REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of June 2, 2003,
by and among Valence Technology, Inc., a Delaware corporation, with headquarters
located at 0000 Xxxxxx Xxxxx Xxxxxxx, Xxxxxx, Xxxxx 00000 (the "COMPANY"), and
the undersigned buyers (each, a "BUYER" and collectively, the "BUYERS").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among the
parties hereto of even date herewith (the "SECURITIES PURCHASE AGREEMENT"), the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Buyers an aggregate of
(i) 1,000 shares (the "PREFERRED SHARES") of the Company's Series C Convertible
Preferred Stock (the "PREFERRED STOCK"), which will be convertible into shares
of the Company's common stock, par value $0.001 per share (the "COMMON STOCK")
(as converted, the " CONVERSION SHARES") in accordance with the terms of the
Company's Certificate of Designations, Preferences and Rights of the Preferred
Stock (the "CERTIFICATE OF DESIGNATIONS") and (ii) warrants (the "WARRANTS") to
purchase up to 352,900 shares of Common Stock (the "WARRANT SHARES"); and
B. To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 ACT"), and
applicable state securities laws.
C. The location of defined terms in this Agreement is set forth on the
Index of Terms attached hereto.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the Buyers
hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
a. "BUSINESS DAY" means any day other than Saturday, Sunday or any
other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.
b. "INVESTOR" means a Buyer, any transferee or assignee thereof to
whom a Buyer assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with Section
9 and any transferee or assignee thereof to whom a transferee or assignee
assigns its rights under this Agreement and who agrees to become bound by
the provisions of this Agreement in accordance with Section 9.
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c. "PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and governmental or any department or agency thereof.
d. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant
to Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis ("RULE 415"), and the
declaration or ordering of effectiveness of such Registration Statement(s)
by the United States Securities and Exchange Commission (the "SEC").
e. "REGISTRABLE SECURITIES" means (i) the Conversion Shares issued or
issuable upon conversion of the Preferred Shares, (ii) the Warrant Shares
issued or issuable upon exercise of the Warrants, (iii) the Dividend Shares
issued or issuable in connection with the Preferred Shares, and (iv) any
shares of capital stock issued or issuable with respect to the Conversion
Shares, the Preferred Shares, the Dividend Shares, the Warrant Shares or
the Warrants as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to
any limitations on conversions of the Preferred Shares or exercises of
Warrants.
f. "REGISTRATION STATEMENT" means a registration statement or
registration statements of the Company filed under the 1933 Act covering
the Registrable Securities.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Securities Purchase Agreement.
2. REGISTRATION.
a. MANDATORY REGISTRATION. The Company shall prepare, and, as soon as
practicable but in no event later than 45 days after the Closing Date (as
defined in the Securities Purchase Agreement) (the " FILING DEADLINE"),
file with the SEC the Registration Statement on Form S-3 covering the
resale of all of the Registrable Securities. In the event that Form S-3 is
unavailable for such a registration, the Company shall use such other form
as is available for such a registration, subject to the provisions of
Section 2(d). The Registration Statement prepared pursuant hereto shall
register for resale at least 4,000,000 shares of Common Stock. The Company
shall use its reasonable best efforts to have the Initial Registration
Statement declared effective by the SEC as soon as practicable, but in no
event later than the date which is (i) in the event that the Registration
Statement is not subject to a full review by the SEC, 90 days after the
Closing Date or (ii) in the event that the Registration Statement is
subject to a full review by the SEC, 135 days after the Closing Date (the
"EFFECTIVENESS DEADLINE").
b. ALLOCATION OF REGISTRABLE SECURITIES. The initial number of
Registrable Securities included in any Registration Statement and each
increase in the number of Registrable Securities included therein shall be
allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement
covering such initial number of Registrable Securities or increase thereof
is declared effective by the SEC.
