AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"),
is made as of December 11, 1998, by and among VALENCE TECHNOLOGY, INC., a
Delaware corporation (the "COMPANY"), with headquarters located at 000 Xxxxxxxxx
Xxx, Xxxxxxxxx, XX 00000 and the undersigned (the "INITIAL PURCHASER").
RECITALS
A. In connection with the Securities Purchase Agreement dated July 27,
1998 by and between the Company and the Initial Purchaser (the "SECURITIES
PURCHASE AGREEMENT"), the Company sold to the Initial Purchaser (i) 7,500 shares
of Series A Convertible Participating Preferred Stock of the Company (the
"SERIES A PREFERRED STOCK") that is convertible into shares (the "SERIES A
CONVERSION SHARES") of the Company's common stock, par value $.001 per share
(the "COMMON STOCK"), upon the terms and subject to the limitations and
conditions set forth in the Certificate of Designations, Preferences and Rights
with respect to such Series A Preferred Stock (the "SERIES A CERTIFICATE OF
DESIGNATION") in the form attached as Exhibit A to the Securities Purchase
Agreement, and (ii) a Warrant (the "INITIAL WARRANT") entitling the holder
thereof to purchase 447,761 shares of Common Stock.
B. In connection with the Amended and Restated Securities Purchase
Agreement dated of even date herewith by and between the Company and the Initial
Purchaser (the "AMENDED SECURITIES PURCHASE AGREEMENT"), the Company has agreed,
upon the terms and subject to the conditions contained therein, to issue and
sell to the Initial Purchaser (i) 7,500 shares of Series B Convertible
Participating Preferred Stock of the Company (the "SERIES B PREFERRED STOCK")
that is convertible into shares (the "SERIES B CONVERSION SHARES") of Common
Stock, upon the terms and subject to the limitations and conditions set forth in
the Certificate of Designations, Preferences and Rights with respect to such
Series B Preferred Stock (the "SERIES B CERTIFICATE OF DESIGNATION") in the form
attached as Exhibit A to the Amended Securities Purchase Agreement, (ii) a
Warrant (the "SECOND WARRANT") entitling the holder thereof to purchase 447,761
shares of Common Stock (the "SECOND WARRANT SHARES"), and (iii) has agreed, upon
the terms and subject to the conditions contained therein, to exchange the
Initial Warrant with a Warrant of like tenor as the Second Warrant (all
references to the Initial Warrant herein shall refer to the Initial Warrant, as
so replaced, and all references to the "INITIAL WARRANT SHARES" shall refer to
the shares of Common Stock issuable upon exercise of the Initial Warrant as so
replaced).
C. In connection with entering into the Securities Purchase Agreement,
the Company and the Initial Purchaser entered into the Registration Rights
Agreement, dated as of July 27, 1998, between the Company and the Initial
Purchaser (the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company
agreed to provide certain registration rights under the Securities Act of 1933,
as amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the "SECURITIES ACT"), and applicable state securities
laws.
D. The Company and the Initial Purchaser, desiring to induce each other
to enter into the Amended Securities Purchase Agreement, have agreed to amend
and restate the Registration
1.
Rights Agreement by this Agreement, to supercede the Registration Rights
Agreement in its entirety.
AGREEMENTS
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, and the Initial
Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
(a) "CONVERSION SHARES" means the Series B Conversion Shares and
the Series A Conversion Shares.
(b) "PREFERRED STOCK" means the Series A Preferred Stock and the
Series B Preferred Stock.
(c) "PURCHASERS" means the Initial Purchaser and any transferees
or assignees who agree to become bound by the provisions of this Agreement in
accordance with Article IX hereof.
(d) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("RULE 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(e) "REGISTRABLE SECURITIES" means the Series A Registrable
Securities and the Series B Registrable Securities.
(f) "REGISTRATION STATEMENT" means a registration statement of
the Company under the Securities Act.
(g) "SERIES A REGISTRABLE SECURITIES" means the Series A
Conversion Shares (including any Series A Conversion Shares issuable with
respect to conversion default payments under the Series A Certificate of
Designation) issued or issuable with respect to the Series A Preferred Stock and
the Initial Warrant Shares issued or issuable with respect to the Initial
Warrant (without regard to any limitations on conversion or exercise) and any
shares of capital stock issued or issuable, from time to time (with any
adjustments), on or in exchange for or otherwise with respect to the Common
Stock or any other Series A Registrable Securities.
2.
