its directors, officers, employees, controlling persons, agents or
fiduciaries under this Agreement or otherwise. Each Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future
to undertake with the Securities and Exchange Commission to submit the question
of indemnification to a court in certain circumstances for a determination of
the Company’s rights under public policy to indemnify Indemnitee.

 

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 any
Indemnitee with respect to Claims initiated or brought voluntarily by
Indemnitee and not by way of defense, except (i) with respect to actions
or proceedings to establish or enforce a right to indemnify under this
Agreement or any other agreement or insurance policy or under the Company’s
Certificate of Incorporation or Bylaws now or hereafter in effect relating to
Claims for Indemnifiable Events, (ii) in specific cases if the Board of
Directors has approved the initiation or bringing of such Claim, or (iii) as
otherwise required under Section 145 of the DGCL, regardless of whether
Indemnitee ultimately is determined to be entitled to such indemnification,
advance expense payment or insurance recovery, as the case may be; or

 

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

 

(c)           Claims Excluded Under Section 145
of the Delaware General Corporation Law. 
To indemnify Indemnitee if (i) Indemnitee did not act in good faith
or in a manner reasonably believed by such Indemnitee to be in or not opposed
to the best interests of the Company, or (ii) with respect to any criminal
action or proceeding, Indemnitee had reasonable cause to believe Indemnitee’s
conduct was unlawful, or (iii) Indemnitee shall have been adjudged to be
liable to the Company unless and only to the extent the court in which such
action was brought shall permit indemnification as provided in Section 145(b) of
the DGCL.

 

10.          Period of Limitations.  No legal
action shall be brought and no cause of action shall be asserted by or in the
right of the Company against any Indemnitee, any Indemnitee’s estate, spouse,
heirs, executors or personal or legal representatives after the expiration of
five years from the date of accrual of such cause of action, and any claim or
cause of action of the Company shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such four-year period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action, such shorter period shall govern.

 

11.          Construction of Certain Phrases.

 

(a)           For purposes of this Agreement,
references to the “Company” shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger that,
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, control person, or
fiduciary of such

 

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constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee,
control person, 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.

 

(b)           For purposes of this Agreement,
references to “other enterprises” shall
include employee benefit plans; references to “fines”
shall include any excise taxes assessed on any 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, agent or fiduciary of the Company that imposes duties on, or involves
services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or its beneficiaries; and if any
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in the interests 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.

 

(c)           For purposes of this Agreement a “Change in Control” shall be deemed
to have occurred if (i) any “person” (as
such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act), other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company 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, who becomes the “beneficial
owner” (as defined in Rule 13d-3 under said Exchange Act), directly or
indirectly, of securities of the Company representing more than 50% of the
total voting power represented by the Company’s then outstanding 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 a majority 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 that 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 a majority 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 transactions) all or substantially all of the Company’s assets.

 

(d)           For purposes of this Agreement, “Independent Legal Counsel” shall
mean an attorney or firm of attorneys, selected in accordance with the
provisions of Section 3(e) hereof, who shall not have otherwise
performed services for the Company or any Indemnitee within the last three
years (other than with respect to matters concerning the right of any
Indemnitee under this Agreement, or of other indemnitees under similar
indemnity agreements).

 

(e)           For purposes of this Agreement, a “Reviewing Party” shall mean any
appropriate person or body consisting of a member or members of the Company’s
Board of Directors or any other person or body appointed by the Board of
Directors who is not a party to the particular Claim for which Indemnitee is
seeking indemnification, or Independent Legal Counsel.

 

(f)            For purposes of this Agreement, “Voting Securities” shall mean any
securities of the Company that vote generally in the election of directors.

 

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12.          Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall
constitute an original.