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In the event that an Investor sells or otherwise transfers any of such
Investor's Registrable Securities, each transferee shall be allocated a pro
rata portion of the then remaining number of Registrable Securities
included in such Registration Statement for such transferor. Any shares of
Common Stock included in a Registration Statement and which remain
allocated to any Person which ceases to hold any Registrable Securities
covered by such Registration Statement shall be allocated to the remaining
Investors, pro rata based on the number of Registrable Securities then held
by such Investors which are covered by such Registration Statement. In no
event shall the Company include any securities other than Registrable
Securities on any Registration Statement without the prior written consent
of Buyers.
c. LEGAL COUNSEL. Subject to Section 5 hereof, the Buyers holding at
least a majority of the Registrable Securities shall have the right to
select one legal counsel to review and oversee any offering pursuant to
this Section 2 ("LEGAL COUNSEL"), which shall be Xxxxxxx Xxxx & Xxxxx LLP
or such other counsel as thereafter designated by the holders of at least a
majority of the Registrable Securities. The Company and Legal Counsel shall
reasonably cooperate with each other in performing the Company's
obligations under this Agreement.
d. INELIGIBILITY FOR FORM S-3. In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the holders
of at least a majority of the Registrable Securities and (ii) undertake to
register the Registrable Securities on Form S-3 as soon as such form is
available, provided that the Company shall maintain the effectiveness of
the Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the SEC.
e. SUFFICIENT NUMBER OF SHARES REGISTERED. In the event the number of
shares available under a Registration Statement filed pursuant to Section
2(a) is insufficient to cover all of the Registrable Securities required to
be covered by such Registration Statement or an Investor's allocated
portion of the Registrable Securities pursuant to Section 2(b), the Company
shall amend the Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or both,
so as to cover at least 130% of the number of such Registrable Securities
as of the trading day immediately preceding the date of the filing of such
amendment or new Registration Statement, in each case, as soon as
practicable, but in any event not later than thirty (30) days after the
necessity therefor arises. The Company shall use it reasonable best efforts
to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof. For purposes
of the foregoing provision, the number of shares available under a
Registration Statement shall be deemed "insufficient to cover all of the
Registrable Securities" if at any time the number of shares of Common Stock
available for resale under the Registration Statement is less than the
product determined by multiplying (i) number of Registrable Securities
covered by such Registration Statement by (ii) 1.10. The calculation set
forth in the foregoing sentence shall be made without regard to any
limitations on the conversion of the Preferred Shares or the exercise of
the Warrants and such calculation shall assume that the Preferred Shares
and the Warrants are then convertible or exercisable into, shares of Common
Stock and assuming the maximum number of Dividend Shares relating to the
Preferred Shares will be issued, assuming all of the
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Preferred Shares remains outstanding through the Maturity Date (as defined
in the Statement of Designations) and no conversions or redemptions of the
Preferred Shares prior to the Maturity Date, at the then prevailing
Dividend Calculation Price (as defined in the Statement of Designations) or
Warrant Exercise Price (as defined in the Warrants), if applicable.
f. EFFECT OF FAILURE TO FILE AND OBTAIN AND MAINTAIN EFFECTIVENESS OF
REGISTRATION STATEMENT. If (i) a Registration Statement covering all the
Registrable Securities and required to be filed by the Company pursuant to
this Agreement is not declared effective by the SEC on or before the
Effectiveness Deadline or (ii) on any day after the Registration Statement
has been declared effective by the SEC sales of all the Registrable
Securities required to be included on such Registration Statement cannot be
made (other than during an Allowable Grace Period (as defined in Section
3(r)) pursuant to the Registration Statement (including, without
limitation, because of a failure to keep the Registration Statement
effective, to disclose such information as is necessary for sales to be
made pursuant to the Registration Statement or to register sufficient
shares of Common Stock), then, as partial relief for the damages to any
holder by reason of any such delay in or reduction of its ability to sell
the underlying shares of Common Stock (which remedy shall not be exclusive
of any other remedies available at law or in equity), the Company shall pay
to each holder of Preferred Shares relating to such Registration Statement
an amount in cash per such Preferred Share held equal to the product of (i)
$10,000 multiplied by (ii) the sum of (A) .015, if the Registration
Statement is not declared effective by the applicable Effectiveness
Deadline, plus (B) the product of (I) .0005 multiplied by (II) the sum of
(x) the number of days after the Effectiveness Deadline that the
Registration Statement is not declared effective by the SEC, plus (y) the
number of days after the Registration Statement has been declared effective
by the SEC that such Registration Statement is not available (other than
during an Allowable Grace Period) for the sale of at least all the
Registrable Securities required to be included on such Registration
Statement. The payments to which a holder shall be entitled pursuant to
this Section 2(e) are referred to herein as "REGISTRATION DELAY PAYMENTS."
