Exhibit 4.2
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE OF THE RIGHTS
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, OR PURSUANT TO A VALID EXEMPTION FROM REGISTRATION
THEREFROM. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THIS WARRANT OR THE SECURITIES ISSUABLE UPON EXERCISE
HEREUNDER.
WARRANT TO PURCHASE
COMMON STOCK
OF
VALENCE TECHNOLOGY, INC.
VOID AFTER JULY 13, 2008
This Warrant is issued to Xxxx & Xxxx Enterprises, LLC, a California
limited liability company, or its registered assigns ("HOLDER") by Valence
Technology, Inc., a Delaware corporation (the "COMPANY"), on July 13, 2005 (the
"WARRANT ISSUE DATE").
1. PURCHASE SHARES. Subject to the terms and conditions hereinafter set forth,
Holder is entitled to purchase from the Company up to 600,000 fully paid
and nonassessable shares of Common Stock (as hereinafter defined). The
number of shares of Common Stock issuable pursuant to this Section 1 (the
"SHARES") shall be subject to adjustment as provided herein. The term
"Shares" also shall be deemed to refer to any securities of the Company or
any other issuer for which Shares may be exchanged or surrendered or which
may be declared on or distributed with respect to the Shares at any time
prior to the Expiration Date (as hereinafter defined). For purposes of this
Warrant, "COMMON STOCK" means (i) the Company's common stock, $0.001 par
value per share, and (ii) any capital stock into which such Common Stock
shall have been changed or any capital stock resulting from a
reclassification of such Common Stock.
2. EXERCISE PRICE. The purchase price for the Shares shall be $2.74 per share,
subject to adjustment as provided herein (the "WARRANT EXERCISE PRICE").
3. EXERCISE PERIOD. This Warrant will be exercisable, in whole or in part,
during the term commencing on the Warrant Issue Date and ending at 5:00
p.m. Pacific Standard Time on July 13, 2008 (the "EXPIRATION DATE"). The
Company shall take all such actions as may be reasonably necessary to
assure that all Shares may be so issued without violation of any applicable
law or governmental regulation or any applicable requirements of any
domestic securities exchange (except for official notice of issuance which
shall be immediately delivered by the Company upon each such issuance).
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4. METHOD OF EXERCISE. Subject to the terms and conditions hereof, this
Warrant may be exercised by Holder, in whole or in part, at any time on any
Business Day (as hereinafter defined) on or after the opening of business
on the date hereof and prior to 11:59 P.M. New York Time on the Expiration
Date by (i) delivery of a written notice, in the form of the subscription
form attached as Exhibit A hereto (the "EXERCISE NOTICE"), of Holder's
election to exercise this Warrant, which notice shall specify the number of
Shares to be purchased, (ii) (A) payment to the Company of an amount equal
to the Warrant Exercise Price multiplied by the number of Shares as to
which this Warrant is being exercised (the "AGGREGATE EXERCISE PRICE") by
wire transfer of immediately available funds (or by check if the Company
has not provided Holder with wire transfer instructions for such payment)
or (B) by notifying the Company that this Warrant is being exercised
pursuant to a Cashless Exercise (as hereinafter defined), and (iii) unless
Holder has previously delivered this Warrant to the Company and it or a new
replacement Warrant has not yet been delivered to Holder, the surrender to
a common carrier for overnight delivery to the Company as soon as
practicable following such date, this Warrant (or an indemnification
undertaking with respect to this Warrant in the case of its loss, theft or
destruction). In the event of any exercise of the rights represented by
this Warrant in compliance with this Section 4(a), the Company shall on the
second (2nd) Business Day (the "WARRANT SHARE DELIVERY DATE") following the
date of its receipt of the Exercise Notice, the Aggregate Exercise Price
(or notice of Cashless Exercise) and (unless Holder has previously
delivered this Warrant to the Company and it or a new replacement Warrant
has not yet been delivered to Holder), this Warrant (or an indemnification
undertaking with respect to this Warrant in the case of its loss, theft or
destruction) (the "EXERCISE DELIVERY DOCUMENTS"), (A) provided that the
transfer agent is participating in The Depository Trust Company ("DTC")
Fast Automated Securities Transfer Program and provided that Holder is
eligible to receive shares through DTC, credit such aggregate number of
shares of Common Stock to which Holder shall be entitled to Holder's or its
designee's balance account with DTC through its Deposit Withdrawal Agent
Commission system or (B) issue and deliver to the address specified in the
Exercise Notice, a certificate, registered in the name of Holder or its
designee, for the number of shares of Common Stock to which the Holder
shall be entitled. Upon (x) delivery of the Exercise Notice and (y) the
Aggregate Exercise Price referred to in clause (ii)(A) above or
notification to the Company of a Cashless Exercise, the Holder shall be
deemed for all corporate purposes to have become the holder of record of
the Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of this Warrant as required by clause
(iii) above or the certificates evidencing such Warrant Shares.
