Document:

Exhibit
10.1

 

 

October 1,
2008

 

Ross
A. Goolsby

10200
Milky Way Drive

Austin,
TX 78730

 

Reference:  Contingent Employment Offer

 

Dear
Ross:

 

Valence
is pleased to extend a contingent offer of employment with you in the capacity
as Chief Financial Officer. You will also hold the title of Assistant Secretary
which duties include, but are not limited to, maintaining corporate governance
and corporate good standing for Valence Technology, Inc. and all its
subsidiaries. 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 Cheryl
Logan, Director of Human Relations. This offer is contingent upon the
occurrence of the following condition precedent: (1) the acceptance by the
CEO and Board of the signed employment offer letter from you. The key terms and
conditions are as follows:

 

Capacity and Duties:

 

You
shall serve the Company as its Chief Financial Officer and shall report to Robert
L. Kanode, President and Chief Executive Officer. In this capacity, you will be
expected to, on a day to day basis, oversee all financial activities which
include, but are not limited to:

 

•                  Implement
worldwide financial/accounting policies, processes, and internal controls to
increase staff efficiency and effectiveness, to ensure alignment with and
achievement of organizational strategies and priorities, as well as protect
organizational assets.

 

•                  Actively
participate as a member of the executive team in establishing the strategic
direction of the company and in managing the day-to-day operations of the
business.

 

•                  Oversee
all aspects of the Company’s financial organization and responsibilities,
including accounting, treasury, financial reporting and analysis.

 

•                  Provide
analysis and insight to financial data, including budget, actual, and
forecasts, to understand discrepancies and variances, and to provide timely
recommendations for improvements and corrective actions.

 

•                  Develop
financial cost models to assist senior management in identifying inefficient
development, manufacturing, sales and fulfillment operations or processes and
assist in implementing cost effective corrective actions.

 

•                  Assume responsibility
for all financial reporting, both internal management reporting and external
reporting within applicable due dates.

 

•                  Assure
compliance with all applicable SEC, SOX and any other public company rules and
regulations at all worldwide Valence Technology, Inc. locations.

 

•                  Assume responsibility
for funding to support normal business activities and business growth.

 

•                  Oversee
the development of business systems to support the financial and operating
needs of the Company.

 

	
  Confidential

  	
  Valence Technology, Inc. 12303 Technology
  Blvd., Suite 950., Austin Texas 78727

  	
   

  
	
   

  	
  Tel: 512-527-2900, Fax: 512-527-2901

  	
   

  

 

 

•                  Provide
cost analysis and implement processes to control spending levels and cash
outflow to match growth of the business.

 

•                  Assist
CEO, BOD and executive team as required in the due diligence and development of
partnership agreements, license contracts, supplier contracts, customer
manufacturing contracts and any other business to business or business to customer
relationships as required.

 

•                  Manage and
foster the Company’s relationship with its outside accounting firms, including
coordination of the annual audits.

 

•                  Assist
with implementing Company-wide quality initiatives.

 

•                  Assume responsibility
for hiring and mentoring worldwide staff to support the requirements of the
financial functions.

 

•                  Assume
responsibility for the assessment and management of employee performance
including the completion of performance and salary reviews and bonus program.

 

Compensation:

 

Your
starting salary will be at an annualized rate of $230,000 paid on a bi-weekly
basis. Since this position is classified as exempt, you will not be eligible
for overtime pay. The Company may make deductions from your salary 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 terminates your employment, for any reason, you will
earn the base salary prorated to the date of termination.

 

Annual Bonus:

 

In
addition, you will be eligible for consideration of an annual bonus of up to
forty percent (40%) of your base salary. This bonus will be at the discretion
of the Company and is based on specific goals set by and agreed to by the CEO
and CFO within 30 days of employment (reference Exhibit A), as well as
based on the Company’s financial performance. This bonus is not guaranteed. In
the event you accomplish the set goals, your considered bonus will be prorated
from your official start date to the Company’s fiscal year end.

 

Stock Options:

 

Upon
acceptance of this offer and your beginning employment, you will receive an
employee stock option grant in the amount of 350,000 shares. 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 three-year period; eighty seven
thousand five hundred (87,500) options vesting after six (6) months
employment from your employment date and the remaining two hundred sixty two
thousand five hundred (262,500) options vesting quarterly in equal quarterly
amounts (26,250) over the remaining thirty (30) months. In the event the
Company terminates your employment for other than Good Cause (as defined below)
all options that have vested, at the time of termination, become exercisable within
90 days following the date of termination for Other than Good Cause, as defined
herein.

 

Benefits:

 

You
will be eligible to receive medical, dental, vision, and life insurance
coverage provided under Valence’s group insurance plans, and will be eligible
to participate in Valence’s 401(k) plan. You will be eligible for three weeks
of vacation per year, accrued on a bi-weekly basis. These benefit plans are
described in more detail in the plan documents available from the Human
Resources Department.

 

2

 

Miscellaneous:

 

Because
of the nature of the Company’s business, you will be required to 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 wither
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.

 

Severance and Change of Control:

 

Valence
reserves the right to terminate your employment agreement for Good Cause:

 

•                  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 Chief Financial Officer, but only if such
neglect continues for 10 days following receipt by you of written notice from
the Company specifying such breach and demanding that you cure such breach, and
(c) your continued willful failure to abide by the Company’s policies
applicable to your employment for 10 days following receipt by you of written
notice from the Company specifying such breach. 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.