Registration Delay Payments shall be paid on the earlier of (I) the last
day of the calendar month during which such Registration Delay Payments are
incurred and (II) the third Business Day after the event or failure giving
rise to the Registration Delay Payments is cured. In the event the Company
fails to make Registration Delay Payments in a timely manner, such
Registration Delay Payments shall bear interest at the rate of 1.5% per
month (prorated for partial months) until paid in full.
3. RELATED OBLIGATIONS.
At such time as the Company is obligated to file a Registration Statement
with the SEC pursuant to Section 2(a) or 2(e), the Company will use its
reasonable best efforts to effect the registration of the Registrable Securities
in accordance with the intended method of disposition thereof and, pursuant
thereto, the Company shall have the following obligations:
a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities (but in
no event later than the applicable Filing Deadline) and use its reasonable
best efforts to cause such Registration Statement relating to the
Registrable Securities to become effective as soon as practicable after
such filing (but in no event later than the Effectiveness Deadline). The
Company shall keep each Registration Statement effective pursuant to Rule
415 at all times until the earlier of (i) the date
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as of which the Investors may sell all of the Registrable Securities
covered by such Registration Statement without restriction pursuant to Rule
144(k) (or successor thereto) promulgated under the 1933 Act or (ii) the
date on which the Investors shall have sold all the Registrable Securities
covered by such Registration Statement (the "REGISTRATION PERIOD"), which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading. The term "reasonable
best efforts" shall mean, among other things, that the Company shall submit
to the SEC, within two (2) Business Days after the Company learns that no
review of a particular Registration Statement will be made by the staff of
the SEC or that the staff has no further comments on the Registration
Statement, as the case may be, and the approval of Legal Counsel pursuant
to Section 3(c), a request for acceleration of effectiveness of such
Registration Statement to a time and date not later than 48 hours after the
submission of such request.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such
period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this
Agreement (including pursuant to this Section 3(b)) by reason of the
Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous report under the Securities Exchange Act of 1934, as amended (the
"1934 ACT"), the Company shall have incorporated such report by reference
into the Registration Statement, if applicable, or shall file such
amendments or supplements with the SEC on the same day on which the 1934
Act report is filed which created the requirement for the Company to amend
or supplement the Registration Statement.
c. The Company shall (A) permit Legal Counsel to review and comment
upon (i) the Registration Statement at least two (2) Business Days prior to
its filing with the SEC and (ii) all other Registration Statements and all
amendments and supplements to all Registration Statements (except for
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K and any similar or successor reports) within a
reasonable number of days prior to their filing with the SEC, and (B) not
file any Registration Statement or amendment or supplement thereto in a
form to which Legal Counsel reasonably objects. The Company shall not
submit a request for acceleration of the effectiveness of a Registration
Statement or any amendment or supplement thereto without the prior approval
of Legal Counsel, which consent shall not be unreasonably withheld. The
Company shall furnish to Legal Counsel, without charge, (i) copies of any
correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement, (ii) promptly after
the same is prepared and filed with the SEC, one copy of any Registration
Statement and any
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amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor,
and all exhibits and (iii) upon the effectiveness of any Registration
Statement, one copy of the prospectus included in such Registration
Statement and all amendments and supplements thereto. The Company shall
reasonably cooperate with Legal Counsel in performing the Company's
obligations pursuant to this Section 3.