(h) "SERIES B REGISTRABLE SECURITIES" means the Series B
Conversion Shares (including any Series B Conversion Shares issuable with
respect to conversion default payments under the Series B Certificate of
Designation) issued or issuable with respect to the Series B Preferred Stock and
the Second Warrant Shares issued or issuable with respect to the Second Warrant
(without regard to any limitations on conversion or exercise) and any shares of
capital stock issued or issuable, from time to time (with any adjustments), on
or in exchange for or otherwise with respect to the Common Stock or any other
Series B Registrable Securities.
(i) "WARRANTS" means the Initial Warrant and the Second Warrant.
(j) "WARRANT SHARES" means the Initial Warrant Shares and the
Second Warrant Shares.
1.2 CAPITALIZED TERMS. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Amended
Securities Purchase Agreement.
ARTICLE II
REGISTRATION
2.1 MANDATORY REGISTRATION. The Company has prepared and filed with the
SEC a Registration Statement on Form S-3 (the "FIRST REGISTRATION STATEMENT")
covering the resale of in excess of 5,000,000 shares of Common Stock issuable
upon conversion of the Series A Preferred Stock and the exercise of the Initial
Warrant which was declared effective by the SEC on December 4, 1998. The
Company shall prepare, and, on or prior to twenty (20) days after the date of
the closing of the sale of Series B Preferred Stock (the "Filing Date"), file
with the SEC a Registration Statement (the "SECOND REGISTRATION STATEMENT") on
Form S-3 (or, if Form S-3 is not then available, on such form of Registration
Statement as is then available to effect a registration of all of the Series B
Registrable Securities, subject to the consent of the Initial Purchasers (as
determined pursuant to Section 11.10 hereof)) covering the resale of 4,000,000
shares of Common Stock, which Registration Statement, to the extent allowable
under the Securities Act and the Rules promulgated thereunder (including Rule
416), shall state that such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon conversion of the Preferred Stock and the exercise of the Warrants to
prevent dilution resulting from stock splits, stock dividends or similar
transactions. The Registrable Securities included in the Registration Statements
referenced above shall be allocated among the Purchasers as set forth in Section
11.11 hereof. The Registration Statements (and each amendment or supplement
thereto, and each request for acceleration of effectiveness thereof) shall be
provided to (and subject to the approval of (which approval shall not be
unreasonably withheld or denied)) the Initial Purchasers and their counsel prior
to its filing or other submission.
2.2 UNDERWRITTEN OFFERING. If any offering pursuant to a Registration
Statement pursuant to Section 2.1 hereof involves an underwritten offering, the
Purchasers who hold a majority in interest of the Registrable Securities subject
to such underwritten offering, with the
3.
consent of the Initial Purchasers, shall have the right to select a total of one
legal counsel to represent the Purchasers and an investment banker or bankers
and manager or managers to administer the offering, which investment banker or
bankers or manager or managers shall be reasonably satisfactory to the Company.
2.3 PAYMENTS BY THE COMPANY. The Company shall cause the Second
Registration Statement to become effective as soon as practicable, but in no
event later than the sixtieth (60th) day following the date of the closing of
the sale of Series B Preferred Stock (or, if the SEC comments on the Second
Registration Statement, the ninetieth (90th) day following the date of such
closing) (the "REGISTRATION DEADLINE"). If (i) sales of all the Series A
Registrable Securities (including any Series A Registrable Securities required
to be registered pursuant to Section 3.2 hereof) cannot be made pursuant to the
First Registration Statement (by reason of a stop order or the Company's failure
to update the Registration Statement or any other reason outside the control of
the Purchasers), (ii) the Second Registration Statement is not declared
effective by the SEC on or before the Registration Deadline, or (iii) after the
Second Registration Statement has been declared effective by the SEC, sales of
all the Registrable Securities (including any Registrable Securities required to
be registered pursuant to Section 3.2 hereof) cannot be made pursuant to the
applicable Registration Statements (by reason of a stop order or the Company's
failure to update such Registration Statements or any other reason outside the
control of the Purchasers), then the Company will make payments to the
Purchasers in such amounts and at such times as shall be determined pursuant to
this Section 2.3 as partial relief for the damages to the Purchasers by reason
of any such delay in or reduction of their ability to sell the Registrable
Securities (which remedy shall not be exclusive of any other remedies available
at law or in equity). In such event, the Company shall pay to each Purchaser an
amount equal to (x) (A) .03 times (B) the aggregate purchase price of the
Preferred Stock held by such Purchaser (including, without limitation, shares of
Preferred Stock that have been converted into Conversion Shares) times (y) the
number of months (prorated per day for partial months) prior to the termination
of the Registration Period (as hereinafter defined) that sales cannot be made
pursuant to the applicable Registration Statements. Such amounts shall be paid
in cash or, at each Purchaser's option, may be convertible into Common Stock at
the "CONVERSION PRICE" (as defined in the Series B Certificate of Designation),
subject, however, to the limitations set forth in Section IVG(ii) of the Series
A Certificate of Designation and Series B Certificate of Designation or Section
8(f) of the Initial Warrant and Second Warrant. Any shares of Common Stock
issued upon conversion of such amounts shall be Registrable Securities. If the
Purchaser desires to convert or exercise the amounts due hereunder into
Registrable Securities it shall so notify the Company in writing within two (2)
days prior to the date on which such amounts are first payable in cash and such
amounts shall be so convertible (pursuant to the terms of the Series B
Certificate of Designation), beginning on the last day upon which the cash
amount would otherwise be due in accordance with the following sentence.
