EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of November 30,
2004, by and among Valence Technology, Inc., a Delaware corporation, with
headquarters located at 0000 Xxxxxx Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000 (the "COMPANY"), and the investors listed on the Schedule of Buyers
attached hereto (individually, a "BUYER" and collectively the "BUYERS").
A. The Company and each Buyer desire to enter into this transaction to
purchase the securities set forth herein pursuant to a currently effective shelf
registration statement on Form S-3, which has at least $7,500,000 in unallocated
securities registered thereunder (Registration Number 333-67942) (the
"REGISTRATION STATEMENT"), which Registration Statement has been declared
effective in accordance with the Securities Act of 1933, as amended (the "1933
ACT"), by the United States Securities and Exchange Commission (the "SEC").
B. Each Buyer wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, that aggregate number of shares
of common stock, par value $.001 per share, of the Company (the "COMMON STOCK"),
set forth opposite such Buyer's name in column (4) on the Schedule of Buyers
(which aggregate amount for all Buyers together shall be 2,475,248 shares of
Common Stock and shall collectively be referred to herein as the "PURCHASED
SHARES").
NOW, THEREFORE, the Company and Buyer hereby agree as follows:
1. PURCHASE AND SALE OF COMMON SHARES.
(a) PURCHASE OF COMMON SHARES.
(i) COMMON SHARES. Subject to the satisfaction (or waiver) of
the conditions set forth in Sections 5 and 6 below, the
Company shall issue and sell to Buyer, and Buyer agrees to
purchase from the Company on the Closing Date (as defined
below), the Common Shares (the "CLOSING").
(ii) CLOSING. The Closing shall occur on the Closing Date at the
offices of Xxxxxxx Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
(iii) PURCHASE PRICE. The purchase price (the "PURCHASE PRICE")
of the Common Shares to be purchased by Buyer at the Closing
shall be equal to $3.03 per Common Share or $7,500,000 in
the aggregate.
(b) CLOSING DATE. The date and time of the Closing (the "CLOSING
DATE") shall be 1:00 p.m., New York Time, on December 1, 2004
after notification of satisfaction (or waiver) of the conditions
to the Closing set forth in Sections 5 and 6 below (or such later
time or date as is mutually agreed to by the Company and Buyer).
As used herein, "BUSINESS DAY" means any day other than Saturday,
Sunday or other day on which commercial banks in the City of New
York are authorized or required by law to remain closed.
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(c) FORM OF PAYMENT. On the Closing Date, (i) Buyer shall pay the
Purchase Price to the Company for the Common Shares to be issued
and sold to Buyer at the Closing, by wire transfer of immediately
available funds in accordance with the Company's written wire
instructions, and (ii) the Company shall cause the Company's
transfer agent (the "TRANSFER AGENT") through the Depository
Trust Company ("DTC") Fast Automated Securities Transfer Program,
to credit such aggregate number of Purchased Shares that such
Buyer is purchasing as is set forth opposite such Buyer's name in
column (4) of the Schedule of Buyers to such Buyer's or its
designee's balance account with DTC through its Deposit
Withdrawal Agent Commission system as specified by such Buyer.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer represents and warrants with respect that:
(a) INFORMATION. Buyer and its advisors, if any, have been furnished
with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and
sale of the Securities which have been requested by Buyer. Buyer
and its advisors, if any, have been afforded the opportunity to
ask questions of the Company. Neither such inquiries nor any
other due diligence investigations conducted by Buyer or its
advisors, if any, or its representatives shall modify, amend or
affect Buyer's right to rely on the Company's representations and
warranties contained herein. Buyer understands that its
investment in the Securities involves a high degree of risk.
Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with
respect to its acquisition of the Securities.
(b) NO GOVERNMENTAL REVIEW. Buyer understands that no United States
federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of
the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.
(c) AUTHORIZATION; VALIDITY; ENFORCEMENT. This Agreement has been
duly and validly authorized, executed and delivered on behalf of
Buyer and shall constitute the legal, valid and binding
obligations of such Buyer enforceable against Buyer in accordance
with their respective terms, except as such enforceability may be
limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.
(d) ORGANIZATION. Buyer is duly organized and validly existing in
good standing under the laws of the jurisdiction of its
organization, and has the requisite power and authorization to
execute and deliver this Agreement and to consummate the
transaction contemplated hereby.
(e) NO CONFLICTS. The execution, delivery and performance of this
Agreement by Buyer and the consummation by Buyer of the
transactions contemplated hereby will not (i) result in a
violation of the constituent documents of Buyer or (ii) conflict
with, or constitute a
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default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any
material agreement, indenture or instrument to which Buyer is a
party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree applicable to such Buyer or
by which any property or asset of Buyer is bound or affected,
except in the case of clauses (ii) and (iii), for such breaches
or defaults as would not be reasonably expected to have a
material adverse effect on Buyer's ability to consummate the
transactions contemplated hereby.