d. The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, at least one
copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference, if requested by an Investor, all exhibits and each preliminary
prospectus, (ii) upon the effectiveness of any Registration Statement, ten
(10) copies of the prospectus included in such Registration Statement and
all amendments and supplements thereto (or such other number of copies as
such Investor may reasonably request) and (iii) such other documents,
including copies of any preliminary or final prospectus, as such Investor
may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by such Investor.
e. The Company shall use its reasonable best efforts to (i) register
and qualify, unless an exemption from registration and qualification
applies, the resale by Investors of the Registrable Securities covered by a
Registration Statement under such other securities or "blue sky" laws of
all applicable jurisdictions in the United States, (ii) prepare and file in
those jurisdictions, such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration
Period, (iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary
or advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(e), (y) subject itself to general taxation
in any such jurisdiction, or (z) file a general consent to service of
process in any such jurisdiction. The Company shall promptly notify Legal
Counsel and each Investor who holds Registrable Securities of the receipt
by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United
States or its receipt of actual notice of the initiation or threatening of
any proceeding for such purpose.
f. The Company shall notify Legal Counsel and each Investor in
writing, including via facsimile or e-mail followed by overnight courier,
of the happening of any event, as promptly as practicable after becoming
aware of such event, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of
a material fact or omission to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (provided that in
no event shall such notice contain any material, nonpublic information),
and, subject to Section 3(r), promptly prepare a supplement or amendment to
such
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Registration Statement to correct such untrue statement or omission, and
deliver ten (10) copies of such supplement or amendment to Legal Counsel
and each Investor (or such other number of copies as Legal Counsel or such
Investor may reasonably request). The Company shall also promptly notify
Legal Counsel and each Investor in writing, including via facsimile or
e-mail followed by overnight courier, (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when
a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to Legal
Counsel and each Investor by facsimile or e-mail on the same day of such
effectiveness and by overnight mail), (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus
or related information, and (iii) of the Company's reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.
g. The Company shall use its reasonable best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of
the Registrable Securities for sale in any jurisdiction and, if such an
order or suspension is issued, to obtain the withdrawal of such order or
suspension at the earliest possible moment and to notify Legal Counsel and
each Investor who holds Registrable Securities being sold of the issuance
of such order and the resolution thereof or its receipt of actual notice of
the initiation or threat of any proceeding for such purpose.
h. For the purposes of establishing a due diligence defense, at the
reasonable request of any Investor, the Company shall furnish to such
Investor, on the date of the effectiveness of the Registration Statement
and thereafter from time to time on such dates as an Investor may
reasonably request (i) a letter, dated such date, from the Company's
independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the
Investors, and (ii) an opinion, dated as of such date, of counsel
representing the Company for purposes of such Registration Statement, in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to the Investors.
i. The Company shall make available for inspection by (i) any
Investor, (ii) Legal Counsel and (iii) one firm of accountants or other
agents retained by the Investors (collectively, the "INSPECTORS"), all
pertinent financial and other records, and pertinent corporate documents
and properties of the Company (collectively, the "RECORDS"), as shall be
reasonably deemed necessary by each Inspector in order to enable it to
exercise its due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information which any
Inspector may reasonably request for the purpose of such due diligence;
provided, however, that each Inspector shall agree to hold in strict
confidence and shall not make any disclosure (except to an Investor) or use
of any Record or other information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to avoid
or correct a misstatement or omission in any Registration Statement or is
otherwise required under the 1933 Act, (b) the release of such Records is
ordered pursuant to a final, non-appealable subpoena or order from a court
or government body of competent jurisdiction, or (c) the information in
such Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement of which the
Inspector has knowledge. Each Investor agrees that it
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shall, upon learning that disclosure of such Records is sought in or by a
court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at its
expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, the Records deemed confidential. Nothing
herein (or in any other confidentiality agreement between the Company and
any Investor) shall be deemed to limit the Investors' ability to sell
Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.
j. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or
other final, non-appealable order from a court or governmental body of
competent jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
Agreement or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to such Investor and allow
such Investor, at the Investor's expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, such
information.
k. The Company shall use its reasonable best efforts either to (i)
cause all the Registrable Securities covered by a Registration Statement to
be listed on each securities exchange on which securities of the same class
or series issued by the Company are then listed, if any, if the listing of
such Registrable Securities is then permitted under the rules of such
exchange, or (ii) secure designation and quotation of all the Registrable
Securities covered by the Registration Statement on the NASDAQ National
Market, or (iii) if, despite the Company's reasonable best efforts to
satisfy the preceding clause (i) or (ii), the Company is unsuccessful in
satisfying the preceding clause (i) or (ii), to secure the inclusion for
quotation on The NASDAQ SmallCap Market for such Registrable Securities
and, without limiting the generality of the foregoing, to use its
reasonable best efforts to arrange for at least two market makers to
register with the National Association of Securities Dealers, Inc. ("NASD")
as such with respect to such Registrable Securities. The Company shall pay
all fees and expenses in connection with satisfying its obligation under
this Section 3(k).
l. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and, to the extent applicable, facilitate the
timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in
such denominations or amounts, as the case may be, as the Investors may
reasonably request and registered in such names as the Investors may
request.
m. If requested by an Investor, the Company shall (i) as soon as
practicable incorporate in a prospectus supplement or post-effective
amendment such information as an Investor reasonably requests to be
included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being offered or sold, the purchase price
being paid therefor
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and any other terms of the offering of the Registrable Securities to be
sold in such offering; and (ii) as soon as practicable make all required
filings of such prospectus supplement or post-effective amendment after
being notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment.
n. The Company shall use its reasonable best efforts to cause the
Registrable Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to consummate the disposition of such
Registrable Securities.
o. The Company shall make generally available to its security holders
as soon as practical, but not later than 90 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 0000 Xxx) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement.
p. The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any
registration hereunder.
q. Within two (2) Business Days after a Registration Statement which
covers Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to
the transfer agent for such Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.
r. Notwithstanding anything to the contrary herein, at any time after
the Registration Statement has been declared effective by the SEC, the
Company may delay the disclosure of material non-public information
concerning the Company the disclosure of which at the time is not, in the
good faith opinion of the Board of Directors of the Company and its
counsel, in the best interest of the Company and, in the opinion of counsel
to the Company, otherwise required (a "GRACE PERIOD"); provided, that the
Company shall promptly (i) notify the Investors in writing of the existence
of material non-public information giving rise to a Grace Period (provided
that in each notice the Company will not disclose the content of such
material non-public information to the Investors) and the date on which the
Grace Period will begin, and (ii) notify the Investors in writing of the
date on which the Grace Period ends; and, provided further, that no Grace
Period shall exceed 30 consecutive days and during any 365 day period such
Grace Periods shall not exceed an aggregate of 45 days and the first day of
any Grace Period must be at least 2 trading days after the last day of any
prior Grace Period (an "ALLOWABLE GRACE PERIOD"). For purposes of
determining the length of a Grace Period above, the Grace Period shall
begin on and include the date the holders receive the notice referred to in
clause (i) and shall end on and include the later of the date the holders
receive the notice referred to in clause (ii) and the date referred to in
such notice. The provisions of Section 3(g) hereof shall not be applicable
during the period of any Allowable Grace Period. Upon expiration of the
Grace Period, the Company shall again be bound by the first sentence of
Section 3(f) with respect to the information giving rise thereto unless
such material non-public information is no longer applicable.