Payments of cash pursuant hereto shall be made within five (5) days after the
end of each period that 3 gives rise to such obligation, provided that, if any
such period extends for more than thirty (30) days, payments shall be made for
each such thirty (30) day period within five (5) days after the end of such
thirty (30) day period.
2.4 PIGGY-BACK REGISTRATIONS. If at any time prior to the expiration of
the Registration Period (as hereinafter defined) the Company shall file with the
SEC a Registration Statement relating to an offering for its own account or the
account of others under the Securities Act of
4.
any of its equity securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), then the Company
shall send to each Purchaser who has a right to have Registrable Securities
covered by a Registration Statement pursuant to this Agreement written notice of
such determination and, if within fifteen (15) days after the date of such
notice, such Purchaser shall so request in writing, the Company shall include in
such Registration Statement all or any part of the Registrable Securities such
Purchaser requests to be registered, except that if, in connection with any
underwritten public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because, in
such underwriter(s)' judgment, marketing or other factors dictate such
limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such Registration Statement only such limited
portion of the Registrable Securities with respect to which such Purchaser has
requested inclusion hereunder as the underwriter shall permit. Any exclusion of
Registrable Securities shall be made pro rata among the Purchasers seeking to
include Registrable Securities, in proportion to the number of Registrable
Securities sought to be included by such Purchasers; provided, however, that the
Company shall not exclude any Registrable Securities unless the Company has
first excluded all outstanding securities, the holders of which are not entitled
to inclusion of such securities in such Registration Statement or are not
entitled to pro rata inclusion with the Registrable Securities; and provided,
further, however, that, after giving effect to the immediately preceding
proviso, any exclusion of Registrable Securities shall be made pro rata with
holders of other securities having the right to include such securities in the
Registration Statement. No right to registration of Registrable Securities under
this Section 2.4 shall be construed to limit any registration required under
Section 2.1 or 3.2 hereof.
If an offering in connection with which a Purchaser is entitled to
registration under this Section 2.4 is an underwritten offering, then each
Purchaser whose Registrable Securities are included in such Registration
Statement shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other shares of Common Stock included in such underwritten
offering.
2.5 ELIGIBILITY FOR FORM S-3. The Company represents and warrants that it
meets the requirements for the use of Form S-3 for registration of the sale by
the Initial Purchasers and any other Purchaser of the Registrable Securities and
the Company shall file all reports required to be filed by the Company with the
SEC in a timely manner so as to maintain such eligibility for the use of Form
S-3.
ARTICLE III
OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Securities and the
filing of any Registration Statements hereunder, the Company shall have the
following obligations:
5.
3.1 The Company shall prepare promptly and file with the SEC the Second
Registration Statement, and cause such Registration Statement relating to Series
B Registrable Securities to become effective as soon as practicable after such
filing, and keep each of the First Registration Statement and Second
Registration Statement effective pursuant to Rule 415 at all times until such
date as is the earlier of (i) the date on which all of the applicable
Registrable Securities have been sold (and no further applicable Registrable
Securities may be issued in the future) and (ii) the date on which all of the
Registrable Securities (in the reasonable opinion of counsel to the Initial
Purchasers) may be immediately sold to the public without registration and
without restriction as to the number of Registrable Securities to be sold,
whether pursuant to Rule 144 or otherwise (the "REGISTRATION PERIOD"). The
Registration Statements (including any amendments or supplements thereto and
prospectuses contained therein and all documents incorporated by reference
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein not misleading.