(f) NO SHORT SALES. During the one (1) month period prior to the date
hereof, Buyer has not engaged in short sales of the Common Stock
in amounts that exceed the sum of the number of shares of Common
Stock held by Buyer and its affiliates and the number of shares
of Common Stock issuable pursuant to the exercise or conversion
of any other security (without regard to limitations on exercise
or conversion contained therein, if any) held by Buyer and its
affiliates.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Buyers that:
(a) ORGANIZATION AND QUALIFICATION. The Company and its
"SUBSIDIARIES" (which for purposes of this Agreement means any
entity in which the Company, directly or indirectly, owns at
least 10% of the capital stock or holds a comparable equity or
similar interest) are entities duly organized and validly
existing in good standing under the laws of the jurisdiction in
which they are organized, and have the requisite corporate or
other power and authorization to own their properties and to
carry on their business as now being conducted. Other than
Valence Technology (Nevada), Inc., a wholly-owned Subsidiary, the
Company does not have any domestic "Significant Subsidiaries" as
defined in Regulation S-X promulgated by the Securities and
Exchange Commission (the "SEC"). Each of the Company and its
Subsidiaries is duly qualified as a foreign entity to do business
and is in good standing in every jurisdiction in which its
ownership of property or the nature of the business conducted by
it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not
reasonably be expected to have a Material Adverse Effect. As used
in this Agreement, "MATERIAL ADVERSE EFFECT" means any material
adverse effect on the business, properties, assets, operations,
results of operations, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries, taken as a whole,
or on the transactions contemplated hereby or by the agreements
and instruments to be entered into in connection herewith, or on
the authority or ability of the Company to perform its
obligations under the Agreement. The Company has no Subsidiaries
except (i) as set forth on Schedule 21.1 of the Company's Annual
Report on Form 10-K for the year ended March 31, 2004 filed with
the SEC on June 18, 2004 (the "PRIOR 10K") and (ii) Valence
Technology Suzhou, Ltd. and Valence Energy-Tech (Suzhou), Ltd.,
both of which are Chinese limited liability corporations that
were formed following the date of the Prior 10K.
(b) AUTHORIZATION; ENFORCEMENT; VALIDITY. The Company has the
requisite corporate power and authority to enter into and perform
its obligations under this Agreement and to issue the Securities
in accordance with the terms hereof and thereof. The execution
and delivery of this Agreement by the Company and the
consummation by the Company of the
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transactions contemplated hereby, including, without limitation,
the issuance of the Common Shares have been duly authorized by
the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors
or its stockholders. This Agreement has been duly executed and
delivered by the Company, and constitute the legal, valid and
binding obligations of the Company enforceable against the
Company in accordance with its terms, except as such
enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally,
the enforcement of applicable creditors' rights and remedies.
(c) ISSUANCE OF SECURITIES. The Common Shares are duly authorized
and, upon issuance in accordance with the terms hereof, shall be
free from all taxes, liens and charges with respect to the issue
thereof. The "Plan of Distribution" section under the
Registration Statement permits the issuance and sale of the
Purchased Shares hereunder. Upon receipt of the Securities, the
Buyers will have good and marketable title to such Purchased
Shares and the Purchased Shares will be freely tradable on The
Nasdaq SmallCap Market (the "PRINCIPAL MARKET"). The Purchased
Shares constitute less than 10% of the issued and outstanding
shares of Common Stock of the Company.
(d) NO CONFLICTS. The execution, delivery and performance of the
Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby (including, without
limitation, the issuance of the Common Shares) will not (i)
result in a violation of the certificate of incorporation, any
certificate of designations, preferences and rights of any
outstanding series of preferred stock or bylaws of the Company or
any Subsidiary or (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become
a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material
agreement, indenture or instrument to which the Company or any of
its Subsidiaries is a party, or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules
and regulations of the Principal Market) applicable to the
Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or
affected.
(e) CONSENTS. All consents, authorizations, orders, filings and
registrations which the Company is required as of the Closing
Date to obtain to execute, deliver or perform any of its
obligations under or contemplated by this Agreement in accordance
with its terms have been obtained or effected on or prior to the
Closing Date. The Company and its Subsidiaries are unaware of any
facts or circumstances which might reasonably be expected to
prevent the Company from obtaining or effecting any of the
foregoing. The Company is not in violation of the listing
requirements of the Principal Market and has no knowledge of any
facts which would reasonably lead to delisting or suspension of
the Common Stock in the foreseeable future.
(f) ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF SECURITIES. The
Company acknowledges and agrees that Buyer is acting solely in
the capacity of an arm's length purchaser with respect to the
Agreement and the transactions contemplated hereby. The Company
further acknowledges that Buyer is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity)
with respect to the Agreement and the transactions contemplated
hereby, and any advice given by Buyer or any of its
representatives or agents in
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connection with the Agreement and the transactions contemplated
hereby is merely incidental to Buyer's purchase of the
Securities. The Company further represents to Buyer that the
Company's decision to enter into the Agreement has been based
solely on (i) the independent evaluation by the Company and its
representatives and (ii) Buyer's representations, warranties,
covenants and other terms contained in the Agreement.
(g) PLACEMENT AGENT'S FEES. The Company shall be responsible for the
payment of any placement agent's fees, financial advisory fees,
or brokers' commissions (other than for persons engaged by Buyer
or its investment advisor) relating to or arising out of the
transactions contemplated hereby. The Company shall pay, and hold
Buyer harmless against, any liability, loss or expense
(including, without limitation, attorney's fees and out-of-pocket
expenses) arising in connection with any such claim. The Company
acknowledges that it has engaged X.X. Xxxxxxx & Sons, Inc. as
placement agent (the "Agent") in connection with the sale of the
Common Shares. Other than the Agent, the Company has not engaged
any placement agent or other agent in connection with the sale of
the Common Shares.
(h) NO INTEGRATED OFFERING. None of the Company, its Subsidiaries,
any of their affiliates, and any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under
circumstances that would require registration of any of the
Securities under the 1933 Act or cause this offering of the
Securities to be integrated with prior offerings by the Company
for purposes of the 1933 Act or any applicable stockholder
approval provisions, including, without limitation, under the
rules and regulations of any exchange or automated quotation
system on which any of the securities of the Company are listed
or designated.
(i) APPLICATION OF TAKEOVER PROTECTIONS; RIGHTS AGREEMENT. The
Company and its board of directors have taken all necessary
action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar
anti-takeover provision under the Certificate of Incorporation
(as defined in Section 3(p) or the laws of the state of its
incorporation which is or could become applicable to any Buyer as
a result of the transactions contemplated by this Agreement,
including, without limitation, the Company's issuance of the
Securities and Buyer's ownership of the Securities. The Company
has not adopted a stockholder rights plan or similar arrangement
relating to accumulations of beneficial ownership of Common Stock
or a change in control of the Company.
