[VALENCE TECHNOLOGY, INC. LETTERHEAD]
EQUITY LINE OF CREDIT
BINDING TERM SHEET This Term Sheet constitutes a binding agreement between
Valence Technology, Inc. and Xx. Xxxx X. Xxxx.
COMPANY: Valence Technology, Inc.
ISSUE AMOUNT: Up to $20 million of restricted Common Stock
TERM: The term of the equity line of credit will be for
2 years, commencing July 1, 2004 (the "Term").
COMPANY RIGHT TO PUT RESTRICTED 1. The Company shall have the option during the Term
STOCK: to cause Xx. Xxxx to purchase up to $20 million of the
restricted Common Stock of the Company in
one or more installments.
2. The Company may exercise its option to cause
Xx. Xxxx to purchase restricted Common Stock by
delivery of a written notice to Xx. Xxxx
(the "Draw Down Notice"). Each Draw Down
Notice shall specify the dollar amount of
the restricted Common Stock to be purchased
in the draw down, which shall not exceed $3
million, (the "Draw Down Amount") and the
date of the closing of the purchase (each,
a "Closing Date"), which shall be at least
two business days and no more than five
business days after delivery of the Draw
Down Notice.
3. The aggregate Draw Down Amounts in any
particular fiscal quarter shall not exceed $6 million.
4. On each Closing Date, the Company will issue to
Xx. Xxxx that number of shares of Common Stock
equal to the Draw Down Amount divided by
the Purchase Price. Each certificate
evidencing the shares shall bear a
restricted legend indicating that the
shares may not be sold or transferred
unless registered or pursuant to a
transaction exempt from the applicable
securities laws.
PURCHASE PRICE: The Purchase Price for the sale of
the restricted Common Stock sold as part of
any draw down shall be the average of the
closing bid prices of the Common Stock for
the five trading days prior to the Closing
Date.
REGISTRATION RIGHTS: In conjunction with the first draw down, the
Company will amend its existing registration
rights agreement with Xx. Xxxx to add the shares
issued in any draw down pursuant to the line of
credit as registrable securities thereunder.
1
COMMITMENT REDUCTION If at any time during the Term the Company enters
into: 1) a debt or equity financing arrangement with
a third party or 2) closes on the sale of the Company's
building or equipment from its Northern Ireland facility,
Xx. Xxxx shall have the option to reduce the commitment
to provide funding under this agreement by up to the amount
of net proceeds received by the Company in such transaction,
on a dollar-for-dollar basis (to a maximum of the Draw
Down Amount remaining un-funded under this agreement).
TERMINATION The commitment under this agreement may be
terminated in the event of the closing of a
merger or acquisition in which the combined
company's financial resources are adequate
to cover its planned obligations through at
least June 30, 2005.
TRANSFERABILITY Xx. Xxxx may cause another person or entity to provide
funding under this agreement.
LEGAL FEES, EXPENSES The Company shall reimburse all legal fees and expenses
related this transaction upon formal request by Xx. Xxxx.
This equity line of credit has been entered into as of the 11th day of June,
2004.
Valence Technology, Inc.
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxxx X. Xxxx
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Xxxxx X. Xxxxxxxxx Xxxx X. Xxxx
VP of Finance
