[VALENCE TECHNOLOGY, INC. LETTERHEAD]
December 2, 2004
Xxxx Xxxxxx
0000 Xxxxx Xxxxx
Xxxxxx, XX 00000
Dear Xxxx:
I am pleased to offer you a position with Valence Technology, Inc. (the
"Company") as its Vice President of Sales and Marketing. This letter outlines
the terms of our employment offer. If it is agreeable to you, please so indicate
by executing a copy of this letter in the space provided for below, and
returning it to the undersigned. The key terms are as follows:
1. Capacity and Duties. You shall serve as the Vice President of Sales and
Marketing and shall report directly to Xxxxxxx Xxxxxxxx, Chairman of the
Board of Directors, Chief Executive Officer and President of the Company.
Subject to the direction and control of the Chairman of the Board of
Directors, Chief Executive Officer and President of the Company, you shall
have the full authority and responsibility to operate and manage, on a
day-to-day basis, the Sales and Marketing business and affairs of the
Company. You shall devote your business time, energy, and efforts
faithfully and diligently to promote the Company's interests. The foregoing
shall not preclude you from engaging in appropriate professional,
educational, civic charitable or religious activities or from devoting a
reasonable amount of time to private investments, provided that such
activities do not interfere or conflict with your duties to the Company.
Except for routine travel incident to the business of the Company, you
shall perform your duties and obligations under this Agreement from an
office provided by the Company in Austin, Texas.
2. Compensation. During the term of your employment with the Company, your
salary shall be at an annualized rate of two hundred thousand dollars
($200,000). The Company may deduct from your salary amounts sufficient to
cover applicable federal, state and/or local income tax withholdings and
any other amounts, which the Company is required to withhold by applicable
law. You are also eligible for a sales incentive compensation program with
a target bonus payment of 50% of your annual base salary, to be paid
quarterly. The program specifics will be finalized within 30 days of your
date of hire. In the event you or the Company terminates your employment,
for any reason, you will earn the base salary prorated to the date of
termination.
3. Stock Options. You will be granted 220,000 stock options under the
Company's stock incentive programs. The exercise price of this option will
be the closing value of Valence's stock on your first day of employment.
This option vests over a four-year period; 25% on your
anniversary date and 75% vests quarterly over the remaining three years. In
the event of a Change of Control in the Company, termination without Good
Cause or resignation with Good Reason (each as defined below), all options
granted prior to the effective date of the transaction shall immediately
vest and become exercisable on the date of such Change of Control or
Termination for Other than Good Cause or Resignation for Good Reason.
4. Benefits. During the term of your employment, if and to the extent eligible
you shall be entitled to participate in all operative executive officer
benefit and welfare plans of the Company then in effect ("Company Benefit
Plans"), including, to the extent then in effect, group life, medical,
disability and other insurance plans, all on the same basis generally
applicable to the executives of the Company; 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 Plan at any time effective upon notification to you.
You will be eligible for four weeks of vacation per year, accrued on a
bi-weekly basis.
5. Payments on Change of control or Termination for Other than Good Cause or
Resignation for Good Reason.
5.1 If during the twenty four (24) months commencing on your first day of
employment, there occurs a Change of control (as defined in Section
5.3 below) of the Company, the Company terminates your employment for
other than Good Cause (as defined in Section 5.2 below), or you resign
for Good Reason (as defined in Section 5.4 below), the Company shall
(a) pay to you, on the fifth day following the date on which the
Change of Control, termination or resignation occurs (which for
purposes of this Section 5, shall be the Termination Date), a lump sum
payment of an amount equal to one hundred thousand dollars ($100,000)
and (b) provide you with continued group health insurance coverage for
six (6) months following the termination date, on the same terms as
during your employment, provided that the Company's carrier allows for
such coverage continuation. In the event the Company's carrier does
not allow such coverage continuation, the Company will pay the monthly
premium for group health benefits for a period of six (6) months,
provided that you elect to continue such benefits and remain eligible
to receive the benefits in accordance with the applicable provisions
of COBRA. If your health insurance coverage included your dependents
immediately prior to the Termination Date, such dependents shall also
be covered at the Company's expense. In the event a Change of control,
a termination for other than Good Cause or you resign for Good Reason
or otherwise following such twenty four (24) month period, you shall
be entitled to receive only your base salary then in effect, prorated
to the date of termination, and any benefits and expense reimbursement
to which you are entitled by virtue of your employment with the
Company and indemnification for acts and decisions made while in your
role as Vice President of Sales and Marketing of the Company.