(j) SEC DOCUMENTS; FINANCIAL STATEMENTS. Since December 31, 2002, the
Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "1934 ACT") (all of the foregoing filed
prior to the date hereof, or in connection with the Closing
subsequent to the date hereof, filed prior to the date of the
Closing, and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC
DOCUMENTS"). The Company has delivered to Buyer or its
representatives true, correct and complete copies of the SEC
Documents not available on the XXXXX system. As of their
respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the
SEC Documents, and none
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of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As of
their respective dates, the financial statements of the Company
included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.
Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the
results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). No other information provided by or
on behalf of the Company to Buyer which is not included in the
SEC Documents contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which
they are or were made, not misleading.
(k) ABSENCE OF CERTAIN CHANGES. Since December 31, 2003, there has
been no material adverse change and no material adverse
development in the business, properties, operations, condition
(financial or otherwise), results of operations or prospects of
the Company or its Subsidiaries; provided, that any adjustments
to the carrying value of the Company's tangible or intangible
assets on its balance sheets (resulting from its periodic review
in connection with its annual audit) relating to the potential
transition by the Company to alternative battery constructions
shall not be deemed to constitute a breach of this Section 3(1).
Since December 31, 2003, the Company has not (i) declared or paid
any dividends (other than on its Series C Preferred Stock, (ii)
sold any assets, individually or in the aggregate, in excess of
$100,000 outside of the ordinary course of business or as
disclosed in the SEC Documents or (iii) had capital expenditures,
individually or in the aggregate, in excess of $1,500,000. The
Company has not taken any steps to seek protection pursuant to
any bankruptcy law nor does the Company have any knowledge or
reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any
fact which would reasonably lead a creditor to do so. The Company
is not as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at the Closing, will
not be Insolvent (as defined below). For purposes of this Section
3(1), "INSOLVENT" means (i) the Company is unable to pay its
debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured, (ii) the
Company intends to incur or believes that it will incur debts
that would be beyond its ability to pay as such debts mature or
(iii) the Company has unreasonably small capital with which to
conduct the business in which it is engaged as such business is
now conducted and is proposed to be conducted.
(l) NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES
No event, liability, development or circumstance has occurred or
exists, or is contemplated to occur, with respect to the Company
or its Subsidiaries or their respective business, properties,
prospects, operations or financial condition, that would be
required to be disclosed by the Company under applicable
securities laws on a registration statement on Form S-1 filed
with the
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SEC relating to an issuance and sale by the Company of its Common
Stock and which has not been publicly announced.
(m) CONDUCT OF BUSINESS; REGULATORY PERMITS. Neither the Company nor
its Subsidiaries is in violation of any term of or in default
under its Certificate of Incorporation, any Certificate of
Designations, Preferences and Rights of any outstanding series of
preferred stock of the Company or Bylaws or their organizational
charter or bylaws, respectively (except, with respect to the
Subsidiaries, for violations that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect). Neither the Company nor any of its Subsidiaries is in
violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or its
Subsidiaries, and neither the Company nor any of its Subsidiaries
will conduct its business in violation of any of the foregoing,
except for violations which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. Without limiting the generality of the foregoing, the
Company is not in violation of any of the material rules,
regulations or requirements of the Principal Market and has no
knowledge of any facts or circumstances which would reasonably
lead to delisting or suspension of the Common Stock by the
Principal Market in the foreseeable future. Since December 31,
2002 (i) the Common Stock has been designated for quotation or
listed on the Principal Market, (ii) trading in the Common Stock
has not been suspended by the SEC or the Principal Market and
(iii) the Company has received no communication, written or oral,
from the SEC or the Principal Market regarding the suspension or
delisting of the Common Stock from the Principal Market. The
Company and its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct
their respective businesses, except where the failure to possess
such certificates, authorizations or permits would not reasonably
be expected to have, individually or in the aggregate, a Material
Adverse Effect, and neither the Company nor any such Subsidiary
has received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permit.
(n) FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other
Person acting on behalf of the Company or any of its Subsidiaries
has, in the course of its actions for, or on behalf of, the
Company (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official
or employee from corporate funds; (iii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices
Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.
(o) TRANSACTIONS WITH AFFILIATES. Except as disclosed on the Prior
10K, the Company's Schedule 14A filed with the SEC on September
30, 2004, and any of the Company's Quarterly Reports on Form 10Q
or Periodic Reports filed in Form 8-K filed with the SEC since
the Prior 10K was filed and other than the grant of stock options
pursuant to compensation or similar arrangements with officers,
directors or employees, none of the officers, directors or
employees of the Company is presently a party to any transaction
with the Company or any of its Subsidiaries (other than for
ordinary course services as employees, officers or directors),
including any contract, agreement or other arrangement providing
for the furnishing of services
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to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the
Company, any corporation, partnership, trust or other entity in
which any such officer, director, or employee has a substantial
interest or is an officer, director, trustee or partner.