Notwithstanding anything to the contrary, the Company shall cause its
transfer agent
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to deliver unlegended shares of Common Stock to a transferee of an Investor
in accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale, and delivered a copy of the
prospectus included as part of the applicable Registration Statement, prior
to the Investor's receipt of the notice of a Grace Period and for which the
Investor has not yet settled.
4. OBLIGATIONS OF THE INVESTORS.
a. At least two (2) Business Days prior to the first anticipated
filing date of a Registration Statement, the Company shall notify each
Investor in writing of the information the Company requires from each such
Investor if such Investor elects to have any of such Investor's Registrable
Securities included in such Registration Statement. It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect and maintain the effectiveness of
the registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may
reasonably request.
b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by
the Company in connection with the preparation and filing of any
Registration Statement hereunder, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from such Registration Statement.
c. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g)
or the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration
Statement(s) covering such Registrable Securities until such Investor's
receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(g) or the first sentence of 3(f) or receipt of
notice that no supplement or amendment is required. Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to
deliver unlegended shares of Common Stock to a transferee of an Investor in
accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor's
receipt of a notice from the Company of the happening of any event of the
kind described in Section 3(g) or the first sentence of 3(f) and for which
the Investor has not yet settled.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company shall be paid by the Company. The Company shall also
reimburse the Riverview Group, LLC for the fees and disbursements of Legal
Counsel incurred in connection with registrations, filings or
10
qualifications pursuant to Sections 2 and 3 of this Agreement which amount shall
be limited to $15,000.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor, the
directors, officers, partners, employees, agents, representatives of, and
each Person, if any, who controls any Investor within the meaning of the
1933 Act or the 1934 Act (each, an "INDEMNIFIED PERSON"), against any
losses, claims, damages, liabilities, judgments, fines, penalties, charges,
costs, reasonable attorneys' fees, amounts paid in settlement or expenses,
joint or several, (collectively, "CLAIMS") incurred in investigating,
preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the SEC,
whether pending or threatened, whether or not an indemnified party is or
may be a party thereto ("INDEMNIFIED DAMAGES"), to which any of them may
become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or any post-effective amendment thereto or
in any filing made in connection with the qualification of the offering
under the securities or other "blue sky" laws of any jurisdiction in which
Registrable Securities are offered ("BLUE SKY FILING"), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein
any material fact necessary to make the statements made therein, in light
of the circumstances under which the statements therein were made, not
misleading, (iii) any violation or alleged violation by the Company of the
1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the
offer or sale of the Registrable Securities pursuant to a Registration
Statement or (iv) any material violation of this Agreement (the matters in
the foregoing clauses (i) through (iv) being, collectively, "VIOLATIONS").
Subject to Section 6(c), the Company shall reimburse the Indemnified
Persons, promptly as such expenses are incurred and are due and payable,
for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to
the Company by such Indemnified Person for such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section
3(d); (ii) with respect to any preliminary prospectus, shall not inure to
the benefit of any such person from whom the person asserting any
11
such Claim purchased the Registrable Securities that are the subject
thereof (or to the benefit of any person controlling such person) if the
untrue statement or omission of material fact contained in the preliminary
prospectus was corrected in the prospectus, as then amended or
supplemented, if such prospectus was timely made available by the Company
pursuant to Section 3(d), and the Indemnified Person was promptly advised
in writing not to use the incorrect prospectus prior to the use giving rise
to a Violation and such Indemnified Person, notwithstanding such advice,
used it or failed to deliver the correct prospectus as required by the 1933
Act and such correct prospectus was timely made available pursuant to
Section 3(d); (iii) shall not be available to the extent such Claim is
based on a failure of the Investor to deliver or to cause to be delivered
the prospectus made available by the Company, including a corrected
prospectus, if such prospectus or corrected prospectus was timely made
available by the Company pursuant to Section 3(d); and (iv) shall not apply
to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not
be unreasonably withheld or delayed. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
b. In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement each Person, if
any, who controls the Company within the meaning of the 1933 Act or the
1934 Act (each, an "INDEMNIFIED PARTY"), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the
1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise
out of or are based upon any Violation, in each case to the extent, and
only to the extent, that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such
Investor expressly for use in connection with such Registration Statement;
and, subject to Section 6(c), such Investor will reimburse any legal or
other expenses reasonably incurred by an Indemnified Party in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior written consent of such Investor, which consent shall not be
unreasonably withheld or delayed; provided, further, however, that the
Investor shall be liable under this Section 6(b) for only that amount of a
Claim or Indemnified Damages as does not exceed the net proceeds to such
Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9. Notwithstanding anything
to the contrary contained herein, the indemnification agreement contained
in this Section 6(b) with respect to any preliminary prospectus shall not
inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or
supplemented.