3.2 The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until the termination of the Registration Period or, if earlier, such time as
all of such Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
the Registration Statements. In the event the number of shares available under a
Registration Statement filed pursuant to this Agreement is, for any three (3)
consecutive trading days (the last of such three (3) trading days being the
"REGISTRATION TRIGGER DATE"), insufficient to cover one hundred seventy-five
percent (175%) of the applicable Registrable Securities held by any Purchaser
(without regard to any limitations on conversion or exercise), the Company shall
amend, if permissible, the applicable Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover two hundred percent (200%) of the applicable Registrable
Securities issued or issuable to such Purchaser (without regard to any
limitations on conversion or exercise), in each case, as soon as practicable,
but in any event within five (5) days in the case of an amendment and ten (10)
days in the case of a Registration Statement after the Registration Trigger Date
(based on the market price of the Common Stock and other relevant factors on
which the Company reasonably elects to rely). The Company shall cause such
amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof.
3.3 The Company shall furnish to each Purchaser whose Registrable
Securities are included in the Registration Statement and its legal counsel (a)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of the Registration Statements referred
to in Section 2.1, each letter written by or on behalf of the Company to the SEC
or the staff of the SEC, and each item of correspondence from the SEC or the
staff of the SEC, in each case relating to such Registration Statement (other
than any portion, if any, thereof which contains information for which the
Company has sought confidential treatment), and (b)
6.
such number of copies of a prospectus, including a preliminary prospectus, and
all amendments and supplements thereto and such other documents as such
Purchaser may reasonably request in order to facilitate the disposition of the
Registrable Securities owned (or to be owned) by such Purchaser.
3.4 The Company shall use commercially reasonable efforts to (a) register
and qualify the Registrable Securities covered by the Registration Statement
under securities laws of such jurisdictions in the United States as each
Purchaser who holds (or has the right to hold) Registrable Securities being
offered reasonably requests, (b) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (c) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (d) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (i) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3.4, (ii) subject itself to general taxation in any such
jurisdiction, (iii) file a general consent to service of process in any such
jurisdiction, (iv) provide any undertakings that cause the Company material
expense or burden, or (v) make any change in its charter or by-laws, which in
each case the board of directors of the Company determines to be contrary to the
best interests of the Company and its stockholders.
3.5 In the event the Purchasers who hold a majority in interest of the
Registrable Securities being offered in an offering pursuant to a Registration
Statement or any amendment or supplement thereto under Section 2.1 or 3.2 hereof
select underwriters for the offering, the Company shall enter into and perform
its obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriters of such offering.
3.6 As soon as practicable after becoming aware of such event, the Company
shall notify (by telephone and also by facsimile and reputable overnight
courier) each Purchaser of the happening of any event, of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and use its best efforts promptly
(but in any event within five (5) days) to prepare a supplement or amendment to
the Registration Statement to correct such untrue statement or omission, and
deliver such number of copies of such supplement or amendment to each Purchaser
as such Purchaser may reasonably request.
3.7 The Company shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest practicable time and to notify (by telephone and also by facsimile and
reputable overnight carrier) each Purchaser who holds Registrable Securities
being sold (or, in the event of an underwritten offering, the managing
underwriters) of the issuance of such order and the resolution thereof.
Notwithstanding anything to the contrary, the Company shall cause the Transfer
Agent to deliver unlegended shares of Common Stock to a transferee of Purchaser
in accordance with the terms of the applicable Certificate of Designation
7.
in connection with any sale of Registrable Securities with respect to which such
Purchaser has entered into a contract for sale prior to receipt of notice of
such suspension and for which such Purchaser has not yet settled.
3.8 The Company shall permit a single firm of counsel designated by the
Initial Purchasers to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing with the
SEC, and not file any document in a form to which such counsel reasonably
objects.
3.9 The Company shall make generally available to its security holders
as soon as practical, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Securities Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement.
3.10 The Company shall make available for inspection by (i) any
Purchaser, (ii) any underwriter participating in any disposition pursuant to the
Registration Statement, (iii) one firm of attorneys and one firm of accountants
retained by the Purchasers, and (iv) one firm of attorneys retained by all such
underwriters (collectively, the "INSPECTORS") all pertinent financial and other
records, and pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall be reasonably deemed necessary by each
Inspector to enable each Inspector to exercise its due diligence responsibility,
if any, and cause the Company's officers, directors and employees to supply all
information which any Inspector may reasonably request for purposes of such due
diligence; provided, however, that each Inspector shall hold in confidence and
shall not make any disclosure (except to a Purchaser) of any Record or other
information which the Company determines in good faith to be confidential, and
of which determination the Inspectors are so notified in writing, unless (a) the
disclosure of such Records is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (b) the release of such Records is
ordered pursuant to a subpoena or other order from a court or government body of
competent jurisdiction, or is otherwise required by applicable law or legal
process or (c) the information in such Records has been made generally available
to the public other than by disclosure in violation of this or any other
agreement (to the knowledge of the relevant Purchaser). The Company shall not be
required to disclose any confidential information in such Records to any
Inspector until and unless such Inspector shall have 7 entered into
confidentiality agreements (in form and reasonable substance satisfactory to the
Company) with the Company with respect thereto, substantially in the form of
this Section 3.10. Each Purchaser agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein shall be deemed to limit a Purchaser's ability to
sell Registrable Securities in a manner which is consistent with applicable laws
and regulations.