 

In
addition, Valence may terminate your employment agreement without cause with 30
days notice. Your employment agreement(s) will terminate automatically on
your death or permanent disability. You may terminate your employment agreement
in the event there is a “change of control” of the Company as defined below:

 

•                  Change
in Control is defined as the occurrence of one of the following: (a) any
person, entity or group (as defined under applicable federal securities laws)
becomes the beneficial owner of more than 50% of the combined voting power of
our then outstanding voting securities, but only if such event results in a
change in Board composition such that the directors immediately preceding the
event do not comprise a majority of our Board following the event; (b) a
merger, reorganization or consolidation where out shareholders immediately before
the event do not, immediately after the event, own more then 50% of the
combined voting power of the surviving entity’s then outstanding voting
securities, but only if such event results in a change in our Board composition
such that the directors immediately preceding the event do not comprise a
majority of our Board following the event; (c) the sale of all or substantially
all of our assets to an entity in which we or our shareholders existing
immediately before such event beneficially own less than 50% of the combined
voting power of such acquiring entity’s then outstanding voting securities, but
only if such event results in a change in our Board composition such that the
directors immediately preceding the event do not comprise a majority of the
board of directors of the surviving entity following such event; or (d) any
change in the identity of directors constituting a majority of our Board within
a 24 month period unless the change was approved by a majority of incumbent
directors.

 

3

 

In
the event of termination due to a Change in Control, all options that have
vested plus six (6) months (additional vesting time), at the time of
termination, will become exercisable within 90 days following such Termination.

 

Valence
is an at will employer. As an employee you may terminate employment at any time
and for any reason whatsoever with 30 days notice to Valence. Similarly,
Valence may terminate your employment at any time and for any reason
whatsoever, with or without cause. In the event the Company terminates your
employment for other than Good Cause (as defined above) Valence will provide
you with 30 days notice and three months salary payable as of the date of
termination.

 

Resignation:

 

In
the event you elect to terminate your employment and resign as the Chief
Financial Officer of the Company, you agree to provide the CEO and Board of
Directors with thirty (30) days advance notice of your resignation.

 

As
a Valence employee you will be expected to abide by company rules and
regulations. You will be expected to sign and comply with our employee
agreement which requires, among other provisions, the assignment of patent
rights to any invention made during your employment at Valence and
nondisclosure of proprietary information.

 

This
offer is contingent upon successful completion of a background investigation
and reference checks. Additionally, this offer is subject to your submission of
an I-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.

 

If
you wish to accept employment at Valence under the terms set out above, please
sign and date this letter, and return it to me at your earliest convenience.

 

We
look forward to your favorable reply and to a productive and exciting work
relationship.

 

	
  Sincerely,

  
	
   

  
	
  /s/ Robert L. Kanode

  	
   

  
	
   

  
	
  Robert L. Kanode

  
	
  President and Chief Executive Officer

  

 

 

	
  /s/ Ross A. Goolsby

  	
   

  	
  10/01/2008

  
	
  Approved and Accepted

  	
  Date

  
	
  Ross A. Goolsby

  	
   

  

 

 

Cc:  Cheryl Logan

 

4

 

 

EXHIBIT “A”

 

Ross
A. Goolsby:

 

1st Years Proposed Goals:  (to
be agreed upon within 30 days of employment)

 

1.              ERP System

·Microsoft ERP system in place

·Xapta upgraded and integrated into the MSoft
ERP System

·Salesforce.com integrated into the MSoft ERP
System

·China and US running on one global ERP system

2.              Uniform accounting practices
worldwide including accurate product cost accounting

3.              Establish a uniform review process
based on fair un-bias requirements for SEC and SOX reporting

 

	
  Confidential

  	
  Valence Technology, Inc. 12303 Technology
  Blvd., Suite 950., Austin Texas 78727

  	
   

  
	
   

  	
  Tel: 512-527-2900, Fax: 512-527-2901Exhibit 10.2

 

PROMISSORY NOTE

 

	
  $1,000,000

  	
   

  	
  Austin, Texas

  

 

September 26, 2008

 

Valence Technology, Inc., a Delaware corporation (“Maker”),
hereby promises to pay to the order of Berg & Berg Enterprises, LLC (“Lender”),
or its successors and assigns, in lawful money of the United States of America,
One Million Dollars ($1,000,000), together with accrued and unpaid interest
thereon, November 15, 2008 (the “Maturity Date”).

 

The unpaid principal amount of this Promissory Note shall bear interest
at a rate per annum equal to 8.0% calculated on the basis of a 365-day year and
the actual number of days elapsed.

 

This Promissory Note may be prepaid in whole or in part at any time,
without premium or penalty.

 

Maker hereby waives presentment, demand, notice of dishonor, protest,
notice of protest and all other demands, protests and notices in connection
with the execution, delivery, performance, collection and enforcement of this
Promissory Note.  Maker shall pay all
costs of collection when incurred, including reasonable attorneys’ fees, costs
and expenses.

 

This Promissory Note is being delivered in, is intended to be performed
in, shall be construed and interpreted in accordance with, and be governed by
the internal laws of, the State of Texas, without regard to principles of
conflict of laws.

 

This Promissory Note may only be amended, modified or terminated or any
provision hereof waived by an agreement in writing signed by the party to be
charged.  This Promissory Note shall be
binding upon the successors and assigns of Maker and inure to the benefit of
Lender and its successors, endorsees and assigns.

 

	
   

  	
  VALENCE TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Roger A. Williams

  
	
   

  	
   

  
	
   

  	
  Name: Roger A. Williams

  
	
   

  	
   

  
	
   

  	
  Title: Vice President Law

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