 

13.          Binding Effect; Successors and Assigns. 
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors, assigns,
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, spouses, heirs, and personal and legal representatives. The Company
shall require and cause any successor (whether direct or indirect by purchase,
merger, consolidation or otherwise) to all, substantially all, or a substantial
part, 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.
This Agreement shall continue in effect with respect to Claims relating to
Indemnifiable Events regardless of whether any Indemnitee continues to serve as
a director, officer, employee, agent, controlling person, or fiduciary of the
Company or of any other enterprise, including subsidiaries of the Company, at
the Company’s request.

 

14.          Attorneys’ Fees.  In the event
that any action is instituted by an Indemnitee under this Agreement or under
any liability insurance policies maintained by the Company to enforce or
interpret any of the terms hereof or thereof, any Indemnitee shall be entitled
to be paid all Expenses incurred by Indemnitee with respect to such action
(including, without limitation, attorney’s fees), regardless of whether
Indemnitee is ultimately successful in such action, and shall be entitled to
the advancement of Expenses with respect to such action, unless, as a part of
such action, a court of competent jurisdiction over such action determines that
the material assertions made by Indemnitee as a basis for such action were not
made in good faith or were frivolous, provided, however, that until such
determination is made, Indemnitee shall be entitled to receive payment of
Expense Advances hereunder with respect to such action. In the event of an
action instituted by or in the name of the Company under this Agreement to
enforce or interpret any of the terms of this Agreement, Indemnitee shall be
entitled to be paid all Expenses incurred by Indemnitee in defense of such
action (including costs and expenses incurred with respect to Indemnitee
counterclaims and cross-claims made in such action), and shall be entitled to
the advancement of Expenses with respect to such action, unless, as a part of
such action, a court having jurisdiction over such action determines that each
of the Indemnitee’s material defenses to such action was made in bad faith or
were frivolous.

 

15.          Notice.  All notices
and other communications required or permitted hereunder shall be in writing,
shall be effective when given, and shall in any event be deemed to be given (a) five
calendar days after deposit with the U.S. Postal Service or other applicable
postal service, if delivered by first class mail, postage prepaid, (b) upon
delivery, if delivered by hand, (c) one business day after the business
day of deposit with Federal Express or similar overnight courier, freight
prepaid, or (d) one day after the business day of delivery by facsimile
transmission, if deliverable by facsimile transmission, with copy by first
class mail, postage prepaid, and shall be addressed if to Indemnitee, at
Indemnitee’s address as set forth beneath Indemnitee’s signature to this
Agreement and if to the Company at the address of its principal corporate
offices (attention: Chief Executive Officer) or at such other address as such
party may designate by ten calendar days’ advance written notice to the other
party hereto.

 

16.          Consent to Jurisdiction. 
The Company and Indemnitee each hereby irrevocably consent to the
jurisdiction of the courts of the State of Delaware for all purposes in
connection with any action or proceeding that arises out of or relates to this
Agreement and agree that any action instituted under this Agreement shall be
commenced, prosecuted and continued only in the Court of Chancery of the State
of Delaware in and for New Castle County, which shall be the exclusive and only
proper forum for adjudicating such a claim.

 

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17.          Severability.  The
provisions of this Agreement shall be severable in the event that any of the
provisions hereof (including any provision within a single section, paragraph
or sentence) are held by a court of competent jurisdiction to be invalid, void
or otherwise unenforceable, and the remaining provisions shall remain
enforceable to the fullest extent permitted by law. Furthermore, to the fullest
extent possible, the provisions of this Agreement (including, without
limitations, each portion of this Agreement containing any provision held to be
invalid, void or otherwise unenforceable, that is not itself invalid, void or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.

 

18.          Choice of Law.  This
Agreement shall be governed by and its provisions construed and enforced in
accordance with the laws of the State of Delaware, as applied to contracts
between Delaware residents, entered into and to be performed entirely within
the State of Delaware, without regard to the conflict of laws principles
thereof.

 

19.          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 effectively to bring suit to
enforce such rights.

 

20.          Amendment and Termination. 
No amendment, modification, termination or cancellation of this
Agreement shall be effective unless it is in writing signed by all parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.