3.11 The Company shall hold in confidence and not make any disclosure of
information concerning a Purchaser provided to the Company unless (a) disclosure
of such information is necessary to comply with federal or state securities
laws, (b) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration
8.
Statement, (c) the release of such information is ordered pursuant to a subpoena
or other order from a court or governmental body of competent jurisdiction or is
otherwise required by applicable law or legal process, (d) such information has
been made generally available to the public other than by disclosure in
violation of this or any other agreement (to the knowledge of the Company), or
(e) such Purchaser consents to the form and content of any such disclosure. The
Company agrees that it shall, upon learning that disclosure of such information
concerning a Purchaser is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to such
Purchaser prior to making such disclosure, and allow the Purchaser, at its
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
3.12 The Company shall cause the listing and the continuation of listing
of all the Registrable Securities covered by the Registration Statements on the
Nasdaq National Market System, the Nasdaq SmallCap Market, the New York Stock
Exchange or the American Stock Exchange, and cause the Registrable Securities to
be quoted or listed on each additional national securities exchange or quotation
system upon which the Common Stock is then listed or quoted.
3.13 The Company shall provide a transfer agent and registrar, which may
be a single entity, for the Registrable Securities.
3.14 The Company shall cooperate with the Purchasers who hold Registrable
Securities being offered and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing Registrable Securities to be offered
pursuant to the Registration Statement and enable such certificates to be in
such denominations or amounts, as the case may be, as the managing underwriter
or underwriters, if any, or the Purchasers may reasonably request and registered
in such names as the managing underwriter or underwriters, if any, or the
Purchasers may request, and, if requested by the Initial Purchaser, within one
(1) business day after such request, the Company shall cause legal counsel
selected by the Company to deliver, to the transfer agent for the Registrable
Securities (with copies to the Purchasers whose Registrable Securities are
included in such Registration Statement) an opinion of such counsel in the form
attached hereto as EXHIBIT 1.
3.15 At the request of any Purchaser, the Company shall promptly prepare
and file with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary in order to change the plan
of distribution set forth in such Registration Statement.
3.16 The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including, without limitation, the Securities Act and the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated by the
Commission).
9.
3.17 The Company shall take all such other actions as any Purchaser or
the underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities.
3.18 From and after the date of this Agreement, the Company shall not,
and shall not agree to, allow the holders of any securities of the Company to
include any of their securities in any Registration Statement or any amendment
or supplement thereto under Section 2.1 or 3.2 hereof without the consent of the
holders of a majority of the Registrable Securities.
ARTICLE IV
OBLIGATIONS OF THE PURCHASERS
In connection with the registration of the Registrable Securities, the
Purchasers shall have the following obligations:
4.1 It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Purchaser that such Purchaser shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least ten (10)
business days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Purchaser of the information the
Company requires from each such Purchaser.
4.2 Each Purchaser, by such Purchaser's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statements hereunder, unless such Purchaser has notified the Company in writing
of such Purchaser's election to exclude all of such Purchaser's Registrable
Securities from the Registration Statement.
4.3 Each Purchaser whose Registrable Securities are included in a
Registration Statement understands that the Securities Act may require delivery
of a prospectus relating thereto in connection with any sale thereof pursuant to
such Registration Statement, and each such Purchaser shall use its reasonable
efforts to comply with the applicable prospectus delivery requirements of the
Securities Act in connection with any such sale.
4.4 [INTENTIONALLY DELETED].
4.5 Each Purchaser agrees that, upon receipt of written notice from the
Company of the happening of any event of the kind described in Section 3.6, such
Purchaser will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Purchaser's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3.6 and, if so directed by the Company, such
Purchaser shall deliver to the Company (at the expense of the Company) or
destroy (and deliver
10.
to the Company a certificate of destruction) all copies in such Purchaser's
possession (other than a limited number of permanent file copies), of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice. Notwithstanding anything to the contrary, the Company shall
cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee of a Purchaser in accordance with the terms of the Warrants or the
Preferred Stock in connection with any sale of Registrable Securities with
respect to which such Purchaser has entered into a contract for sale prior to
receipt of such notice and for which such Purchaser has not yet settled.
