VALENCE TECHNOLOGY, INC.
000 XXXXXXXXX XXX
XXXXXXXXX, XXXXXX 00000
May 1, 2001
Xx. Xxxxxxx Xxxxxxxx
000-000-0000
0000 Xxxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Dear Xxxxxxx:
I am pleased to offer you a position with Valence Technology, Inc. (the
"Company") as its Chief Executive Officer and President. 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 of our offer are as follows:
1. CAPACITY AND DUTIES. You shall serve the Company as its Chief Executive
Officer and President and shall report directly to the Board of Directors of the
Company (the "Board of Directors"). Subject to the direction and control of the
Board of Directors, you shall have the full authority and responsibility to
operate and manage, on a day to day basis, the business and affairs of the
Company, and shall perform such other duties and responsibilities as are
currently prescribed by the Bylaws of the Company and which are customarily
vested in the office of chief executive officer of a corporation. 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 principally from an office provided by the Company at a location in
Texas to be designated by you.
2. NOMINATION TO THE BOARD OF DIRECTORS. The Company agrees to nominate you to
the Board of Directors for all periods during which you serve as Chief Executive
Officer and President of the Company and to use its best efforts to cause the
shareholders to cast their votes in favor of your continued election to the
Board. You agree to resign from the Board of Directors of the Company and each
of its subsidiaries at such time as you no longer serve the Company as its Chief
Executive Officer and President.
3. COMPENSATION. During the term of your employment with the Company, your
salary shall be $500,000 per year. Commencing on January 1, 2002 and on each
anniversary thereafter (each, an "Adjustment Date"), or from time to time at the
sole discretion of the Board of Directors, your salary shall be reviewed by the
Board of Directors and may be increased, but may never be decreased, in the sole
discretion of the Board of Directors. 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.
In the event you or the Company terminate your employment, for any reason, you
will earn the Base Salary prorated to the date of termination.
4. STOCK OPTIONS. You will be granted stock options under the Company's stock
incentive programs to purchase an aggregate of 1,500,000 shares of the Company's
common stock. The options shall have an exercise price equal to the last
reported per share sales price at the closing of the NASDAQ National Market on
the date that you accept this offer of employment, which date shall be indicated
in the space provided for below (the "Acceptance Date"). The options will vest
over four years as follows: options to purchase 375,000 shares (25%) will vest
on the first anniversary of the Acceptance Date. The remaining options shall
vest in 12 equal quarterly installments on September 1, December 1, March 1 and
June 1 during the term of your employment. The options shall be evidenced by a
stock option agreement in the form of the Company's standard stock option
agreement under the Company's incentive programs. The stock option agreement
shall contain a provision to the effect that if a Change of Control, termination
without Good Cause or resignation with Good Reason (each as defined below)
occurs, those options that are scheduled to become exercisable on the vesting
date immediately following the Change in Control shall accelerate and become
exercisable as of the date of such Change in Control.
5. 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.
6. PAYMENTS ON CHANGE IN CONTROL OR TERMINATION FOR OTHER THAN GOOD CAUSE OR
RESIGNATION FOR GOOD REASON.
6.1 If during the 24 months commencing on the Acceptance Date, there occurs
a Change in Control (as defined in Section 6.3 below) of the Company, the
Company terminates your employment for other than Good Cause (as defined in
Section 6.2 below), or you resign for Good Reason (as defined in Section 6.4
below), the Company shall (i) 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 6, shall be the Termination Date), a lump sum payment
of an amount equal to $500,000 and (ii) provide you with continued group health
insurance coverage for one (1) year 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 twelve (12) 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 of a
Change in Control, a termination for other than Good Cause or you resign for
Good Reason or otherwise following such 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
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entitled by virtue of your employment with the Company and indemnification for
acts and decisions made while in your role as Chief Executive Officer and
President of the Company.
6.2 For purposes of this Agreement, "Good Cause" shall mean and include
termination by reason of (i) your conviction (including any plea of guilty or no
contest) of (x) any felony or misdemeanor involving the embezzlement, theft or
misappropriation of monies or other property of the Company or (y) any felony
involving the embezzlement, theft or misappropriation of monies or other
property or crime of moral turpitude; (ii) willful and continued neglect by you
of your duties as Chief Executive Officer and President, but only if such
neglect continues for 30 days following receipt by you of written notice from
the Company specifying such breach and demanding that you cure such breach, and
(iii) your willful failure to abide by the Company's policies applicable to your
employment. Any determination of the existence of "Good Cause" for purpose of
this Agreement may be made only by the good faith action of a majority of the
Board (not including you if you are a Director) after a reasonable opportunity
for you and your counsel to appear before the Board. In the event your
employment is terminated 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 Chief Executive Officer and President of the Company.
6.3 For purposes of this Agreement, "Change in Control" of the Company
shall be deemed to have occurred if (a) there shall be consummated (x) 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 than 50% of the voting control of the surviving
corporation immediately after the merger or consolidation, or (y) 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 50% of the voting
control of the Company, or (c) a liquidation of the Company.
6.4 VOLUNTARY RESIGNATION WITH 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 the location in Texas you designate at the
commencement of your employment without your agreement (b) the Company assigns
to you any duties inconsistent with your position as Chief Executive Officer and
President 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 6.3),
any compensation plan in which you participated prior to the Change of Control,
including, but not limited to, the Company's incentive compensation plans
(including stock option and stock purchase plans), or (ii) makes any change to
such compensation plans or benefits which has the effect of substantially
diminishing the level of your overall benefits received under this Agreement,
unless an equitable arrangement has been made with respect to such compensation
plan or benefits that you have approved (d) a Change
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of Control (as defined in Paragraph 6.3) occurs (e) you are involuntarily
removed from the Company's Board of Directors or the stockholders of the Company
vote to remove you from the Company's Board in any vote taken for that purpose
(except where you have been terminated for "Good Cause" as defined in Paragraph
6.2) or (f) the Company has breached a material provision of this Agreement that
has not been cured within 30 days of written notice from you to the Company.
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. To obtain reimbursement, expenses must be submitted promptly with
appropriate supporting documentation in accordance with the Company's policies.
8. CERTAIN EXPENSES. The Company shall reimburse you (i) reasonable attorney's
fees incurred in reviewing this letter and negotiating the terms of your
employment, and (ii) reasonable costs incurred by you in relocating you and your
family in proximity to the Company's principal executive offices (if you are so
requested).
9. DISPUTE RESOLUTION. All disputes arising in connection with your employment
shall be settled by binding arbitration under the rules of the American
Arbitration Association 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.
10. MISCELLANEOUS. 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. That 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. 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, on thirty days written notice to the other (except in
the case of termination for Good Cause), 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 an officer of the
Company and by you.
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Xxxxxxx, it is my firm belief that you will be a wonderful addition to our
senior management team. I'm looking forward to working with you as Chief
Executive Officer and President of Valence Technology, Inc..
Sincerely,
/S/ XXX XXXXXX
---------------------------------
Xxx Xxxxxx, Chairman of the Board
ACCEPTED AND AGREED TO:
/S/ XXXXXXX XXXXXXXX
-----------------------------
Xxxxxxx Xxxxxxxx Date: May 2, 2001