c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any
12
governmental action or proceeding) involving a Claim, such Indemnified
Person or Indemnified Party shall, if a Claim in respect thereof is to be
made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be;
provided, however, that an Indemnified Person or Indemnified Party shall
have the right to retain its own counsel with the fees and expenses of not
more than one counsel for such Indemnified Person or Indemnified Party to
be paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of
the Indemnified Person or Indemnified Party and the indemnifying party
would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. In the case of an
Indemnified Person, legal counsel referred to in the immediately preceding
sentence shall be selected by the Investors holding at least a majority in
interest of the Registrable Securities included in the Registration
Statement to which the Claim relates. The Indemnified Party or Indemnified
Person shall cooperate fully with the indemnifying party in connection with
any negotiation or defense of any such action or Claim by the indemnifying
party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or Claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to
the status of the defense or any settlement negotiations with respect
thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall,
without the prior written consent of the Indemnified Party or Indemnified
Person, consent to entry of any judgment or enter into any settlement or
other compromise which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such Claim
or litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified
Party or Indemnified Person with respect to all third parties, firms or
corporations relating to the matter for which indemnification has been
made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person
or Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.
d. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified
Damages are incurred.
e. The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
13
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no person
involved in the sale of Registrable Securities which person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) in connection with such sale shall be entitled to contribution from any
person involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities pursuant to such
Registration Statement.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Investors to sell securities of the Company
to the public without registration ("RULE 144"), the Company agrees to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so
long as the Company remains subject to such requirements (it being
understood that nothing herein shall limit the Company's obligations under
Section 4(c) of the Securities Purchase Agreement) and the filing of such
reports and other documents is required for the applicable provisions of
Rule 144; and
c. furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company,
if true, that it has complied with the reporting requirements of Rule 144,
the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so
filed by the Company, and (iii) such other information as may be reasonably
requested to permit the Investors to sell such securities pursuant to Rule
144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights under this Agreement shall be automatically assignable by the
Investors to any transferee of Registrable Securities if: (i) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment; (ii) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned; (iii)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the 1933 Act
and applicable state securities laws; (iv) at or before the time the Company
14
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement, Warrants and Certificate of Designation.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and Investors
who then hold at least a majority of the Registrable Securities. Any amendment
or waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company. No such amendment shall be effective to the extent
that it applies to less than all of the holders of the Registrable Securities.
No consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.
11. MISCELLANEOUS.
a. A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the such record owner of such Registrable
Securities.
b. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated
and kept on file by the sending party); or (iii) one Business Day after
deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If to the Company:
Valence Technology, Inc.
0000 Xxxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, President and CEO
With a copy to:
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
15
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: C.N. Xxxxxxxx Xxxxxxx, III
If to Legal Counsel:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxx, Esq.
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers, or to such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal laws
of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any
other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the non- exclusive jurisdiction of the state and
federal courts sitting the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper.
Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
16
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
e. This Agreement, the Securities Purchase Agreement and the Statement
of Designations constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement, the Securities
Purchase Agreement and the Statement of Designations supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
f. Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
j. All consents and other determinations required to be made by the
Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by Investors holding at least a majority of
the Registrable Securities, determined as if all of the Warrants then
outstanding have been exercised for Registrable Securities without regard
to any limitations on exercises of the Warrants.
k. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules
of strict construction will be applied against any party.