(p) EQUITY CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of (x) 200,000,000 shares
of Common Stock, of which as of the date hereof, 80,969,808 are
issued and outstanding (none of which are treasury shares),
10,246,425 shares are reserved for issuance pursuant to the
Company's stock option and purchase plans and 1,889,315 shares
are reserved for issuance pursuant to securities exercisable or
exchangeable for, or convertible into, shares of Common Stock,
and (y) 10,000,000 shares of preferred stock, of which 1,000 are
designated as Series C Preferred Stock, of which as of the
Closing Date, none will be issued and outstanding; of which 431
are designated as Series C1 Preferred Stock, of which as of the
Closing Date, 431 shares will be issued and outstanding; and of
which 430 are designated Series C2 Preferred Stock, of which as
of the Closing Date, 430 shares will be outstanding. All of such
outstanding shares have been, or upon issuance will be, validly
issued and are fully paid and nonassessable. Except as disclosed
on the Prior 10K, the Company's Schedule 14A filed with the SEC
on September 30, 2004, or any of the Company's Quarterly Reports
on Form 10Q or Periodic Reports on Form 8-K filed with the SEC
since the Prior 10K was filed: (i) no shares of the Company's
capital stock are subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted
by the Company; (ii) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares
of capital stock of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to
issue additional shares of capital stock of the Company or any of
its Subsidiaries or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into, or exercisable or
exchangeable for, any shares of capital stock of the Company or
any of its Subsidiaries; (iii) there are no outstanding debt
securities, notes, credit agreements, credit facilities or other
agreements, documents or instruments evidencing Indebtedness (as
defined in Section 3(r)) of the Company or any of its
Subsidiaries or by which the Company or any of its subsidiaries
is or may become bound; (iv) there are no financing statements
securing obligations in any material amounts, either singly or in
the aggregate, filed in connection with the Company; (v) there
are no agreements or arrangements under which the Company or any
of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act; (vi) there are no
outstanding securities or instruments of the Company or any of
its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries; (vii) there are no securities
or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities; (viii)
the Company does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or
agreement; and (ix) the Company and its Subsidiaries have no
liabilities or obligations required to be disclosed in the SEC
Documents (as defined herein) but not so disclosed in the SEC
Documents, other than (with respect to each of (i) through (ix)
above) which, individually or in the aggregate, do not or would
not reasonably be expected to have a Material Adverse Effect. The
Company has furnished to Buyer true, correct
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and complete copies of the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof
(together with any certificate of designations of any outstanding
series of preferred stock of the Company, the "CERTIFICATE OF
INCORPORATION"), and the Company's Bylaws, as amended and as in
effect on the date hereof (the "BYLAWS"), and the terms of all
securities convertible into, or exercisable or exchangeable for,
Common Stock and the material rights of the holders thereof in
respect thereto.
(q) INDEBTEDNESS AND OTHER CONTRACTS. Neither the Company nor any of
its subsidiaries (i) except as disclosed in the financial
statements included in the Prior 10K and each Quarterly Report on
Form 10-Q filed by the Company since the filing of the Prior 10K
(including the notes thereto), has any outstanding Indebtedness
(as defined below), (ii) except as disclosed in the Prior 10K and
each Quarterly Report on Form 10-Q filed by the Company since the
filing of the Prior 10K, is a party to any contract, agreement or
instrument, the violation of which, or default under which, by
the other party(ies) to such contract, agreement or instrument
would reasonably be expected to result in a Material Adverse
Effect, (iii) is in violation of any term of or in default under
any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not
reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect, or (iv) is a party to
any contract, agreement or instrument relating to any
Indebtedness, the performance of which, in the judgment of the
Company's officers, has or is expected to have a Material Adverse
Effect. For purposes of this Agreement: (x) "INDEBTEDNESS" of any
Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed
as the deferred purchase price of property or services (other
than trade payables entered into in the ordinary course of
business), (C) all reimbursement or payment obligations with
respect to letters of credit, surety bonds and other similar
instruments, (D) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of
property, assets or businesses, (E) all indebtedness created or
arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect
to any property or assets acquired with the proceeds of such
indebtedness (even though the rights and remedies of the seller
or bank under such agreement in the event of default are limited
to repossession or sale of such property), (F) all monetary
obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to
in clauses (A) through (F) above secured by (or for which the
holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, change,
security interest or other encumbrance upon or in any property or
assets (including accounts and contract rights) owned by any
Person, even though the Person which owns such assets or property
has not assumed or become liable for the payment of such
indebtedness, and (H) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in
clauses (A) through (G) above; (y) "CONTINGENT OBLIGATION" means,
as to any Person, any direct or indirect liability, contingent or
otherwise, of that Person with respect to any indebtedness,
lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the
obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect
thereto; and (z) "PERSON" means
9
an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency
thereof.
(r) ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by the Principal Market, any
court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company,
threatened against or affecting the Company, the Common Stock or
any of the Company's Subsidiaries or any of the Company's or the
Company's Subsidiaries' officers or directors in their capacities
as such, except (i) as disclosed under Item 3 ("Legal
Proceedings") of the Company's Prior 10-K or (ii) such as are not
reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
(s) INSURANCE. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such
losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which
the Company and its Subsidiaries are engaged. Neither the Company
nor any such Subsidiary has been refused any insurance coverage
sought or applied for and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that would
not have a Material Adverse Effect.
(t) EMPLOYEE RELATIONS. (i) Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or
employs any member of a union. The Company and its Subsidiaries
believe that their relations with their employees are good. No
executive officer of the Company (as defined in Rule 501(f) of
the 0000 Xxx) has notified the Company that such officer intends
to leave the Company or otherwise terminate such officer's
employment with the Company. No executive officer of the Company,
to the knowledge of the Company, is, or is now expected to be, in
violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or
any restrictive covenant, and, to the knowledge of the Company,
the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any material
liability with respect to any of the foregoing matters.
(i) The Company and its Subsidiaries are in compliance with all
federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and
conditions of employment and wages and hours, except where
failure to be in compliance would not, either individually
or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.