(b) While this Warrant remains outstanding and exercisable, Holder may elect to
receive shares equal to the value of this Warrant (or any portion thereof
remaining unexercised) by surrender of this Warrant at the principal office
of the Company together with notice of such election, in which event the
Company shall issue to Holder a number of shares of Common Stock computed
using the following formula:
X = Y (A-B)
----------
A
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Where X = the number of shares of Common Stock to be issued to
Holder.
Y = the number of shares of Common Stock being exercised
under this Warrant (on the trading day immediately
preceding the date of such calculation).
A = the Weighted Average Price (as hereinafter defined)
of one share of the Company's Common Stock (at the date
of such calculation).
B = Exercise Price (as adjusted to the date of such
calculation).
(c) The following words and terms as used in this Warrant shall have the
following meanings:
(i) "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.
(ii) "PRINCIPAL MARKET" means the principal securities exchange or
trading market for a security.
(iii) "WARRANT DELIVERY DATE" means the date this Warrant is deemed
delivered hereunder for purposes of exercise.
(iv) "WEIGHTED AVERAGE PRICE" means, for any security as of any date,
the dollar volume-weighted average price for such security on its
Principal Market during the period beginning at 9:30 a.m., New
York City Time (or such other time as the Principal Market
publicly announces is the official open of trading), and ending
at 4:00 p.m., New York City Time (or such other time as the
Principal Market publicly announces is the official close of
trading), as reported by Bloomberg Financial Markets
("BLOOMBERG") through its "Volume at Price" functions (ignoring
any trade of more than 10,000 shares of such security pursuant to
an individual transaction (subject to adjustment for stock
splits, stock dividends, stock combinations and other similar
transactions involving such security after the Warrant Delivery
Date), or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such
security during the period beginning at 9:30 a.m., New York City
Time (or such other time as such over-the-counter market publicly
announces is the official open of trading), and ending at 4:00
p.m., New York City Time (or such other time as such
over-the-counter market publicly announces is the official close
of trading), as reported by Bloomberg, or, if no dollar
volume-weighted average price is reported for such security by
Bloomberg for such hours, the average of the highest closing bid
price and the lowest closing ask price of any of the market
makers for such security as reported in the "pink sheets" by the
National Quotation Bureau, Inc. If the Weighted Average Price
cannot be calculated for such security on such date on any of the
foregoing bases, the Weighted Average Price of such security on
such date shall be the fair market value as mutually determined
by the Company and the Holder.
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(d) If this Warrant is submitted for exercise, unless the rights
represented by this Warrant shall have expired or shall have been
fully exercised, the Company shall, as soon as practicable and in no
event later than five (5) Business Days after the Warrant Delivery
Date and at its own expense, issue a new Warrant identical in all
respects to this Warrant exercised except it shall represent rights to
purchase the number of Shares purchasable immediately prior to such
exercise under this Warrant, less the number of Shares with respect to
which such Warrant is exercised (together with, in the case of a
Cashless Exercise, the number of Shares surrendered in lieu of payment
of the Exercise Price).
(e) No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common
Stock issued upon exercise of this Warrant shall be rounded up or down
to the nearest whole number. In lieu of any fractional shares, the
Company shall pay cash to the Holder equal to such fraction multiplied
by the Weighted Average Price for a share of Common Stock as of the
date of exercise.
(f) In the case of a dispute as to the determination of the Exercise Price
or the arithmetic calculation of the Shares, the Company shall
promptly issue to the holder the number of Shares that are not
disputed and resolve such dispute in accordance with Section 12.