5.2 For purposes of the Agreement, "Good Cause" shall mean and include
termination by reason of (a) your conviction (including any plea of
guilty or no contest) of (i) any felony or misdemeanor involving the
embezzlement, theft or misappropriation of monies or other property of
the Company and (ii) any felony involving the embezzlement, theft or
misappropriation of monies or other property or crime of moral
turpitude; (b) your willful and continued neglect by you of your
duties as Vice President of Sales and Marketing, but only if such
neglect continues for 30 days following receipt by you of written
notice from the Company specifying such breach
2
and demanding that you cure such breach, and (c) your willful failure
to abide by the Company's policies applicable to your employment. In
the event your employment is terminated in accordance for "Good
Cause," you shall be entitled to receive only your base salary then in
effect, prorated to the date of termination, and any benefits and
expense reimbursement to which you are entitled by virtue of your
employment with the Company and indemnification for acts and decisions
made while in your role as Vice President of Sales and Marketing of
the Company.
5.3 For purposes of this Agreement, "Change of control" of the Company
shall be deemed to have occurred if (a) there shall be consummated (i)
any consolidation or merger of the Company into or with another Person
(as such term is used in Sections 13(d)(3) and 14(d)(2) of the
Securities and Exchange Act of 1934, as amended (the "Exchange
Act,")), if the shareholders of the Company immediately prior to such
consolidation or merger (collectively, the "Company Shareholders") own
less that 50% of the voting control of the surviving corporation
immediately after the merger or consolidation, or (ii) any sale, lease
or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the
Company; (b) any Person other than Xxxx Xxxx or any entity owned or
affiliated with him shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of voting securities of
the Company representing more than fifty percent (50%) of the voting
control of the Company, (c) a liquidation of the Company.
5.4 Voluntary Resignation for Good Reason. You may voluntarily resign your
position with the Company for Good Reason, at any time, on thirty (30)
days advance written notice. You will be deemed to have resigned for
"Good Reason" if you resign following any of the circumstances: (a)
the Company relocates your principal work location from Austin, Texas
without your agreement (b) the Company assigns to you any duties
inconsistent with your position as Vice President of Sales and
Marketing of the Company, or substantially diminishes your status,
responsibilities or organizational position (c) your Base Salary is
reduced more than ten percent (10%) (d) the Company (i) fails to
continue in effect at a level at least equal to the compensation or
benefits (or formulas therefore) in effect immediately prior to a
Change of Control (as defined in Paragraph 5.3), (ii) any compensation
plan in which you participated prior to the Change of Control,
including, but not limited to, the Company's incentive compensation
plans or benefits which has the effect of substantially diminishing
the level of your overall benefits received under the Agreement,
unless an equitable arrangement has been made with respect to such
compensation plan or benefits that you have approved (e) a Change of
Control (as defined in Paragraph 5.3) occurs or (f) the Company has
breached a material provision of the Agreement that has not been cured
within thirty (30) days of written notice from you to the Company.
6. 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. To obtain reimbursement, expenses must be submitted promptly
with appropriate supporting documentation in accordance with the Company's
policies.
7. Dispute Resolution. All disputes arising in connection with your employment
shall be settled by arbitration in the county in which the principal
executive offices of the Company is located at the time the dispute arises.
The Company and you will execute a separate arbitration agreement in
customary form evidencing such agreement.
3
8. Miscellaneous. This offer is subject to your submission of an 1-9 form and
satisfactory documentation respecting your identification and right to work
in the United States no later than three days after your employment begins.
Because of the nature of the Company's business, you must execute a
Confidentiality Agreement in the Company's standard form as a condition of
your employment with the Company. The Agreement may be modified by the
Company from time to time, and as a condition of continued employment you
agree to execute any amended Agreement. Except as may be otherwise set
forth herein, your employment with the Company will be on an at-will basis,
meaning that either you or the Company may terminate the employment at any
time, with or without notice, and with or without Good Cause. No employee
of the Company may alter your status as an at-will employee.
To indicate your acceptance of the Company's offer, please sign and date
this letter in the space provided below and return it to me. A duplicate
original is enclosed for your records. This letter sets forth the terms of your
employment with the Company as of this date and supersedes any prior
representations or agreements whether written or oral. This letter may not be
modified or amended except by a written agreement, signed by the Chairman of the
Board of Directors, Chief Executive Officer and President of the Company and by
you.
Xxxx, I look forward to your favorable reply and to a productive and
exciting working relationship
Sincerely,
/s/ Xxxxxxx Xxxxxxxx 12/2/04
----------------------------- ----------------------------
Xxxxxxx Xxxxxxxx Date: December 2, 2004
ACCEPTED AND AGREED TO:
/s/ Xxxx X. Xxxxxx 12/2/04
----------------------------- ----------------------------
Xxxx Xxxxxx Date: December 2, 2004
Cc: Xxx Xxxxxx
4