(u) TITLE. The Company and its Subsidiaries have good and marketable
title to all personal property owned by them which is material to
the business of the Company and its subsidiaries, in each case
free and clear of all liens, encumbrances and defects except (i)
mortgages on the Company's manufacturing facility in Northern
Ireland, (ii) assets pledged under security agreements between
the Company and Xxxx & Xxxx Enterprises, LLC and/or its
affiliates, (iii) liens for taxes not yet delinquent, (iv)
mechanics' and materialmen's liens (and
10
other similar liens), and liens under operating and similar
agreements, to the extent the same relate to expenses incurred in
the ordinary course of business and that are not yet due, (v)
that are routine Governmental Approvals, or (vi) such as do not
materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the
Company and any of its Subsidiaries. Except as disclosed under
Item 2 ("Properties") in the Prior 10K, neither the Company nor
any of its Subsidiaries owns any real property. Any real property
and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its Subsidiaries.
(v) INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries
own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service xxxx registrations, service
names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and other
intellectual property rights ("INTELLECTUAL PROPERTY RIGHTS")
necessary to conduct their respective businesses as now
conducted. None of the Company's Intellectual Property Rights
have expired or terminated, or are expected to expire or
terminate within two (2) years from the date of this Agreement,
except for those which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The
Company does not have any knowledge, of any infringement by the
Company or its Subsidiaries of Intellectual Property Rights of
others. There is no claim, action or proceeding being made or
brought, or to the knowledge of the Company, being threatened,
against the Company or its Subsidiaries regarding its
Intellectual Property Rights except such as would not reasonably
be expected to have, individually or in the aggregate, a Material
Adverse Effect. The Company does not have any knowledge of any
facts or circumstances which might give rise to any of the
foregoing infringements or claims, actions or proceedings. The
Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all
of their intellectual properties.
(w) ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are in
compliance with any and all Environmental Laws (as hereinafter
defined), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and
(iii), the failure to so comply could be reasonably expected to
have, individually or in the aggregate, a Material Adverse
Effect. The term "ENVIRONMENTAL LAWS" means all federal, state,
local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or
subsurface strata), including, without limitation, laws relating
to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, "HAZARDOUS MATERIALS") into
the environment, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered,
promulgated or approved thereunder.
11
(x) SUBSIDIARY RIGHTS. The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed
by applicable law) to receive dividends and distributions on, all
capital securities of its material Subsidiaries as owned by the
Company or such Subsidiary.
(y) TAX STATUS. The Company and each of its Subsidiaries (i) has made
or filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it
is subject, (ii) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations,
except those being contested in good faith and (iii) has set
aside on its books provision reasonably adequate for the payment
of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes
in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company know of no
basis for any such claim.
(z) INTERNAL ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with
management's general or specific authorization and (iv) the
recorded accountability for assets and liabilities is compared
with the existing assets and liabilities at reasonable intervals
and appropriate action is taken with respect to any difference.
(aa) XXXXXXXX-XXXXX ACT. The Company is in compliance with any and all
applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 that
are effective as of the date hereof, and any and all applicable
rules and regulations promulgated by the SEC thereunder that are
effective as of the date hereof, except where such noncompliance
would not have a Material Adverse Effect.
(bb) REGISTRATION STATEMENT.
(i) The Company has filed with the SEC, on August 17, 2001, a
"shelf" registration statement on Form S-3 under the 1933
Act, and the rules and regulations of the SEC promulgated
thereunder (the "RULES AND REGULATIONS"). Such registration
statement, as amended at the time it became effective,
including the exhibits and information (if any) deemed to be
part of such registration statement at the time of
effectiveness pursuant to Rule 430A or 434(d) under the 1933
Act, is hereinafter referred to as the "REGISTRATION
STATEMENT". The Registration Statement was declared
effective by the SEC on August 17, 2001, and no stop order
suspending the effectiveness of the Registration Statement
has been issued and, to the Company's knowledge, no
proceeding for that purpose has been initiated or threatened
by the SEC. The Company proposes to file the Prospectus (as
defined below) with the SEC pursuant to Rule 424(b) of the
Rules and Regulations. The Prospectus Supplement, in the
form in which it is to be filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations, along with the
Prospectus included as part of the Registration Statement
(as updated through the date hereof) is hereinafter referred
to as the "PROSPECTUS," except that if any revised
prospectus
12
or prospectus supplement shall be provided by the Company
prior to the Closing Date for use in connection with the
offering and sale of the Common Shares which differs from
the Prospectus (whether or not such revised prospectus or
prospectus supplement is required to be filed by the Company
pursuant to Rule 424(b) of the Rules and Regulations), the
term "Prospectus" shall refer to such revised prospectus or
prospectus supplement, as the case may be, from and after
the time it is first provided for such use. Any reference
herein to the Registration Statement or the Prospectus shall
be deemed to refer to and include the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 which
were filed under the Exchange Act on or before the last to
occur of the effective date of the Registration Statement,
the date of Prospectus, and any reference herein to the
terms "amend", "amendment" or "supplement" with respect to
the Registration Statement, or the Prospectus shall be
deemed to refer to and include (i) the filing of any
document under the Exchange Act after the effective date of
the Registration Statement, the date of such Prospectus, as
the case may be, which is incorporated therein by reference
and (ii) any such document so filed.
(ii) Upon the filing or first delivery to the Buyer of the
Prospectus, the Registration Statement (and any
post-effective amendment thereto) and the Prospectus (as
amended or as supplemented if the Company shall have filed
with the Commission any amendment or supplement to the
Registration Statement or the Prospectus) contained and will
contain all statements which are required to be stated
therein in accordance with the 1933 Act and the Rules and
Regulations, complied and will comply in all material
respects with the 1933 Act and the Rules and Regulations,
and did not and will not contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements
therein (in the light of the circumstances under which they
were made, in the case of the Prospectus) not misleading.
The Company has not distributed any offering material in
connection with the offering and sale of the Common Shares,
other than the Registration Statement and the Prospectus.
(cc) LISTING.