5. ISSUANCE OF SHARES. The Company covenants that the Shares, when issued
pursuant to the exercise of this Warrant, will be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof. The Company covenants that it will at
all times keep available such number of authorized shares of its Common
Stock, free from all preemptive rights with respect thereto, as will be
sufficient to permit the exercise of this Warrant for the full number of
Shares specified herein.
6. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The number of and kind
of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) If the Company shall at any time prior to the expiration of this
Warrant subdivide its Common Stock, by split-up or otherwise, or
combine its Common Stock, or issue additional shares of its Common
Stock as a dividend with respect to any shares of its Common Stock,
the number of Shares issuable on the exercise of this Warrant shall
forthwith be proportionately increased in the case of a subdivision or
stock dividend, or proportionately decreased in the case of a
combination. If the Company shall at any time subdivide the
outstanding shares of Common Stock or issue additional shares as a
dividend, the Exercise Price then in effect immediately before that
subdivision shall be proportionately decreased, and, if the Company
shall at any time combine the outstanding shares of Common Stock, the
Exercise Price then in effect immediately before that combination
shall be proportionately increased. Any adjustment under this Section
6(a) shall become effective at the close of business on the date the
subdivision or combination becomes effective, or as of the record date
of such dividend, or in the event that no record date is fixed, upon
the making of such dividend.
(b) If the Common Stock issuable upon exercise of this Warrant shall be
changed into the same or a different number of shares of any other
series or class or classes of stock, whether by capital
reorganization, reclassification, or otherwise (other than a
subdivision or combination
17
of shares or stock dividend provided for above), Holder shall, on its
exercise, be entitled to purchase, in lieu of the Common Stock which
Holder would have become entitled to purchase but for such change, a
number of shares of such other series or class or classes of stock
equivalent to the number of shares of Common Stock that would have
been subject to purchase by Holder on exercise of this Warrant
immediately before the change.
(c) The form of this Warrant need not be changed because of any adjustment
in the number of shares of Common Stock purchasable upon its exercise.
A Warrant issued after any adjustment upon any partial exercise or in
replacement may continue to express the same number of shares of
Common Stock (appropriately reduced in the case of partial exercise)
as are stated on the face of this Warrant as initially issued, and
that number of shares shall be considered to have been so changed at
the close of business on the date of adjustment.
7. PURCHASE RIGHTS; ORGANIC CHANGE.
(a) Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Company's assets to
another person or entity or other transaction, in each case which is
effected in such a way that holders of Common Stock are entitled to
receive securities or assets with respect to or in exchange for Common
Stock is referred to herein as an "ORGANIC CHANGe." Prior to the
consummation of any (i) sale of all or substantially all of the
Company's assets to an acquiring person or entity or (ii) other
Organic Change following which the Company is not a surviving entity,
the Company will secure from the person or entity purchasing such
assets or the person or entity issuing the securities or providing the
assets in such Organic Change (in each case, the "ACQUIRING ENTITY") a
written agreement (in form and substance mutually satisfactory to
Holder, the Company and the Acquiring Entity) to deliver to Holder in
exchange for this Warrant, a security of the Acquiring Entity
evidenced by a written instrument substantially similar in form and
substance to this Warrant and mutually satisfactory to Holder, the
Company and the Acquiring Entity (including, an adjusted exercise
price equal to the value for the Common Stock reflected by the terms
of such consolidation, merger or sale, and exercisable for a
corresponding number of shares of Common Stock acquirable and
receivable upon exercise of this Warrant, if the value so reflected is
less than the Exercise Price in effect immediately prior to such
consolidation, merger or sale). In the event that an Acquiring Entity
is directly or indirectly controlled by an entity whose common stock
or similar equity interest is listed, designated or quoted on a
securities exchange or trading market, if requested in writing by
Holder, the Company shall use its reasonable best efforts to effect
the ability of Holder to elect to treat such person or entity as the
Acquiring Entity for purposes of this Section . Prior to the
consummation of any other Organic Change, the Company shall use its
reasonable efforts to make appropriate provision (in form and
substance reasonably satisfactory to Holder) to insure that Holder
thereafter will have the right to acquire and receive in lieu of or in
addition to (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the exercise of
this Warrant, such shares of stock, securities or assets that would
have been issued or payable in such Organic Change with respect to or
in exchange for the number of shares of Common Stock which would have
been acquirable and receivable upon the exercise of this Warrant as of
the date of such Organic Change.