 

21.          Integration and Entire Agreement. 
This Agreement sets forth the entire understanding between the parties
hereto and supersedes and merges all previous written and oral negotiations,
commitments, understandings and agreements relating to the subject matter
hereof between the parties hereto.

 

22.          No Construction as Employment Agreement. 
Nothing contained in this Agreement shall be construed as giving the
Indemnitee any right to be retained in the employ of the Company or any of its
subsidiaries.

 

23.          Corporate Authority.  The Board of
Directors of the Company has approved the terms of this Agreement.

 

[Signature Page Follows]

 

9

 

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

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  VALENCE
  TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INDEMNITEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Print
  Name:

  	
   

  
				

 

10Exhibit 10.2

 

	
  

  	
  Valence

  Technology, Inc.

  	
   

  

 

August 29th, 2007

 

Mr. Alastair
Johnston 

7 Knockhill Park

Belfast,
BT5 6HX

Northern Ireland

 

Dear
Alastair,

 

We
are pleased to offer you the position of Vice-President, Worldwide Marketing &
Sales of Valence Technology, Inc. (the “Company”). This letter and the
attached Statement of Employment Particulars outline the terms of our
employment offer. If it is agreeable to you, please so indicate by executing a
copy of this letter and Statement of Employment Particulars, in the spaces
provided, and return both documents to the undersigned.

 

1.
Capacity and Duties.  You
shall serve the Company as its Vice President, Worldwide Marketing &
Sales and shall report directly to me, the Company’s CEO and President.

 

2.
Compensation.  Your
starting salary will be at an annualized rate of ninety-six thousand pounds
sterling (£96,000) per annum payable in monthly intervals. The Company may
deduct from your salary amounts sufficient to cover applicable income tax
withholdings and any other amounts which the Company is required to withhold by
applicable law. In the event you are involuntarily separated from the Company
within twenty-four (24) months from your first date of employment, upon signing
a mutually acceptable release, Company will pay you a one-hundred thousand
dollar (US$100,000.00) lump-sum. In the event you voluntarily resign from
Valence, no separation payment will be paid by Company.

 

4.
Stock Options.  Upon your
employment, you will receive an employee stock option in the amount of
two-hundred and fifty thousand (250,000) shares. This option vests over a four (4) year
period as follows: 25% upon the anniversary of your first day of employment,
the remaining 75% vesting quarterly over the remaining 3 years. The exercise
price for this option grant will be the closing value of Valence’s stock on
your first day of employment.

 

5.
Benefits.  During the
term of your employment, if and to the extent eligible, you shall be entitled
to participate in all operative benefit and welfare plans of the Company then
in effect for Company’s UK employees including, to the extent then in effect,
group life, medical, disability and other insurance plans; provided, however,
that nothing contained in this paragraph shall, in any manner whatsoever,
directly or indirectly, require or otherwise prohibit the Company from
amending, modifying, curtailing, discontinuing or otherwise terminating, any
Company benefit and welfare plan at any time effective upon notification to
you. For any employee benefit or welfare plan which is based in whole or in
part on length of employment, your prior employment term with Valence will be
included when calculating such employment benefits.

 

Valence Technology, Inc. 1889 E. Maule Ave.,
Suite A, Las Vegas, Nevada 89119

Tel: 702-558-1000, Fax: 702-558-1001

 

 

6.
FY 2008 Cash Bonus.  You will be
eligible to receive a performance bonus that will be equivalent to three
quarters of a percent (0.75%) of the worldwide Qualified Revenue achieved in
fiscal year 2008 (FY2008) by the Company. For purposes herein, Qualified
Revenue shall mean the worldwide battery and systems sales revenue received by
the Company exclusive of licensing revenue and revenue from sales to OEMTec,
Light Engineering and EVI, and other possible House Accounts based on agreement
between you and the President & CEO of the Company. The eligibility
for the performance bonus is contingent on the following accomplishments:

1)                                      The Company
achieving $25M in Qualified Revenue for FY2008;

2)                                      The Company
achieving $10M in Qualified Revenue in any one calendar quarter in FY2008 or
thereafter (the “$10M QTR”);

3)                                      You and your
sales team develop one new strategic customer account per calendar quarter on
average for the time period beginning with the third quarter of FY2008 until
the Company completes the $10M QTR; and

4)                                      You are
employed by Valence at the time the Company completes the $10M QTR.