(i) The offer and sale of the Common Shares by the Company to
the Buyer at the Closing will be made pursuant to the
Registration Statement and the Prospectus, and will comply
in all material respects with the requirements of the 1933
Act, the 1934 Act and the rules and regulations promulgated
thereunder.
(ii) The Company's Common Stock is registered pursuant to Section
12(g) of the 1934 Act and is listed on the Principal Market,
and the Company has taken no action designed to, or likely
to have the effect of, terminating the registration of the
Common Shares under the 1934 Act or de-listing the Common
Shares from the Principal Market, nor to the Company's
knowledge is the National Association of Securities Dealers,
Inc., currently contemplating terminating such listing. The
Company has not, in the 12 months preceding the date hereof,
received notice from the Principal Market to the effect that
the Company is not in compliance with the listing or
maintenance requirements of the Principal Market. The
Company is, and has no reason to believe that it will not in
the foreseeable future continue to be, in compliance with
all such listing and maintenance requirements. The issuance
and sale of the Securities hereunder does not contravene the
rules and regulations of the Principal Market and no
shareholder approval is required for the Company to fulfill
its obligations under this Agreement.
13
The Company and the Common Shares meet the criteria for
continued listing and trading on the Principal Market.
4. COVENANTS.
(a) BEST EFFORTS. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided
in Sections 5 and 6 of this Agreement.
(b) REPORTING STATUS. Until the date on which Buyer shall have sold
all of the Common Shares (the "REPORTING PERIOD"), the Company
shall file all reports required to be filed with the SEC pursuant
to the 1934 Act, and the Company shall not terminate its status
as an issuer required to file reports under the 1934 Act even if
the 1934 Act or the rules and regulations thereunder would
otherwise permit such termination.
(c) USE OF PROCEEDS. The Company will use the proceeds from the sale
of the securities for working capital purposes and not for the
repayment of any outstanding Indebtedness of the Company or any
of its Subsidiaries.
(d) LISTING. The Company shall promptly secure the listing of all of
the Purchased Shares upon each national securities exchange and
automated quotation system, if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance)
and shall maintain such listing of all Purchased Shares from time
to time issuable under the terms of this Agreement. The Company
shall maintain the Common Stock's authorization for quotation on
the Principal Market. Neither the Company nor any of its
Subsidiaries shall take any action which would be reasonably
expected to result in the delisting or suspension of the Common
Stock on the Principal Market. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this
Section 4(e).
(e) FEES. Subject to Section 7 below at the Closing, the Company
shall pay a nonaccountable expense allowance of $20,000 to
Riverview Group, LLC (a Buyer) or its designees, which amount
shall be withheld by such Buyer from its Purchase Price at the
Closing. The Company shall be responsible for the payment of any
placement agent's fees, financial advisory fees, or broker's
commissions relating to or arising out of the transactions
contemplated hereby, including, without limitation, any fees or
commissions payable to the Agent. The Company shall pay, and hold
Buyer harmless against, any liability, loss or expense
(including, without limitation, reasonable attorney's fees and
out-of-pocket expenses) arising in connection with claim relating
to any such payment. Except as otherwise set forth in this
Agreement or in the Registration Rights Agreement, each party to
this Agreement shall bear its own expenses in connection with the
sale of the Securities to Buyer.
(f) DISCLOSURE OF TRANSACTIONS AND OTHER MATERIAL INFORMATION. As
soon as practicable on the first Business Day following the
execution and delivery of this Agreement, the Company shall issue
a press release reasonably acceptable to the Buyers disclosing
all material terms of the transactions contemplated hereby. On or
before 8:30 a.m., New York Time, on the second Business Day
following the execution and delivery of this Agreement, the
Company shall file a Current Report on Form 8-K describing the
terms of the transactions contemplated by this Agreement in the
form required by the 1934 Act, and attaching this
14
Agreement (and all schedules to this Agreement) as an exhibit to
such filing (including all attachments, the "8-K FILING"). From
and after the filing of the 8-K Filing with the SEC, Buyer shall
not be in possession of any material, nonpublic information
received from the Company, any of its Subsidiaries or any of its
respective officers, directors, employees or agents, that is not
disclosed in the 8-K Filing. The Company shall not, and shall
cause each of its Subsidiaries and its and each of their
respective officers, directors, employees and agents, not to,
provide Buyer with any material nonpublic information regarding
the Company or any of its subsidiaries from and after the filing
of the 8-K Filing with the SEC without the express written
consent of Buyer. Subject to the foregoing, neither the Company
nor any Buyer shall issue any press releases or any other public
statements with respect to the transactions contemplated hereby;
PROVIDED, HOWEVER, that the Company shall be entitled, without
the prior approval of any Buyer, to make any press release or
other public disclosure with respect to such transactions (i) in
substantial conformity with the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and
regulations, including the applicable rules and regulations of
the Principal Market (provided that in the case of clause (i)
each Buyer shall be consulted by the Company (although the
consent of such Buyer shall not be required) in connection with
any such press release or other public disclosure prior to its
release).
(g) CONDUCT OF BUSINESS. The business of the Company and its
Subsidiaries shall not be conducted in violation of any law,
ordinance or regulation of any governmental entity, except where
such violations would not result, either individually or in the
aggregate, in a Material Adverse Effect.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Common Shares
to Buyer at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion by providing Buyer with prior written notice thereof:
(a) Buyer shall have executed this Agreement and delivered the same
to the Company.
(b) Buyer shall have delivered to the Company the Purchase Price for
the Common Shares being purchased by Buyer at the Closing by wire
transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
(c) The representations and warranties of Buyer shall be true and
correct in all material respects as of the date when made and as
of the Closing Date as though made at that time (except for
representations; and warranties that speak as of a specific
date), and Buyer shall have performed, satisfied and complied in
all material respects (except for covenants, agreements and
conditions that are qualified by materiality, which shall be
complied with in all respects) with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied
or complied with by Buyer at or prior to the Closing Date. The
Company shall have received a certificate, executed by an
authorized representative, dated as of the Closing Date, to the
foregoing effect in the form attached hereto as EXHIBIT A.