4.6 Without limiting a Purchaser's rights under Section 2.1 or 3.2
hereof, no Purchaser may participate in any underwritten distribution hereunder
unless such Purchaser (a) agrees to sell such Purchaser's Registrable Securities
on the basis provided in any underwriting arrangements in usual and customary
form entered into by the Company, (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements, and (c)
agrees to pay its pro rata share of all underwriting discounts and commissions
and any expenses in excess of those payable by the Company pursuant to
Article V.
ARTICLE V
EXPENSES OF REGISTRATION
All expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Articles
II and III, including, without limitation, all registration, listing and
qualification fees, printers and accounting fees, the fees and disbursements of
counsel for the Company, and the reasonable fees and disbursements of one
counsel selected by the Purchasers pursuant to Section 2.2, hereof shall be
borne by the Company.
ARTICLE VI
INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
6.1 To the extent permitted by law, the Company will indemnify, hold
harmless and defend (a) each Purchaser who holds such Registrable Securities,
(b) each underwriter of Registrable Securities and (c) the directors, officers,
partners, members, employees, agents and persons who control any Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), if any, (each,
an "INDEMNIFIED PERSON"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "CLAIMS") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a material fact
required to be stated or necessary
11.
to make the statements therein not misleading, (ii) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus if used prior to the effective date of such Registration Statement,
or contained in the final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "VIOLATIONS"). Subject to the restrictions set forth in Section
6.3 with respect to the number of legal counsel, the Company shall reimburse the
Purchasers, each such underwriter and controlling person, and each such other
Indemnified Person, promptly as such expenses are incurred and are due and
payable, for any reasonable legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6.1: (x) shall not apply to an Indemnified
Person with respect to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company by such Indemnified Person expressly for use in the Registration
Statement or any such amendment thereof or supplement thereto; (y) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld; and (z) with respect to any preliminary prospectus, shall
not inure to the benefit of any Indemnified Person if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented, if such
corrected prospectus was timely made available by the Company pursuant to
Section 3.3 hereof, and the Indemnified Person was promptly advised in writing
not to use the incorrect prospectus prior to the use giving rise to a Violation
and such Indemnified Person, 11 notwithstanding such advice, used it. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Purchasers pursuant to Article IX.
6.2 In connection with any Registration Statement in which a Purchaser
is participating, each such Purchaser agrees to indemnify, hold harmless and
defend, to the same extent and in the same manner set forth in Section 6.1, the
Company, each of its directors, each of its officers who signs the Registration
Statement, its employees, agents and persons, if any, who control the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and any other stockholder selling securities pursuant to the
Registration Statement, together with its directors, officers and members, and
any person who controls such stockholder or underwriter within the meaning of
the Securities Act or the Exchange Act (such an "INDEMNIFIED PARTY"), against
any Claim to which any of them may become subject, under the Securities Act, the
Exchange Act or otherwise, insofar as such Claim arises out of or is based upon
any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Purchaser expressly for use in connection with
such Registration Statement; and subject to Section 6.3 such Purchaser will
reimburse any legal or other expenses (promptly as such expenses are incurred
and are due and payable) reasonably incurred by them in connection with
12.
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6.2 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Purchaser, which consent shall not be unreasonably withheld;
provided, further, however, that a Purchaser shall be liable under this
Agreement (including this Section 6.2 and Article VII) for only that amount as
does not exceed the net proceeds actually received by such Purchaser as a result
of the sale of Registrable Securities pursuant to such Registration Statement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive
the transfer of the Registrable Securities by the Purchasers pursuant to Article
IX. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6.2 with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented, and the Indemnified Party failed to utilize such
corrected prospectus.