 

The
performance bonus will be placed in a non-interest earning escrow account if
the Company achieves $25M in Qualified Revenue for FY2008. Upon the successful
completion of the four contingencies, the performance bonus will be payable
within ten (10) days following the accounting close of the $10M QTR.

 

7.
Business Expenses.  You will be
reimbursed for all reasonable, out-of-pocket business expenses incurred in the
performance of your duties on behalf of the Company, consist with Company
policies. To obtain reimbursement, expenses must be submitted promptly with
appropriate supporting documentation in accordance with the Company’s policies.

 

8.
Probationary Period.  The first
six months of your employment are probationary. During the six-month
probationary period the notice period to be given by both parties is one week.
After a successful probationary period any notice of termination given to you
by the Company will be three months notice. You are also required to give the
company three months notice of termination of your employment after successful
completion of your probationary period. The Company reserves the Right to make
Payment in Lieu of Notice at its sole discretion.

 

 

To
indicate your acceptance of the Company’s offer, please sign and date this
letter and the attached Statement of Employment Particulars, in the space
provided for each, and return the signed copies to the undersigned. A duplicate
original of each document is enclosed for your records. This letter and
accompanying Statement of Employment Particulars sets forth the terms of your
employment with the Company as of the date indicated above and supersedes any
prior representations or agreements whether written or oral.

 

 

Sincerely,

 

 

	
  /s/
  Robert L. Kanode

  	
   

  
	
  Robert
  L. Kanode

  	
   

  
	
  CEO
  and President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACCEPTED
  AND AGREED TO:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/
  Alastair Johnston

  	
   

  
	
  Alastair
  Johnston

  	
   

  
	
   

  	
   

  
	
  Date:
  31/8/07

  	
   

  

 

 

	
  

  	
   

  	
   

  
	
   

  	
   

  
	
  12303 Technology Blvd. 

  Suite 950

  Austin, Texas 78727

  	
  T +1 512 527 2900

  F +1 512 527 2910

  W www.valence.com

  

 

ADDENDUM

 

December 22, 2008

Alastair Johnston

Re: Addendum to Employment Offer
and Statement of Particulars

 

Dear Alastair,

 

In recognition and appreciation
of your hard work and dedication to Valence, I would like to extend to you a
salary increase of £4,000 per annum. This adjustment will increase your annual
salary to £100,000 per year. The effect of the change will be noted in the January 2009
payroll.

 

In addition to the salary
increase, I would like to extend the proposed Bonus Compensation Plan for
FY2010. The plan highlights are as follows:

 

	
  Term:

  	
  FY2010

  
	
  Existing Stock:

  	
  250,000
  (will continue original vesting schedule)

  
	
  Prior Comp Plan: 

  	
  $50,000
  award (to be paid on the January 2009 payroll)

  
	
  Bonus Stock Options: 

  	
  March 31,
  2010 (Award date with immediate vesting)

  
	
  Cash
  Bonus:

  	
  None

  

 

This
Stock Bonus Plan is
contingent on assured compliance with Gross Margin Target established by
Valence’s Chief Executive Officer and Chief Financial Officer and in accordance
with the approved pricing schedule and budget. The Bonus Stock Option strike
price will be $2.53 per share, being not less than the fair market value
of the Common Stock on December 22, 2008, the date of this contract
signing. The terms and conditions of this Stock Bonus Plan are subject to all
the provisions of the 2000 Stock Option Plan.

 

This Addendum supersedes
all prior Bonus agreements, arrangements, and communications, whether oral or
written, between the parties. No amendment to this Agreement may be made except
by a writing signed by the Company and Employee.