15
6. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of Buyer hereunder to purchase the Common Shares at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for Buyer's sole
benefit and may be waived by Buyer at any time in its sole discretion by
providing the Company with prior written notice thereof:
(a) The Company shall have executed and delivered to Buyer (i) the
Agreement and (ii) the Common Shares being purchased by Buyer at
the Closing pursuant to this Agreement.
(b) Buyer shall have received the opinion of Akin Gump Xxxxxxx Xxxxx
& Xxxx LLP, the Company's counsel, dated as of the Closing Date,
in substantially the form of EXHIBIT B attached hereto.
(c) The Company shall have delivered to Buyer a certificate
evidencing the incorporation and good standing of the Company and
of Valence Technology (Nevada), Inc., in each such corporation's
state of incorporation issued by the Secretary of State of such
state of incorporation as of a date within ten (10) days of the
Closing Date.
(d) The Company shall have delivered to Buyer a certificate
evidencing the Company's qualification as a foreign corporation
and good standing issued by the Secretary of State of the State
of Texas as of a date within ten (10) days of the Closing Date.
(e) The Company shall have delivered to Buyer a certified copy of the
Certificate of Incorporation as certified by the Secretary of
State of the State of Delaware within ten (10) days of the
Closing Date.
(f) The Company shall have delivered to Buyer a certificate, executed
by an Assistant Secretary of the Company and dated as of the
Closing Date, as to (i) the resolutions consistent with Section
3(b) as adopted by the Company's Board of Directors in a form
reasonably acceptable to Buyer (the "RESOLUTIONS"), (ii) the
Certificate of Incorporation and (iii) the Bylaws, each as in
effect at the Closing, in the form attached hereto as EXHIBIT C.
(g) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Closing Date
as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company
shall have performed, satisfied and complied in all material
respects (except for covenants, agreements and conditions that
are qualified by materiality, which shall be complied with in all
respects) with the covenants, agreements and conditions required
by the Agreement to be performed, satisfied or complied with by
the Company at or prior to the Closing Date. Buyer shall have
received a certificate, executed by the Chief Executive Officer
of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably
requested by Buyer in the form attached hereto as EXHIBIT D.
(h) The Company shall have delivered to Buyer a letter from the
Company's transfer agent certifying the number of shares of
Common Stock outstanding as of a date within five (5) days of the
Closing Date.
16
(i) The Common Stock (A) shall be designated for quotation or listed
on the Principal Market and (B) shall not have been suspended by
the SEC or the Principal Market from trading on the Principal
Market nor shall suspension by the SEC or the Principal Market
have been threatened either (I) in writing by the SEC or the
Principal Market or (II) by falling below the minimum listing
maintenance requirements of the Principal Market.
(j) The Company shall have obtained all governmental, regulatory or
third party consents and approvals, if any, necessary for the
sale of the Common Shares.
(k) The Company shall have delivered to Buyer such other documents
relating to the transactions contemplated by this Agreement as
Buyer or its counsel may reasonably request.
7. TERMINATION. In the event that the Closing shall not have occurred
with respect to Buyer on or before five (5) Business Days from the
date hereof due to the Company's or Buyer's failure to satisfy the
conditions set forth in Sections 5 and 6 above (and the nonbreaching
party's failure to waive such unsatisfied condition(s)), the
nonbreaching party shall have the option to terminate this Agreement
with respect to such breaching party at the close of business on such
date without liability of any party to any other party; PROVIDED,
HOWEVER, if this Agreement is terminated pursuant to this Section 7,
the Company shall remain obligated to reimburse the non-breaching
Buyers for the expenses described in Section 4(e) above.
8. MISCELLANEOUS.
(a) GOVERNING LAW; JURISDICTION; JURY TRIAL. 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 in 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. 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 WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
17
(b) COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts
have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due
execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original,
not a facsimile signature.
(c) HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the
interpretation of, this Agreement.
(d) SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or
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.
(e) ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all other
prior oral or written agreements between Buyer, the Company,
their affiliates and Persons acting on their behalf with respect
to the matters discussed herein, and this Agreement and the
instruments referenced herein contain the entire understanding of
the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein,
neither the Company nor Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No
provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and Buyer. No
provision hereof may be waived other than by an instrument in
writing signed by the party against whom enforcement is sought.
No such amendment shall be effective to the extent that it
applies to less than all of the holders of the Common Shares then
outstanding. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any
provision of this Agreement unless the same consideration also is
offered to all of the parties to this Agreement. The Company has
not, directly or indirectly, made any agreements with any Buyers
relating to the terms or conditions of the transactions
contemplated by this Agreement except as set forth in this
Agreement.
(f) NOTICES. 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 an overnight courier 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.
Xxxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President and CEO
18
with a copy to:
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: C.N. Xxxxxxxx Xxxxxxx, III, Esq.
If to a Buyer, to its address and facsimile number set forth on the
Schedule of Buyers, 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 with a copy (for informational purposes) to Xxxxxxx
Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Facsimile: (212)
000-0000, Telephone:(000) 000-0000, Attention: Xxxxxxx Xxxxx, Esq. 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 an
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iii) above, respectively.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective
successors and assigns. Neither party shall assign this Agreement
or any rights or obligations hereunder without the prior written
consent of the other party.
(h) NO THIRD PARTY BENEFICIARIES. 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.
(i) SURVIVAL. Unless this Agreement is terminated under Section 7,
the representations and warranties of the Company and Buyer
contained in Sections 2 and 3, the agreements and covenants set
forth in Sections 4 and 8 shall survive the Closing. Each Buyer
shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.