6.3 Promptly after receipt by an Indemnified Person or Indemnified Party
under this Article VI of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to made against any indemnifying party under this
Article VI, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that such indemnifying party shall diligently pursue such defense and
that such indemnifying party shall not be entitled to assume such defense and an
Indemnified Person or Indemnified Party shall have 12 the right to retain its
own counsel with the fees and expenses to be paid by the indemnifying party, if
the representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual or
potential conflicts of interest between such Indemnified Person or Indemnified
Party and any other party represented by such counsel in such proceeding or the
actual or potential defendants in, or targets of, any such action include both
the Indemnified Person or the Indemnified Party and any such Indemnified Person
or Indemnified Party reasonably determines that there may be legal defenses
available to such Indemnified Person or Indemnified Party which are different
from or in addition to those available to such indemnifying party. The
indemnifying party shall pay for only one separate legal counsel for the
Indemnified Persons or the Indemnified Parties, as applicable, and such legal
counsel shall be selected by Purchasers holding a majority-in-interest of the
Registrable Securities included in the Registration Statement to which the Claim
relates (with the approval of the Initial Purchaser if they hold Registrable
Securities included in such Registration Statement), if the Purchasers are
entitled to indemnification hereunder, or by the Company, if the Company is
entitled to indemnification hereunder, as applicable. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Article VI,
except to the extent that the indemnifying party is actually prejudiced in its
ability to defend such action. The indemnification required by this Article VI
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
13.
ARTICLE VII
CONTRIBUTION
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Article
VI to the fullest extent permitted by law; provided, however, that (i) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person of
Registrable Securities who was not guilty of such fraudulent misrepresentation,
and (ii) contribution (together with any indemnification or other obligations
under this Agreement) by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale of
such Registrable Securities.
ARTICLE VIII
REPORTS UNDER THE EXCHANGE ACT
With a view to making available to the Purchasers the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or regulation of
the SEC that may at any time permit the Purchasers to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:
8.1 File with the SEC in a timely manner and make and keep available all
reports and other documents required of the Company under the Securities Act and
the Exchange Act so long as the Company remains subject to such requirements (it
being understood that nothing herein shall limit the Company's obligations under
Section 4.3 of the Securities Purchase Agreement) and the filing and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and
8.2 Furnish to each Purchaser so long as such Purchaser holds Preferred
Stock, Warrants or Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Purchasers to sell such securities pursuant
to Rule 144 without registration.
ARTICLE IX
ASSIGNMENT OF REGISTRATION RIGHTS
The rights of the Purchasers hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
automatically assigned by each Purchaser to any transferee of all or any portion
of the Preferred Stock or the Registrable Securities if: (a) the Purchaser
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after
14.
such assignment, (b) the Company is, within ten (10) business days after such
transfer or assignment, furnished with written notice of (i) the name and
address of such transferee or assignee, and (ii) the securities with respect to
which such registration rights are being transferred or assigned, (c) following
such transfer or assignment, the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act or applicable
state securities laws, (d) at or before the time the Company receives the
written notice contemplated by clause (ii) of this sentence, the transferee or
assignee agrees in writing for the benefit of the Company to be bound by all of
the provisions contained herein, and (e) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement.
ARTICLE X
AMENDMENT OF REGISTRATION RIGHTS
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with written consent of the Company, the Initial
Purchaser (but not if the Initial Purchaser no longer owns any Preferred Stock
or Registrable Securities and is not affected by such amendment or waiver) and
Purchasers who hold a majority interest of the Registrable Securities. Any
amendment or waiver effected in accordance with this Article X shall be binding
upon each Purchaser and the Company. Notwithstanding the foregoing, no amendment
or waiver shall retroactively affect any Purchaser without its comment or
prospectively adversely affect any Purchaser who no longer owns 14 any Preferred
Stock, Warrants or Registrable Securities without its consent.
Neither Article VI nor Article VII hereof may be amended or waived in a
manner adverse to a Purchaser without its consent.
ARTICLE XI
MISCELLANEOUS
11.1 A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
11.2 Any notices herein required or permitted to be given shall be in
writing and may be personally served or delivered by courier or by confirmed
telecopy, and shall be deemed delivered at the time and date of receipt (which
shall include telephone line facsimile transmission). The addresses for such
communications shall be:
15.
If to the Company:
Valence Technology, Inc.
000 Xxxxxxxxx Xxx
Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Godward LLP
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telecopy: (000) 000-0000
If to CC Investments, LDC:
CC Investments, LDC
Corporate Centre, West Bay Road
P.O. Box 31106 SMB
Grand Cayman, Cayman Islands
with a copy to:
Castle Creek Partners, LLC
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx
and with a copy to:
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
and if to any other Purchaser, at such address as such Purchaser, shall have
provided in writing to the Company, or at such other address as each such party
furnishes by notice given in accordance with this Section 11.2.
11.3 Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
16.
11.4 This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to contracts made and to be
performed in the State of Delaware. The Company irrevocably consents to the
jurisdiction of the federal courts located in the State of Delaware and the
state courts of the State of Delaware located in the County of New Castle in the
State of Delaware in any suit or proceeding based on or arising under this
Agreement and irrevocably agrees that all claims in respect of such suit or
proceeding may be determined in such courts. The Company irrevocably waives the
defense of an inconvenient forum to the maintenance of such suit or proceeding.