17
l. This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.
* * * * * *
18
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYERS:
VALENCE TECHNOLOGY, INC. THE RIVERVIEW GROUP LLC
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxx Xxxxxx
------------------------------- ------------------------------------
Name: Xxxxxxx X. Xxxxxxxx Name: Xxxxx Xxxxxx
Title: Chief Executive Officer Title: Chief Operating Officer
SCHEDULE OF BUYERS
INVESTOR ADDRESS INVESTOR'S REPRESENTATIVE'S ADDRESS
INVESTOR AND FACSIMILE NUMBER AND FACSIMILE NUMBER
-----------------------------------------------------------------------------------------------------
THE RIVERVIEW GROUP, LLC 000 Xxxxx Xxxxxx, 0xx floor Xxxxxxx Xxxx & Xxxxx XXX
Xxx Xxxx, Xxx Xxxx 00000 000 Xxxxx Xxxxxx
Attention: Manager Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000 Attn: Xxxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
Residence: New York Telephone: (000) 000-0000
19
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
EquiServe Trust Company, N.A.
Blue Hills Office Park
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxx (Re: VALENCE TECHNOLOGY)
Ladies and Gentlemen:
We are counsel to Valence Technology, Inc., a Delaware corporation (the
"COMPANY"), and have represented the Company in connection with that certain
Securities Purchase Agreement (the "PURCHASE AGREEMENT") entered into by and
among the Company and the buyers named therein (collectively, the "HOLDERS")
pursuant to which the Company issued to the Holders shares of its Series C
Convertible Preferred Stock, par value $.001 per share, (the "PREFERRED SHARES")
convertible into shares of the Company's Common Stock, par value $.001 per share
(the "COMMON STOCK") and warrants exercisable for shares of Company Common Stock
(the "WARRANTS"). Pursuant to the Purchase Agreement, the Company also has
entered into a Registration Rights Agreement with the Holders (the "REGISTRATION
RIGHTS AGREEMENT") pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement), including the shares of Common Stock issuable upon exercise of the
Warrants under the Securities Act of 1933, as amended (the "1933 ACT"). In
connection with the Company's obligations under the Registration Rights
Agreement, on ____________ ___, 200_, the Company filed a Registration Statement
on Form S-3 (File No. 333-_____________) (the "REGISTRATION STATEMENT") with the
Securities and Exchange Commission (the "SEC") relating to the Registrable
Securities which names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
By:_____________________
CC: [LIST NAMES OF HOLDERS]
INDEX OF TERMS
PAGE
1933 Act....................................................................1
1934 Act....................................................................5
Agreement...................................................................1
Allowable Grace Period.....................................................10
Blue Sky Filing............................................................11
Business Day................................................................1
Buyer.......................................................................1
Certificate of Designations.................................................1
Claims.....................................................................11
Common Stock................................................................1
Company.....................................................................1
Conversion Shares...........................................................1
Effectiveness Deadline......................................................2
Filing Deadline.............................................................2
Grace Period................................................................9
Indemnified Damages........................................................11
Indemnified Party..........................................................12
Indemnified Person.........................................................11
Inspectors..................................................................7
Investor....................................................................1
Legal Counsel...............................................................3
NASD........................................................................8
Person......................................................................2
Preferred Shares............................................................1
Preferred Stock.............................................................1
Records.....................................................................7
Register....................................................................2
Registrable Securities......................................................2
Registration Delay Payments.................................................4
Registration Period.........................................................5
Registration Statement......................................................2
Rule 144...................................................................14
Rule 415....................................................................2
SEC.........................................................................2
Securities Purchase Agreement...............................................1
Violations.................................................................11
Warrant Shares..............................................................1
Warrants....................................................................1