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8. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company
will not, by amendment of its Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms of this Warrant,
and will at all times in good faith carry out all the provisions of this
Warrant and take all action as may be required to protect the rights for
Holder. Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any shares of Common Stock receivable
upon the exercise of this Warrant above the Exercise Price then in effect,
(ii) will take all such actions as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant, and (iii) will
take all action necessary to reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting
the exercise of the Warrant, 100% of the number of shares of Common Stock
as shall from time to time be necessary to effect the exercise of the
Warrant.
9. NOTICE OF CERTAIN EVENTs. If at any time prior to the termination or full
exercise of the Warrant:
(a) the Company shall pay any dividend payable in stock upon its Common
Stock or make any distribution to the holders of its Common Stock;
(b) there shall be any reclassification of the Common Stock of the
Company;
(c) there shall be any consolidation or merger of the Company with or
into, or sale of substantially all of its assets to, another entity,
or any other Organic Change; or
(d) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company.
then, in any one or more of such cases, the Company shall give Holder at least
20 days prior written notice of the date on which the books of the Company shall
close or a record shall be taken for such dividend or distribution or for
determining rights to vote in respect to say such other address of Holder as
shown on the books of the Company.
10. EXERCISE, TRANSFER AND EXCHANGE RESTRICTIONS. The Company shall maintain at
its principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), a register for
this Warrant, in which the Company shall record the name and address of the
person or entity in whose name this Warrant has been issued, as well as the
name and address of each transferee. The transfer, surrender or exchange of
any of this Warrant or Common Stock issued upon exercise of this Warrant is
subject to any restrictions on transfer imposed by state and federal
securities laws. This Warrant and all rights hereunder are transferable, in
whole or in part, on the books of the Company maintained for that purpose
at its principal offices by Holder upon surrender of the Warrant properly
endorsed.
11. DISPUTE RESOLUTION.
(a) In the case of a dispute as to the arithmetic calculation of the
Exercise Price or the arithmetic calculation of the Shares, the
Company shall submit the disputed arithmetic calculations via
facsimile or other electronic transmission within two (2) Business
19
Days of receipt of the Exercise Notice giving rise to such dispute, as
the case may be, to Holder. Holder and the Company shall determine the
correct arithmetic calculation within three (3) Business Days of such
disputed arithmetic calculation being transmitted to Holder. If Holder
and the Company are unable to agree upon correct arithmetic
calculation of the Exercise Price or the Shares within such time, then
the Company shall, within two Business Days submit via facsimile or
other electronic transmission the disputed calculation to an
independent, reputable nationally recognized accounting firm selected
by the Company and approved by Holder. The Company shall cause the
accounting firm to perform the calculation and notify the Company and
Holder of the results no later than ten (10) Business Days from the
time it receives the disputed determinations or calculations. Such
accounting firm's determination shall be binding upon all parties
absent manifest error.
(b) In the case of a dispute as to the determination of fair market value
of a security to determine the Exercise Price, the Company shall
submit the disputed determination via facsimile or other electronic
transmission within two (2) Business Days of receipt of the Exercise
Notice giving rise to such dispute, as the case may be, to Holder. If
Holder and the Company are unable to agree upon such determination or
calculation of the Exercise Price or the Shares within three (3)
Business Days of such disputed determination being submitted to the
Holder, then the Company shall, within two Business Days submit via
facsimile or other electronic transmission the disputed determination
of the Exercise Price to an independent, reputable investment bank
selected by the Company and approved by the holder of this Warrant.
The Company shall cause the investment bank or the accountant, as the
case may be, to perform the determinations and notify the Company and
Holder of the results no later than ten (10) Business Days from the
time it receives the disputed determinations or calculations. Such
investment bank's determination shall be binding upon all parties
absent manifest error.
(c) The fees and expenses associated with the determinations made by such
investment bank or accountant shall be paid by the party whose
determination or calculation as initially presented to the investment
bank or accountant is further from the final determination or
calculation of the investment bank or accountant (or shared equally by
the Company and Holder if the final determination or calculation is at
the midpoint of the determinations or calculations presented by the
Company and the Holder).
12. REPLACEMENT. If this Warrant is lost, stolen, mutilated or destroyed, the
Company shall promptly, on receipt of an indemnification undertaking
reasonably satisfactory to the Company (or in the case of a mutilated
Warrant, the Warrant), issue a new Warrant of like denomination and tenor
as this Warrant so lost, stolen, mutilated or destroyed.