The parties hereto further agree that service of process upon the parties hereto
mailed by first class mail shall be deemed in every respect effective service of
process upon each such party in any such suit or proceeding. Nothing herein
shall affect either party's right to serve process in any other manner permitted
by law. The parties hereto agree that a final non-appealable judgment in any
such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
11.5 This Agreement, the Preferred Stock, Warrants and the Amended
Securities Purchase Agreement (including all schedules and exhibits thereto and
all certificates and opinions required thereby) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement, the Preferred
Stock, the Warrants and the Amended Securities Purchase Agreement supersede all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof, including the Securities Purchase Agreement
and the Registration Rights Agreement.
11.6 Subject to the requirements of Article IX hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto. Notwithstanding anything to the contrary contained
herein, including, without limitation, Article IX, the rights of a Holder
hereunder shall be assignable to and exercisable by a bona fide pledgee of the
Registrable Securities in connection with a Holder's margin or brokerage
accounts.
11.7 The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
11.8 This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto, by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
11.9 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.
17.
11.10 All consents and other determinations to be made by the Purchasers
pursuant to this Agreement shall be made by the Purchasers holding a majority of
the Registrable Securities (determined as if all Preferred Stock then
outstanding had been converted into Registrable Securities) held by all
Purchasers.
11.11 The initial number of Registrable Securities included on any
Registration Statement and each increase to the number of Registrable Securities
included thereon shall be allocated pro rata among the Purchasers based on the
number of Registrable Securities held by each Purchaser at the time of such
establishment or increase, as the case may be. In the event a Purchaser shall
sell or otherwise transfer any of such holder's Registrable Securities, each
transferee shall be allocated a pro rata portion of the number of Registrable
Securities included on a Registration Statement for such transferor. Any shares
of Common Stock included on a Registration Statement and which remain allocated
to any person or entity which does not hold any Registrable Securities shall be
allocated to the remaining Purchasers, pro rata based on the number of shares of
Registrable Securities then held by such Purchasers. Without implication that
the contrary would otherwise be true, for purposes of this paragraph, all
Preferred Stock then outstanding shall be assumed converted into Registrable
Securities.
11.12 If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement.
18.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
VALENCE TECHNOLOGY, INC.
By: /s/ Xxx X. Xxxxxx
-------------------------------
Xxx X. Xxxxxx
President, Chairman and Chief Executive Officer
Initial Purchaser:
CC INVESTMENTS, LDC
By: Castle Creek Partners, LLC
By: /s/ Xxxx Xxxxxxxxx
--------------------------
Xxxx Xxxxxxxxx
Director
19.
EXHIBIT 1
To Amended and Restated
Registration Rights Agreement
[Date]
[Name and address of transfer agent]
RE: VALENCE TECHNOLOGY, INC.
Ladies and Gentlemen:
We are counsel to Valence Technology, Inc., a Delaware corporation (the
"COMPANY"), and we understand that [Name of Purchaser] (the "HOLDER") has
purchased from the Company Series [A][B] Convertible Participating Preferred
Stock of the Company (the "PREFERRED STOCK"), convertible into shares of the
Company's common stock, par value $.001 per share (the "COMMON STOCK"). The
Preferred Stock was purchased by the Holder pursuant to a [Amended and Restated]
Securities Purchase Agreement, dated as of [ ], 1998, by and among the
Company and the signatories thereto (the "AGREEMENT"). Pursuant to an Amended
and Restated Registration Rights Agreement, dated as of December 11, 1998, by
and among the Company and the signatories thereto (the "REGISTRATION RIGHTS
AGREEMENT"), the Company agreed with the Holder, among other things, to register
the Registrable Securities (as that term is defined in the Registration Rights
Agreement) under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
upon the terms provided in the Registration Rights Agreement. In connection with
the Company's obligations under the Registration Rights Agreement, on _____ __,
1998, the Company filed a Registration Statement on Form S-_____ (File No. 333-
__________) (the "REGISTRATION STATEMENT") with the Securities and Exchange
Commission (the "SEC") relating to the Registrable Securities, which names the
Holder as a selling stockholder thereunder.
[Other customary introductory and scope of examination language to be inserted]
Based on the foregoing, we are of the opinion that the Registrable Securities
have been registered under the Securities Act.
[Other appropriate customary language to be included.]
Very truly yours,
cc: [Name of Purchaser]
20.