 

We appreciate your
contribution and efforts to the success of Valence Technology, and wish you
success throughout the remainder of this year.

 

	
  Signed:

  	
  /s/ Alastair Johnston

  	
   

  	
  Signed:

  	
  /s/ Robert L. Kanode

  
	
   

  	
  Alastair Johnston

  	
   

  	
   

  	
  Robert L. Kanode

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date: 

  	
  7/1/09

  	
   

  	
  Date:

  	
  1/7/09

  

 

 

	
  

  	
   

  	
   

  
	
   

  	
   

  
	
  12303 Technology Blvd. 

  Suite 950

  Austin, Texas 78727

  	
  T +1 512 527 2900

  F +1 512 527 2910

  W www.valence.com

  

 

Alastair
Johnston:                                    

Robert
L. Kanode                                     

 

Alastair Johnston Proposed
Compensation Plan FY2010

 

(Requires Comp. Committee Approval)

Revision as Approved By Comp Committee February  , 2009

 

	
   

  	
   

  	
  Plan Highlights

  
	
  Term

  	
   

  	
  FY2010 

  
	
  Base Salary

  	
   

  	
  100,000 British Pounds

  
	
  Assured
  Compliance with Gross Margin Target Established By CFO/CEO

  	
   

  	
  Approved Pricing Schedule / Budget 

  
	
  Bonus Stock
  Option Strike Price

  	
   

  	
  $2.53 

  
	
  Bonus Stock
  Option Award Date with Immediate Vesting

  	
   

  	
  Date of Audit Report for FY 2010

  
	
  FY2010 Cash
  Bonus 

  	
   

  	
  NONE 

  
	
  FY2011
  Compensation Plan to be Negotiated by

  	
   

  	
  1-Dec-09

  

 

	
   

  	
   

  	
  Audited

  	
   

  	
  Bonus

  	
   

  	
   

  	
   

  	
  Stock Option Bonus Award

  	
   

  
	
   

  	
   

  	
  Revenue Goal

  	
   

  	
  Percentage of

  	
   

  	
   

  	
   

  	
  # of Stock

  	
   

  	
  Total

  	
   

  
	
  Stock Option Bonus Plan*

  	
   

  	
  FY2010

  	
   

  	
  Revenue Goal

  	
   

  	
  Value of Bonus

  	
   

  	
  Options**

  	
   

  	
  Options

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Base Stock Option Bonus

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  18,972

  	
   

  	
  18,972

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  55,336

  	
   

  	
  55,336

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  94,862

  	
   

  	
  94,862

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  126,482

  	
   

  	
  126,482

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stretch Stock Option Bonus Equal to 

  Bonus plus Stretch Bonus 

  Percentage of Difference in Goals

  	
   

  	
  Stretch
  Revenue 

  Goal

  	
   

  	
  Stretch
  Bonus 

  Percentage

  	
   

  	
  Value of
  

  Stretch Bonus

  	
   

  	
  # of
  Stretch

  Stock

  Options**

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  3,162

  	
   

  	
  129,644

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  23,715

  	
   

  	
  150,198

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  50,593

  	
   

  	
  177,075

  	
   

  
	
  Maximum Stock Option Bonus

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  94,862

  	
   

  	
  221,344

  	
   

  

 

* The Company
believes that Instruction 4 to Item 402(b) of Regulation S-K under the
Securities Exchange Act of 1934, as amended, is applicable to the specific audited
revenue goals.  The disclosure of such
information would cause competitive harm to the Company as the audited revenue
goals involve confidential information. 
Therefore, such audited revenue goals, and the bonus percentages and
values which are calculated directly therefrom, are not disclosed herein.  The Company believes that the target levels
of performance based on the audited revenue goals are reasonably, but not
easily, achievable, and believes that such target levels should be reasonable
so as to motivate the executive officer receiving the grant and further the
objectives of the Company.

 

** Calculated at Stock Option Strike Price of $2.53

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