13. LEGENDS. It is understood that the certificates evidencing Shares may bear
the following legend if applicable:
"These securities have not been registered under the Securities
Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration
statement in effect with respect to the securities under such Act
or an opinion of counsel reasonably satisfactory to the Company
that such registration is not required or unless sold pursuant to
Rule 144 of such Act."
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14. NO STOCKHOLDER RIGHTS. Prior to exercise of this Warrant, except as
otherwise provided in this Warrant, Holder shall not be entitled to any
rights of a stockholder with respect to the Shares, including (without
limitation) the right to vote such Shares, receive dividends or other
distributions thereon, exercise preemptive rights or be notified of
stockholder meetings, and such Holder shall not be entitled to any notice
or other communication concerning the business or affairs of the Company.
15. SUCCESSORS AND ASSIGNS. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and Holder and
their respective successors and assigns.
16. AMENDMENTS AND WAIVERS. Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived (either generally or
in a particular instance and either retroactively or prospectively), with
the written consent of the Company and Holder.
17. NOTICES. All notices required under this Warrant shall be deemed to have
been given or made for all purposes (a) upon personal delivery, (b) upon
confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile; (c) one Business Day after being
sent, when sent by recognized overnight courier service, or (d) five days
after posting when sent by registered or certified mail. Notices to the
Company shall be sent to the principal offices of the Company (or at such
other place as the Company shall notify Holder in writing). Notices to
Holder shall be sent to the address of Holder on the books of the Company
(or at such other place as Holder shall notify the Company in writing).
18. ATTORNEYS' FEES. If any action of law or equity is necessary to enforce or
interpret the terms of this Warrant, the prevailing party shall be entitled
to its reasonable attorneys' fees, costs and disbursements in addition to
any other relief to which it may be entitled.
19. CAPTIONS. The section and subsection headings of this Warrant are inserted
for convenience of reference only and shall not constitute a part of this
Warrant in construing or interpreting any provision hereof.
20. GOVERNING LAW. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant 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 jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York.
[Signature page follows.]
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IN WITNESS WHEREOF, the Company caused this Warrant to be executed by an
officer thereunto duly authorized.
VALENCE TECHNOLOGY, INC.
/s/ Xxxxx X. Xxxxxxxxx
------------------------------------
By: Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President of Finance
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EXHIBIT A TO WARRANT
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
VALENCE TECHNOLOGY, INC.
The undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock ("Warrant Shares") of Valence
Technology, Inc., a Delaware corporation (the "Company"), evidenced by the
attached Warrant (the "Warrant"). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
1. FORM OF EXERCISE PRICE. The Holder intends that payment of the Warrant
Exercise Price shall be made as:
____________ a "CASH EXERCISE" with respect to ___________________
Warrant Shares; and/or
____________ a "CASHLESS EXERCISE" with respect to ______________
Warrant Shares.
2. PAYMENT OF EXERCISE PRICE. In the event that the holder has elected a
Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the Warrant.
3. DELIVERY OF WARRANT SHARES. The Company shall deliver __________ Warrant
Shares in accordance with the terms of the Warrant in the following name and to
the following address:
Issue to: --------------------------------------------------------------------
Facsimile Number: -------------------------------------------------------
DTC Participant Number and Name (if electronic book entry transfer): -----
Account Number (if electronic book entry transfer): ----------------------
Date: _______________ __, ______
[Name of Registered Holder]
By:
-------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
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ACKNOWLEDGMENT
The Company hereby acknowledges receipt of this Exercise Notice and hereby
directs [TRANSFER AGENT] to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated ________________,
20__ from the Company and acknowledged and agreed to by [TRANSFER AGENT].
VALENCE TECHNOLOGY, INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
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EXHIBIT B TO WARRANT
FORM OF WARRANT POWER
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the capital stock of Valence Technology, Inc., a Delaware
corporation, standing in the name of the undersigned on the books of said
corporation. The undersigned does hereby irrevocably constitute and appoint
______________, attorney to transfer the warrants of said corporation, with full
power of substitution in the premises.
Dated: _________, 20__
------------------------------------
Name:
--------------------------------
Title:
--------------------------------