(j) FURTHER ASSURANCES. 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.
19
(k) INDEMNIFICATION.
(i) In consideration of Buyer's execution and delivery of the
Agreement and acquiring the Securities hereunder and in
addition to all of the Company's other obligations under the
Agreement, the Company shall defend, protect, indemnify and
hold harmless Buyer and all of its stockholders, partners,
members, officers, directors, employees and direct or
indirect investors and any of the foregoing Persons' agents
or other representatives (including, without limitation,
those retained in connection with the transactions
contemplated by this Agreement) (collectively, the
"INDEMNITEES") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a
party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and
disbursements (the "INDEMNIFIED LIABILITIES"), incurred by
any Indemnitee as a result of, or arising out of, or
relating to (a) any material inaccuracy of any
representation or warranty made by the Company in this
Agreement, (b) any material breach of any covenant,
agreement or obligation of the Company contained in this
Agreement or (c) any cause of action, suit or claim brought
or made against such Indemnitee by a third party (including
for these purposes a derivative action brought on behalf of
the Company) and arising out of or resulting from (i) the
execution, delivery, performance or enforcement of this
Agreement, (ii) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Securities, (iii) any
disclosure made by Buyer pursuant to Section 4(f), or (iv)
the status of Buyer as an investor in the Company (other
than in connection with any action such Buyer may have taken
or may have failed to taken). To the extent that the
foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under
applicable law.
(ii) Promptly after receipt by an Indemnitee under this Section
8(k) of notice of the commencement of any action or
proceeding (including any governmental action or proceeding
involving an Indemnified Liability, such Indemnitee shall,
if a claim for an Indemnified Liability is to be made
against the Company under this Section 8(k), deliver to the
Company a written notice of the commencement thereof, and
the Company shall have the right to participate in, and, to
the extent the Company so desires to assume control of the
defense thereof with counsel mutually satisfactory to the
Company and the Indemnitee; provided, however that the
Indemnitee shall have the right to retain its own counsel
with the fees and expenses of not more than one counsel to
be for such Indemnitee to be paid by the Company, if, in the
reasonable opinion of counsel retained by the Company, the
representation by such counsel of the Indemnitee would be
inappropriate due to actual or potential differing interests
between such Indemnitee and any other party represented by
such counsel in such proceeding. The Indemnitee shall
cooperate fully with the Company in connection with any
negotiation or defense of any such action or claim for
Indemnified Liabilities by the Company and shall furnish to
the Company all information reasonably available to the
Indemnitee which relates to such action or claim. The
Company shall keep the Indemnitee fully apprised at all
times as to the status of the defense or any settlement
negotiations with respect thereto. The Company shall not be
liable for any settlement of any action, claim, or
proceeding effected without its prior written consent,
provided, however, that the Company shall not unreasonably
withhold, delay or condition its consent. The Company shall
not, without the prior written consent of the Indemnitee,
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
20
such Indemnitee of a release from all liability in respect
to such Indemnified Liabilities or litigation related
thereto. Following indemnification as provided for
hereunder, the Company shall be subrogated to all rights of
the Indemnitee 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 Company within a reasonable time of
the commencement of any such action shall not relieve the
Company of any liability to the Indemnitee under this
Section 8(k), except to the extent that the Company is
prejudiced in its ability to defend such action. The
indemnification required by this Section 8(k) 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 Liabilities are incurred.
(l) NO STRICT CONSTRUCTION. 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.
(m) REMEDIES. Buyer shall have all rights and remedies set forth
in this Agreement and all rights and remedies which such
holders have been granted at any time under any other
agreement or contract and all of the rights which such
holders have under any law. Any Person having any rights
under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or
other security), to recover damages by reason of any breach
of any provision of this Agreement and to exercise all other
rights granted by law. Furthermore, the Company recognizes
that in the event that it fails to perform, observe, or
discharge any or all of its obligations under this
Agreement, any remedy at law may prove to be inadequate
relief to Buyer. The Company therefore agrees that Buyer
shall be entitled to seek temporary and permanent injunctive
relief in any such case without the necessity of proving
actual damages and without posting a bond or other security.
(n) PAYMENT SET ASIDE. To the extent that the Company makes a
payment or payments to Buyer hereunder or Buyer enforces or
exercises its rights hereunder or thereunder, and such
payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded,
repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including,
without limitation, any bankruptcy law, state or federal
law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment
had not been made or such enforcement or setoff had not
occurred.
[SIGNATURE PAGE FOLLOWS]
21
IN WITNESS WHEREOF, each Buyer and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
COMPANY:
VALENCE TECHNOLOGY, INC.
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President of Finance
BUYER:
RIVERVIEW GROUP, LLC
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Authorized Signatory
22
SCHEDULE OF BUYERS
(1) (2) (3) (4) (5)
AGGREGATE
PURCHASE AGGREGATE LEGAL
PRICE OF NUMBER OF REPRESENTATIVE'S
PURCHASED PURCHASED ADDRESS AND
BUYER ADDRESS AND FACSIMILE SHARES SHARES FACSIMILE NUMBER
-------------------------------------------------------------------------------------------------------------
Riverview Group LLC 000 Xxxxx Xxxxxx $7,500,000 2,475,248 Xxxxxxx Xxxx & Xxxxx LLP
New York, New York 000 Xxxxx Xxxxxx
Attention: Manager Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000)000-0000 Attention: Xxxxxxx Xxxxx, Esq.
Telephone: (000)000-0000 Facsimile: (000) 000-0000
Residence: New York Telephone: (000) 000-0000
23
EXHIBITS
Exhibit A Form of Buyer's Officer's Certificate
Exhibit B Opinion of Company's Counsel
Exhibit C Form of Company's Secretary's Certificate
Exhibit D Form of Seller's Officer's Certificate
24
